Draft Industrial Training Levy (Engineering Construction Industry Training Board) Order 2023

Matt Western Excerpts

Wednesday 12th July 2023 General Committees

[Matt Western (Warwick and Leamington) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Sharma.

As Members will be aware, the engineering and construction industry is central to delivering our net zero ambitions and crucial to addressing the slow growth that has held back our economy these past 13 years. Companies within the engineering construction industry design, engineer, construct and decommission some of the biggest infrastructure projects both in this country and overseas. I was delighted to get the opportunity—I would certainly recommend it—to visit the interconnector site up in Blyth in Northumberland, where National Grid, which is headquartered in my constituency, has undersea cables come ashore, delivering up to 3% of UK electricity.

UK100 estimates that, by 2050, four of five jobs will be supporting the transition to net zero. It is estimated that there is the potential for 1.18 million new jobs by 2050 in low carbon and renewable energy industries. Apprenticeships will be central to ensuring that workers in the sector have the breadth of skills and knowledge required to take up those roles. The sector will need to attract talent from a variety of pools if it is to match the growth in demand. Therefore, it seems fitting that only last week my right hon. and learned Friend the Member for Holborn and St Pancras (Keir Starmer) set out how the next Labour Government, if elected, would reform the apprenticeship levy to ensure the next generation of workers in the sector.

Our proposal is to transform the apprenticeship levy into a growth and skills levy, giving employers the flexibility that they need and, indeed, want. The Minister will no doubt have seen the article earlier this year by the chief executive of Balfour Beatty, who believes that the apprenticeship levy in its current form has “failed” and that a more flexible skills levy would respond better to employer needs. That is exactly what our growth and skills levy would do, alongside ensuring that every penny of the apprenticeship levy is spent on skills and training, which currently does not happen.

Employers will be able to use up to 50% of the growth and skills levy for flexible, high-quality courses for their workforce, together with the 50% they allocate to apprenticeships. In a speech last year replying to a similar SI, my hon. Friend the Member for Chesterfield (Mr Perkins) questioned whether unpaid traineeships in a sector that is already understaffed were the best way to attract new talent. One advantage of the growth and skills levy is that funds can be utilised to offer paid traineeships or similar initiatives as a pipeline into an apprenticeship, thereby diversifying and increasing the pool of skilled talent.

Looking more closely at this draft order, I understand the need for the changes to the ECITB levy being introduced today and we are supportive of them. This year, the ECITB launched its three-year strategy to ensure growth in the engineering construction industry, backed with £87 million to support workforce training alongside tackling labour shortages and skills gaps. The strategy has been designed to prepare for a boom in project activity for engineering construction employers.

Citing National Grid again, I am aware of the plans, as referenced by the Minister, for electrifying the UK economy and how that infrastructure has to be delivered at pace. But these projects span a range of sectors, including nuclear build and decommissioning, renewables, water treatment, and carbon capture projects linked to the UK’s net zero plans. Given that any future Labour Government have pledged to invest heavily in home insulation, double our onshore wind capacity, increase offshore wind capacity, triple solar power by 2030, and invest in tidal power, we welcome all such ambitions.

As the Minister will already know, there is some resentment among larger employers at having to pay both the ECITB and apprenticeship levies, and it is vital that the ECITB levy adds value to businesses and the sector more widely. The Minister will be aware that, under the Industrial Training Act 1982, the maximum levy is set at 1% of an employer’s total emoluments, unless the Minister thinks a higher levy would be appropriate in the circumstances.

I understand that the ECITB has recommended the 1.2%, broadly supported by its members, as the Minister was saying, and I listened to his response to the hon. Member for Lichfield about what the sector might feel when it is under pressure due to the potential cancellation of contracts and a contraction in the UK economy. Perhaps the Minister could elaborate a little bit more on his assessment of the affordability of the 1.2%, given the other cost pressures facing the sector.

My only other point is about the wider skills agenda, which I think is linked to this. The Government’s change in position over BTECs is welcome, and I wondered whether the Minister has analysed how scrapping well-respected BTECs will impact the engineering construction industry. Given that the Under-Secretary of State for Work and Pensions, the hon. Member for Mid Sussex (Mims Davies), admitted earlier this year that the take-up of the new T-level qualification for construction still falls way behind BTECs, surely this is a matter of utmost urgency.

In conclusion, Labour does not oppose the draft order in its current form, and we support the Government in the hope that this SI has the desired results.