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Lord Skelmersdale: My Lords, as the Minister said, the Construction Industry Training Board provides grants to the construction industry for training related to that industry. The majority of its training courses are devised for qualifying a construction workforce. I have no complaint about the CITB, which I know does an excellent job for the construction industry in general.

However, I want to raise a matter which, arguably, should not have to be mentioned on the Floor of the House but in a statutory instruments policy committee, which still does not exist in either House. However, as we heard during Questions last week, a proposal for such a committee is in the pipeline and will go before your Lordships' Liaison Committee at its next meeting. Be that as it may, there is a clear problem regarding the Construction Industry Training Board levy—although I am sure to be told that it has nothing specifically to do with this order.

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In a nutshell, what should be the position of a firm or, indeed, a sector, that derives no benefit from the board's training activities? That is the position in which hire companies find themselves. There is a very limited number of training courses for them, yet they contributed a mammoth 2.7 million to the board last year. The modern hire and rental industry provides not only items such as concrete mixers and cranes, but marquees, mobile mortuaries, wedding dresses and speed cameras. All are covered by the board's activities.

It is therefore not surprising that during 2001, the Hire Association Europe—the trade body for the hire and rental industry—mounted a legal challenge to the levy in the Queen's Division at the High Court. On 23rd November 2001, Mr Justice Keith handed down his judgment on the argument mounted by the Hire Association Europe that one of its member firms, Gibbon Equipment Hire Limited, did not derive any benefit from the training offered. He found that although he did not believe that this fact assisted in construing the legislation, he did believe that it would be a good argument for saying that the letting out on hire of plant equipment should not have been included in the list of activities covered by the board in the first place—in other words, it was not the then current CITB training levy order that was at fault but preceding legislation.

For some reason, which I do not know, it was not until a year later that a Member of another place took up the issue with the Minister, Mr Lewis, a colleague of the noble Lord on the Government Front Bench today. He pointed out, I am sure quite correctly, that levy orders did not specify who was to pay the levy, only how; and, as the Joint Committee on Statutory Instruments found out, a de minimis size of firm, not, I repeat, the type of firm, a matter to which the Minister referred in his opening remarks.

The Minister's colleague said that the types of firm are to be found in SI 1992 No. 3048. I regret to say that they are not. The 1992 order is merely an amending order relating to the construction of the board itself. The order he should have referred to in his letter is SI 1964 No. 1079, and specifically Schedule 1 thereto, which does list types of firm—interestingly, by the operations they conduct rather than by the type of firm per se.

Noble Lords may think, as I do, that the Minister's letter was less than helpful. Were it not for your Lordships' Library staff this morning, I would not have got to the bottom of all this. However, having now discovered what the Minister's letter should have said, I must be fair and concede that he went on to say:

    "I am willing at any time to consider proposals from the construction industry or any sector of it, including the hire and rental sector, to change the definition".

I am informed that a meeting between departmental officials and a Mr Coyne of the Hire Association Europe was held on 27th November last. However, to my knowledge, the results of that meeting seem to have disappeared into what the space industry calls a black hole.

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Was the Minister briefed on the outcome of that meeting? What is his current thinking on the matter? Lastly, and most importantly, would the Minister be receptive to a meeting with me and officials of the Hire Association Europe in order that we may right a wrong which has persisted for many years?

Lord Puttnam: My Lords, I do not wish to delay the House—the debate of my noble friend Lord Plant is already much delayed—but each year I rise to make a point about this order, which I believe is one of the most important orders to pass through the House. To an extent, it is misunderstood and not sufficiently appreciated.

The order represents a triumph for two important industries which have organised themselves in such a way as to create adequate training resources for the reasons set out by the noble Lord. But that is only part of the story. In their manifesto, the Labour Government committed to reviewing the whole issue of training levies across the spectrum. Many industries conform to exactly the same conditions as the construction and engineering industries—that is, they are transient and cyclical—and, for the life of me, I cannot understand why the Government will not pay attention to this important issue. It is impossible to underestimate what damage would have been done to the construction industry and the engineering industry had the order not been in place originally.

I raise the question now because there will be an opportunity to take another look at this issue during the passage through the House of the Communications Bill. The draft Bill creates an opportunity for the film, television and communications industries to commission an audit of skills and to recommend industry training standards for the entire communications world.

I am seeking some kind of amendment under which Ofcom would have reserve powers to impose a levy in the event of the industry wilfully ignoring its self-imposed strategy. I do not believe that that is unreasonable.

The most important point made by the Minister is that this is an arrangement made by the majority in the engineering and construction industries. The biggest single problem in Britain, where there is an overwhelming skills deficit in many industries, is that those industries are forced to go ahead at the speed of the most reluctant and recalcitrant funders of training. That is bad for the economy, bad for Britain and bad for those industries.

