Industrial Training Levy (Construction Industry Training Board) Order 2018

Lord Stunell Excerpts

Tuesday 20th March 2018 Grand Committee

[Lord Jones (Lab)]

My Lords, I thank the Minister for his crystal-clear exposition of the order. I certainly do not wish to oppose it and I much appreciate the figures supplied concerning the planned expenditure on infrastructure and the references to much-needed investment in housing.

My memory goes back to when I served in another place alongside the late Lord Eric Varley, some 30 years ago. In our opposition role, it appeared that night after night and month after month, after 10 pm there would be orders to abolish existing training boards. Those orders were brought forward by the late Peter Morrison, a Minister in the Department of Employment and the Member of Parliament for Chester, whose constituency abutted my own and with whom I often collaborated. I sometimes wonder whether the nation’s extreme shortage of skilled labour has its roots in those successive abandonments of training boards in those debates after 10 pm in the 1980s. We certainly all agree that the nation needs a more skilled workforce. I know that the CITB is a great survivor and has a substantial training ground in north Norfolk, not a million miles away from the Sandringham estate.

I do not wish to detain the Committee but could the Minister, perhaps with the aid of his officials, exemplify a typical SME and indicate what sort of money that business may need to find each year for the levy? He rightly mentioned housing investment. The names of some of the great companies which build houses across Britain come to mind, such as Redrow, Persimmon, Barratt and Taylor Woodrow. Is he able in this Committee, or if not in writing at another time, to say what sort of money they pay? What is the levy on such exemplary great companies in housing and/or construction? That is my query following his exposition.

[Lord Stunell (LD)]

My Lords, I will draw attention to one of the other facets of the importance of the construction industry and of the CITB. I too agree that the order should quite properly go forward, but a number of factors need a little further exploration. In presenting the case, the Minister set out the demands there will be on the construction industry in the infrastructure pipeline and the need to increase the number of homes built to 300,000 by the mid-2020s—2025 is seven years ahead. The infrastructure pipeline of £600 billion that he mentioned is, I understand, additional to that.

There is a requirement for 158,000 extra jobs in the construction industry. I am sure the Minister will be familiar with the statistic that some 70,000 people leave the industry each year and currently only about 40,000 UK residents are recruited to it. The difference is made up by EU 27 migrant workers. It is that side of the equation that I want to draw to the Minister’s attention.

While we might need another 158,000 employees to meet these very necessary targets, some 200,000 workers in the construction industry are from the EU 27 and another key ambition of the Government is to reduce inward migration to the tens of thousands, presumably over approximately the same timescale to the mid-2020s. Add those two figures together and you get more than a third of a million extra workers who need to be recruited from within the UK to maintain or deliver that. I have the advantage of a press release from the Federation of Master Builders from January, which says:

“Two-thirds of those running small and medium-sized … construction firms are struggling to hire bricklayers and carpenters as construction skills shortages hit a ‘record high’”.


We do not have any surplus. We certainly have pressure on that. The building survey report that I saw last week from GK Strategy—nowadays, with practically all jobs being online, you can also monitor how many people apply for jobs online—notes that the number of searches of UK-based jobs by workers in Romania has fallen by 36%. In other words, far fewer Romanians are looking at jobs in the UK as a destination they want to go for. Overall, there is a drop of some 30% in Eastern European searches for jobs in the UK.

The indication is that even without government policy action, the whole process of Brexit and the declaration of intent is leading to a reduced flow of workers coming in through the construction industry. The Home Builders Federation says that at the moment 17.7% of its workforce is from the EU 27, of which more than 50% are from Romania, the country from which applications appear to be drying up.

Putting all that together, the task being set for the Construction Industry Training Board—and, indeed, for the Government—is extremely serious and intense. It will require real focus and determination if we are not to find that some, if not both, of the Government’s ambitions about reducing migration on the one hand and delivering the infrastructure pipeline on the other are not to be frustrated.

