Skip to main content

Lords Chamber

Volume 415: debated on Wednesday 10 December 1980

The text on this page has been created from Hansard archive content, it may contain typographical errors.

House Of Lords

Wednesday, 10th December, 1980

The House met at half-past two of the clock: The LORD CHANCELLOR on the Woolsack.

Prayers—Read by the Lord Bishop of Chelmsford.

North Sea Gasfields: Production Incentives

My Lords, I beg leave to ask the first Question which stands in my name on the Order Paper.

The Question was as follows:

To ask Her Majesty's Government what prices—as an incentive to their investment—the British Gas Corporation have offered the Southern North Sea offshore gasfield operators, Conoco, Amoco and Shell to produce an extra 50 million cubic feet per day by the winter 1983–84.

My Lords, the prices offered by the British Gas Corporation are commercial and confidential between the corporation and the producers concerned.

My Lords, I thank my noble friend for that expected reply. May I ask him whether he is aware that our obligations under the EEC require transparency in gas prices? Also, would he not agree that transparency is in the interests of consumers who have a very proper interest in watching that they are not being overcharged?

My Lords, I agree with my noble friend on both counts, but he will appreciate that one cannot be transparent in the middle of negotiation.

My Lords, can the noble Earl explain how one can be transparent even about prices?

My Lords, if I tangle on definitions with the noble and learned Lord, I know that I shall lose.

My Lords, may I ask my noble friend whether it is not the case that agreement has been reached between the BGC on the one hand, and producing companies on the other, to mount an investment of the order of, I think, £100 million or more to put in compressers and an extra pipeline? Therefore is it correct to suggest that negotiations are still in progress?

My Lords, I do not think that the negotiations are completely finalised yet. That is why I must be cautious about what I say in public.

My Lords, may I ask just one other question? Can my noble friend say whether it is the case that when these negotiations began the companies in question were saying three years ago that, given a proper price, they could develop more gas, and would it not have been prudent—if I may put it in this way—for negotiations to be started before May of last year?

My Lords, with hindsight, that is indeed possible. But since we came into office we have, as my noble friend knows, tried to accelerate proceedings as we all have a very great interest in the development of these valuable fields.

Gas Gathering System: Sale Of Liquids

2.38 p.m.

My Lords, I beg leave to ask the second Question which stands in my name on the Order Paper.

The Question was as follows:

To ask Her Majesty's Government when a decision will be taken about the destination of natural gas liquids to be conveyed by the projected gas gathering pipeline and to be separated at the British Gas Corporation's terminal at Saint Fergus.

My Lords, several different prospective purchasers for the natural gas liquids have declared themselves and are in discussion with the organising group and the other interested parties. The destination of these natural gas liquids is an important element in the timely planning and completion of the projected gas gathering system. My right honourable friend the Secretary of State for Energy will announce in another place any decisions the Government take in the interests of advancing the project.

My Lords, I thank my noble friend for that reply. Would he not agree that the choice of destination for the liquid natural gases is essential to completing proposals for financing the scheme, which in turn is essential to getting it started soon? Is it not urgent that this should happen, so that we can actually make a plausible claim to take the Norwegians' natural gas?

My Lords, I thank my noble friend for his tolerance towards the fact that on neither of his two Questions have I been able to say as much as I should like. I can flesh out my second Answer a little in respect of his supplementary, by saying that the competitors for the ethane for petrochemical use are Dow and Highland Hydrocarbons at Nigg Bay, Occidental near Peterhead, Shell, Esso, BP and ICI at Mossmorran, Grangemouth and Tees-side. The rest of the natural gas liquids, containing propane, butane and natural gas, are likely to be fractionated at a coastal location and the products shipped. But they could also, of course, provide feedstock for petrochemical or other local development.

My Lords, I thank my noble friend for that answer, which, he will not be surprised to hear, I regard as somewhat gaseous. Would he not agree that there is growing doubt in Norway, Germany and France about our ability to get this scheme going in time to take the Statfjord gas? Therefore, whatever else we say, it really is urgent to get on with it.

My Lords, I agree about the urgency, and I do not think our colleagues on the continental mainland have any cause at all for disquiet.

My Lords, is the noble Earl aware that the word "fractionated" is not very transparent either?

My Lords, is the noble Earl aware that, with all these esoteric questions, what most of us who are taxpayers are interested in is that a legitimate and constructive point of view is taken by the Government, so that there is maximum saving for the taxpayer, rather than the enterprise in gaseous efforts that is taking place?

My Lords, one of the problems which the Government have—and I am, in a sense, glad that they have it—is that domestic gas is very heavily subsidised.

Air Tickets: Discount Sales

2.40 p.m.

My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.

The Question was as follows:

To ask Her Majesty's Government what are their plans to encourage the expansion of legitimate low price air fares in order to minimise the sale of discounted air tickets at "bucket shops".

My Lords, our work in this field consists of bilateral action where we have the power and opportunity, and multilateral action principally within the European Community to persuade our partners of the need for a more liberal régime. Some success has been achieved on the North Atlantic to Hong Kong, and to certain destinations in Europe.

My Lords, I thank the noble Lord for that reply. Does he not think that it really is most unfair and altogether dishonest to allow and encourage, as some of the airlines do, the selling of tickets in the "bucket shops" because they cannot sell them through the ordinary channels? Surely it would be better to get IATA to change the arrangements, so that tickets can be sold perfectly genuinely at whatever price they are worth. We had a good example on the railways the other day with the "granny" tickets. If that had been done dishonestly, by people who were not interested in honest-to-God railway traffic, there would have been a tremendous row. I hope that the noble Lord will do something about the unfairness to people who keep to the rules as laid down by IATA.

My Lords, my noble friend asked me a question a week or so ago about the prospect of effective prosecution for offences, if offences there are in this field. I explained to her then the difficulty of securing sufficient evidence to ensure that the prospect of a successful prosecution was reasonable. I am afraid that is still the situation. Essentially, IATA is a trade association. It is not possible for a Government to impose their views on the members of that association.

My Lords, I joined in a week or so ago. I was not after prosecutions then and I am not now. May I ask the Minister why the Government will not say that they no longer accept the IATA ruling that legitimate agents should not sell discounted tickets?—because that is the first step. Secondly, is the Minister aware that on 30th September last British Airways said on television that they sold these tickets to the "bucket shops"? As the Minister will be aware, other scheduled airlines do so. Why is it that the Government take refuge in talking about prosecutions and the difficulty of securing convictions when it is known that these tickets are available, that the public wants them and that the airlines have to sell them? Why can they not be made available at all retail outlets?

My Lords, I absolutely agree that the long term, if not the medium term, solution to this matter is to achieve a proper régime of lower air fares. That is the policy which we are pursuing and that is the area in which we have had some success, as I have already described. It is not the case that airlines have cheap tickets and high priced tickets to sell. The blank ticket, which is the document causing the difficulty, does not precisely state which fare is to be charged. That depends upon the booking arrangements between the travel agent and the passenger. As I said on the last occasion when we discussed the matter, some tickets have been stolen, others are supplied by the airlines in the expectation that they will be used for the correct fare, while on the other occasions there is genuine misunderstanding about what the correct fare ought to be.

My Lords, I do not wish to be rude, but this is a complete blockage to taking action. The tickets are there and the Minister knows that they are there. Is he aware that they are sold by the scheduled airlines to the "bucket shops"? Why are the Government not prepared to say that they will no longer accept the ruling banning the legitimate agents from selling them?

My Lords, the fares between any two points are agreed by international agreement between the two countries concerned. It is not open to the British Government to lower fares unilaterally on any international route; we have to achieve agreement with the other Government concerned. Unfortunately, that is not always possible.

My Lords, the term "bucket shop", which is no compliment, is being bandied around. Can the noble Lord tell us what is the difference between a "bucket shop" and a legitimate retail outlet, so that the simpler of us know when we go to buy an air ticket exactly what we are doing?

My Lords, I hesitate to offer a legal definition of the difference, but what is referred to in the Question are those places where you can buy tickets at other than the correct fare.

My Lords, is it not a fact that many of these scheduled air services run at barely one-third of their capacity, that on many lines the economy fares could be reduced by two-thirds of their existing rates and that still the company would show a profit? Is this not, to say the least, an undignified way for a national airline to conduct its business?

My Lords, I absolutely agree that the level of fares on very many routes is too high. Our policy is aimed at securing a lowering of those fares where, as I have said, they are high. As I have also said, we have achieved some success in that field. In the meantime, we have to be certain that the bilateral agreements which we have agreed to are upheld.

My Lords, would not my noble friend agree that IATA is one of the reasons for higher fares—a question which I asked him a few weeks ago? Is it not high time, therefore, that IATA was done away with?

My Lords, IATA is a trade organisation of the airlines concerned. My noble friend ought therefore to put his question to the airlines.

My Lords, in pursuing his efforts, would the noble Lord bear in mind that among the worst offenders in failing to produce cheap air fares are the two state-owned airlines of this country and of Canada on the British-Canadian run who, sharing the run between them, have failed to produce virtually any cheap fares, in contrast to the United States routes from this country?

My Lords, the difficulties on the Canadian route result from our failure to persuade the Canadian Government—not necessarily the airlines concerned—of the need to reduce fares.

My Lords, may I just ask this question, because the Minister did not answer what I asked him: Is he aware that I said nothing at all about fixing fares between the two countries concerned? I asked him why these discounted tickets cannot be made available at all outlets if the Government would only say, "We can no longer accept the IATA ruling that this is not so "? It is nothing to do with bilateral agreements between different countries.

My Lords, the noble Baroness is normally so well informed on these matters that I am surprised she advances that argument. The fact of the matter is that fares have to be agreed between the two Governments, whatever IATA says.

Neb: Disposal Of Holdings

2.50 p.m.

My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.

The Question was as follows:

To ask Her Majesty's Government whether they are satisfied with the National Enterprise Board's progress in disposing of its holdings.

My Lords, the NEB has made satisfactory progress in carrying out its disposals function. During the last 12 months it has sold its holdings in eight companies for a total of £118 million.

My Lords, while thanking the noble Viscount the Minister for that Answer, may I ask whether he can say whether the impending change of directors may result in any change of policy in the future and, in particular, with a speed-up of disposals?

My Lords, my right honourable friend has recently made clear that there is no change in the roles of the NEB, that the resignations of Sir Arthur Knight and other directors are all for outside reasons and that he does not anticipate any difficulty in filling their positions.

My Lords, may I ask the noble Viscount whether he is aware that so far there has been no satisfactory explanation in the other place or in your Lordships' House, or through the press media, of why several able, talented and prominent people have resigned from the board? Why has there been no explanation? Can it be that they dislike the process of disposing of what might prove to be, if left untouched at the present time and in the foreseeable future, a most valuable asset in the future in the mechanism of the National Enterprise Board?

My Lords, the Question bears on the number of holdings that have been sold, which I have already revealed was in line with what I told the House a year ago the approximate level of sales would be. So far as the wider question of the NEB is concerned, we shall shortly have the Industry Bill in this House, when no doubt these matters will be discussed again; but Sir Arthur Knight has said publicly—and my right honourable friend in the other place has drawn attention to it—that his resignation is not only for personal reasons, but that there is no difference of opinion on policy. Sir John King has agreed to take the chairmanship of British Airways and Sir Robert Clayton's very important functions in one of our largest engineering companies do not leave him with adequate time.

As my right honourable friend has recently said, it is of some gratification that the formidable board that came together a little more than a year ago has in fact produced people who are going on to take major opportunities elsewhere, and we do not anticipate a change in the very important roles of the NEB for the future.

My Lords, would the noble Viscount take this opportunity to agree that if there is to be a continuing role for the National Enterprise Board, as the Government acknowledge that there should be, what the board needs is as much support and encourage- ment as it can be given, particularly in relation to its commercial judgment?

My Lords, I do not think that those questions are at stake or have been at stake. I think the board is performing according to the revised roles in an excellent way.

My Lords, is the Minister aware that if the Government give a little discouragement to the NEB for disposing of its holdings, it would show a glimmer of consensus which would be welcomed by moderates in all parties?

My Lords, I think in my original Answer I made clear that we are very satisfied with the degree of disposals at this stage. Of course, the NEB still has a portfolio of some 60 companies—in all conscience a very big task for any holding company.

My Lords, is the noble Viscount aware that when I asked my previous supplementary question I had no intention of criticising the policy of the Government? They have been elected democratically and they are entitled to proceed with their policy; but would it not be wise to exercise some caution, some prudence in a matter of this sort? Is it not possible that these assets might prove beneficial in the future?

My Lords, I think Her Majesty's Government have acted with extreme prudence and in a very pragmatic way. The number of disposals of shares is of eight companies. We did not in fact press the NEB to dispose of them at an inflexible rate. In February of this year I made clear to your Lordships that in fact we were not pressing a particular detailed plan and timing. However, the board has managed to achieve good sales of eight companies, and I believe that it will continue in an orderly way as and when it is possible to dispose of more shares to enable those companies to prosper in the private market-place.

My Lords, should it not be the policy of the Government to encourage the NEB to keep shares which are profitable so that it is less dependent upon Government finance?

My Lords, I think in this House we have been through the arguments as to whether the NEB should have a broad-ranging, positive role. There will be another chance when the latest Industry Bill comes to this House after the Christmas Recess, and I do not believe that I should be drawn into these wider questions today.

Forestry Policy

My Lords, with the leave of the House, at a convenient moment after 3.45 this afternoon, my noble friend Lord Mansfield will repeat a statement being made in another place on forestry policy.


2.58 p.m.

rose to call attention to the importance of the country's industrial base and the necessity for an adequate training programme to enable industry to meet the nation's needs in the future; and to move for Papers.

The noble Lord said: My Lords, I beg leave to move the Motion for Papers standing in my name. Successive Governments have emphatically stated that all their policies are directed to the main aim of establishing viable, economic, wealth-producing industries, recognising as they all do that, without such a base, housing, schools, roads, hospitals, rising living standards are just impossible. Of course Governments fundamentally differ on how to bring about this state of affairs, but there is certainly no difference in the end itself.

The last Government sought to revitalise our base by the Social Contract, by their industrial strategy, setting up as they did 40 sector working groups to analyse and, hopefully, to resolve the bottlenecks and problems in industry; and, if I may say so, thank goodness that this Government have not made it impossible for those committees to continue to work. This Government seek to do it by curtailing public expenditure and, they hope, consequently reducing certain forms of taxation and hoping that that will provide the necessary investment in plant and in people.

If we are completely and frankly honest with ourselves, I think we must say that no Government in modern times have succeeded in establishing that viable base. Indeed, it would be true to say that there is today no industrial growth whatsoever, no investment in either plant or people which is capable of creating those circumstances; and all those things are so necessary for our very survival. Even if one disagrees violently with the means to bring these things about, it makes it a little more palatable if the means are pursued with vigour and determination and have an end result such as I have tried to describe.

The situation today is too serious for ideological point scoring. That is why we do not apologise in any way for bringing the issues of both our industrial base and training before your Lordships' House. All industries are facing increased competition and rapid technological change. Some have declined as a result, perhaps, unfortunately, beyond the point where they can be revived. But some sectors of industry must survive, even in this climate, or we shall be left with no wealth-producing base whatsoever. I make no apologies for saying—indeed, I now declare an interest as chairman of the Engineering Training Board—that vital among those key sectors that must survive is the engineering industry, however you describe it, for not only does it have a role to play in producing that wealth, but so many other industries are dependent upon its products, particularly bearing in mind the increasing speed of engineering technology and its development. And I say that this applies as much to offices and banks and insurance as it does to factories themselves.

Your Lordships' House recently debated, and if I have my facts correct generally supported with some qualification, the Finniston Report, emphasising as it did the need to regenerate our manufacturing base and to improve the competitiveness of British industry. It is a matter of regret that on this vital issue of our professional engineers, and production engineers, firms of all sizes and all types, neither the Government, nor indeed the institutions, supported the Finniston Committee on its main recommendation, namely, the establishment of a statutory engineering authority. Nevertheless, it is the duty—I emphasise the duty—of Government to ensure that the supply of people with the skills and knowledge we need is secured. It just cannot be left to chance, because any ground lost now will never be regained.

The state's responsibility to secure these vital needs was first acknowledged in the 1962 White Paper, and if your Lordships hear a tinge of regret in my voice it is because a Conservative Government introduced that White Paper, and not one of my own calling. Nevertheless, this led to the introduction of the 1964 Industrial Training Act. That Act was widely supported by all parties and welcomed as possibly one of the most progressive pieces of legislation that has been placed on the statute hook. It marked the point at which industry began to take training seriously. Before it, with notable exceptions, training received only amateurish and haphazard attention.

The Act led to widespread improvement in training, to better standards, and to the development of a professional training expertise throughout industry. But, perhaps more important than anything, it brought to an end once and for all the policy of piracy operated by certain firms who did no training on those firms that had the conscience to undertake the requisite amount of training. The surest way to ensure a return to such a chaotic state of affairs as existed before 1964 is to abolish the existing training arrangements that we have.

When he was Secretary of State for Employment in 1972, the noble Lord, Lord Carr, undertook a review of training arrangements, and he stated at the time:

"Boards have massive achievements to their credit in changing the attitude of much of industry to training".

Some of us thought that such a change had permanently taken place and that the training position for the future was secured. Consultations that ensued, however, revealed that such an assumption was certainly not valid. The 1973 Employment and Training Act which followed modified the original 1964 Act. It transferred the cost of the operation of the boards from industry to public funds. It imposed limits on the boards' powers to raise the training levy. It introduced the important idea that where firms through their own endeavours, through their own initiatives, introduced training to the required standards, they would be exempt from the levy in its totality. In many ways, these were steps forward, and though in some respects the 1973 Act weakened the 1964 Act, under that Act it is still possible today to ensure that industrial investment in the skills and knowledge of people continues.

Exemption from the training levy requires firms to plan their training for the future. The evidence this year is that, in spite of a very brave effort on the part of firms to maintain their recruiting and training programmes, the economic climate is such that there is an alarming drop in the intake of craftsmen and technicians, an alarming drop which, quite frankly, is eating our seed corn if we allow it to continue. It is so serious that, whereas a required intake of 23,000 was estimated, a figure of very nearly 17,000 only was introduced, a shortfall of 6,000. Were it not for the efforts, as a result of money granted through the MSC, by which we had been able to train an additional 2,000, we would be that figure of 6,000 short rather than just—I say just—the 4,000 that we are presently short.

Somehow, some way—and I would emphasise this to noble Lords on the Government Benches—the gulf between what industry can afford to train, based upon its order books, and what it needs to train if we are going to meet the economic upturn as and when it comes, must be bridged from public funds; and it must start now, for it takes four years for these people to come on stream. If the upturn in the economy has not then taken place, let us forget all about being an industrial nation and settle for becoming a banana republic. That is the stark alternative which faces your Lordships' House, and I hope that I am not saying that in exaggerated terms.

