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Industrial Training Levy (Construction Board) Order 1998

7.19 p.m.

Lord Whitty rose to move, That the draft order laid before the House on 15th January be approved [19th Report from the Joint Committee].

The noble Lord said: My Lords, noble Lords may have noticed me attempting to prolong the previous debate. I did so because I thought I would not be here for the next order! However, I am here, moving the first order and speaking to the second order on the industrial training boards. I hope it will be for the convenience of the House if I speak to the two orders together.

The proposals before your Lordships this evening seek authority for the Construction Industry Training Board and the Engineering Construction Industry Training Board to impose a levy on the employers in their industries to finance their training activities, including grants schemes, and ability to fund the operating costs of the boards. Provision for this is contained in the Industrial Training Act 1982 and the orders before your Lordships would give effect to proposals submitted by the two boards.

Because the proposals from each board include provision to raise a levy in excess of 1 per cent. of an employer's payroll, the Industrial Training Act 1982 requires that in such cases the proposals must be approved by the affirmative resolution of both Houses. They have already been through the other place.

In each case the proposals are based on employers' payrolls and their use of sub-contract labour. The higher rates imposed on labour-only payments reflect the fact that employers using labour-only subcontractors do not, in the main, play any active part in the training of the pool of skilled labour from which they recruit.

As required by the Industrial Training Act 1982, both boards have provided for the exemption of small firms from the levy. The level at which this exemption takes effect is unchanged from last year and aims to strike the right balance between helping small firms to grow and giving them unfair commercial advantage. However, the boards are committed to supporting the training efforts of small firms, whether or not they pay the levy. All firms need a skilled, competent workforce if they are to be competitive and small firms in these sectors are encouraged to take advantage of the services offered by the boards.

In the case of the Engineering Construction Industry Training Board the proposals in terms of percentage are exactly the same as those approved by your Lordships last year. The board treats head offices and construction sites as separate establishments and proposes to raise a

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four-part levy. For head offices the rates are 0.4 per cent. of payroll and 0.5 per cent. of net expenditure by employers on labour-only sub-contracting. Those head offices employing 40 or fewer employees are exempt. The rates for sites are 1.5 per cent. of payroll and 2 per cent. of net expenditure by employers on labour-only sub-contracting. There is exemption for site employers with combined payroll and net labour-only payments of £75,000 or less. The proposals are therefore the same as last year. The Construction Industry Training Board proposes to raise a two-part levy: 0.29 per cent. of payroll and 2.28 per cent. of net expenditure by employers on labour-only sub-contracting. Employers with combined payroll and labour-only payments of less than £61,000 are exempt.

These rates represent an increase for the first time since 1990. The previous rates were 0.25 per cent., now 0.29 per cent., and 2 per cent., now 2.28 per cent. The board states that the increases are necessary for two reasons. First, recent changes to the definition of self-employment have significantly affected employment practices in the construction industry. The trend is moving away from labour-only sub-contracting towards direct employment and because of the higher levy rate on labour-only, this will lead to a reduction in the board's income. At the same time, the greater numbers of direct employees coupled with relatively high levels of construction activity are expected to lead to an increase in the amount of training being carried out and a corresponding increase in grant and support provided by the board.

For both boards the proposals involve levy rates in excess of 0.2 per cent. with no provision for exempting employers who make their own training arrangements. In such cases the Industrial Training Act 1982 requires boards to demonstrate that the proposals have the support of the employers in the industry. I am satisfied that each board has obtained that support.

Your Lordships will know from previous debates that the two boards are the only two statutory industry training boards. Each has just undergone an independent review of the need for its continuance--a review which included a survey of the views of employers in each sector. The reviews concluded that both boards were widely supported by employers and sectoral interest groups. Their opinion was that without them there would be a serious deterioration of training in their sectors. Based on these findings the Government have agreed that the boards will continue their work. Each board will however, be set specific objectives which address particular recommendations of the review and which will further increase their effectiveness and develop their capabilities, especially at the strategic level.

I am also pleased to tell your Lordships that each of the boards has received government recognition as the national training organisation for its appropriate sector. This is an important development for them because it places them very firmly within the wider national network of sector-level training organisations and puts a new emphasis on strategic activities and partnerships.

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The Government wish to see them expand their role into one which is forward looking and contributes to national as well as sector skills.

The draft orders before the House will enable the two boards to carry out their training responsibilities in 1998, and I believe it is right that the House should agree to approve them. I commend them to the House. I beg to move.

Moved, That the draft order laid before the House on 15th January be approved.[19th Report from the Joint Committee].--(Lord Whitty.)

7.25 p.m.

Lord Pilkington of Oxenford: My Lords, in principle we on this side of the House support the orders. The valuable work that the two bodies have done is widely recognised. In fact, I believe that they are the only two training bodies that have survived from the 1980s. I underline what the Minister said: they both undergo severe reviews and receive support from the employers and from all concerned with the industries.

Since the Minister has had to deal with the whole of Europe and the problems of the Middle East, I shall not burden him with many questions. I only have two. As he knows, we have recently been considering the Teaching and Higher Education Bill which is mainly concerned with people between the ages of 16 and 18 receiving training outside. I should like the Minister to say something about how that relates to the two bodies and whether there will be any conflict. I am sure that he can reassure me on that point.

Secondly, I gather that the Minister's honourable friend Mr. Raynsford gave an extensive talk on the relationship of the New Deal to the construction industry. For the record of Parliament, it would be good if the Minister could tell us what Mr. Raynsford said in, I gather, a flashy gathering somewhere in London. Perhaps in the more sober atmosphere of the Chamber, the Minister could tell us what the plan is.

With those two questions, we welcome the orders and wish both the bodies well.

7.27 p.m.

Lord Whitty: My Lords, I greatly welcome the support of the Opposition for the changes. As the noble Lord said, they are widely supported within the industry.

In regard to the two questions, the first was the interface with the provisions in the Teaching and Higher Education Bill. I believe that the noble Lord and I will have the pleasure of debating it again tomorrow night. The ITBs' governing legislation allows them to raise a levy and to provide grants for employers who provide suitable training. But it does not require employers to train their employees nor to release them to undertake training.

In the Teaching and Higher Education Bill there is new legislation to ensure that certain 16 and 17 year-olds in a job will be entitled to take time off and to pursue appropriate qualifications within the workplace and elsewhere.

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It would be our belief that employers in the construction and engineering industry who undertake training which meets the boards' requirements, would meet the requirements in the training for 16 to 17 year-olds. So although the employers in the construction industry and the engineering construction industry will not be exempt in any sense from the legislation, it is anticipated that the training under the boards will help meet the requirements for those two age groups.

In relation to the remarks of my honourable friend in another place, Mr. Nick Raynsford--I am not sure that the place was any flashier than Millbank Tower; if the noble Lord knew it as well as I do, he would realise that it is not that flashy--the New Deal arrangements for the construction industry will be complementary to the CITB's new entrant training scheme (NET). They will form a valuable incentive to employers to take on much needed recruits in the industry. Trainees will be able to progress from the New Deal to the employed national traineeships and to modern apprenticeship schemes with full support from the CITB's grant scheme.

On a separate question which the noble Lord did not directly raise but which was addressed by my honourable friend Mr. Raynsford, there is no question of either the weekly employment subsidy or the £750 training grant available under the New Deal being affected by the grants and allowances provided to employers under the CITB scheme and paid from the levy income. I hope that that in part at least clarifies the position of the interface between the New Deal and the ongoing relationships under the training boards. I commend the order to the House.

On Question, Motion agreed to.

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