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Industrial Training Levy (Construction Board) Order 2006

My Lords, the Minister and I have exchanged views on these two orders in the past five years in this House. He will know that we on these Benches very much support the notion of the Construction Industrial Training Board and the levy-grant system that it incorporates here. The construction industry and the construction engineering industry are both characterised by a small number of very large firms, by a large number of very small firms, and perhaps above all by a great deal of sub-contracting in the industry. It is partly because of that tradition of sub-contracting that the industry has been plagued by the free rider problem of someone else always having to do the training. Firms that do the training find that their apprentices are poached by other companies as soon as they are trained. All the expense of training is therefore regarded to some extent as wasted because others benefit from it. In those circumstances, many firms say that it is not worth while training. This has characterised the industry to far too great an extent, which is why we have the levy-grant system that underpins it. As the noble Baroness, Lady Buscombe, indicated, the system is endorsed by a large number of employers in both sectors. She quoted the figure of 72 per cent of employers in the construction industry who support the levy-grant system, and said that 73 per cent say that there would be less training if it were not there. It is notable, as the Minister said, that for every pound that is invested in training in the construction industry, it is reckoned that £1.79 worth of training is extracted. The figure is similar for the construction engineering industry; it is £1.45. So a good amount of leverage comes out of these expenditures. Like the noble Baroness, Lady Buscombe, I wish to put to the Minister a number of worries. The first picks up on the noble Baroness’s point about the low completion rate of apprenticeships. She suggested that that was partly because colleges could not find work placements for apprentices—a second worry—but many apprentices do not complete their apprenticeship because they are offered a job before that. Perhaps too many employers are prepared to offer a job to apprentices who have not obtained their qualification. As the Minister knows, the ordinary apprenticeship results in a level 2 qualification but the industry regards the NVQ 3 as the proper, full apprenticeship. The failure of many apprentices to go on from level 2 to level 3 is very notable in the industry. The Minister might like to discuss the following point with his government colleagues in the other place. The Government will be funding a number of large construction projects, particularly in the run-up to the Olympic Games and, for example, in building schools for the future. They will be the major purchaser and funder of many projects. Is it not possible for the Government to write into their contracts the requirement that those employed should have the full qualifications necessary for the job? That would help good employers who fund training to encourage their apprentices to complete their apprenticeship, because they would be employing those with full qualifications rather than apprentices who dropped out half way through. Given the conditions written into many contracts—for example, those for motorways—it would not be an extraordinary contractual requirement. Secondly, there are now many more young people applying for apprenticeships than there are places available—in a sense, that is a very good upturn—because colleges find it so difficult to find work placements. In particular, it is very difficult to find work placements with small and medium-sized enterprises. I put it to the Minister that it might be feasible to give greater incentives to small and medium-sized enterprises to take on apprentices. The noble Baroness, Lady Buscombe, did not mention LSC funding of level 3 qualifications. As the Minister knows, the LSC will fund a level 3 apprentice up to 19. Many of those proceeding from level 2 to level 3 are over 19. Although there is an extreme shortage of skills in the industry, there is no public funding, and employer funding is required for post-19 qualifications. Quite a number of young men and women do not proceed to level 3 because they cannot get funding. The industry has benefited enormously from the influx of immigrant labour, particularly from eastern Europe, over the past three years, but that is not a satisfactory situation. The age profile of the industry is skewed towards those aged 45 and over at the moment. We must replace those older people with trained younger people whom we grow ourselves rather than import. It is important that there is every incentive for people to proceed to get their full qualification.