I do not want now to go into any detail about the review of the 1973 Act which this Government asked the MSC to undertake. It is sufficient to say to your Lordships that, in the main, that review body, comprised as it was of trade unionists, of representatives of the CBI and of others interested, came down in favour of the existing arrangements. It is true that it made certain qualifications and I wish to refer to those later. But, following that review and following its publication, the Secretary of State for Employment made a statement in the other place which quite frankly causes a little concern. He made it clear that the Government intend to consider the position in each section of industry and to make decisions by next summer. There have been nearly 18 months of investigation by the review body. It has received evidence from all quarters and it has made its recommendations. Yet, today all the training facilities are in such a state of flux that they will not know what their situation is until July next year.

That is bad enough. But the Government have also made it clear that in general, with the exception of certain key sectors, they will rely upon voluntarism in order to achieve training standards. The main drawback of voluntarism is that inevitably there are too few volunteers. History has proved that voluntarism does not work, and moreover, it has worked nowhere in Western Europe. There have been suggestions in the past that somehow, some way, we should go commercial and sell our expertise as regards training boards to industry. I wonder what companies would think if and when—and I hope it will be never—such a suggestion is made in the present economic climate? I must be more than frank and say that the recommendation to return the operating cost to industry is, in the present industrial climate, certainly not practical and, in my view, firms should not be asked—again in the present climate—to undertake that additional task. Certainly I hope that any words that are said in this debate—and certainly these words of mine—may fall on fertile ground and that this course will not be pursued. Of course, in itself, it is ideal. I think that industry may itself desire it. But to suggest that this should be returned by 1982 is putting a most optimistic and unrealistic construction on when the upturn of the economy is likely to take place.

I should also like to refer to the statement of the Secretary of State concerning the spending of £250 million on training services and the working towards the point at which every 16 or 17 year-old who is not in full-time education or employment will receive vocational training. That is an ideal and wonderful suggestion, and it would be churlish of anyone to pour cold water on that suggestion. But, in an atmosphere of all too scarce resources, would it be unfair to say that the Government should examine very, very closely untried and costly training schemes, launched at the expense, possibly, of well-established and modern arrangements developed in industry over the past 15 years? Such schemes may well temporarily reduce the unemployment figures, but I do not know whether they are, or will be, of any lasting benefit to the economic wellbeing of our country.

The chairman of the Manpower Services Commission, Sir Richard O'Brien, in a most excellent paper delivered to the National Economic Development Council made, among many points, the following, which I shall quote verbatim. He said:

"The process of change, particularly of technological change, is speeding up and manpower studies underline how far-reaching the effects will be. By 1985 for the first time in our history there are likely to be more white-collar jobs than manual jobs in Britain. Even if further rises in unemployment are assumed"—

and one has to put in the caveat that that is not an unfair assumption—

"there will be rather more managers, people with professional skills such as engineers, and technologists and technicians at work in 1985. By way of contrast, there will be fewer skilled workers exercising traditional craft skills and there will be a very big drop indeed in the number of less skilled manual jobs".

Sir Richard went on to say that there would be over 900,000 fewer unskilled and semi-skilled jobs available in 1985 compared with 1978. He said:

"The lessons are obvious. Economic recovery will be held up unless people train in the skills in high demand. Firms will have to be far readier to train and far more responsive to changes in the labour market than they have shown themselves to be so far".

It is against that background that I ask your Lordships to consider the issue of the continuance of training boards and particularly training boards in the key sectors of our industry.

The resources available must be spread widely and some must be allocated to ensure that effective use is made of the vast training resources that already exist. I should like to say in that connection that it was the unanimous decision of the chairmen of all training boards that somehow, some way, we must cut out the time-exhausting bureaucratic channels through which one has to go before in some instances—particularly where one is dealing with finance—some of the most elementary decisions are held up to the delay and frustration of industry.

One recognises at the outset that where public money is involved the appropriate Secretary of State must be accountable to Parliament and must be able to report to it. But surely it must be possible, once cash limits and once budgets are agreed, to say to those training boards, "Get on with the job and at the end of your financial year we shall hold you accountable within the policy of Government, and if you do not fulfil that commitment we shall get rid of you and get in somebody who does." I believe that that is the way to deal with some of this bureaucratic nonsense which is surely strangling some of the most well-intentioned efforts of people dedicated to training work.

Mr. Chairman—I apologise to your Lordships, I cannot forget my presidential hat; I nearly said "fellow members "! My Lords, something must be said about adult training, for I know that this is the concern of many industrialists, many employers. Technology is developing at such a rate that skilled men on the one side are being declared redundant and need retraining in the new skills.

The media, all too often supported by people who have little knowledge, immediately raise the cry of the restrictive practices of the trade unions. Let me try, in the brief time left, to give some information to your Lordships. The Engineering Industry Training Board embarked upon a new scheme of craft training for new proposals. It said to industry at large, to trade unionists and to academics, "Why should it be that in training for craftsmanship we have a different arrangement from that in any other profession or calling? It does not matter how inadequate the training facilities, how inept the trainers, how unable the recipients of the training may be to assimilate the information; at the end of a given period of time we have no failures. We just say that they are craftsmen or craftspeople. Why should we not embark upon a scheme where status is achieved by the attainment of standards, as in any other calling? And the sooner a boy or girl achieves those standards the sooner will they be recognised in their particular status".

We held over 100 tripartite meetings throughout the length and breadth of Britain: industrialists, trade unionists, academics. I might be forgiven for referring to the last first, for they surround their arguments with philosophical arguments which are the most difficult to answer. I once thought that the best definition of an intellectual was "One educated above his intelligence", and it is not a bad description when one comes to think of some of the difficulties of arguing that education is for life, forgetting that working is the greatest part of any one person's life, if they are fortunate enough to be able to work.

We argued that given a degree of vocational training in schools, given a concentration on maths, we would be able to reduce the training period, or at least the off-the-job training period. Industrialists were equally sceptical. They said, "There is no substitute for experience". They did not like the idea of trusting sophisticated and costly machine tools to the operations of boys at what they considered may be the tender age of 19, forgetting that they have the vote and can be responsible in law for all their actions, and even called to die for their country at that age if necessary. The trade unions have an equally vested opposition in saying that the earlier we get to skilled status, the earlier will those people be on the dole. So from every quarter we met opposition. It is not going to stop us, for the attainment of standards as the means of attaining status is something that inevitably must come, and must inevitably lead to training at any age.

But there is one other point we cannot ignore. A given vacancy—to whom is it offered? The school-leaver, bright eyed and anxious to play a part? Or do you place him on the dole and retrain the man who has come out of work because, due to technology, his job is no longer there? That is a social question you must answer, and which Governments must answer. All I can say is that we at the training board are doing our best to overcome legitimate objections and are pursuing this matter. I must say that we are not prepared to say what our amended arrangements are. We published them before and got rebuffed. This time we are going to make certain they are accepted before we publish them. I think that is a wise course to adopt.

I apologise for keeping your Lordships so long. I am involved and have declared my interest, but I must finish as I began. Everything depends upon our ability to create wealth in the face of very severe international competition and rising technology. Left to themselves, too many companies will be tempted to neglect training, especially in a time of recession. We must therefore continue with these efforts, recognising that these are difficult times, recognising that Government resources are scarce indeed, but that if we neglect this need to train we shall neglect it at our economic peril. My Lords, I beg to move for Papers.

3.26 p.m.

My Lords, I very much welcome this debate in the name of the noble Lord, Lord Scanlon, and would like to congratulate him most warmly on the way in which he opened it. Inevitably, deepening recession and unemployment rising from levels which are already unprecedentedly high make it difficult for all of us to catch a glimpse of some kindly light amid the encircling gloom. Inevitably again, whichever Government are in office during a recession must expect fierce criticism that their choice of policies are making an already bad situation worse—and I shall face up to any such criticisms and answer them. But the terms of the noble Lord's Motion, as well as the way in which he moved it, do direct us towards the positive and do so recognise that some of our difficulties stem from poor adaptation to change and inadequate preparation for future needs. The Government endorse that view, and I am most grateful to the noble Lord for giving us this opportunity to agree with him and to show our hand on training matters. I am also very much looking forward to the maiden speech of an ex senior colleague in a previous Conservative Government, the noble Lord, Lord Boardman, later this afternoon.

I want to devote my opening remarks to training, dealing with specific points put to me, including Finniston, when I come briefly to wind up. Before I come to training, let me say a few words about the present industrial recession: its devastating effects on levels of employment, on the wealth-creating basis of the country, and its threat to our social and political stability. Because, of course, the Government recognise what industry is going through and share all the anxieties that have been expressed.

An industrial crisis on this scale is not merely damaging politically, although of course it is damaging. It also makes it harder for Government to help ease the social stress occasioned by an industrial crisis (employment, loss of morale) and harder to help with the necessary structural changes and adaptations that can and should provide the positive challenge of recession. There is another side to the coin. Bad times can provide the spur to make one change outdated or restricted industrial habits, to overhaul things in the sheer interest of survival, and to adapt to new products and processes if only because the old ones have disappeared. But recession also makes it harder for Government to help because recession is horribly expensive: the Government lose in revenue taken in and lose on benefit and subsidies pumped out. The deficits of the major public trading industries, for example, the nationalised industries, are now taking about the equivalent of half the revenues of all the North Sea in each year. That denies needed resources to other industries. It also requires financing, given our other spending commitments.

Because of the difficulties of bringing fiscal policies swiftly enough into line such financing may also be inherently inflationary, as we can witness in the money supply figures. But it is on any count absurd to suggest (and I quite acquit the noble Lord, Lord Scanlon, of any such suggestion) that Governments would choose policies liable to deepen recession or, having made the wrong choice, would continue on such a damaging and expensive path—just to save face, so to speak—if they felt they had any real freedom of manoeuvre, or even if they were merely uncertain that alternative routes would not even lead to greater disasters.

There are two reasons why the present Government are not able to do more to ease industry through the present recess though they are already doing a great deal. One is the reason put pithily and well by the previous Prime Minister, Mr. Callaghan, when he said that you cannot spend your way out of recession any more. Indeed, there is some evidence that your spending prolongs the recession. The other reason, which answers the question why you cannot spend your way out of recession any more, lies in the nature of this present recession itself.

The speed and severity of the British industrial crisis is due to the fact that the so far irresistible force of our manufacturing decline—poor managerial decisions, restrictive labour practices, loss of markets, inflation—has met the so far immovable object of the 1970s energy crisis, or perhaps I should say the petro-dollar crisis, because dear energy costs are not the problem so much as the failure of Western economies to adapt to them. Japan and the other competitive capitalist economies in the Far East have adapted to dear energy successfully, so successfully that they are becoming a serious threat to Western manufacturing industry overall, let alone to our domestic industry, which is uncompetitive, even by Western standards. For reasons that I hope will become clear, I believe we shall change in time, and therefore I do not think this threat will materialise in full. But it is there; it is as positively there as the threat of invasion.

Then again, the inflationary and destabilising effects of the huge money surpluses of the oil producing nations create opportunities for success for an economy as sophisticated in financial services as ours. Of course they do, and we have the continued success of our invisible earnings to prove it. But they also make life extremely bleak for investment in manufacturing, even if other things were equal where manufacturing industry's competitiveness is concerned, and, as we know, they are not. If you add to all this the steadily rising material expectations of Western democracies and their electorates (our own not least) as well as a value or ethical system which insists on a large and rising network of social benefits (again, our own not least) you have the recipe for the competitive currency inflations which have bedevilled the Western democracy in the 'seventies.

Without a lively growth in overall world demand, political economies cannot continue to inflate, even if they wished to chance the other hazards and disruptions of currency instability. So what has happened now in the world is that we are all deflating—we are all monetarists now, if you like—and demand is running out of the Western economies like air out of a balloon. British industry, because we are a major trading economy, unprotected, like France or America, by a relative self-sufficiency, suffers especially, and that suffering, already bad, is compounded by the irony that our oil surplus strengthens our currency. That offers better security for the great tide of money which OPEC has unleashed upon the world, a factor aided by the high interest rates, which in my view are engendered less by doctrinaire monetarism than by the high social expectations of this economy and the need, therefore, of Governments to borrow. There is another side to this coin: that same currency strength keeps the cost of imports down. Some union leaders have rebuked the Government for not taking artificial steps, as it were, to force down the rate of exchange further. Even if we were able to do so, is there any deliverable guarantee that the increases in RPI would not immediately feed through into wage claims? And do employers and managers, equally anxious at the high level of sterling, realise how much more than by the exchange rate they lose competitiveness by granting wage claims unmatched by genuine productive increases or profit sharing?

When you contemplate this explosive mixture of internal and external forces, the wonder is not that there are 2 million unemployed but that we do not see twice that number. The wonder is not that British industry is such a terrible case, but that its case is not much worse. The truth is that belatedly, and with much pain, adaptations are being made. British industry is better managed and better manned than we often allow. The trade share is holding up. The price inflation is falling faster than the Government expected and we are confident that the currency inflation will show a similar fall. Wages are adapting fast as people are allowed once again to perceive reality and react to it. There is social stress but no evidence, I believe, of dangerous strain. There will be more agony than muddle perhaps, but we are going to get through.

The real question of this debate, then, is this: having come through, are we going to learn from this experience and have a brighter future, or shall we lapse back again into our old bad habits and become trapped in our immediate and rather inglorious history? The real question for the Government is how can we help, not hinder, the adjustment that should have been made long ago and which we cannot any longer afford to prevent being made. I believe that the two essential elements of the adjustment are helping those worst hit by the transition, particularly the young unemployed, and getting our training arrangements for the future right.

The special programmes run by my department and the Manpower Services Commission must begin with the special problems faced by young people without jobs. We must give priority to young people, because recession affects recruitment and people fresh from school more than most. We have a special duty to ensure that in these difficult times their prospects are not permanently damaged and their morale not permanently impaired. Accordingly, we are massively expanding the Youth Opportunities Programme, which provides work experience and basic training for young people. In the next financial year, we shall finance 440,000 opportunities in the programme; that is 180,000 more than in this year. We have already increased the size of the programme this year, and this scale of increase implies a very substantial extra effort from all concerned.

Getting the money for these programmes, which we have succeeded in doing, is only half the battle. The evolution of YOP into a comprehensive national service containing a better proportion of basic training schemes puts considerable strains on employers, local authorities, the educational and careers services, voluntary organisations and on unions properly anxious to safeguard the real employment position of their members. It therefore calls for real national effort and push on this issue because it is a collaborative programme. At its heart are its sponsors. We need many more employers, particularly large organisations, to come forward with offers of help. I therefore warmly welcome the CBI's announcement that it is setting up a new unit under my noble friend Lord Carr of Hadley to increase the number of places which it offers and to develop and improve the training content of what is provided.

Besides increasing the number of places provided on the YOP and improving the training content, we are also improving the two undertakings given to young people. We aim to offer any school-leaver unable to find work a place on a suitable scheme by Christmas, and not, as now, by the next Easter; and we shall also try to offer a place within three months to anyone under 18 who has been unemployed for three months rather than the six months as at present. The emphasis will increasingly be placed on good quality training for work, and two-thirds of the places will provide work experience on employers' premises. We are trying to work towards the point—the noble Lord, Lord Scanlon, acknowledged this and I thank him for doing so—where every 16 and 17 year-old not in education or a job will be assured of some vocational preparation and training lasting up to his or her 18th birthday. These are extremely ambitious targets but they represent, if we can get it together, a new deal for the young unemployed. The package is of course very expensive. It will help those in need a great deal, and in doing so will make less painful the effects of the transition that we are riding so uncomfortably. The package will do those things, but it will not, and cannot, create permanent jobs. Only economic upturn, and lowered inflation, can do that. That is why, if we are to ride the transition successfully, we must look above and beyond the package for the young to our needs in a longer perspective, and look to training.

Earlier in my speech I made some remarks about the effects of the national and international recession. I think that it is fairly well universally agreed that—even if the general position were much better, even if we were not now in recession—great changes in industry and the labour market are taking place anyway and that those with the fleetest footwork carry the prizes away. We can already see the trends emerging—and the noble Lord mentioned some of them. Unskilled jobs are disappearing; over 650,000 such jobs disappeared between 1971 and 1978, and a further million will probably go by 1985. There will be a decline in jobs for those whose skills are narrowly job-, firm- or industry-specific. The numbers of non-transferable craftsmen (such as miners and some workers in the steel and shipbuilding trades) fell by nearly 25 per cent. between 1971 and 1978. Traditional skilled manual jobs are steadily declining. For instance, as the noble Lord knows, the number of engineering craftsmen declined by 3 per cent. between 1971 and 1978.

On the other hand, at the same time the demand for other types of skills and abilities is increasing. In some areas, despite present circumstances, there is an actual shortage in the supply of people with computer-related skills. There will be an increase in demand for people whose skills can be used across a range of tasks or industries; and that really is what electronics is now all about. So flexibility and adaptability will be at a premium.

To make the most of the opportunities we need the right kind of industrial training arrangements. I have already mentioned our productivity record. One part of our failure to be competitive is a lack of training of the right quality and quantity. As the noble Lord very fairly acknowledged, this is not a new problem. Over the years different Governments—and industry—have on many occasions considered ways of improving matters.

The 1964 Industrial Training Act was the outcome of such consideration. It was under that Act that industry training boards were first established as a means of encouraging and assisting the training efforts of industry itself. Boards were required to raise a levy on firms within their industry and empowered to make grants to firms to help them with training. Under the 1973 Employment and Training Act boards were required to exempt from payment of the levy, except where there was in the industry a consensus that there should not be exemption, establishments which trained adequately to meet their own needs. The 1973 Act also set up the Manpower Services Commission to run the public employment and training services. As well as supporting the work of ITBs and providing funds to meet their operating costs and for training grants, the MSC became responsible for the public provision of training for adults who are not in employment. So for a moment or two I should like to speak about this kind of training.

This provision is today known as the Training Opportunities Scheme, or TOPS for short. Government training is not of course new. It was I think first provided in the 'forties. It aims at training, or retraining, adults, thus enabling them to be better equipped to find and keep suitable work. Today such training is provided in the skill centres and colleges of further education, as well as in employers' establishments. This year some 67,500 adults are expected to complete training courses under the scheme. In addition, the MSC provides training services to employers on a sub-contracted or fee-charging basis. At least one good effect of the recession is that we are now far less short of skilled instructors than we were. Then there is what might be called the "educational" aspect of training: the technical, professional or other vocationally-oriented courses that people pursue in colleges on a full-time or part-time basis all over the the country.

But despite those developments, we lag behind other countries in our training attitudes, and there is clearly a need for fresh thinking. All the efforts of past years have not prevented skill shortages holding us back when the economy got moving; and, my Lords, this recession will end, if only in the sense that as stocks run down demand, whether soundly based or temporary, inevitably goes up again. The prospect of technological development makes it vitally important for us to maintain, extend and improve training for that time.