Having read the CITB briefing in preparation for this discussion, and having met the CITB just over a month ago, I am well aware that it is planning to both shrink and refocus its work and to direct it in a different direction. I do not criticise that. It is necessary in view of the feelings of concern that were widespread in the industry about the CITB and its role. Indeed, the CECA—Civil Engineering Contractors Association —members’ survey, completed last year, reported that,

“some members felt it was becoming more difficult to get hold of their CITB representative especially since the CITB has re-organised. CECA members generally reported less satisfaction with CITB since recent changes”.

The consensus was indeed on the figures that the Minister gave but some pretty rough ground was covered in reaching it. Expectations of the CITB are clearly high and need to be delivered.

Putting all that together, I would be very interested to hear from the Minister not just what he has said already but how this proposal fits in with the broader aims of the construction industry strategy, as set out by the Government in their overall industrial strategy earlier this year. Does he agree that the CITB will need to expand and intensify its work, not least by getting the long list of courses and apprenticeships currently waiting for approval approved and those courses operating as quickly as possible? To pick up what my noble friend Lady Garden said about the two levies, will the Government please work with the industry and the CITB to make sure that, as the Minister expressed it, these things are complementary? That is not how the industry sees it. By and large, I would say that it is—using the other spelling—uncomplimentary about the fact that there are these two levies. The larger employers which fail to pay both are, frankly, gaming the system in order to spend the money, not necessarily on the task which the Minister clearly thinks is important, which is training and recruiting additional people for the industry, not simply upskilling those who are already in it.

[Lord Watson of Invergowrie (Lab)]

My Lords, I thank the Minister for the clear and concise manner in which he laid out what this statutory instrument seeks to achieve. It is not often that we read from the same page but this is such an occasion because the Opposition fully support the introduction of the latest version of the CITB levy. The Minister started by saying, I think, that this is the third of these he has done. It is my second and I remember a year ago there were only two of us involved in the debate, so it was good to have contributions from the Liberal Democrats and my Labour colleague. It is an important industry so the way its training develops is very important as well.

From memory, there used to be in excess of 20 industrial training boards until they were significantly reduced in number by the Industrial Training Act 1982. That is the legislation under which this order is issued. Today there are just three boards, each of which is a non-departmental public body, and thus accountable to Parliament. They raise most of their funds through training levies and various commercial activities. We learn from the Explanatory Memorandum that the CITB expects to raise around £200 million in levy in each of the three years to which the order relates. It is to be hoped that the board will return more than this figure each year to the sector—as, to its credit, was the case in 2016.

It is interesting that the CITB itself made the proposal to reduce the rate of the levy for workers employed directly by the employer, but not for those employed indirectly. The memorandum explains that this is the result of the prevailing economic conditions and the skills needs of the sector. That is understandable, but why is there a differential? The economic conditions hit those employing people both directly and indirectly, so the rationale for the difference is not immediately obvious.

--- Later in debate ---

[Viscount Younger of Leckie]

The noble Lord, Lord Stunell, asked about skill shortages, which is another item high on the Government’s list. The CITB is committed to helping construction employers to deliver the pipeline of work faster, better and more efficiently. The CITB aims to use its evidence base on skills requirements to ensure that employers can access the high-quality training its workforce needs. The key is to work with employers and design with them a skills system more responsive to the needs of industry.

[Lord Stunell]

Is the Minister satisfied that the CITB will have the muscle and means to deliver such an expanded programme in the timescale he is speaking about?

[Viscount Younger of Leckie]

I was about to move on to a further point made by the noble Lord about the CITB and its efficiency. He may well be aware that reforms are under way as a result of the report published on the ITB back in November 2017 and linked to the 2016 skills plan. The report found that the CITB levy remained necessary, which is why we are here, but that it must reform and serve the skills needs of the construction industry better. That is a very clear message. Recommendations were made in two areas: improving governance and accountability; and ensuring that the CITB has a more positive impact on the industry. I hope I can reassure the noble Lord that, with the changes being made at the moment, the CITB will be fit for purpose to handle the issues that he raised.