Seventh Standing Committee on Delegated Legislation



Thursday 30 January 1997



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The Committee consisted of the following Members:

Chairman: Mr. Michael Lord

Booth, Mr. Hartley (Finchley)

Byers, Mr. Stephen (Wallsend)

Coombs, Mr. Anthony (Wyre Forest)

Couchman, Mr. James (Gillingham)

Dunn, Mr. Bob (Dartford)

Foster, Mr. Don (Bath)

Gorman, Mrs. Teresa (Billericay)

Greenway, Mr. John (Ryedale)

Howarth, Mr. Alan (Stratford-on-Avon)

Olner, Mr. Bill (Nuneaton)

Paice, Mr. James (Parliamentary Under-Secretary of State for Education and Employment)

Pearson, Mr. Ian (Dudley, West)

Pope, Mr. Greg (Hyndburn)

Riddick, Mr. Graham (Colne Valley)

Spearing, Mr. Nigel (Newham, South)

Speed, Sir Keith (Ashford)

Temple-Morris, Mr. Peter (Leominster)

Watson, Mr. Mike (Glasgow, Central)

Wise, Mrs. Audrey (Preston)

Mr. T. W. P. Healey, Committee Clerk.

3 Seventh Standing Committee on Delegated Legislation Thursday 30 January 1997

[MR. MICHAEL LORD in the Chair]

Draft Industrial Training Levy (Construction Board) Order 1997
Draft Industrial Training Levy (Engineering Construction Board) Order 1997

10.30 am

The Parliamentary Under-Secretary of State for Education and Employment (Mr. James Paice): I beg to move, That the Committee has considered the draft Industrial Training Levy (Construction Board) Order 1997.

The Chairman: With this it will be convenient to consider the draft Industrial Training Levy (Engineering Construction Board) Order 1997.

Mr. Paice: The proposals before the Committee 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 to fund the operating costs of the boards. Provision for that is contained in the Industrial Training Act 1982 and the orders before the Committee would give effect to proposals submitted by the two boards. The Act also requires that where the levy is in excess of 1 per cent. of an employer's payroll, the proposals must be approved by affirmative resolution of both Houses. In each case, the proposals are almost exactly the same as those approved by the House last year. As in previous orders, they are based on employers' payrolls and their use of subcontract labour. As required by the Industrial Training Act, both boards have provided for the exemption of small firms from the levy. The level at which that 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, all firms need a skilled competent work force if they are to be competitive, and small, non-levy-paying firms in those sectors are encouraged to take advantage of the services offered by the boards and to provide placement opportunities for trainees. The proposal for the construction industry is for a two-part levy of 0.25 per cent. of payroll and 2 per cent. of net expenditure by employers on labour-only subcontracting. Employers with combined payroll and labour-only payments of less than £61,000 will be exempt from the levy. The Committee may wish to know that I have been concerned during the past year—indeed, a number of both Conservative and Opposition Members have 4 written to me—about the reported practice of some employers passing on the CITB levy to their labour-only subcontractors. I condemn that practice because it is the employers who have asked for the levy, the employers who set the rate of levy, and the employers who decide how the levy is spent. Some of them are then passing the financial burden of their decisions on to individuals who have had no say in those decisions. Although neither the CITB nor the Government can interfere in agreements made voluntarily about such matters, I emphasise that the Industrial Training Act 1982 does not in itself enable them to pass on to others the liability to pay the levy. I therefore welcome the decision of the CITB to issue guidance making it clearer to employers that the key liability lies with them. The engineering construction industry training board treats its head offices and construction sites as separate establishments and proposes to raise a four-part levy. For head offices, the rates will be 0.4 per cent. of payroll and 0.5 per cent. of net expenditure on labour-only subcontractors. Head offices employing 40 or fewer employees will be exempt. The rates for sites will be 1.5 per cent. of payroll and 2 per cent. of net expenditure on labour-only subcontracting. There will be exemption for site employers with combined payroll and labour-only payments of £75,000 or less. Both sets of 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 of the boards has obtained that support. The Committee will know from previous debates that the two boards are the only two statutory industry training boards. They have been retained at the express wish of their industries, and the continuing level of support from employers is a crucial indicator of their effectiveness. During the past year, I have met the chairmen of both boards—Hugh Try of the CITB and Norman Dunlop of the ECITB—to review progress. I want to take the opportunity to commend them and their staff for redoubling their efforts to understand and respond to the business needs of employers in their industries. As members of the Committee may know, both boards are, as non-departmental public bodies, subject to periodic review of their role and performance. Both are presently constituted until March 1998 and policy reviews of both are about to begin; indeed, employer surveys, which are the first part of those reviews, are imminent. The reviews will also include full consultation with industry and other interests. I expect a final report to be produced by the end of the year. It will make recommendations about whether the boards should continue as statutory training boards or become national training organisations without levy-raising powers, as with other industry-level training organisations. I have received several representations and should, therefore, perhaps add that the report may conceivably recommend that the 5 boards continue as statutory training boards; it may, however, change their scope so that some peripheral sectors of their industries move in or out of scope. The draft orders will enable the boards to carry out their training responsibilities in 1997, and I commend them to the Committee.

10.35 am

Mr. Greg Pope (Hyndburn): I apologise for the absence from the Opposition Front Bench of my hon. Friend the Member for Wallsend (Mr. Byers), who is fulfilling an engagement of long standing. He is presenting awards to the ceramic industry in Stoke-on-Trent, which further confirms his status as the glamour boy of the Labour Benches. Labour will not oppose the draft orders, which provide for the renewal of the training levies in the construction and engineering construction industries. Improving the nation's skills base is a key objective and deserves the widest support from all parties in Parliament. Many employers perceive that there is a skills shortage, which is damaging their ability to recruit the people whom they need. 6 The Labour party believes that a new statutory framework is required and looks forward to introducing one in the near future. Such a framework would ensure that companies had the human resources necessary to compete in today's markets. We must have a skills base that ensures that people can get a job, keep it and, if necessary, find another one if they lose it. We welcome the important sectoral agreements that will be approved today. The same model could be spread to other industries and we want that to happen. The agreements have our support.

Question put and agreed to.

Resolved, That the Committee has considered the draft Industrial Training Levy (Construction Board) Order 1997.

Draft Industrial Training Levy (Engineering Construction Board) Order 1997

Resolved, That the Committee has considered the draft Industrial Training Levy (Engineering Construction Board) Order 1997.—[Mr. Paice.]

Committee rose at twenty-two minutes to Eleven o'clock.



Lord, Mr. Michael (Chairman)

Booth, Mr.

Coombs, Mr. Anthony

Couchman, Mr.

Dunn, Mr.

Gorman, Mrs.

Greenway, Mr. John

Paice, Mr.

Pope, Mr.

Riddick, Mr.

Speed, Sir Keith

Temple-Morris, Mr.