The need to do that has been emphasised by both the CBI and the TUC. As we now all know, the noble Lord is personally aware of the need to ensure that we have the right sense of direction and framework for industrial training. I should like to pay my tribute to his involvement, courage and work with the Engineering Industry Training Board. All is not lost when Conservative Adminstrations heap praises on the noble Lord, even if there is an element, appropriate enough in this House, of praise for the new application of the gamekeeper's previous poaching skills. I am sure that the noble Lord will agree with me that it is right for the Government to be actively considering future training policy. Putting Government money into training is not the whole answer. But we shall of course continue to spend about £250 million on TOPS and training for skills.

I have mentioned the programmes for young people. I should add that we intend also to continue and develop the programme of unified vocational preparation for young people in jobs where the jobs they are in have no structured training. I believe that there can be no serious disagreement that it is high time that we undertook other equally fundamental reforms.

Since the noble Lord mentioned it, I wish briefly to say a few words about the apprenticeship system. This system, the traditional route by which young people acquire skills and craft status, must be modernised, as the noble Lord said. Not only is the system outdated, but the way in which it operates is in many cases so restrictive that it threatens our future ability to be able to meet the changing skill demands. The rules governing apprenticeships are agreed by both sides of industry, but let me quickly go through some aspects of what happens when the system operates at its worst.

In some skilled trades opportunities for employment are generally open only to those who have completed a full apprenticeship. Most of these people are obliged to start their training at age 16. While the rules of most apprenticeship schemes make exceptional provision for those over 17 to start skill training, in practice this is rarely possible. In my view one should not be on the shelf at the age of 17 or 18. The effect is to restrict options for individuals and indeed for industry; and the individual's choice of work is determined at an unreasonably early stage.

Opposition to the training of adults is shortsighted—and I am so glad that the noble Lord recognised this. Sometimes adults are allowed to train only if they have had previous experience in the trade concerned, and even where TOPS or other adult trainees are accepted, there are often restrictive conditions attached to their employment, which prevents effective use being made of their abilities. For example, they may be acceptable only where there are no "time served" men available.

I should like to quote a concrete example. Leyland Vehicles decided to build its Titan bus at its plant in Lowestoft. That meant expanding the workforce by a further 300. But in that part of the country there is a shortage of skilled coach-body builders. Leyland planned to recruit unskilled workers and train them to the necessary standard. But the craftsmen at the plant demanded either a substantial cash sum to train the new workers, or considerable differences in their respective wages. No agreement was reached, despite management assurances that the craftsmen's skills would be protected, and the net result was that the Titan bus was not built at Lowestoft.

There are of course many examples—an increasing number, I am very glad to say—of much more flexible approaches to these matters. But it seems to me that restrictions of the kind that I have outlined are quite inappropriate in many circumstances today. We cannot expect industry to seize opportunities effectively if firms must work in this straitjacket when seeking skilled labour.

The noble Lord mentioned technology. Changing technology means that it is ridiculous to expect the skills learnt between the ages of 16 and 20 to last a working lifetime of 40 years; and reliance on the MSC's TOPS is not the answer. Industry itself must look at the way that its own work forces can be given the opportunities to acquire the skills that firms require. If industry is to have the skilled manpower that it needs, when it needs it, reliance on the apprenticeship system, which takes up to four years, will be insufficient. But until the system is overhauled skilled training for adults will be necessary, and to this end we are very interested in the concept of the "Open tech" to build on the work of the Open University as rapid advances in technology—in computing and microelectronics, viewdata systems and the like—now make this possible.

As the noble Lord mentioned, it is our intention to extend reliance as far as possible on voluntary training arrangements, for which the industry itself would be responsible. Statutory training boards would be kept for a few key sectors where they are likely to be essential to securing wider training objectives. I appreciate the noble Lord's point about the strain which this presents for industry at the present time, but I would also remind the noble Lord that, of course, industry has a large vested interest in our reducing our own expenditure, our own borrowing and, therefore, interest rates. But I give him the assurance that while our present intention is to reduce Exchequer funding of ITB operating costs in one way or another in 1981–82, and have them cease in 1982–83, we will be prepared to consider the timing in the light of the forthcoming MSC review on training, of which the noble Lord made mention.

In sum, my Lords, there is no doubt about the urgency of our task. We are experiencing a sharp rise in unemployment. This is the unhappy but inevitable result of making a major economic transition which we have delayed beyond its time and which we are now having to undertake in very difficult weather. In some sectors we are still delaying, clinging to antique industries and working practices, many of which are rooted in the earliest days of the Industrial Revolution, or earlier. This might be understandable if the old industrial order was still a lever we could rely on to deliver prosperity. But although there will of course still be an immense contribution from heavy industry—particularly in energy-related activities and transport—traditional methods and applications cannot be relied upon to deliver prosperity and full employment any more.

I have said that Britain is passing through a transition from one kind of industrial society to another. This transition is not the result of policy, whether Labour or Conservative. It has been going on for two decades at least, and the criticism to level at Governments, surely, of either party again, is that they have connived at our national tendency to slow down or restrict inevitable change. I say "inevitable" not because I believe in some determinist view of history but because we are a trading economy and cannot isolate ourselves from changes taking place elsewhere. How successfully we make the transition depends primarily on the ability and willingness of people to make it possible by accepting and, indeed, welcoming it.

I say "welcoming" because we sometimes talk as if our old industrial society were desirable in itself, or as if we should fight for its retention. It seems to me extraordinary to be so attached to it. High employment it may have provided, although that only in fits and starts and cycles of depression and boom. But think of its cost. Low wages; low productivity; confrontation and the mentality of "two sides of industry "; a separation of the sexes at work and all the social and cultural implications that that implies; environmental pollution; and the contrast between heavy industrial landscapes and the quality of life rather unfairly offered to those whose work allows them to live outside the old industrial centres. I do not think any Conservative worth his salt should be too Utopian or take too rosy a view of human life. But I do think that the new high technology, high added value and high-wage industries are in human terms surely better, even if they do not, individually, employ so many people under one roof or in one town. Whatever our differences with those on the Benches opposite, none of us believes that Governments can simply or painlessly create a new industrial order. But what we can and must do is lessen the painful effects of transition on people as individuals, and prepare an industry practically and usefully for the future.

Forestry Policy

3.55 p.m.

My Lords, with the leave of the House, I will now repeat a Statement being made in another place by my right honourable friend the Secretary of State for Scotland. The Statement reads as follows:

"With the projected rise in demand for timber into the next century and with the world's forests likely to come under increasing pressure, the Government believe that long-term confidence in both forestry and wood processing industries in this country is fully justified. We look for a steadily increasing proportion of our requirements of timber to come from our own resources. A continuing expansion of forestry is in the national interest, both to reduce our dependence on imported wood in the long term and to provide continued employment in forestry and associated industries.

"Recent difficulties in the pulp and paper sector, which represents only an eighth of the market for wood grown in this country, do not change that conclusion. Forest owners have adjusted to the changed markets. Export opportunities in Europe for small roundwood are being successfully exploited. Looking further ahead, our industries, with the more advanced processes being developed in this country, are expected to be capable of absorbing the rising production from our existing forests, and of enlarging their present 9 per cent. share of the home market.

"There should be scope for new planting to continue in the immediate future at broadly the rate of the past 25 years while preserving an acceptable balance with agriculture, the environment and other interests. We see a greater place for participation by the private sector in new planting, but the Forestry Commission will also continue to have a programme of new planting, in particular where it will contribute to the rational management of their existing plantations, and also in the more remote and less fertile areas where afforestation will help maintain rural employment.

"The main basis of policy for the future must remain the successful and harmonious partnership between the private sector and the Forestry Commission. In accordance however with the Government's support for private enterprise and our policy of reducing public expenditure, a determined effort will be made, by making better use of the capital invested in their existing assets, to reduce that part of the Commission's grant-in-aid which finances the Forestry Enterprise. We therefore propose to provide opportunities for private investment in these assets, including the sale of a proportion of the Commission's woodlands and land awaiting planting, with lease-back arrangements where it is important to maintain continuity of management to meet wood supply requirements or to preserve environmental interests. In planning its broad implementation of this policy, the Forestry Commission will take account of the views of the organisations concerned. We will seek an early opportunity to take the necessary powers for private investment in Commission assets on these lines.

"Following a review of the administration of grant-aid and felling licensing carried out under the auspices of Sir Derek Rayner, we propose to make these less complex and less costly to administer. A single new scheme will be introduced at the start of the next forest year on 1st October 1981, of which the main features will be planting grants, a simplified plan of operations and a minimum of legal formalities. The Basis III Dedication Scheme and the Small Woods Scheme will accordingly be closed as from 1st July 1981. Existing Dedication Schemes will continue for present participants, although some procedures will be simplified and individual dedication agreements will not be renewed on a change of ownership. The felling licensing system will be simplified to recognise the change in circumstances since this was introduced. Copies of a consultative paper, on which the various interested parties are being invited to comment, have been placed in the Vote Office.

"As my right honourable and learned friend the Chancellor of the Exchequer has already informed the House, the Government intend to continue the current income tax arrangements for forestry in order to maintain confidence in the private sector".

My Lords, that concludes the Statement, and I need hardly acid that copies of the consultative paper are available in the Printed Paper Office.

4 p.m.

My Lords, I should like to thank the noble Earl for repeating the long-awaited Statement on the future of forest policy. I should like to commend the earlier part of the Statement in which he assured us that a continuing expansion in forestry is in the national interest. We have always believed that forestry required a very long-term view to be taken, and the continuing commitment of the Government to the support of forestry is welcomed, I am sure, in the public sector as well as in the private sector. I very much support the sentence in the Statement to the effect that, looking further ahead, our industries with the more advanced processes being developed in this country, are capable of absorbing the rising production. At the present time we have the ridiculous situation of pulp wood from Scotland being exported to Scandinavia to be re-imported into Scotland as pulp and paper, with all the added value involved. I am quite sure this is a temporary difficulty.

The Statement that the Forestry Commission will continue to have a programme of new planting is very welcome. But I should like to ask the Minister what the extent of that programme might be since, in a later paragraph, he says that the basis of policy in the future must remain the successful and harmonious partnership between the private sector and the Forestry Commission. The partnership has been based on equality in the past. The planting programme of the Commission and the planting programme of the private sector were largely equal over a reasonable period. But if the Statement continues to say that the Commission's grant in aid is to be reduced, would the noble Earl give us some indication of what the grant in aid might provide in the way of opportunities for planting as far as the Commission is concerned?

I note that it is the intention to introduce further opportunities for private investment in forestry by the operation of lease-back arrangements and by the sale of Forestry Commission assets. I should be interested to learn what the lease-back arrangements were to be. Is it a case of institutional investment in forestry while the forests will remain under the continued management of the Commission? I note also that it is proposed that there should be a sale of a proportion of the Commission's woodlands. May I say that any dismemberment of the Forestry Commission would be resented, not only on this side of the House but also on the noble Earl's side of the House, where the partnership which was existed between the private sector and the Forestry Commission is something which has been worthwhile and sensible. This applies not only to their working together in the field, but also in research and the other support which the Forestry Commission provides to private forestry.

So far as the rationalisation of the dedication procedures are concerned, this will be very much welcomed. All of us who are engaged in forestry suffer from great frustrations by the administrative delays which are sometimes involved in securing agreement for the development of new woodlands; I am glad that the dedication scheme is to be re-examined and that the commitment of the existing dedication scheme is accepted because that represents a legal commitment. So far as the termination of the Dedication 3 Scheme is concerned, I would welcome further comment; because if this is to be replaced by a purely planting grant, this involves no long-term future commitment such as a dedication scheme provides. A planting grant is a planting grant; but a dedication scheme is a more lengthy commitment by the Government to support. It would be interesting if the noble Earl would enlighten us on that point.

I am delighted to learn that there is no intention to change the existing fiscal arrangements for private forestry. I am quite sure that people who invest in forestry require some incentives; and the present arrangements encourage people to put money in what is a long-term investment with a very small immediate return. I presume that the new arrangements which the noble Earl has outlined will require legislation. At that time, we shall be able to examine in greater detail what is proposed in the Statement.

4.6 p.m.

My Lords, in the absence of my noble friends who have a much greater knowledge of this industry than I have, it falls to me to thank the noble Earl for repeating the Statement. It seems to me that the Statement envisages a major reorganisation of this important industry, and I would suggest that it needs a full-scale debate in the near future of this proposal. I hope that that debate might take place before the Government have completed the task of drafting their Bill, because we all know how difficul it is to get changes made in a Bill once it has gone so far through the machine that it is in draft. I was very interested, as I am sure were all noble Lords, by the suggestion of the sale by the Forestry Commission of woodlands to private enterprise to be leased back for management by the Forestry Commission. I should like to repeat the question put by the noble Lord, Lord Taylor of Gryfe: whether the Government envisage that the people who buy these woodlands will be simply financial enterprises who look at the amount they have to pay and the amount they get back by way of lease; or whether they will encourage genuine foresters, people interested in forestry, to go in for these transactions. I must say that it is quite a new way of "privatising" an industry—to use that horrible word, the use of which is becoming too common—and it seems to me a little like a desperate attempt to find some means of reducing the public sector borrowing requirement by getting in some capital.

There is only one other point I should like to ask about. It seems that if sections of woodland are put up for sale in this way it will be inevitable that the best woodlands will go and the less satisfactory, the more difficult ones, will be the ones left to the Forestry Commission. Will not the result be that the return on the Forestry Commission's undertaking will be less than it was before? This will counteract to some extent the financial saving that the Government hope to make by collecting a certain amount of capital.

4.9 p.m.

My Lords, if I may answer the noble Lords on the Front Benches opposite, may I thank them for their general welcome of the Statement and the matters it contains—a cautious welcome, but nonetheless a welcome for that. This is a radical and far-reaching look at our forestry industry, and I concede, as the noble Lord, Lord Taylor of Gryfe, implied, that we have taken some time to do it. But there have been a number of extraneous factors which have intruded and have caused what was going to be a good, hard look to become a good, hard, long look at what we propose for the future. The noble Lord, Lord Taylor of Gryfe, asked, ineffect, what the extent of the role of the Forestry Commission will be in the future. I can tell him that both on its authority side and on its enterprise side we do not envisage, still less do we wish, that it should in any way be diminished. I will give that undertaking.

Of course, we make no bones about the fact that the prospect of sales, either of forest land or of land which the authority has acquired for planting purposes but not yet planted, is to an extent a wish to enable the private side of forestry to participate financially in the acquisition, growing, harvesting and management of forests. I anticipate that, as the private sector comes into the management of forestry, so, to an extent, will the planting of forests by the Forestry Commission—I repeat "to an extent"—decline. Overall, the total area we expect to be planted between now and, let us say, the end of the century will, we anticipate, be approximately the same in degree as has been planted since the war in the past 25 or 30 years. There is no question of the relationship or the partnership between the private sector and Forestry Commission being dismembered or in any way adversely affected.

The noble Lord and the noble Viscount asked about the scheme for selling and selling plus lease-back. Without being facetious, may I say that there is no prospect and it is not envisaged that the forests at present under the control of the Forestry Commission will be put onto the shelves like goods in a supermarket so that would-be investors can take and pay for those which commend themselves to them. Then, as the noble Viscount implied, the best would go and the worst would remain.

The Forestry Commission will be totally in charge of the sales which take place. I anticipate that there may be many forests and many areas of woodland where for management purposes, environmental or commercial considerations and, not least, employment considerstions, such woodlands will not be for sale or alternatively—and this particularly applies to employment—will be for sale and leaseback. So there is absolutely no danger of the jewels in the Forestry crown being sold off with only the less exciting, less profitable and less easy to manage woodland remaining.

The noble Viscount, Lord Simon, asked who the investors will be. We anticipate in the first instance that there will be a number of financial institutions connected with the City and possibly pension funds, who will be very keen to invest their policyholders' money in this type of long-term investment. It may well be that the Forestry Commission will find itself in good competition with Lord Taylor's present employers. But we are informed that the investors are there and this is the type of investment in which they would be keen to engage on a long-term basis. There is no reason why a private individual should not invest in this way. I very much hope that there are a few who will consider that this investment would commend itself to them.

I think that the noble Viscount also said that this to him represents a desperate attempt to reduce the public sector borrowing requirement. To an extent it is going to do just that; but I would prefer to put it before the noble Viscount in this way: what this represents really is the release and better use of capital which is locked up in the Forestry Commission for years and years, and we think that it is much better that capital from the private sector should be locked up in this way, if such a course commends itself to the investors, than should be the public's cash. To that extent there will be a diminution or reduction of the public sector borrowing requirement, but we think that that will be a very good thing.

I am asked whether there will be legislation. Indeed there will so far as sales are concerned. It will be introduced into the other place in a matter of days rather than weeks. I am also asked whether there should not be a debate on this major reorganisation. I am sure that the Government would welcome that, although time considerations are always our enemy. No doubt the "usual channels" will make such arrangements if the House feels that they are required.

My Lords, I wonder whether I may ask one more question. In the event of certain assets belonging to the Forestry Commission being sold or being involved in leaseback arrangements with consequent revenue, will these revenues accrue to the Forestry Commission for further development and planting or will they be simply taken by the Treasury?

My Lords, the noble Lord will know that there are long-standing and extremely strict rules by which hypothecation of revenue is not allowed in this country and never has been. In fact, the money will go to the Treasury; but I can assure the noble Lord that, although it will go to the Treasury, it will not be swallowed up without trace and arrangements will be made for it to be well used.

My Lords, I am sure that all noble Lords who are interested in forestry to any degree at all will be most grateful to the noble Earl for the Statement that he has made. May I ask one small, simple question which may be of interest to forestry owners? Will the noble Earl define more clearly what he meant when he talked of small round timber?

My Lords, there are various scales of timber which can be put to different uses. I would say that this is the timber which is the product of forests probably at their first or second thinnings.

My Lords, I shall intervene for only a few minutes. A matter I raised some little time ago—

My Lords, I want to ask a question. The noble Earl will remember that I brought forward a question as to what can be done regarding adopting a scheme of dedication. In this way forests can be planted by individuals or groups in order to commemorate or to continue to pay tribute to those who in a particular way, either politically or in some other way, have rendered help to the nation. I tried to explain last time—and that is why I asked the question—that it is actually in practice at present in the Jewish National Fund, which raises its money from individuals and plants forests throughout the land. Is there any step that the noble Earl might take in order to consider that proposition?

My Lords, there is absolutely nothing to stop individuals or groups of individuals from planting trees for whatever purpose in any suitable place. The question of course arises as to whether public money should be granted for such purposes, unless there is a commercial crop at the end of it. I cannot really conceive that anybody would want to plant a commemorative forest of sitka. But I suppose it is possible, certainly, in regard to the broad leafed species. The short answer to the noble Lord's point is that there is no reason why these commemorative trees should not be planted in a proper place.

