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Industrial Training Levy (Construction Board) Order 2006

My Lords, this is an important, if somewhat technical, matter that is worthy of consideration. The Minister has made a good case for the continuation of the levy, setting it in the context of the industry’s importance. As he said, the Industrial Training Act 1982  established industrial training bodies to ensure that the quantity and quality of training adequately met the needs of the industries for which they were established. The 1982 Act also contained provision for the levy on employers to finance ITB activities and share the cost of training more evenly between companies in the industry. There are two ITBs covering the construction and drilling industries, as we can see from the orders before us, and we are taking those matters together. Both boards provide a wide range of services and training initiatives, including setting occupational standards, providing vocational qualifications, delivering apprenticeships and paying direct grants to employers who carry out training to approved standards. These matters are significant because of the context in which we are considering them. Your Lordships will be familiar with the work of Kate Barker and her review of housing supply. Regardless of what one may think about some aspects of the report, one problem that Kate Barker identified, and on which we all agree, is the paucity of skills in the construction industry. That will act as a bar to the delivery of the targets that her report established as necessary. Indeed, the Government, in their own policy, have endorsed those targets. Undoubtedly, we will be unable to build on the scale proposed without significant improvement in the quantity and quality of skills available to the construction industry. I think it important to note at this juncture that, having followed the debate on these orders in another place, while we support them, we do not want to be diverted into the intricacies of house building policies. The Minister will know that I am referring to the failed attempts by the honourable Member for Normanton, Edward Balls MP—I think he prefers to be called ““Ed””—to ensnare my honourable friend John Hayes. However, it is worth saying a word about the Barker review. Mrs Barker warned:"““The track record of the industry, in areas such as consumer satisfaction, skills, innovation and local acceptance, is not sufficiently strong to inspire confidence in policy makers that it can deliver””." That is worrying indeed. In particular, Mrs Barker warned:"““The industry needs to address its weak record of innovation and remove barriers to the take-up of modern methods of construction and off-site manufacturing.""““Investment in skills needs to increase to produce higher levels of output in the future and to bring the take-up of apprenticeships towards the levels of leading international comparators. In the short-term, Government should consider increasing support for skills in the construction sector alongside any increases in the industry-funded training levy””." She refers specifically to the matter before us. A report by the adult learning inspectorate, published in May last year, found that the construction industry’s own research showed an acute shortage of skilled craftspeople. There are 300,000 fewer skilled craftspeople than the industry needs in terms of contracts already planned. During the 1970s, 100,000 people were being trained each year across a range of construction skills, but by 2004, that figure had declined to fewer than 40,000. The standard of training currently offered can only make the situation worse. Some 40 per cent of those being trained in construction industry skills were found by the adult learning inspectorate to be trained inadequately, and only 34 per cent of trainees complete their apprenticeships. Those are worrying figures, and they are worrying for all of us, regardless of party. While we are taking the orders together, I draw particular attention to the Construction Industry Training Board—the subject of the first of the orders. It is the largest provider of training in the building and crafts industries. It has 10,000 learners, but only 25 per cent of those will complete their qualifications. Nick Perry, director of inspection at the Adult Learning Inspectorate, commented that the construction industry must face up,"““to the critical problems endemic in its training methods today””," if the industry is to develop the new houses that the Government have planned for. Quite apart from the other buildings that emanate from such efforts to a standard that our nation deserves, urgent action is needed to improve the provision of training in the construction industry. The Minister said that there is support for the continuation of the levy at an appropriate level. That is vital. The level must be appropriate to deliver the sort of return that is needed. The Minister mentioned that support, and perhaps it is worth while amplifying his point by drawing your Lordships’ attention to some figures: 72 per cent of employers support the continuation of the CITB levy-grant system; and 73 per cent believe that the amount of training in the industry would worsen in the absence of CITB construction skills. I draw two worries to the Minister’s attention, and I hope that he will respond. First, in the past six years, the proportion of levy-paying employers who are members of the main employer federations has dropped from 58 per cent to just over 50 per cent. That reflects a decline in the percentage of construction employers who become federation members, rather than any diminution in support for the levy system in the industry. I mentioned the high level of support, but as fewer people become members of the federation, there is a worry that the levy system will cease to have the necessary depth of support to facilitate the outcomes that we all want. Secondly, we on these Benches have real concerns about the apprenticeship framework. The major cause of the current low level of apprenticeship framework completions in the construction industry is the failure of further education colleges to find work experience opportunities for trainees who are enrolled on full-time courses. This is one of the examples—there are others—of a gap between what we do in FE and what we do in industry. We need a greater synergy between the activities of further education colleges and the demands of a range of industries, including the construction industry. Perhaps that should be the substance of a debate for another day, but for now, we support the orders.