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Baroness Carnegy of Lour: My Lords, the Minister has been fairly damning about competitive tendering. Maybe there was something in the previous legislation that was a little too rigid, but there was absolutely no need for compulsory competitive tendering to be restrictive, although the way in which it operated may have been restrictive. I believe that the Government had a political problem when they changed to this system. It has been welcomed by everybody and far be it from me to object to it, but I believe that the Minister has been unnecessarily damning about a system that in the past many of us have operated extremely successfully.

Lord Whitty: My Lords, the concept of having to assess whether a contract is better put to outside tender or dealt with in-house changed the psychology of local government. I am making the point that the rules attached to that, the compulsory nature and the presumptions within it were extremely rigid. Although some cost savings may have been achieved in particular contracts in particular areas, in many instances that rigidity prevented the local authorities from making creative use of the procurement process. I believe that left a bad legacy.

These regulations are intended to be much more flexible and to have broader objectives built into them. That is why we are removing those barriers. I am not being utterly condemnatory of the CCT process, but on balance I believe that it increased the rigidity and central control rather than giving local authorities the ability to assess the situation themselves. The best value regime is intended to do that, and this order will enable them to do so.

On Question, Motion agreed to.

Industrial Training Levy (Construction Board) Order 2001

7.51 p.m.

Lord Davies of Oldham rose to move, That the draft order laid before the House on 21st December 2000 be approved [3rd Report from the Joint Committee].

The noble Lord said: My Lords, I beg to move that the draft order laid before the House on 21st December 2000 be approved. For the convenience of the House I shall speak also to the second order in my name on the Order Paper, the Industrial Training Levy (Engineering Construction Board) Order 2001.

The proposals before your Lordships 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. As

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your Lordships will know from previous debates, those two boards are the only statutory industrial training boards. They exist because of wide support from employers and employer interest groups in these sectors that believe that without them there would be a serious deterioration in training.

The proposals are expected to raise between £78 million and £83 million for the Construction ITB and around £10 million for the Engineering Construction ITB. The money will be used to finance their training activities, including grants schemes, and the operating costs of the boards. Provision for that is contained in the Industrial Training Act 1982 and the orders give effect to proposals submitted by the two boards.

In each case the proposals are based on employers' payrolls and their use of sub-contract labour. Each board has included the provision to raise a levy in excess of 1 per cent of an employer's payroll. The 1982 Act requires that in such cases the proposals must be approved by affirmative resolution of both Houses. The other place has already approved the proposals.

As required by the Industrial Training Act, both boards have provided for the exemption of small firms from the levy. The level at which this exemption takes effect aims to strike the right balance between helping small firms to grow and giving them an unfair commercial advantage. However, the boards are committed to supporting the training efforts of small firms, whether or not they pay the levy. All companies 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 and to provide opportunities for trainees and apprentices.

The Construction ITB is proposing the following rates: 0.5 per cent of payroll for direct employees and 1.5 per cent of net expenditure on subcontract labour; but employers whose combined payroll and net expenditure on sub-contract labour is less than £61,000 will not be liable to pay the levy. The figure represents a reduction of just over a third on the current rate of 2.28 per cent for sub-contract labour and is part of moving to a single rate of levy, subject to annual consultation throughout the industry.

The board is significantly increasing its investment in training. It is making additional grants and other resources available to support employers' efforts. This is being wholly financed by cost reductions, an increase in non-levy income and increased levy income from growth in the industry.

In the case of the Engineering Construction ITB, which assesses head offices and construction sites separately, the following levy rates are proposed: 0.18 per cent of the total of payroll and net expenditure on sub-contract labour for head offices, but head offices whose combined payroll and net expenditure on sub-contract labour is £1 million or less will not be liable to pay the levy; and a levy rate of 1.5 per cent of the total of payroll and net expenditure on sub-contract labour for construction sites, but sites whose

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combined payroll and net expenditure on sub-contract labour is £75,000 or less will not be liable to pay the levy.

The proposals from the Engineering Construction ITB are the same as those approved by your Lordships last year. 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 requires boards to demonstrate that the proposals have the support of the employers in the industry.

I am satisfied that each board has that necessary support. All of the key employer federations have been consulted about the levy rates and agree that these rates are necessary to fund the boards' training plans.

My honourable friend in another place will be meeting with the chairs of each board--Jim Rowland from the ECITB and Hugh Try from the CITB--in the spring to discuss their performance over the last year and to look at key issues for the future. In particular, we shall look at how their work in England will inform and influence that of the regional development agencies and, from April, the new Learning and Skills Council.

Each board is also the government-recognised national training organisation for its sector and is fully involved with the national network. We welcome the importance that each is placing on a forward-looking strategic planning process informed by rigorous analysis of skill needs and supply. We believe that this is crucial if they are to ensure that the education, training, skills and qualifications needs of their sectors, both now and for the future, are met.

The draft orders before the House will enable the two boards to carry out their vital training responsibilities in 2001. I believe that it is right that the House should agree to approve them. I commend them to the House.

Moved, That the draft order laid before the House on 21st December 2000 be approved [3rd Report from the Joint Committee].--(Lord Davies of Oldham.)

Baroness Seccombe: My Lords, I thank the Minister for explaining the two orders before us this evening. As my honourable friend Graham Brady stated during the earlier passage of these orders in another place, the Conservative Party is sceptical about industrial boards in general. However, we believe that the Construction Board and Engineering Construction Board perform valuable functions which we are content to support. These industries are important and it is right that we should look to support the acquisition of skills through appropriate mechanisms.

The orders give the power to impose a compulsory levy or charge on business backed up by recourse to the employment tribunals to enforce the payment of those levies. The issue of tribunals is an important one as we are currently seeing a burgeoning litigation culture in which our hard-pressed employers are being regarded increasingly as an easy route to compensation payments.

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In October, ACAS reported a 32 per cent rise during 1999-2000 in individual complaints. According to Personnel Today, the human resources weekly,

    "the raft of legislative changes brought in under the Employment Relations Act 1999 is the chief factor behind the big rise in tribunal claims reported by ACAS".

According to ACAS, the lowering of the qualifying period for unfair dismissal cases from two years to one is estimated to have generated an extra 6,700 cases, while the working time regulations and the national minimum wage account for an extra 7,000 cases.

I raise this point to illustrate that we are seeing a growth in employment litigation, and moreover that this increase stems largely from new regulations imposed by this Government on business. Hence, I share the concern expressed by my honourable friend in another place that we should seek to keep the number of tribunals arising from these orders to a minimum. The Minister in another place implied that relatively few cases regarding the levy go to tribunal, but I hope that the Minister will assure us that these orders will be unlikely to increase that load.

Another important point concerns the issue of costs associated with the levy and whether this results in receivership. In another place the Minister was unable to answer the question of how many cases arise each year in which the levy is a factor in bringing about receivership. I should be grateful if the Minister were able to cast any light on that point today.

The reason I ask about these important issues is because of the desire on this side of the House to ensure that obligations placed in business by the state do not result in adverse effects on enterprise or employment. However, we recognise the importance of these respective levies and are supportive of the orders.

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