My Lords, is the noble Lord aware that a by curious coincidence the report of the Select Committee on Science and Technology on the Scientific Aspects of Forestry and its accompanying volume of evidence has been published on this very day? May I, on behalf of the Select Committee, ask him for an undertaking that in working out the policy that he has just proclaimed he will give the most careful attention to the recommendations contained in this report?

My Lords, I should like to pay tribute to the noble Lord, Lord Sherfield, and his Select Committee. As he said, they have conducted a very wide-ranging inquiry into the scientific aspects of forestry. Not only do my right honourable friends and I welcome the attention which has been given to this topic but we shall be studying the report in considerable detail, together with the recommendations that are made. It would be premature of me, particularly as the report has been published only today, to deal with the matter in any depth, but questions of research are extremely important and we shall announce our conclusions in due course.

My Lords, does the noble Earl appreciate how difficult it is to understand exactly where we are, when we are told that a Bill is going to be introduced in another place dealing with some of these points and at the same time there is a consultative document? What are the policy aspects that are firmly determined—which surely must be when the are in a Bill—and what are the aspects there for consultation? He was very short today on targets, although my noble friend pressed him twice on that subject. I think we want a little more information. It is not good enough to say that it will go on more or less the same as it has since the end of the war. If the noble Earl knows the position since the end of the war, he will realise that there has been considerable variation from five years to five years. Most of us who are interested in forestry were hoping that there would be a considerable stepping up in relation to forestry.

There is one other point. Is there going to be in this Bill any change in respect of the powers of the Commission, who have powers for the compulsory purchase of land? They have never used them because they have been able to get land, but now we are being told that they have to sell that land. This will make it very difficult indeed to reach planting programmes that we do not even know about. That is why I should like to know a little more about planting programmes and the Government's intentions in respect of them. I feel like the spokesman for the Liberal Party: that this was not initiated by the Forestry Commission—not even by those in the Scottish Office who are interested in forestry—but rather as a result of pressure in relation to the financial problems of the Government.

My Lords, may I deal with those matters one by one? The legislation, first, is to enable sales of forest and land to take place. At the moment there are restricted powers for the Secretary of State for Scotland, and no powers at all for the English Ministers. Therefore that is the purpose of the legislation which is to be introduced. The consultative paper, which is available in the Printed Paper Office, is entirely concerned with private forestry, and it is on the administration of felling control and the new proposals for grant aid upon which we wish to consult all the interested parties before we bring the new scheme into effect at the commencement of the next forest year. So the noble Lord will see that these relate to two totally different matters.

Then the noble Lord berates me, or at any rate the Government, for not giving precise targets for the expansion of forestry. May I just say this? Previous governments, and not least the one which the noble Lord adorned with such distinction, have accepted the need for general direction and also short-term programmes for the Forestry Commission, but not precise long-term targets for the industry as a whole, which would be unrealistic. Many of the factors are not under direct government control, especially those affecting the private sector, which we wish to play an increasing role.

Finally, we cannot commit future Administrations to a programme which they might not be able or willing to fulfil for a variety of reasons. May I say what we think ought to happen? Since 1919 the area of productive forest in this country has about doubled. If matters go on up to the end of the century—say between 1980 and 2000—as they have done since the end of the war, then the area of productive forest should increase by yet another third. That is the sort of target, bearing in mind all these imponderables, that we should like to see achieved.

My Lords, may I ask the Minister whether we cannot at least have a full-scale debate on what we have heard this afternoon? It has come as a great surprise to me, as a forester of nearly 50 years' standing—and I agree entirely with the noble Lord, Lord Taylor of Gryfe—that it looks as though the Forestry Commission will be badly cut about. Forestry must be a continuous process. As Sir Walter Scott said,

"Trees are aye growing while you are sleeping".
That is something that should be remembered. The forestry industry in this country is not in a satisfactory state. We buy an enormous amount of timber from abroad and we find the greatest difficulty in selling our own production. The whole of this aspect should be considered, but it requires a full-scale debate to discuss the whole situation more thoroughly.

My Lords, I entirely agree with my noble friend when he says that these matters are very important. They are indeed long-term and they vitally affect one of the most important sectors of our economy, not least for the rural areas. The matter of a debate is one for the usual channels, but my noble friend the Chief Whip is in his place and I have no doubt he has taken note of everything that has transpired this afternoon.

My Lords, we have been on this Statement now for 33 minutes. May I ask the Government Chief Whip whether it is not about time that the House moved back to the main debate?

My Lords, I am, of course, in the hands of the House on this matter. It would be improper for me to try to curtail your Lordships if the House wished to ask further questions for elucidation; but I am quite happy to agree with the noble Lord, Lord Byers, that perhaps we might move on now.


Debate resumed.

4.28 p.m.

My Lords, I must first apologise to your Lordships' House, as I have already apologised to the noble Earl, Lord Gowrie, for the fact that I fear I shall not be in my place for the winding up, as I have to chair the Select Committee on Unemployment, which meets at five o'clock.

The subject of today's debate needs to be tackled on two levels. It needs to be tackled as a matter of urgency now to deal with what is becoming a deepening emergency. The noble Earl, Lord Gowrie, said, whistling to keep his spirits up, that it was remarkable that the unemployment figure was no higher than two million. I can assure the noble Earl that unemployment is higher than two million. It is now agreed on all sides that the official figures greatly under-represent the reality of unemployment as it is being experienced today. Indeed, I understand there is yet another horrible jargon word being coined—"disemployment" I think is the term—which means, if I understand it aright, people who are not in employment but who would be in employment if there were any hope of getting a job. Of course, pre-eminently among those who do not appear in the figures of unemployment are women who are simply not registering for employment or, for one reason or another, do not appear in the figures.

The situation, as I know the noble Earl recognises, has nose-dived since about May, from which time the unemployment figures, even the official figures, have risen dramatically and the number of bankruptcies has increased alarmingly. So as an emergency measure there are steps to be taken immediately, but that of course is not enough for a debate of' this kind. We need also to consider ways in which we can establish recovery on a basis that can be maintained, and in which the country as a whole can have confidence that there is, in fact, a good economic future, as, in my view, there could be if we take the steps which need to be taken. Of course, I am going to suggest steps which will cost money, and I know it is already written into the noble Earl's answering brief that there is no money to spend. But before we get that reply, may I make the point that there is a world of difference between spending money on current consumption, which is used up once and for all with no future benefit, and spending money on investment without which there will be no future.

May I also point out to the noble Earl, although it is difficult to get the exact figures, that the estimate appears to be that each unemployed person costs little short of £5,000 per year and that figure, with inflation, is rising. I have given a conservative estimate of what it costs. That is money wasted—not wasted, of course, in terms of benefit for the person who has to be maintained while unemployed, but wasted in terms of any benefit that it brings to the economy as a whole.

In giving that figure, I have made no addition for the social costs of unemployment, by which I do not only mean the human suffering for which no financial figure can be given, but the social cost for which very heavy financial figures can be given—the social cost of crime, disorder, ill health and mental illness, which, although it is very difficult to get a precise figure, everyone in your Lordships' House will agree is a cost which rockets as unemployment goes up. So it is far more than the figure of £5,000 per annum, and anything that we can do in terms of investment which would increase employment is, in part, paid for—not entirely, I recognise—by the reduction of the charges of unemployment which we are having to bear.

I would also suggest to the noble Earl that the Government could go still further than they have already done in borrowing from the citizenry, through the extension of these popular "granny" bonds, which those of uswho have been entitled to them—if not as grannies, by virtue of anno domini—have been only too glad to take advantage of. The Government have now dropped the age. Why cannot the Government drop the age much further, so that there can be for the country as a whole, or, at least, for a much larger proportion of it, the opportunity to buy indexed bonds at low interest rates, instead of the Government selling gilts at very high interest rates which commits the future to a very undesirable extent?

The Government are confident about the drop of inflation, and in its continuing fall, and there is some reason to think that this confidence is justified. So commitment to a much wider extension of indexed bonds would not be an unreasonable commitment for the Government to undertake, in order to raise the resources that are necessary. For there is no way to deal with either the immediate situation or the long-term changes that are necessary unless the Government are prepared to invest—and I say "invest" because it is investment that is required.

In the short term, surely, there are several steps which could be considered. Is it really impossible to cut the employers' national insurance contribution for people under 21 who are employed? As we know, unemployment horrible though it is in all age groups, and severe though it is in all age groups, is particularly harmful among the young and is particularly heavy among the young. I know that under the previous Administration my own party was in favour of increasing the national insurance contribution for employers. But I believe that the time has come when that quick and easy way of, on the one hand, easing the burden on employers and their cash flow problems, and, on the other hand, giving positive encouragement to the employment of school-leavers is something which we should very carefully consider.

Is it now also possible for the Government to look at a moratorium on PAYE payments from those firms which are going broke at the present time, because the last straw is paying to the Government a PAYE bill that they owe? It cannot be good economics to let an otherwise viable firm go out of business, because they are failing to pay debts to the Government, when the Government then have to support the people who are put out of work as a result of the bankruptcy that follows.

Is it not also possible for the Government to consider lower interest rates for genuine investment in industry? It may not be possible to reduce interest rates further than the 2 per cent., although I wish they could—and there seems no reason why, in the short term they should not—but, at least, they should create differential interest rates in the interests of genuine investment in industry.

Finally, is it not possible to allow to industrial purchasers considerable discounts for bulk purchases of energy supplies from nationalised industries? As we all know in your Lordships' House, our industry is competing against our competitors' industry not only because the level of the pound is very disadvantageous for export purposes, but also because, for one reason or another—for reasons of fair competition and for reasons of unfair competition—the energy costs of many of our competitors are lower than the energy costs which industry in this country has to face.

Those are four steps which could be taken without too much difficulty, and which could be taken quickly, in order to alleviate the immediate problem. None of them would have dramatic results but each, in its way, would ease the position of a number of firms, would stem the flow of bankruptcies and would stem the rise in unemployment, both of which will continue, as we well know. But we could, at least, do something to halt that alarming increase which has gone on ever since May of last year.

But, of course, these short-term measures are in themselves only staunching the wound. They are not dealing with what is needed to be done in order to establish recovery, and to establish the economic future of the country. Here, surely, we need to recognise that we cannot wait for a hidden hand or for natural forces to bring about that restructuring of industry which Government after Government have ducked. If only in the 'sixties, when there were four jobs for every man at the labour exchange, we had grasped the nettle, had run down the industries for which there is no future, had invested in the industries for which there is a future and seized the opportunity of high technology, how different our plight would be today!

It is not too late to do it now, but it gets later with every day that passes, because with the passage of time our competitors are moving into high technology. The Americans and the Japanese will command those markets, and once those markets are commanded by our competitors it will be a hundredfold more difficult for us to snatch them back. So delay must not be brooked, and it needs Government initiative and Government expenditure to get high technology industry going.

There is in the country a growing, widespread support for the need for change of this kind. It has been said:
"The priority for industrial policy, if Britain is to maintain its share of world trade let alone restore it to the position of 10 years ago, is to enlarge its reserves of skilled manpower and technological expertise and to increase the rate at which technological advances are adopted in this country".
Then the same writers go on:
"If the random adoption of new technology change is one of the major determinants of trading success, then the single most important technological development in the next 10 years is that of micro-electronics. This means that those countries whose industrial enterprises adopt this new technology into their products, their manufacturing processes and their services will enjoy trade success and economic growth. Thus it is argued that a large part of Britain's trading and economic future will be determined in no small measure by its success in creating the skills and investment needed to exploit micro-electronic technology".
Those words were not written by the CBI or produced by a research team from a university. Those words are taken from TUC publications on employment and technology. There lies the base for collaboration.

I wonder whether your Lordships' House fully appreciated what it heard when the noble Lord, Lord Scanlon, spoke. The noble Lord, Lord Scanlon, was the very distinguished leader of the engineering trade union. He is now the chairman of the Engineering Training Board. Let us remember that the Engineering Training Board is a tripartite body in which agreement has to be obtained for its decisions from unions, employers and educationalists. When the noble Lord, Lord Scanlon, said that industry is prepared to move towards the acceptance of the achievement of standards in training rather than time-served apprenticeships, to some noble Lords that may have sounded like a minor change. I assure your Lordships' House that it is a revolutionary change, one which has in it the seeds of great hope for the future.

I beg the Government to seize the opportunity. The employers, the trade unions and the Government need, as they have never needed before, to get together: not just occasionally, grudgingly, in an adversarial way but in order to produce something along the lines of the indicative planning which has served the French economy so well ever since the post-war period. Now is the opportunity. The noble Lord, Lord Scanlon, has said to the Government. "We want to collaborate". That is the burden of his theme. Will the Government take this opportunity to establish the kind of collaboration that we need?

We suffer from the need to have dramatic, adversarial politics in this country and, indeed, in industry; but beneath the surface of adversary, beneath the veneer of adversary, there is, thank God! a growing realisation that either we have to collaborate and work together or we will perish together. Now is the time to collaborate: to collaborate at the level of the unions, the employers and the Government, and to follow it through into the country as a whole.

People are waiting to be told what to do. They are ready. They are frightened by the rising figures of unemployment. This is not now an abstract matter; it is the unemployment of one's own cousins, brothers and nephews. People up and down the country know this and would follow a lead. Is it not possible for the Government to give that lead? If people said that it was a U-turn, if there were little mocking laughs at that U-turn, they would be drowned a thousandfold in the applause which would come because the Government had been prepared to do it.

My Lords, since the noble Baroness has said that she will not be here later, and since she has made a direct appeal to the Government, I think that I should answer her now. We do do this. We are taking up this initiative. We are trying to detensify it by doing it in the context of the work of the Manpower Services Commission. This is where many of our correlated training activities take place. It is not enough. We want to do more. But we are doing it.

My Lords, I am fully aware, particularly in the case of the noble Earl, Lord Gowrie, that he is very anxious to do this. But do it with panache. Give it publicity. Get it over to people that you are doing it. The Government are doing it almost as if they are ashamed of it. This is something to which the Government should be giving the maximum publicity. Within the ranks of the Conservative Party surely there are people with the public relations skills, if nothing else—I know that this is often used as a term of abuse—to get it over that this is what the Government are doing.

We need development towards the new technology and we need to do it fast. We need the restructuring of industry which will give opportunities in new industry and in the markets of the developing countries. Let us not forget those new markets in the developing countries into which we can move if we have the energy and the skill to get there and to do the restructuring that is required. There must be investment in industry and then investment in people. Of course, we are glad about the £250 million that the Secretary of State announced last week, or the week before, and about the improvements to the scheme, details of which the noble Earl, Lord Gowrie, has given us today. But by itself the Youth Opportunities Programme will not provide the skill base and the knowledge base that the country requires. To an extent it is a social programme, and it is none the worse for that; but do not let us fool ourselves that it is going to give us the skill that we need.

I am optimistic about the future of the economy if we do the things which are there for us to do, but I am not optimistic about the future of one section of our people; namely, the unskilled. All the evidence shows that the future for the unskilled is bleak indeed, and that it may well be that not a few but many youngsters leaving school today who never acquire skills or knowledge which are marketable will never have a regular job until they come to retirement age. May I add that for the ethnic minorities this prospect is magnified many times. So the need for training is a need for action of the most radical kind.

I give the greatest support to what the noble Lord, Lord Scanlon, has said about the training boards. I beg the Government not to hand over training merely to voluntary effort. The people who will give the voluntary effort are doing the training, anyway. They do not need the encouragement. It is the people who will refuse the voluntary effort for whom the work of the training boards is required. Through thick and thin, the training boards have maintaind what we so badly need; namely, a tripartite approach. There was agreement, even in the worst days of controversy, between management and the trade unions. The training boards, with unions and employers upon them, have continued to do the work. For that reason alone—because they are a forum of joint decision-making—they deserve to be maintained. They are a forum in which new ideas can be got over to both sides of industry and in which real discussion can take place and real decisions be made. I beg the Government to think again before they weaken the training boards.

When it comes to the training of adults and of school-leavers, I appreciate what the noble Earl, Lord Gowrie, has said. But it is not enough. We in this country do less for training than any of our competitors. In Germany, 90 per cent. of the school-leavers get either full-time education or vocational training. In France, vocational training is built into the education system. We are bedevilled with the idea, for some extraordinary reason, that to do anything in the educational system which has vocational value is, somehow, to betray education. So we are in the ridiculous position of saying that mathematics is a good educational subject for the noble Earl, Lord Gowrie, and for me, but that if one is going to be an engineer it is tainted because it is vocational. If that is not nonsense, I do not know what is.

We have got to tackle this problem. We know that it is deeply embedded in the cultural and the educational system of this country. We must develop a different understanding about vocational development inside our schools. We must get a continuation of education inside industry. We are reaching the point at which no youngster under the age of 19 should not be receiving training of some kind. I am not at all sure that we do not need to have a merging of departments, so that one department takes responsibility for vocational education and training and for the employment of people coming out of schools and going into industry. There is something about the structure of administration in this country which results in the fact that if two Government departments are dealing with one question that question never gets solved. Something far more radical than has so far been proposed is required. It needs money; but if we do not spend the money at this point, then in 10 years' time we shall have no money to spend.

4.50 p.m.

My Lords, I should like to join the noble Baroness, Lady Seear, in congratulating my noble friend Lord Scanlon for placing this Motion on the Order Paper and for moving it in the way he did, and also for making in his speech the initiative that he did. Next, I should like to make two apologies: one to the House in general in that, due to a longstanding engagement, I shall be obliged to leave almost immediately, which will appear rude and indeed will be rude but is not intended to be so. I am obliged to address a meeting of civil engineers in Essex this evening on, among other things, how the House of Lords works. I shall explain to them that it is one of the assemblies wherein subjects of this nature and of this importance, although they are political in their content can none the less be discussed in a fairly nonpartisan atmosphere. We know that they are political and we quite understand the politics of them, but we can still debate them in a less heated way than happens elsewhere.

My second apology relates to the maiden speech of my old friend, the noble Lord, Lord Boardman. I very much fear that I shall miss his speech. I was looking forward to hearing it because I know that it will be interesting, and I congratulate him on it in advance. I shall read it tomorrow with care and I shall send him a note, congratulating him again.

Turning now to the subject of the debate, I do not want to speak in the broad, general way in which speakers have tackled the subject so far. I do not really want to deal with the re-training of the casualties of the current economic difficulties through which the country is going. I want to concentrate on the narrow field of the professional engineer, which was the subject before the Finniston Committee which reported earlier this year. I was a member of that committee and I have some interest in what happened to the recommendations which we made.