I commend the order to the House as an example of what is possible when industries are far-sighted and have a full understanding of the long-term implications of their training requirements.

5.45 p.m.

Baroness Blatch: My Lords, I wish to preface my words by agreeing at least with the thrust of the remarks made by the noble Lord, Lord Puttnam, to the effect that the encouragement of training can only be a good thing. We shall debate how that should be

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achieved, but we shall argue about the means to the end rather than the principle itself. Like my noble friend Lord Skelmersdale, I have no difficulty in agreeing that the CITB does a good job and that it has served the construction industry extremely well.

However, I hope that the noble Lord, Lord Puttnam, will agree that certain questions must be raised. First, I believe that the whole policy needs to be revisited and I wish to put that question to the Minister tonight. Secondly, some form of redress must be provided for those concerns which feel hard done by. Each year the orders pass through the House almost on the nod. The industry itself determines the levy; noble Lords agree that it is a good thing and the orders are approved. But within the construction and engineering sectors some companies derive no benefit whatever from them. They face a compulsory tax which they have no option but to pay. Therefore there ought to be in place a mechanism for redress, but there is none. That appears to me to lead to compulsory pressure and punishment.

In paragraph 3 of the regulatory impact assessment it states that:

    "An employer who provides no training will have to pay a levy but will get no grant from the Board".

It is possible for companies to pay the levy and then to provide training at their own expense, but still receive nothing from the board. The board reaches a decision based on criteria approved by itself on who should or should not receive grant-in-aid. The sum quoted by my noble friend in relation to hire companies is 2.7 million. That is a great deal of money for which the companies see no return.

I wish to raise one or two further important questions. The House has two choices before it: either to reject the order or to accept it. The noble Lord on the Front Bench opposite need not send messages to his colleagues outside because I shall support the second option, but I do so with a number of reservations. In advising acceptance of the second option, the regulatory impact assessment states that the consequence of approving the order would be that,

    "with its operating income secured, the board would be able to continue to organise, manage and fund the range of training services that have been developed on the industry's behalf. The cost would be shared between firms".

Who monitors the process and who determines the quality? Given that this covers one of only two compulsory boards approved by the Government, how do they satisfy themselves that the proposal represents good value for money?

Secondly, a note in paragraph 20 of the regulatory impact assessment states that:

    "The purpose of the Industrial Training Act is to encourage adequate training in any given industry"—

at this point the points made by the noble Lord, Lord Puttnam, are important—

    "The cost of training itself cannot be quantified in the examples which follow".

I must ask why the cost cannot be quantified. The scheme has been running for so many years that it should be possible for the Government at least to have some form of quantification with regard to the cost.

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The assessment goes on to state:

    "It is not possible to estimate the extent to which the imposition of a levy/grant mechanism induces employers to incur additional training costs to those which they might or might not already be incurring, particularly as many employers will have operated under these arrangements for a number of years".

Again, unless those estimates are made, how can anyone determine the value that is added by the system? I cannot believe that it is not possible to measure its value and I wish to press the Minister a little on the point. How can the House state that the system is good and is working well, providing high-quality and a sufficient quantity of training, when the Government are not in a position to know what is being delivered?

Paragraph 1 of the regulatory impact assessment states that,

    "the Secretary of State [is empowered] to set up industrial training boards to ensure that the quantity and quality of training are adequate to meet the needs of the industry for which they are established".

However, the document also makes it clear that the Government cannot measure the quantity and quality of the training provided. How can the Government come before Parliament and state that they are ensuring that the quality and quantity of training is adequate to meet the needs of the industry?

As I have said, I seek to make two important points. The first concerns redress for those companies within the sector which feel hard done by because they are paying a tax from which they derive no benefit. In his opening statement the noble Lord on the Front Bench opposite stated that all those involved in the sector agree with the scheme, but noble Lords on this side have mentioned at least one rather substantial part of the sector, one which deals with its own training requirements, that receives no benefit as a result of the levy.

My final point relates to the examples given in the impact assessment. We are given a list of five examples, but no scenario is set out for any single one. We are told that there will be costs of 30 for completing a levy return and 30 for processing a levy assessment: we do not even know whether that is good value for money. Huge sums of money are incurred in completing grant claims. In one case it is 23,926; in another only 90; in another nothing at all. There are further sums mentioned of 2,364 and 21,000. It would be helpful to know the scenario for each of these examples in order to judge whether particular areas of industry within the sector are receiving value for money.

I support what my noble friend Lord Skelmersdale said on behalf of the board. It is incumbent on the Minister to give us the outcome of the meeting with Mr Coyne when at least the possibility of revisiting the 1964 order was discussed. If the meeting did not produce a definitive outcome, I should like to place on record our belief that the 1964 order should be revisited and that there should be a further examination of the definition of companies that qualify to come within the terms of this compulsory order.

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