Before I continue, I think we should start by understanding that a modern industrial society is essentially an engineering society. That is the heart and core of it. Other things are important, but right at the centre of a modern industrial society is engineering. All the success of a modern industrial society hinges on the success of engineering. That is true for the moment, but who knows what will happen in the future? We know that there is intense engineering competition from places like Taiwan, Korea and elsewhere, and it may be that at some time the engineering centre of gravity of the world will shift eastwards, and that will pose very serious problems which we shall have to deal with then and which we should foresee now.

The other problem relates to the current economic difficulties. In the course of his very interesting speech the noble Earl, Lord Gowrie, remarked—and I will paraphrase what he said—that his Government were dealing with the economic problem really by creating a recession out of which would come strength for the future. That is more harshly put than the noble Earl put it, but I am sure he knows what I mean. I quite understand that; it is one way of dealing with the situation. It has an historical analogy, of course, in that it is not unlike the eighteenth century type of medicine whereby patients were cured by an application of leeches for a small bleeding. The problem there was that the doctor had to be sure that he was applying the leeches to the right place. I have a horrible feeling that the Government might possibly be applying the leeches to the arteries, and I am not sure that that really is what is intended. I think the Government must be very careful not to push this recession just too far so that we could possibly end up de-industrialised. Then the problems of the future of the engineering society would be much less pressing than they are now!

Reverting to the Finniston Report, I make no complaint that the Government have not adopted the Finniston recommendations exactly as we phrased them. I think it would be absurd to expect that. We were a group of people who examined the problem over a period of time; we examined the evidence and we argued about it, we thought about it and fought about it and we came up with proposals. It is not surprising that another group of people in the Government, examining the same problems, thinking about them as hard as we did and arguing about them as we did, might come up with different conclusions from those reached by the Finniston Committee. After all, I did not myself agree with all the Finniston Committee's recommendations, so I can hardly complain if the Government disagree as well.

The main problem really is what, if anything, do the Government intend to do?—and when. It is almost a year—in early January—since we reported, and it is quite likely that the Government are about to propose fairly soon their final decision on our major recommendation; namely, the proposed new engineering authority. We intended that that authority should be statutory and should be answerable to Parliament. The Secretary of State for Industry made it quite clear during the summer that he did not accept that. He thought the new engineering authority should be set up under the Privy Council as a chartered body. Speaking as a long-time member of the Institution of Civil Engineers, I consider the Government's proposal to be quite sensible. Although it runs counter to the Finniston proposal I think the chartered body rather than the statutory one is most likely to gain for the authority, if and when it is set up, the good will and support of the already established engineering institutions in the country.

One of the major duties of the new authority deals exactly with the subject of this debate. According to a draft charter which has been published abroad, the objectives of the new authority will be to create standards for education and training, for the information of engineers, as it is nowadays called, to collaborate with professional institutions, training boards (where they still exist) and others in identifying and accrediting academic courses and industrial training programmes which satisfy certain criteria, and to support and otherwise encourage the development and provision of initial and continuing information for engineers. These important objectives and duties are entirely right. It is to be hoped that the body appointed by the Government is sufficiently powerful to do these things—not merely to oversee them, but to do them and to ensure that they are done properly.

What did we on Sir Monty Finniston's committee want to see? We wanted, first, to ensure that the preparation of professional engineers—and it is only those I am talking about at the moment, although there are many others—should be based, first, on an academic education, followed by structural training and supported by actual experience. Once a young man or a young woman as the case may be, has followed through these three strands of academic education, of industrial training and of showing that he or she can actually do the job—can "carry the can", as it were—at that point the person would become a professional engineer and would be registered as such.

Another important recommendation, and one which I think has not quite received the publicity which it should have, and which refers not only to the future but to the present, is this: We believed on the committee that engineers in mid-career, beyond the initial period of training information, should be entitled as of right to paid study leave in order to pursue courses of study and of training from time to time during their career. I know that in the comments which the department received after we published our report a number of industrialists, while saying that that was quite a good idea, protested that they might find it difficult to pay for it. That might well be true, but I think it is nonetheless an essential thing and something which we would do well to bring in as rapidly as possible. After all, the French already have a payroll levy for industrial training; I think it is 2 per cent. This is the kind of thing we could repeat in this country, and not wait for the authority; that can be done by Government right away.

There is one other thing that I want to say about the authority on training. It is quite important that the requirement for young engineers to be trained in industry should never be regarded as a source of cheap labour for industry. I know that in the best companies that does not happen anyway, but there are others where a young trainee is regarded as something of a dogsbody and paid as little as possible for doing as much as possible. I do not think that should be encouraged, and it is an important aspect of the authority's work to see that it should not be. The method we proposed was that courses of training in industry should be accredited by the engineering authority, and monitored, firstly to ensure that they avoided that pitfall and secondly to ensure that courses did provide the kind of training which is useful both to the young engineers and also to industry. So accreditation is a very important part of our proposal, and I am certain that will be followed by the authority when it is set up.

It might well be argued that many of these things that I have been talking about are already being done by the engineering institutions, and, in the case of the best of the institutions, so they are and so they have been for quite a long time. The best of them set standards, they hold seminars, they function as learned societies and they monitor or accredit courses of study both in the universities and in industry. All of this they do on a voluntary basis. Some of these institutions, particularly the civils and the chemicals, are extremely successful in this. Others of the institutions are rather less successful and some of them are not successful at all. But all of them try to do it.

If it is happening already and is partially successful, you might argue that we should just leave well alone, let the institutions get on with it and sit back and see what happens. The reason why that is not enough is that industry has not responded sufficiently well to these efforts, though they have been going on for many years—for a very long time indeed. The institutions have not, I think, failed industry; I think industry has failed the institutions by ignoring the important work they have been doing. That is why we need a new authority which is sufficiently powerful and sufficiently authoritative to encourage and ensure that industry fulfills the policies of the authority.

For that reason I am a little bit sceptical about part of the draft charter, as I understand it. No doubt discussions are going on and it may be that the charter may not turn out eventually as it is in the draft. The draft says that the new authority would collaborate with the institutions in this work of monitoring and accrediting and dealing with training. I do not think this is sufficient, for the reason I have already stated. Industry has failed to respond to the institutions in the past. There is no particular likelihood that industry would now respond to the institutions when they were collaborating with the new authority. It is absolutely essential, I believe, that the authority itself takes on the duty and responsibility of accrediting, monitoring and identifying academic courses and industrial training programmes. That job will only be done fully and done properly, I believe, if the authority does it itself and it is not delegated to the institutions.

All this will require a fairly massive effort on the part of the authority; that is quite obvious. For that reason, I am a little disappointed that, in the press conference that the Secretary of State held last August, he offered no more than a loan to the authority to float it. I think that it is, if not niggardly, certainly not generous. I believe that the importance of this authority, and the importance of setting it up powerfully right from the beginning on a strong and secure foundation, requires much more than a mere loan. I think that the authority should be adequately backed and adequately supported by the Government. This is a matter of the utmost importance. It deserves the utmost support and much more than the Government seem willing to give so far. There is still time for the Government to change their mind, and I hope they will do so.

My Lords, I end by repeating my congratulations to my noble friend and repeating my apologies to the House for the fact that I shall have to leave.

5.7 p.m.

My Lords, I am sure we are extremely grateful to the noble Lord, Lord Scanlon. He has introduced this afternoon a matter of the utmost importance, and, if I may say so, speaking for those of us who are given the splendid term of "Prelate", we are extremely grateful for this lead that has been taken for many of us who are affected very deeply. I speak also as chairman of the Manpower Services Commission in Birmingham and the West Midlands. I should like to make a few remarks basic to the issue of training. Obviously I am not in a position to talk along the particularities of the noble Lord, Lord Howie; nor am I able to anticipate the speech of the noble Lord, Lord Boardman.

However, there do seem to me to be two or three specific matters of basic industrial training that are necessary for the whole theme of Lord Scanlon's proposition to the Government and which I wholeheartedly endorse. I also very much endorse the urgency note sounded by the noble Baroness, Lady Seear. There is, first of all, the basic contribution of the Manpower Services Commission and its special programmes. Whether it is the Youth Opportunities programmes, the Work Experience schemes, the Community Enterprise programmes, all are essential avenues to wider and deeper training. They should not be seen as a stop-gap. I believe that they have come to stay. Surely, therefore, they are increasingly becoming, the normal extension of formal education, the necessary bridge between school and work.

I believe that these schemes have enabled us to show that we have got to start by ensuring that all young people receive a formal introduction to work. We know what is required because of our experience with the Youth Opportunities programmes. We know that it is not a case of extending the school leaving age. We also have vast experience of training apprenticeships. If young entrants are to be given a proper opportunity to develop themselves importantly in the engineering community, and to give a proper return to their employer, they must receive on the way to their full-time job a programme lasting a year or more of planned work experience, of basic training and work-related education. If I may say so, this particularly applies to those who fall below the average educational standards, of which we hear a good deal.

Secondly, the programme of education, the programme of training, is frighteningly dependent upon the careers service. This is an essential and splendid concept, and the careers officers of our nation are doing a difficult and strung-out job. May I remind your Lordships that the careers service is a statutory service, but it is to be initiated and administered in the long run by the Department of Employment. As regards execution, the careers service is under the guidance of the Department of Education and Science. As regards pay and deployment, it is under the control of the local education authority and thereby dependent upon the local rate support grant.

If the noble Baroness, Lady Seear, says that if two departments of Government receive the same question we shall not get an answer, I am bound to say that if ever there was an instance, as I see it, of an essential Government service laying the foundations of industrial training it is the careers service. How can it operate under these different authorities and accountabilities? Nevertheless, it is a service that watches over our boys and girls in their last years at school and their early years of training or being at work. It is an essential service and one that is presently being cut down through lack of funds in many areas—although I am glad that the Minister gave assurances that that would not be the case. However, it still remains at the discretion of the local authority.

There are also the colleges of further education. Thus far no mention has been made of our colleges of technology—splendid institutions in a great many areas. Those colleges have a particular anxiety at present. I speak from experience of the West Midlands, where we must have a dozen or more "Techs". What is the truth about them? Our technical colleges are running severely below strength at a time when they need to be full. The engineering workshops in several colleges in the West Midlands are down to one-third of their normal intake. In three or four years' time we fully expect to need those who should now be receiving basic engineering training, but there are very few boys and girls taking the basic training that these Techs offer to their community.

There are three causes of that situation. First, there is the lack of sponsorship by industry due to the restriction of their finances. Secondly, there is the reduction of funds available to the Training Service Department of the MSC for employers who undertake the training of first year apprenticeships. I understand that that situation is being looked at, but that is a department of the Manpower Services Commission that has not received any benefit at the Minister's hands in the last few weeks. Thirdly, the situation is also due to the fact that if boys and girls go to a technical college they receive no training allowance and, if they undertake more than 21 hours of study a week, they find themselves ineligible for the unemployment allowance. That is a tragedy. Over and over again I have heard of young people who have been advised by their parents that the family cannot afford to have them go to the Tech because if they did so they would lose their benefit. Surely this is a matter that urgently needs to be very carefully looked into.

There are also the industrial training boards, of which we have heard a good deal this afternoon. I see the industrial training boards as part of the educational system of the nation. They are the areas of industrial training that are looking for quality and not just quantity. Once again, the opportunities of those training boards are largely overlaid by the financial constraints, because the initial expense of the training boards remains the voluntary responsibility of the industries concerned.

Have the training boards outlived their usefulness? Certainly not. It is essential that these training boards in the great areas of industry such as I represent in the West Midlands be continued and be given extra strength to continue. Those boards, and indeed youth opportunities programmes, must be concerned, therefore, with the long term investment of human resources and personal ability. If the training boards cannot afford, at present, to train apprentices and if the boards are governed by resources largely conditioned by the rise and fall of markets, then our industrial recovery two or three years' hence will be seriously jeopardised.

In 1981 and 1982 there may well be a whole lost generation of trainees as has already been implied this afternoon. It is estimated that at present we are training 60 per cent. less than the industry will require in 1983 and 1984. If that applies to the engineering industry it also applies to the construction industry and, indeed, to the agricultural industry. In Kidderminster alone in 1977–78 the training boards were able to sponsor between 50 and 60 young people—both men and women. That number dropped by half, and I regret to tell your Lordships that the carpet training board is not able to fund one single trainee this year and there are only seven young people doing that course in the whole region of Kidderminster.

So, the time-honoured concept of apprenticeship, which involves the commitment of an employer to train, is in jeopardy. If that commitment is broken, as it is being broken today, it will not only be a tragedy for the individual young employee, but it will also be the failure by the company and will mean the discrediting of the idea of apprenticeship and technical training.

Is this not a time for a radical reappraisal of the whole area that covers the 16 to 19 year-old age group of our nation? As the noble Baroness has already pleaded, we would certainly plead for such consideration to be given so that there might be a unified department. I regret very much that the noble Lord, Lord Vaizey, is not present this afternoon, and we wish him well in his recovery after his serious operation. But there is no doubt that he has given an enormous amount of thought to the whole area of the technical training of the 16 to 19 year-olds in the service of the nation. Can we not, therefore, pool our resources and share them out so that the boys and girls get a fair and appropriate opportunity to be trained? The resources for their training at the moment are very varied: there are sixth form colleges; sixth forms in certain schools; technical colleges; unified vocational preparation courses; skill centres; industrial training boards; work experience schemes and youth opportunities programmes. Is it surprising that the nation is in a certain amount of confusion at this stage and does not see how to advise this new generation to go forward into the new technological age?

I plead, along with others and indeed with the noble Lord, Lord Scanlon, for all that the noble Lord said at the beginning of this important debate. The situation is confused by a multiplicity of agencies and by financial assistance to the young—some enjoy allowances and some do not; some are eligible for unemployment benefit and some are not; and a few receive wages, but many do not. It ought to be standardised for a generation in which we put our trust.

So, I would hope that we can reshape the training basis of the school-leaver and make it not only obligatory, but as of right that these young people—for the first three years after they have left school—are trained and receive some allowance and can also expect employment at the end of that time. Only then will we be able to look to removing the stigma and demoralisation of unemployment of this age group; only then can we expect a great increase in the available pool of young people for the technical training that is required, and only then can we allay employers' complaints and fears about the high youth wage rates and damaging conditions of apprenticeships to our employment situation. Finally, surely if it were known that there was a unified and basic training foundation for this age group, it would have a salutary effect on our schools and their curricula?

5.20 p.m.

My Lords, I am happy to follow the right reverend Prelate, who brings a special and wise experience to this debate. May I join with noble Lords in saying how grateful I am to the noble Lord, Lord Scanlon, for introducing this debate on such an important issue and for doing it in a way which on this occasion avoids me embarrassment, which I might otherwise have suffered owing to the convention of the House. I am happy that I have not been placed in that embarrassment, thanks to the nature of his speech. I am sure that noble Lords who have spoken will understand if, because of this occasion, I do not pursue some of the interesting but perhaps on one or two occasions more controversial points that have been raised, although I am happy to find that there has been such a vast amount of common ground in the speeches which have been made to your Lordships' House so far.

I believe that the Motion falls into two parts: first, the importance of our basic industries; and secondly, the need for proper industrial training. Of course I accept both of those parts. Let me take first the industrial base. There are those who argue that this could be filled with small businesses and with service industries. Important as those are, I do not believe that that is a realistic approach. There are many small businesses which can only act as satellites to larger organisations: the makers of engineering components and the like must have motor car, aircraft, and similar industries to serve.

I am sure that the right reverend Prelate will know, from the area of the West Midlands, for example, how important it is that the many small businesses in that area are able to supply larger industries with products and processes which are not easily transferable or cannot be exported. Indeed, the proportion of our exports that comes from the top 100 companies shows how important it is that our industrial base must include large industrial concerns as well as the smaller ones. But of course small business must be encouraged. They will provide more new jobs than anything else. They are to be encouraged; but we must recognise that they depend on a core of larger industries to feed them.

As for service industries, they of course are no less important. Some of the financial services, banking, insurance, and the like, and tourism, are of vital importance to our balance of payments. But a large number, and perhaps the vast majority of our service industries, are mostly, and can only be, for domestic use. I do not mean it in a derogatory way if I say that they must be taking in each other's washing. There must be an element of that amongst our service industries; therefore we should not reckon that they can pay the import bills for all the food and raw materials that we must bring into this country. Our industrial base cannot, of course, be the same as was created at the time of the first industrial revolution and which indeed has persisted with far too few changes for a long time since then. There must be constant change. For far too long governments have failed to recognise the need for this change and have subsidised employment in industries that have had no long-term future, instead of supporting and encouraging the growth of new ones.

This brings me to the second part of the Motion, the need for adequate training. Even today there are some firms which are suffering from bottlenecks owing to shortage of skills and skilled labour. The Chamber of Commerce in a recent survey found that one-third of the reporting firms were held back because of shortage of skills. Admittedly that is only half the amount—it was two-thirds earlier in the year—but it still shows a significant barrier. If in a time of world recession we cannot meet the skills which are required, it is indeed depressing to think what the position may be, and will be, when world trade recovers.

So I ask, what can and should we do about this? First, I would agree with the noble Baroness, Lady Seear, in many of the remarks she made relating to our school-leavers. I believe that the education system needs a major shake-up. Preparation for industrial training must begin at school, and numeracy and literacy are essential. Yet a recent survey carried out, again by the Association of British Chambers of Commerce, showed some depressing results. May I quote one example? Of 12 applicants for the job of laboratory assistant, only one knew what a percentage was. These applicants were in the ages of 16 to 17. Unfortunately matters are declining; they are apparently getting worse. In one area, where in 1967 the percentage of 16-year-old applicants for apprenticeships whose standard in arithmetic was too low to qualify for those apprenticeships was 29, in 1977 it has risen to 60 per cent. That is a very depressing trend.

Secondly, I would move up the educational scale and question whether our systems for higher education may not be too much concentrated on education for living rather than on education for making a living. A cynic once said that the great advantage of classical education is that it enables you to despise the wealth which it prevents you from creating. I do not agree, my Lords, although I am not a classical scholar, but I recognise that there is a danger. Despite the great expansion that there has been in higher education over the last 25 years, we are not getting the numbers of scientists and engineers that industry needs. This, again, is something which I find depressing, because so much of our future potential lies in high technology industries, and we must have men and women who are trained to create and manage those.

Our objective must also be to ensure that we have a workforce with wider and transferable skills, and to keep these updated; and those must be responsive to user requirements. I endorse very much of what the noble Lord, Lord Scanlon, said in his speech on this subject. Of course, the industrial training boards have a vital role to play. I shall not add anything to what the noble Lord said, because of his vast experience of this subject and the great contribution he has made to it, but I believe with him that certainly there has to be rethinking and revamping in a large number of training boards and in our approach to them. They are an essential component of the training that industry needs.

Perhaps understandably, industry also tends to concentrate on the younger new entrant, and the older person who needs training gets left by the wayside. This is a problem. My noble friend Lord Gowrie in his speech referred to TOPS and showed the recognition that the Government have of this problem, an attitude which we recognise and support. But in a time when the pace of technological change is so great, adults must be given every opportunity to train and retrain for new jobs. Of course it can be done and has been successfully done on many occasions.

I recall how many of the coal miners in the North East, when there was a major rundown in the coal mines there 10 or 15 years ago, were retrained and became absolutely first-class textile workers. Indeed, this is the sort of thing that has to be achieved in the areas where industries are changing, and large numbers have to be given the opportunity to acquire new skills and new jobs. In his average working lifetime the American has three careers and takes eight jobs. In this country the average worker in his lifetime has one career and takes two jobs. That shows that we have not been adjusting to change or, at any rate, have not been in a position to change and adapt to the new skills which must now be taken on board.

We must also persuade the trade unions to be less old-fashioned and restrictive in their practices regarding apprenticeships and employment, and I say that without fear of breaching any convention, because I endorse so much of what the noble Lord, Lord Scanlon, said on this subject. The defects in the present system were brought to light to a great extent in the Donovan Report in 1968. Twelve years have since elapsed and progress has been depressingly slow. I hope we can now encourage all concerned to get a greater movement and modern thinking in the trade union movement. There are some signs that that is coming.

We must make use of modern methods for training. Modern technology demands special skills, but it also provides special aids for training—audio-visual presentations and the like. There is an excellent Bow Group paper entitled Open Tech. which describes the aids and methods of distant learning in a way of which I know my noble friend is aware. I am also aware that he and his right honourable friend have done and are doing much to promote activity in this field. My noble friend and the Secretary of State have shown much interest in these and other ideas. More money is rightly being devoted to projects such as the Youth Opportunities Programme, and my noble friend referred to areas in which further advances are being made. The need is recognised, but it requires the united resolve of Government, industry and the trade unions to achieve speedy action, and I hope the debate will help to activate some of that.

5.33 p.m.

My Lords, it is my privilege to offer the noble Lord, Lord Boardman, our congratulations on his maiden speech. He comes to us with great experience and a distinguished career and I am sure that the contribution he will make in your Lordships' House will be of great assistance to the House and to the Government. I was interested in his reference to smaller industries, a subject to which the Prime Minister refers often, and I agree very much with what he said.

The real problem today concerns the great industries of the West Midlands and the North which 30 years ago we forgot to modernise and reorganise, unlike our competitors in various parts of Europe. I wish to be brief but I must apologise to the House, the Minister and the noble Lord, Lord Scanlon, because I shall not be able to stay to hear their replies owing to an engagement which I cannot possibly postpone. However, those of us who heard Lord Scanlon's speech could not but feel being in for a great treat; in my view it was one of the finest speeches made in your Lordships' House for a long time, certainly since I have been here, and of course he speaks with experience of the grass roots of industry. At present he is chairman of the Engineering Board and he has given a lifetime to these problems. I hope noble Lords who did not hear his speech will take the opportunity of reading it in Hansard.

I agree that we will not solve these problems by demonstrations, marches or violence in the streets because in the end the people who take part in those activities will ask, "What is your policy?" Whether we be in Opposition or Government, that is the question they will ask. After all, we had demonstrations years ago—Yarrow, the marches on London and so on—and all they produced was the National Government of 1930. I suppose it was that Government which greatly helped to solve the problem of 2¾ million unemployed at that time. It was the revival of industry in the 1930s which began to deal with that terrible problem, a problem which had created such anxieties for the minority Labour Government and Prime Minister Ramsay MacDonald, and of course it was the rearmament programme which formed the basis of the revival of our great engineering industries.

What we need are not demonstrations and inflammatory speeches but a policy to deal with our current problems. In a recent defence debate I suggested that the Government might embark on a special extensive training programme for the transition to the micro silicone chip industry and the great change that will occur in a few years' time, and I said that that change would come about sooner than we thought. I had some experience of this sort of thing before the last war when I was connected with an aircraft company in the West of England. Although we had very little capital, we embarked on a wholesale scheme of training apprentices and trained far more than we could possibly use in our industry. Nor did we make it a condition that they had to stay on after giving them seven years of technical and scientific training; some left but some of them returned to us later.

In the defence debate I mentioned that at the outbreak of hostilities in 1939 we lacked people skilled in engineering, people capable of dealing with the new weapons in the aircraft and arms industries generally, and some of the arms produced by the enemy certainly surprised us at that time. We were told, "We fight with existing weapons", but it was Lord Beaverbrook who quickly discovered that we could not produce enough Spitfires and Hurricanes because we did not have the engineers. I was therefore delighted to hear the noble Lord, Lord Scanlon, place emphasis on the need for engineers. We talk a lot about scientists and experts in the silicone chip industry, but basically top skilled engineers provide the backbone of industry in this country. We were short of such people at the start of the last war, particularly at the beginning, on aircraft but later on tanks and other equipment.

We are going to feel the effects of the silicone microchip industry much sooner than we think. Ministers make passing reference to this, but if we look at what is happening in that industry today we see clearly that the effects will occur much faster than we imagine. Unless we are prepared and organised to deal with the situation, there will be not 2 million unemployed, but nearer 4 million.

I was interested in the point about apprentices raised in today's debate. My recollection is that most skilled workers never objected to having an apprentice working beside them. That was always normal practice, and I believe that it is today. I would suggest to the Government that they must be much bolder about this matter. They must take some risks. They must go for a scheme of co-operation involving industry, training colleges and local institutes. It is no good waiting and hoping that the policy now being followed will create opportunities or employment in the service industries and so on. The Government must make a bold move and recognise that the silicon chip industry can provide an opportunity for us to regain our competitiveness in Europe. This is the chance that we missed 30 years ago, and I believe that it needs a Government, with all their support and authority, to take advantage of the opportunity.

We do not need more demonstrations and declamatory speeches. We need a Government scheme—and if I had my way I would put the noble Lord, Lord Scanlon, in charge of it—which will go in for a national cadre of skilled engineers and microchip technologists. We could then give the noble Lord some power, and give him his head, as we did with Lord Beaverbrook and people of that kind in the war. The noble Lord could then begin to obtain the co-operation of industry, as his speech today indicated he would be able to do.

5.42 p.m.

My Lords, I should like to join the noble Lord, Lord Granville of Eye, in congratulating my noble friend Lord Boardman on his maiden speech. I am sure that I speak not only for myself when I say that an arresting voice, perfect delivery, and a fine feeling for language only whets my appetite to hear much more from him.

Many of your Lordships will remember the great parliamentary occasion when the Finniston Report was debated in your Lordships' House. I shall always remember it for one reason in particular. It was on that occasion that the maiden speech of the noble Lord, Lord Scanlon, was delivered. On that occasion, and again today, when the noble Lord concluded his speech a shout of approval went up from all sides of the House—and rightly so, since once more the noble Lord has demonstrated that he is above all else a patriot and thinks only of the national economic interest and eschews narrow partisan political points. It is men like him who give meaning to the phrase, Her Majesty's loyal Opposition.

I believe, as indeed Finniston believed, that the imbalance between the out-turn from our schools and universities and the industrial requirements of the nation is critical. We produce too many administrators and not nearly enough engineers and technicians. Why, my Lords? I believe that the problem does not lie so much in the industrial training boards; neither does it lie so much in the universities; nor does it lie so much in industry. It lies at a time long before vocational training is even contemplated. Enthusiasm for engineering subjects must be encouraged at a very early, ante O-level stage. At present any enthusiasm is quickly smothered by the classical Victorian approach to the subject. Even today the science subjects—physics, chemistry, mechanics—are initially taught in theory, and in practice subsequentially. How much better to attach a child's imagination to the application of the sciences, say, to engineering, and then get him to beg for knowledge of the theory!

My Lords, let me draw an analogy. For hundreds of years the teaching of music initially consisted of compelling the "victim" to learn whole series of chords, scales, phrases and arpeggios, in the belief that as all music must contain these elements, if one knows them, one must then be able to play anything. However, long before the child has snapped shut the piano lid upon his teacher's knuckles he has long since stifled any desire to learn more. Much better to get him to play something—anything—and the chords, scales and phrases will look after themselves.

And so it is with industry. As long as a child's exposure to, say, engineering is limited to his first exposure, most probably watching a man mending his mother's washing machine, how can the imbalance of supply of technically qualified and enthusiastic young people be corrected? I suggest that once the enthusiasm is attracted, half the battle is won. That is of course an age-old Jesuit principle, and it is as true today as it ever was. I appreciate that it is a long-term answer. However, I believe it is a sound one nevertheless.

I believe that it would be no exaggeration to suggest that prospects in the micro-electronics and related fields are nothing other than dizzily exciting. And yet the Council for Applied Research and Development reported only last September that there is a shortage of 25,000 to 40,000 trained people in the software field alone. In addition, the council drew attention to the shortage of skills in other micro-electronics and related fields.

Arising out of the foregoing, may I close by asking my noble friend Lord Gowrie two questions? While I applaud the Government's decision to allocate no less than £9 million to micro-processor education, do Her Majesty's Government share the strongly stated regret of the Council for Applied Research and Develop- ment that none of this fund will be used to purchase equipment for schools? I ask that question because it is the equipment that attracts the imagination of the child. It is not the theory. It is a tactile intelligence that children have; and this is what gets them. If you try to teach them football in the classroom, they will never learn. They want to get their feet on the ball and their hands on their subject.

I come now to my second question. May I ask my noble friend how seriously the Government are taking recommendations 5 and 6 contained in the Report on Information Technology of the Council for Applied Research and Development?—that is, those recommendations concerning training and education in these fields.

5.48 p.m.

My Lords, like other speakers in the debate, I am very grateful to the noble Lord, Lord Scanlon, not only for his speech, but for giving us the opportunity to debate this subject at a time when the Employment and Training Act 1973 is under review and when we need to lift our sights rather higher than the present economic recession and look to the training needs of the future. As many noble Lords have indicated, it is, unfortunately, a fact that we are falling back, falling back not just in our competitive position as regards industry and trade, but also in relation to the provisions that we make for training—provisions which are very essential to industry.

The October issue of the DE Gazette reported that this year fewer school-leavers were recruited for craft and technician training in engineering than at any time since 1973. Yet in September, just a few weeks before the issue of the October Gazette, the MSC Review of the Employment and Training Act drew attention to the fact that, despite rising unemployment, there is a skill shortage—that is, a shortage of people with skills and training—particularly in three areas: in engineering craft technician and professional skills, in a number of building trades and in computer skills. Apart from computer skills, the two other areas, of course, are in the area of traditional skills; but the noble Earl the Minister rightly reminded us that we are in a position of transition, that we are in the process of changing from one industrial society into another, and surely at a time of such transition it is essential to build up the training potential and programmes that industry will need in the future.

I welcomed what the Minister said, and I welcomed what the Secretary of State for Employment had already said in another place, about additional funds being available for the Youth Opportunities Programme. I think this is absolutely essential; but, like the noble Baroness, Lady Seear, I do not think that such a programme is a replacement for a comprehensive training programme. One is meeting the problem of unemployment and the other should be meeting the needs of the nation in the future.

I spend my time, as many noble Lords will appreciate, in trying to persuade employers, trade unions, educationalists and other policy-making bodies, that it is in their own interests and in the long-term economic interests of the country to provide equal opportunity policies; that is, equal opportunities for both boys and girls, men and women. Nowhere is this more essential than in the provision of training. Both the Minister and Lord Scanlon referred to one of the basic concepts within training, and that is apprenticeship schemes. Both of them, I was interested to note, had criticism to make—constructive criticism. I welcomed this, because it is a fact that our apprenticeship system today is still meeting the needs of the 19th century Industrial Revolution rather than the 20th century Industrial Revolution, and I think it is absolutely essential that it should be brought up to date.

In the Sunday Times on, I think, 30th November, we were given a peep into a possible new programme for apprenticeships which I understand from this report is being considered by the MSC and the two sides of industry. I hope that this will take account of these very problems and of some of the points that the two noble Lords made, particularly, if I may say so, in relation to the timing of apprenticeship and of the fact that it is now demanded that apprenticeships should be taken up immediately on leaving school, and should be taken at one go instead of perhaps at a later period and perhaps on a modular basis.

The noble Earl, in his criticism of the apprenticeship scheme, said that one of the things it did was to separate men and women. Of course, he was absolutely right because, again according to the Manpower Services Commission, something like 43 per cent. of boys leaving schools enter into apprenticeships or learnerships in skilled occupations, whereas only 6·5 per cent. of girls leaving schools enter into similar kinds of training. That, surely, is not taking advantage of the human talents and resources that are available to us. It seems to me that there is a need now—and I think it was the right reverend Prelate the Bishop of Worcester who made this point—to have a more broadly-based preparation for young people, so that they can transfer their skills from one area to another as the industrial needs and demands change.

This, of course, has implications for the education system, and here I should like to join with other noble Lords in congratulating the noble Lord, Lord Boardman, on his maiden speech, and say how much we appreciated the points he made. In particular, I appreciated the points that he made in relation to education right across the board, because it is a fact that our education system is still not preparing young people for the kind of world that they are going to live in. Education is not something that should be seen in a vacuum; it is part of society as a whole. Again, I would agree with what has already been said, that there is an unnatural division, and an unhealthy division, between education and training, and there is a need for the two to be unified. Within the education system—and I am not going to go into this today, because we are not debating education and time does not permit it—girls are at a much greater disadvantage compared to boys.

Then I would turn to adult training because here again, as many noble Lords have said, it is essential that we should now think in terms of not one period of training but training and retraining. The area that I want to refer to is the TOPS training scheme, and I would draw attention to the mismatch that is occurring in this area, too. Of our training schemes generally, the TOPS training scheme is the only one where women get anything like a fair share of the resources that are available, and 45 per cent. of the TOPS courses completed in 1979 were completed by women. But of those courses, 65 per cent. were in secretarial work.

A report was published quite recently—a report with which my commission was associated—on the subject of the changing techniques in offices, Information Technology on the Office—The Impact on Women's Jobs. This report predicted that by 1990 171,000 typing secretarial jobs—that is, 17 per cent. of the total workforce in this particular area—would be lost. It seems to me that it is pointless training people in that area if there are not going to be opportunities, when there are going to be opportunities in other areas, in some of the new computer technology areas. This point has been made to the Manpower Services Commission. I know they are conscious of it, but I have seen nothing from them yet which is an adequate replacement for the traditional kind of training that has been offered to women.

There is one other point that I should like to make on this question of adult training and that refers to the provisions available within the EEC Social Fund. Noble Lords will be aware that there is a sum of money available in the Social Fund for the training of unemployed women above the age of 25. I think it is very discouraging to note that in 1979 the United Kingdom's allocation of the resources under this particular scheme was ·0037 per cent.—a very minute proportion of the resources that were available. When we are saying that the economic position of the country does not permit us to spend as much as we should like on training, I think we ought to take full advantage of all the resources that are available to us; and I should like the Department of Employment to take this particular scheme more seriously than they may have done in the past.

Finally, I would make one reference to what I regard as a welcome development. I understand that the Department of Education and Science has recently appointed someone with experience in industry and experience in the education and industrial scene and the link between the two, to examine and report on the provisions for industry-school links and to point out where the inadequacies are. I think this is absolutely important. If we are going to attract the young people into industry, if we are going to attract people of the right talents into industry, then I think it is important that they should understand the kind of undertakings they are entering. It seems to me from my experience, and, in particular, my experience in relation to the image that girls have of industry, that this is completely misconceived. Again, it is a 19th century concept rather than the challenging concept of industry today. I should like to think that as much backing as possible can be given to this examination, so that we can really inspire young people of both sexes to take the necessary training and to put their talents at the service of the country through working in industry.

6.3 p.m.

My Lords, I must start by thanking the noble Lord, Lord Scanlon, for introducing this debate with such tremendous enthusiasm and inspiration as to catch the imagination of us all. May I also congratulate my noble friend Lord Boardman upon his very skilled and non-controversial speech. With his vast practical background in general areas we should expect him to be skilled, but I am looking forward to hearing him in a controversial speech. That would be most interesting and worthwhile. I shall spend most of my time talking about the industrial training boards, but, before I come to that, may I say a few words about the MSC. I see the most important, in fact almost the all-consuming, role of the MSC as looking after the unemployed and running the programmes which the MSC have skilfully introduced to deal in varying ways with people out of employment. They also, of course, deal with the whole question of running the job centres; but that is another side of their work which does not, I think, affect this debate. To be frank, I do not think that they have proved themselves frightfully good or knowledgeable about industrial training, about training people actually in industry. They have on the whole—indeed, it is admitted in the document Outlook on Training which was produced by the special committee set up to investigate the future of industrial training—caused almost more trouble in their dealings with the industrial training boards than they have improved matters. On top of that, they have an actual responsibility for encouraging industrial training in those areas not covered by the training boards, notably the nationalised industries and whole sections of industry that do not have training boards. I do not think that one has heard of great progress in those areas; there is no splendid occasion where one has heard of great advances there in the way one has within the training boards.

The first thing that I would say to my noble friend Lord Gowrie is; "Please clear your mind of the thought that the MSC are the best people to advise you on training within industry. They have not a very good record". And, although my right honourable friend the Secretary of State for Employment in another place on 26th November went out of his way to say that the MSC were the best body to give him the advice he was seeking on what to do with the training boards, and said that this was because they had members from the employers' side and from the trade unions' side, this is quite irrelevant. The trouble with the MSC is that it is one step removed from the firing line. The training boards have training advisers who go in and advise on training in companies actually making things or providing a service. They are, therefore, in touch with what actually happens. The further you get away from the firing line—and I know this because I have been both a director of training in a company and the director of a training board—the more airy fairy your thoughts become and the more irrelevant becomes the connection between what you propose and real life. I am afraid this is a fact of life which must be recognised.

There is a lot of talk about transferable skills. It is a very good theory; people would very much like to see if they cannot devote training to encourage and enable skills to be transferred between one type of activity and another. There is something in this, but nothing like as much as the theorists would have us believe. In practice, a very large amount—it varies with the job—but mostly at least half and sometimes more than half of what you need to know to do a particular job is peculiar to a particular com- pany, let alone to the particular activity you are dealing with; and only a rather small fraction is transferable to similar types of jobs in another industry or even in another company within the same industry. Although there is something in the transfer of skills, it is nothing like as practicable in real life as the theorists would have people believe. I give that as an example.

My Lords, to turn to the question of the industrial training boards, I must emphasise, to start with, that I shall be talking mainly about who pays for it. That is the issue which is really before us and the issue recognised by my noble friend in the few remarks he devoted to this subject and also in what my right honourable friend the Home Secretary mentioned on 26th November. The most important thing is that industry does not want to pay for any form of statutory training. That is a fact. You have only to ask any industry, any firm within an industry, and you will find that this is something they are really determined not to do. It is not quite clear what is in the Government's mind regarding payment for it. Maybe they are waiting for this advice from the not wholly suitable Manpower Services Commission to give them a lead.

Perhaps I could remind the Government of a few basic facts, if they are thinking in terms of prolonging the levy. So far as the levy goes, as from 1964 it has never, in net terms, had to be paid by any of the big, good training companies, because they have always earned as much—and, in a lot of cases, more—in grant than they have ever paid in levy. The training board that I worked for, the distributive board, always netted out these sums before we even charged our customers. Incidentally, we called them "customers" and I think that is a very good attitude for any training board; but that is by the way.

The big companies never paid. The little companies, because of their size and the fact that practically all the training boards, except the construction hoard, had a percentage-of-pay-roll type of levy, did not pay enough to pay substantially for the costs of running the hoard. So the weight all fell—and I am talking about the early days—on the medium-sized companies and some of the big companies that did not train so well. That was where the weight came, particularly on the medium-sized companies.

Most of the training boards in my experience have managed during the course of the past 14 years to bring of that type companies—and, indeed, a number of little ones as well—up to a standard in which they themselves earn as much, if not more, in grant than they should pay in levy. So one gets the situation that the better training boards are now in a position that they cannot run themselves on support of the levy. This was recognised before 1973. It was one of the reasons why the cost of paying for the boards was undertaken by the Government operating through the Manpower Services Commission. This was foreseen and understood.

The real point I am trying to make to your Lordships is that if it is thought: "What we will do"—because I have heard this floated—"is ask all the companies that are in scope and above the cut-off point to pay a share of the cost of running it, without bothering with the ordinary levy grant system" (which I believe averages out something like 0·2 per cent. of payroll) then one is going to ask the big companies, the ones most influential in industry, the good trainers anyhow, to start doing something that they have never done before. What is more, 0·2 per cent. for a big company with a large payroll and employing several thousands of people is a very large sum indeed. It is not to be sneezed at.

I do not think it is reasonable to ask for the levy to be paid under either of the two systems that I have touched upon, the old-fashioned or 1964 way or an across-the-board way. So I suggest that it was always difficult to apply the levy fairly. In present-day situations—because there has been progress and, in some cases, a lot of progress over the past 14 years—it would now be even more unfair. I suggest to the Government that they should abandon any thought of continuing a system of which the levy forms a part. It may be suggested that this will remove a vital weapon from the hands of the industrial training boards. Indeed, many industrial training board people I have talked to believe just that; I do not know whether the noble Lord, Lord Scanlon, does. There are many people operating in training boards now who feel that their most important weapon will be removed. My own experience was that the only weapon of any significance was persuasion and expertise on the part of training advisers.

In the early days the levy had one important benefit: it enabled the training adviser to get his foot in the door. I will return to that point later. Therefore I recommend that the Government should abandon all thought of the levy. I will go further than that and say, therefore, that all sections of a board's staff who are concerned with the maintenance of records of companies—the register, as it is called—for statutory reasons, and those concerned with the collection of levy and disbursement of grant, should be phased out over two years with all training boards. This should allow the levy collection of late payers for the two-year period to be carried out. Apart from its legal aspect, it is a very necessary feature that one should collect levy of the late payers to ensure fairness with the prompt payers. During those two years, the cost of supporting those parts of the board's staff, the levy and register staff, should be borne by the Exchequer because they would be winding up a statutory duty. I would remind your Lordships that I have laid an accent on fairness to governments. Fairness is one of the features that enables a board to be accepted by companies.

Now, what are the features of the industrial training board worth retaining? I think there are two. First, I suggest to the Government that an important benefit to them and the country—and I should mention in passing that the noble Baroness, Lady Seear, made a very similar point to this one—is that industrial training boards include groups of people from management and trade unions involved in discussion on subjects of common interest which are usually not contentious. This I believe to be very valuable. What is more, the people who sit on the training boards from both the trade union side and from the industry side are people not just of the top level, not the type found more in the NEDO structure, for example. They are people of all levels of both sorts of activities, and if there are 24 training boards with an average 10 from each side, perhaps more, that makes 240 trade unionists and 240 industrialists, not to mention 180 educationists. I am not decrying the educationists, but they are not the key point.

I suggest to the Government at this particular point in time that for the next two or three years they should keep these priceless groups of people discussing non-controversial subjects. They are something that the Government would be most unwise to sweep away. They need them in as many industries as they can get them. They should not wind up the training boards which they might call unproductive, small or whatever other criterion they have. They need them all.

The cost of running the boards themselves, and of the people who serve on them—that is the expenses of the members, because they do not get paid—the honorariums of the chairmen (I would not deprive them of that) and the cost of the relatively small secretariat required to deal with the board and its own committee meetings should be borne by the Government. It is a national benefit, a greater benefit to the nation than it is even to the industry, in a strange way, because although it is obviously necessary to the industry, the industry in a way has to perform this service anyhow. At industry level, one finds trade unionists and management talking. They have to do so; they cannot run their businesses without it. So they have it there. What the Government do not have are people discussing non-controversial subjects.

The second beneficial feature of the industrial training boards is the training advisory service provided by them. Over the years these advisory services have improved gradually all the time because they learned from experience. They have served their industry and they know what their industry is doing. Perhaps back in 1971–72, when we were coming up to the 1973 Act, we could not say that because so many boards were newly established and the training and advisory services had not got themselves worked in: it takes time to do these things. But they are very important and they have two main features which are of value to industry and the country. Because of the ability of training advisers to visit all the companies within a sector of industry, they can pick out the best training practices in each company and communicate those practices to the other companies in that sector of industry. This then enables them—this is the second feature—to build up a standard of excellence for the industry which the industry can turn to as being something which sets a good training pattern.

I therefore recommend to the Government that the training advisory services should be retained, including the supporting staff—because most of those services have a "think tank" and probably have some publicity going with them and that sort of thing—and that the Government should give support for these services over at least three years. I would hope it might go longer than that but I do not suppose the Government could bear it. Having heard what my noble friend Lord Gowrie said about winding up the costs by 1982—or was it 1983?—I should like to see it going on until at least 1984–85. As they are going to be spared a lot of other costs, this might be the kind of thing we could trade with them. When the Government cease to pay, I think they should decrease the amount they pay year by year—perhaps the full amount for the first full year, two-thirds in the second full year, and one-third in the third full year, and then they are on their own, they are commercial.

That may not appeal to all training boards, but I have spoken to at least one which accepts it, provided it is given time to adjust to it. That would then enable it to provide a service. But it would not only provide a service for its own industry—and of course at the moment it does provide a service, in fact various sorts of services, particularly of an advisory nature within a company, and also in running appropriate courses and giving advice on how courses might be run by the company. All these things are done. In the case of Lord Scanlon's engineering board, they run schools for apprentices. That is an even more important service.

Things of this kind could be paid for by the industry when they take the services, and also the training advisor services of the boards could be under contract to the Government in the same way as the noble Lord, Lord Rothschild, made his recommendation as to how research could be handled on a contractor basis. The training boards could be under contract to the Government for those things which the Government wanted done. There is a great deal which can be done in assisting in the training of the unemployed. That could be under contract to the Government; all those schemes which function in that way would be under contract to the Government. There are certain features where the Government might want studies done on this, I think, rather overrated business of transferable skills, but they could well have anything that is going to be of interest between the training boards, as opposed to something within the activities of one sector of industry. That could be under contract to the Government. Out of that one could build up a sort of structure of a board which was itself statutory but running a training advisory service which was operated on a commercial basis under contract to its industry, to the Government and to anyone else who cares to employ it.

In conclusion—I do apologise to your Lordships for being so long, but I particularly wanted to get this across because it is a new idea and I know how terribly difficult it is for Governments to accept new ideas, especially those coming from the Back Benches—and to return to the "foot in the door", which I mentioned earlier, which was the benefit the levy gave to the training boards in the early days, some ITBs will undoubtedly feel at a disadvantage without a legal right to inquire into companies' training practices, supplemented by the moral justification of giving the company value for levy money. In fact, a lot of the training adviser's time has been wasted in inflicting himself or herself on unreceptive companies. I know that very well because when a company was particularly difficult I used to go and inflict myself on it. That was also wasted time. I had the privilege to talk to a chairman of a board who does that in the last resort, but it is terribly wasteful.

Training boards in most parts of the country, and in most industries, have gained a good reputation, certainly with the people at working level who know what actually goes on in the companies. I cannot but say that in many companies if you talk to the top people they may say, "Sweep those training boards away; they are an unnecessary cost", and so on. But if you talk to training officers or people who are so to speak, half-way down, or if you speak to enlightened factory managers, they will think that training boards are a jolly good thing and that they ought to be kept. So it is very important for the Government not to be misled by the captains of industry on this score. They should talk to training officers, and they will perhaps get a different picture. So, with that background, I think the training advisory services and the training boards themselves should be able to stand on their own feet with sufficient companies in their industry to provide the required standard of excellence without the prop of the statutory levy.

I took the precaution of giving a note of what I have just addressed to your Lordships to my noble friend on the Front Bench. I hope this has got through to him and that I might therefore have some reasoned comments on what I have sought to advance as being a better way of tackling the training boards' problems than trying to force either the Government, in the long run, or industry, in the short run, to bear a cost which neither of them want to bear.

6.27 p.m.

My Lords, it falls to me from the Cross-Benches to express to the noble Lord, Lord Boardman, our admiration for and pleasure at his maiden speech. I rather timidly rise to extend my thanks also to the noble Lord, Lord Scanlon, because I am one of those academics who has been educated beyond my intelligence. But I have sufficient intelligence to appreciate that the subject he has brought into your Lordships' House is of enormous—I repeat, enormous—importance to this country at the present time. However, I am sorry to say that, although this subject affects the real workers of this country, the interest in this subject by his fellow Peers in the Labour Party does not seem to be very evident as there are only five of them on the Benches behind him. I must make this comment, because this party professes to look after the labour force of this country—

My Lords, I rise and I am sure the noble Lord will forgive me for intervening. But in case an inaccuracy gets into the Official Report, he will find if he counts that those on the Labour Benches equal those on the Conservative Benches and they certainly do not add up to five. That, academically, is inaccurate.

My Lords, if we were in a scoring match, I think that the Cross-Benches would win. But let us leave that sort of thing out of the debate. Let me make a more serious approach to this, as an academic. During the middle 'thirties, Franklin D. Roosevelt was faced with the same kind of unemployment problem, and he encountered an academic geologist who described to him the events which had taken place when an ice barrier crossed the Columbia river and its tributaries, and dammed back flood waters which coursed across the basalt country and eroded it into deep canyons. Then the ice melted, the water disappeared and the whole area became a desert, called the Coulees. With great imagination, Roosevelt instituted a concrete barrier to take the place of the ice and this barrier—the Coulee Dam—created hydro-electricity and irrigation water. Along the whole length of the 49th parallel, it created an area of agricultural wealth of permanence and endurance, which will support thousands of families forever and anon because of its fertility.

There is a moral in that. We are all talking about trainees. What are you going to train them for? The "new technology" is the popular kind of phrase. Who is going to teach them the new technology, when the technology has not yet been born? But there are some very obvious courses to take, such as Franklin D. Roosevelt's. We have thousands and thousands of acres of maritime land which is too saline, at the moment, to create food. We need food. We will always need food. But we want to try to reduce our subservience to imports of food. With modern technology we could create a land army which would use techniques such as electro-endo osmosis and could desalinate those lands in just a few years. Normally, it takes about 50 years to create soil such as was created in the recovery of soil from the Wash and in Holland. We can do that now in years. But this will create a new type of worker in the agricultural industry, and it will work only if these operations are run by teams.

Here come the trade unions. How are these workers to be classified? Naturally, the National Farmers' Union will say, "they are agriculturalists, so they belong to us". The engineering union will say "No, they belong to us, because they use engineering equipment". The Transport and General Workers' Union will say the same thing; and, of course, not to be outstripped, Mr. Clive Jenkins will claim them as technicians. So you will have this break-up, because this technique introduces what I am coming to. When you are in the world of innovation, you cannot afford to have restrictive practices. This is what Harold Wilson tried to abolish and failed, but this, in essence, is the greatest obstacle that we have to the training of new techniques at the frontiers of knowledge.

I could find employment within a year—and that is no boast—for about 5,000 miners, opening up the non-ferrous metal deposits of this country. But they would not just be miners who were going to slog their way into the ground. They would be mining engineers—and they exist; they have to go abroad for work at the moment—who were skilled in geophysics, skilled in geochemistry, skilled in roof control and skilled in exploration. But, again, they must be allowed to work as a team, and it is only in teamwork that we shall get any major advance in our industrial prosperity.

I should now like to ask the noble Lord, Lord Scanlon, whether he disagrees with this picture, because this did not come out clearly in his speech. He only once mentioned restrictive practices. I made a very careful note of that. It is the essence of industrial development. We must abolish this business of restrictive practices.

But let me turn to a happier note. I had the privilege of being taken around by the greatest living figure in oilfield development and exploration, Sir Philip Southwell. He is the man who discovered and developed the Kuwait oilfields, and is the great figure in the oil world. He took me up to Cromarty Firth to show me what Highland Fabricators had done in building up a new technology. This is the technology in which Britain is ahead of all the people in the world—the building of oil platforms. The cheerful thing about all this is that in two-and-a-half years, under the drive of Sir Philip, who, I might add, is in his 80s, they have excavated the largest dry dock in Europe, they have a unique lock gate to this dry dock, they have a rolling mill which will roll 300 tonnes of steel per week, and they are at the moment building the largest oil platform in the world. All this has been done in two-and-a-half years and has created jobs for thousands of people in that otherwise rather poverty-stricken area.

One of the essential points in this technology is welding. There were no welders available, but within three months they had trained a welding team, and there the trade unions showed great intelligence and co-operation and there were no restrictive practices at all. That is a great credit to this fresh outlook which trade unions are obviously taking on restrictive practices. They now have a superb team of welders who are building these fantastic structures, and I venture to say that oil platforms for other oilfields of the world will become one of the big exports from Britain.

I do not wish to belabour your Lordships with other examples, but I should like to conclude with the hope that all new ventures which imaginative people put forward will be given every possible support. We listened last night to a remarkable story of the London and Scottish Mercantile Oil Company which, about six or seven years ago, started to borrow money. They borrowed about £150 million, and they kept borrowing money and spending money. They are now the foremost private oil company in the North Sea and it is a remarkable story. It is more of this that we want, because it is only in this way that we can break through this awful perplexing barrier of doom that surrounds the country. It gives some hope not only to the young people, but to the middle-aged men who have been dispossessed of their jobs; and men can be trained more rapidly than the educationists would have us believe, once they know exactly what they have been trained for and what is the end product.

6.40 p.m.

My Lords, I am sure that the noble Lord, Lord Energlyn, will forgive me if I do not follow him across the exciting scenario that he has just painted, because I want to confine my remarks to the role of the Industrial Training Board, as, indeed, did my noble friend Lord Mottistone. If I were to take the first half of his speech as mine, it might save a lot of time, but I am not sure exactly where his half is in relation to my notes; so if I become a little disjointed, perhaps your Lordships will forgive me.

I have never been a great admirer of the Manpower Services Commission. I recall that in debates some years ago when the role of the ITBs was to be changed, coming as they did within the ambit of the MSC, I expressed certain doubts. I believe that those doubts have been fulfilled. My noble friend Lord Mottistone said the same in very much more gentle terms. He should know, because he was a director of a training board at the time the change was coming about.

The MSC has lost its way in the morass of an upper tier which understands little about the real job of training. I believe that the superimposition of the MSC has diluted both the effort and the effects of the ITBs. Its report, just issued—Outlook on Training—is an indifferent report. One of the reasons is because of the way the MSC is made up. Of the 14 members, only three are from industry. The rest are MSC people, one way or the other. There is one trade unionist and two industrialists. That is the reason why the report has come out in this way. I have something else to say about this, but I intend to wait until a little later to emphasise the point.

When the report came out it was described by some people as radical. It is not at all radical because it ends up with the message: the same as before but a little more. It leaves training on an industrial rather than a geographical or an occupational base. There is nothing terribly new or exciting about what is proposed. This is a great tragedy because an opportunity had been given to reset the scene.

I know a little about the Road Transport Industry Training Board, and I ought to concentrate on that when I suggest that the boards have done a fairly fantastic job. If I may give a few figures concerning that board, there are some 17,000 trainees, on an annual throughput basis, in the board's training centres. They are both craft and non-craft trainees. That is quite an impressive number when one realises that there are only four centres. The group training associations take care of some 25,000 trainees, while the technical colleges, which provide integrated course facilities, are each year putting through some 13,000 to 14,000 people. That is not a bad effort at training by a board which spent some years upon identifying the areas in which training was needed. One of those areas was management.

I referred on a previous occasion to the fact that it is quite surprising that in the transport industry only 25 per cent. of managers have any kind of formal training or professional qualifications. This is a tragedy. These are the people who are directing affairs. The latest statistics which I have from the board show that 20 per cent. of managers in the industry received approved off-job training in the year 1978–79. That is a significant number when one considers the great number of managers who had had no training at all. Therefore I do not think that we should do too much to upset the work which was started in 1964 and which is only now coming to fruition.

As your Lordships know, I am interested in road matters. It is significant that accidents involving heavy lorries have fallen by one-third per 1,000 kilometre miles in the lifetime of the Road Transport Industry Training Board. I am absolutely sure that this has something to do with the way in which drivers are trained: mainly through the group training schemes which the board sponsors. That is not to deny that legislative requirements have forced the pace, but this is a direct public benefit and takes me to the public benefit of training boards.

All the boards have an outstanding record of co-determination as between themselves, the employers and the trade unions. It is probably the only "talking shop" that is an action shop as well. As my noble friend Lord Mottistone said, these people have to get down to the nitty-gritty. They are on the job. They are not only a "talking shop" down at Millbank or at the other end of the river; they are dealing with the problem and have to find solutions. And they do find solutions. Therefore, I should be reluctant to see that kind of arrangement destroyed by any new arrangement.

In the context in which my noble friend Lord Gowrie spoke with regard to training standards, whatever changes may be made so far as apprenticeships, craft training or anything of that nature is concerned, I believe that the trade unions must be the major party to the setting of those standards. It is those standards which, later on, are going to determine the rate for the job. It is therefore absolutely essential that the unions agree the standard of training which will get that rate and which will give the employer his return on the employed person.

So I was surprised when I read the debate of 26th November in the other place on unemployment, a point again which my noble friend Lord Mottistone has mentioned. I see that my noble friend Lord Sandys has his notepad in his hand. I should like him to make a note of this, in the absence of the Minister. I cannot share the Under-Secretary of State's confidence that the MSC is the right body to advise him further on this matter. To me, the MSC has shown a singular lack of leadership in the report now under review. And now it is being asked to look at the new sector-by-sector problem and to report again. It seems to me to be absolute folly to engage that body, with the almost vested interests which it has.

I cannot remember which noble Lord it was who referred to the MSC as part of the welfare mechanism: I think it may have been the noble Baroness, Lady Lockwood. The MSC is dealing with unemployed persons and it is going to persuade the Secretary of State to pour in a lot of money for this purpose. That is fine within the context of unemployed persons, but that comes, in my book, on the welfare side. What I am looking for is some money to support training for industry which is happening now, which is evolving. I cannot see that happening from this kind of arrangement.

The objective of distance learning or the "open tech" is an interesting mechanism in the whole area of education of which training is a part, but I cannot see it as a tremendously exciting new concept, as such. The proposals that the Secretary of State made in that debate in the House of Commons on the 26th November run almost counter to his own review body. That body spent 12 months considering the question of industrial training. The Secretary of State suggests that we should return to voluntary systems—and here I part company with my noble friend Lord Mottistone. The voluntary system did not work before and it will not work again. It cannot. We shall definitely go back to the good people who always have training programmes supplying the rest of industry—and I abhor the freeloader. That is what will happen again.

In that debate on the 26th November this exact point was made by an honourable Member in another place, to which the Minister replied to the effect, "Ah well, I think that may very well have been the position 10 or 15 years ago but I doubt whether it obtains today". I say to my noble friend on the Front Bench, "It will obtain today and tomorrow and the day after". There is no substitute for the one who pays the piper calling the tune. The "stick and carrot" levy grant system which my noble friend does not like has worked and it does work. Of course there are some people who are disadvantaged but there would be in almost any other system.

While the noble Lord, Lord Scanlon, said there is no way in which industry can be burdened with this, he also said at this moment of time". So he would probably go along with my thought that industry will have to pay in the long run. They may pay a fifth of the share today, increasing, and I can understand the Government's wish to reduce the dependence of industry on Government funding, but with the best will in the world I cannot see industry being able to absorb the total cost in the kind of timescale mentioned by my noble friend. At the end of the day we can get rid of the MSC's interference in the ITBs, we can reestablish ITBs on an industrial, not an occupational, base with the co-operation of the eventual beneficiaries—industry, which will reap the profit which we are going to get out of training people. They will ultimately have to pick up the whole tab for this exercise.

The last point that I should like to make is to ask the Government to consider very much more carefully the timing of this. I ask them to reconsider the value that is likely to be placed on this second MSC report. When it comes, no doubt we shall have an opportunity of having a debate on it. I ask the Government to consider very carefully, while making any decisions with regard to the changing of the training structure, the price that will have to be paid. In the road transport industry board alone some £20 million is already invested in one way or another and I should not like to see any of that investment—that is in monetary terms—poured away, nor should I like to see that body of people who have been working in all of the boards since 1964 have all their work thrown away.

I do not believe that the proposals before us in that report, or the suggestions made during that debate on unemployment in the other place, are nearly as imaginative as they should be; I do not believe that they take into account the public involvement that training has in the general economy of the country—not in the short term but in the very long term, in 15 to 25 years' time. That is what we have to look at now, before we lose everything and the long term is sacrificed for the sake of the short term.

6.56 p.m.

My Lords, I apologise for not having put my name down to speak, but I am moved to do so on account of the speeches which have been made, which I think is probably the best reason for intervening in a debate. I want to take up some of the points, on which I shall he brief, because I feel that they are cardinal to the whole question of what we are going through, not just in terms of massive unemployment but on the whole basis of industry, because massive unemployment is now becoming the bog into which the basis of our industry is disappearing. Therefore we must look for new ways in which to use this opportunity.

It may seem an extraordinarily inverted way of putting it, but we have an opportunity in the nature of our unemployment, because the people who are unemployed today are certainly not just the unskilled; some of them are highly skilled and, with all due respect to the academic being the man educated beyond his intelligence, there are a lot of people in the form of spare-time or unemployed academics. We must not forget that. What we are looking at now, when we are talking about job training, is a very profound problem which, in the short term, will not go away, like unemployment itself. What we are failing to do is to see this as it should be seen, as an opportunity and not just as a dismal prospect.

The fact is that through all kinds of intelligent devices that we have been discussing today we can really begin to prepare for the time when in fact we shall be moving into a new industrial world. We should have been there before today; we have been dragging our feet, but it is the penalty of having been the builders of the industrial revolution and living on our reputation too long. But now we have this opportunity again.

What worries me is the position of the young people. The unemployment rate in Scotland for the 16 to 19 year olds today is 38,000, of whom some 23,000 are having special employment training. This is a terrifying prospect for these young people, particularly in the light of what was said by the right reverend Prelate the Bishop of Worcester about the "stigma of unemployment". We must get rid of that stigma. These are not layabouts; they are people waiting for the opportunity which we have to offer them.

We have here a problem. I present it in this way. I was on a special commission in the United States which was considering the problem of the Job Corps trying to do this in the States, mainly for the blacks but for the young unemployed, trying to get them off the street corners, trying to hide them away by some sort of contrivance. It was a job retraining programme which had $148 million behind it, a perfect inducement for all academics even those trained beyond the limits of intelligence. It was a wonderful opportunity for getting in, and it was a wonderful opportunity for all the electronic people to get in. The result was that they worked out a perfect system of training. In some ways it was a warning to us when we look at job employment today. What are we training them for? How long is what we are training them for going to exist? How long will it last? In this case they were going to be what they called "human cassettes"; they were going to be trained by computers like hens in batteries. They were going to be specially trained for a special job, an item in the automation process with which the engineer had not caught up. They were going to be pushed in as a "human cassette" into that missing part of the circuit. I said, "What do you do with the human cassettes when the engineers find the missing parts?". They said, "We scrub them and reprogramme them".

This is what I am afraid can happen, in less dramatic terms, in many of the job opportunities we are offering today; that is, that people will be trained for things which will not exist and they will have to be trained again. I disagree with the noble Lord, Lord Mottistone. I do believe that we have got to create transferable skills. This was pointed out by the noble Lord, Lord Boardman; I congratulate him on his maiden speech and I hope that we shall hear him again. He made the point that you have to change your job three times in America, and twice here. I am sure we shall be changing our jobs, the new generation will be changing their jobs, five or six times, not just moving from one employer to another but literally changing the nature of the job five or six times in their lifetime. They have to be equipped for it. We have no longer any radio mechanics, we have electronic engineers, and we know that an electronic engineer should be a solid state physicist. People have to know not only "how" but "why". That is what we have to produce in the way of versatility.

This is where we overlap between education and training. Our education has to prepare people for the training, but the training has also to reflect the education, in the sense of not only knowing the "how" but the "why". At this point in our predicament I see enormous opportunities. It has been suggested, and I am glad it was suggested, that we should have the "Open Tech." as well as the Open University (says he, plugging his own product). But also we could use all the new ideas and move in, as we must, into the innovative areas. It is no good just buying into future development; we must be at the roots of the development. What happens now is that research goes into development and is bought up or exploited. We want to be in at the research stage and at the development stage, so that the people we are talking about, the younger generation, will be going through the whole of that process, can be there at the start of the innovation of the new industrial revolution.

It is not just in terms of microchips; we are moving into the area of biotechnology, and, as Lord Energlyn suggested, moving into what I think is one of the roles in which Britain can play an enormous part, the whole development of oceanic industry, not just North Sea oil. We need a great deal of innovative thinking, and to me innovative thinking is the impact of a worthwhile, profitable idea on a prepared mind. We must prepare their minds, not just among the workers but among people who are not taking the opportunities now.

7.5 p.m.

My Lords, we are drawing a little nearer to the end of what I think has been a most important debate. I would join with others in thanking the noble Lord, Lord Scanlon, for the forthright and objective way in which he introduced it, and also, if I may, from these Benches congratulate the noble Lord, Lord Boardman, on his maiden speech and in a moment agree with him on a particular point.

I want to speak solely about training, and taking the objective of training in the context in which we have been discussing it as the improvement of industrial performance. If I may at once somewhat take issue with the noble Lord, Lord Mottistone, on an organisational point—and I think this applies also to the noble Lord, Lord Lucas of Chilworth—I am extremely doubtful whether that basic objective will be best served by making yet another structural reform in our industrial training arrangements, by taking away the function of training from the Manpower Services Commission. I say that as chairman of one of the district manpower committees set up by the Commission to advise them on employment and training problems in the localities, and as one who thus knows better than most the weaknesses as well as the strengths of the Commission.

Nor do I think our position will be improved by the elimination of industrial training boards, a point that has been made by a number of noble Lords. In my experience of industry, problems are not generally solved by altering administrative structures. The suggestions for such changes often, in my experience, simply result in inaction. I have found that it is usually better for all those having a stake in the problem to confront it together within the existing structures, and in this case I suppose that means Government departments, the Manpower Services Commission, employers, trade union and educationists.

The point on which I strongly agree with the noble Lord, Lord Boardman, is that in my view education and training should be much more closely linked. That means that if we are to improve our performance we have to start to do more in the schools to see that every child gets a much better understanding of how through industry the nation earns its living. It seems to me that the adversarial nature of our industrial relations, and for that matter of our politics, is caused at least partly by inadequate knowledge at that stage of the basic purpose of industry, the creation of wealth for the benefit of the whole community, as the noble Lord, Lord Scanlon, reminded us at the very start of this debate. It follows that there is a need also in schools—I think it was the noble Lord, Lord Morris, who brought this point out so well—for more learning by doing and for greater emphasis on the solving of practical problems and making decisions as in real life.

As regards the training of young people for work, I agree very much with the right reverend Prelate the Bishop of Worcester—and there were one or two other noble Lords who made the same point—that we should aim to get as soon as possible to a situation where all school-leavers aged between 16 and 19 who are not in a substantive job are taken right out of the existing system, not least in the matter of collective bargaining. They should all be given the right to have some combination of work experience, further education and, in appropriate cases, training for skill. In this way they could all be paid the same standard allowance and trade unions might thus at last be persuaded to accept that the wages of apprentices should no longer be related to those of adult craftsmen. I think that would be a very great advantage. Such an arrangement would also enable young people to stay on at school after the age of 16 in cases where they could not otherwise afford to do so.

Meanwhile, our existing apprenticeship system will linger on for a good time yet. I do not want to elaborate on its weaknesses because the noble Lord, Lord Scanlon, was open enough to acknowledge them at the beginning of this debate and other noble Lords have brought them out. The point that I want to make is that as the noble Lord, Lord Scanlon, will know, the cost of training a single apprentice over a four-year period in a large company is nowadays anything up to £25,000 and there are a number of such firms who are training more apprentices than are required for their own future needs.

At a time when those companies are literally fighting for their lives, I am very troubled that, unless more is done very quickly to relieve them of that heavy financial burden, some of our best apprentice training schools will close altogether. These firms will have to take decisions regarding their 1981 apprentice intake in the next two or three months. I would ask the noble Earl, Lord Gowrie, when he comes to reply, at least to undertake that the Government will consider with the Manpower Services Commission, as a matter of urgency, possible ways in which the training, services division of the Commission might come to the rescue by using and by financing some of this excellent training capacity.

I should like now to deal with the vexed question of the future of industrial training boards and their funding. I have already expressed the opinion that those boards should not be done away with, but that does not in my view mean that they should stay just as they are. In my view there is a strong case for making them somewhat leaner organisations and for targeting their activities less on line management and more on the training officers to whom, I think, both the noble Lord, Lord Mottistone, and the noble Lord, Lord Lucas of Chilworth, referred. After all, according to Appendix 3 of the report of the body which reviewed the Employment and Training Act 1973, trainers have nearly as much influence on the decisions that are taken in this area as line managers and, in large firms, in my experience they have even more.

The training boards have the great merit—and this was brought out by, I think, the noble Lord, Lord Lucas—compared with the Manpower Services Commission that, whereas the commission and its review team with certain notable exceptions, such as Sir Richard O'Brien himself, are staffed predominantly by civil servants, many ITB staff have very considerable industrial experience. Indeed, the position in relation to the review body is a little worse, I think, than even the noble Lord, Lord Lucas, suggested. It is my understanding that on that body there was not a single employer from private industry, which greatly detracts from the credibility of one of its recommendations in particular, and it is to that matter that I now wish to turn.

Nothing could more predictably have been calculated to arouse the opposition of employers than the Government's acceptance, at a time of severe economic recession, of the recommendation that industry should finance the operating costs of industrial training boards. As I understand it, the argument for this astonishing decision seems to stem mainly from the tensions and frustrations which exist between the MSC and the training boards. But surely there are better ways of resolving that conflict than by saddling employers with additional costs which the review body may consider to be trifling, but which are certainly not so considered by industry.

The great company for which I used to work has calculated that their proportionate share of training board costs is currently over £600,000 per annum. What more easy way could there be for that firm to effect the savings needed to meet the additional cost than to dispense with the services of one-third of its training officers?—for their salaries are equivalent to just the required amount. The consequences of such a step would, in my view, be absolutely disastrous, but surely there are many companies which will now be tempted to move down that road.

I believe that the Government's decision is profoundly mistaken and that it represents a failure to distinguish sufficiently—if I may respectfully say so—between the complementary needs to obtain more revenue by taxing consumption (a point made earlier by my noble friend Lady Seear) and to maintain public spending on investment, in this case on training which industry cannot now afford, but which is vital for our industrial future.

In my view, too, the Government's decision is thoroughly inequitable—a point already made, I think, by the noble Lord, Lord Mottistone. Why should individual firms provide these additional funds for the benefit of a whole industry, and even of other industries, including those employing the 45 per cent. of employees who are outside the scope of training boards altogether? Why should financial resources provided by employers alone then be spent jointly by the three elements which together comprise industrial training boards under the general direction of the MSC? Surely decisions relating to the allocation of training resources should, wherever possible, be taken by the management of individual firms in consultation with their employee representatives.

At least the Government have recognised—and the noble Earl made this point—that in the present circumstances many companies will find difficulty in financing significant extra expenditure of that kind. The Government have therefore delayed the time at which the transfer of these operating costs to employers should take effect until after there has been further consultation and review by the Manpower Services Commission on a sector by sector basis. I go with the noble Lord, Lord Lucas of Chilworth, at least to the extent that I hope that in that review, at any rate, employers from private industry will be strongly represented. I hope that the Government will conclude—and this would really be to take the assurance that the noble Earl has already given a good bit further; a point that has been made particularly by the noble Lord, Lord Lucas of Chilworth, and also by the noble Lord, Lord Mottistone—that the date of implementation of their decision in this matter should be deferred until the state of British industry, after the present recession, has become clear.

I have learnt from experience that the most important training of all—that is, training in the management of people, in leadership, the acceptance of change, and in business realities—benefits greatly from a joint approach between employers and trade unions, for in the last resort these things have to do with matters such as communication, relationships, and trust involving people. In the same way as in this House during the last few years I have often sought to advocate the need for common ground to be marked out on which elements in all political parties can come together to tackle our basic economic and industrial problems (and I make no apology for reverting to that theme in this context), I hope that the Government in the decisions they still have to take in the next few months over this matter of training will carefully consider the views that have been expressed in this debate, and, if I may humbly say so, particularly by those of us who have in one way or another actually borne responsibility for training people in industry.

7.22 p.m.

My Lords, may I join those who congratulated the noble Lord, Lord Boardman, on his maiden speech. He is of course an old campaigner. He and I have discussed industrial matters in another place on many occasions. In those days I had a chip on my shoulder, which he probably got sick of hearing about, when I used to forecast that one fine day we would have a huge unemployment problem of unskilled people and an equally large shortage of skilled ones. The problem is that we have practically got there now. As my noble friend Lord Ritchie-Calder said, we have over the years so neglected the obvious needs of reorganising and modernising our industries that we now face a kind of chasm which, frankly, none of us has any idea how to bridge.

The Motion itself is in two parts. It calls attention to "the importance of the country's industrial base" and then goes on to refer to "adequate training". Most noble Lords, very rightly and properly, have discussed the preparation or the kind of organisation we must now produce in order to get adequate training. I want to spend some little time on the first part of the Motion. I shall not be too long at this hour.

There is now surely a most serious question arising as to the size and the composition of that base itself. We are examining the slide into sheer crisis—I apologise for using that word but I can think of no other—which is now taking place. I hope that the nation is now going to be shaken out of the sheer complacency which has brought us to it. Over the years we have all witnessed the shrinking of our overseas trade; the rise of unemployment; the fact that old industries have been shored up and we have done precious little in comparison with the United States, Germany, and France to try to usher in the kind of industries of the new technological age into which we have moved.

I live on Merseyside where every day now the news is of long established firms, which we thought were institutions for the rest of time, closing down and bringing pretty massive unemployment. I recall the the noble Earl, Lord Gowrie, making an effective speech some time ago in which he showed us that many of the old industries, with their inefficient firms, would go. He added that they would be replaced by modern ones, and they would be replaced by an expansion in the service industries. Well, he has turned out to be right about closures, although I doubt whether he expected his forecast to be realised with such speed. But so far very little has happened in the field of replacement by modern industry. This was the point made to us just now by my noble friend Lord Ritchie-Calder. I know that in this kind of situation it is easy to criticise, but quite frankly the Government must have reached the point where they can state quite clearly what their plans and beliefs are to meet this terribly disturbing position.

There have been certain criticisms of the Manpower Services Commission. I am reminded of the time when a certain noble Lord, whom we all like very much and on whose 78th birthday we have congratulated him today, told us that his Prime Minister was the best one we had. I would say the same about the Manpower Services Commission.

We admired greatly the speech with which my noble friend Lord Scanlon opened this debate. In order to show you, and perhaps another place even more, that democracy is now breaking out like mad all over this place, your Lordships have listened to an opening by a former chairman of the works committee in Metro-Vick and you are now listening to the winding up from this side by another chairman. So my noble friend and I discarded our overalls, and came into this place to bring the breath of the proletariat from Trafford Park into these august surroundings.

My noble friend has done a remarkable job of work with the engineering apprentices movement. I congratulate him heartily on that work and the colleagues with whom he works, because they have done a job which could, in the years to come, give us a chance to get out of this awful morass into which we have moved. The noble Earl, Lord Gowrie, spoke about the inefficient old firms and industries which would go. Far from the problems being confined to inefficient firms whose products are no longer needed, many highly efficient firms with splendid records in the field of training are heavily involved and are having to restrict their training programmes.

Nobody would classify ICI as a highly inefficient firm. But they have already announced well over 4,000 job losses, and according to their chairman, Sir Maurice Hodgson, for ICI to offset the full effects of the loss of profits would take a loss of some 40,000 people. This they think is because of the difference between an exchange rate of 1·60 dollars a few years ago and the present rate of some 2·40 dollars. Again, not only ICI, but in their joint resolution to the CBI national conference, the building industry and civil engineering employers deplored the cutbacks in public sector capital spending. They estimated that some £1,900 million which went to the construction industry alone was chopped off Government spending. Also from my list of firms, which are certainly not inefficient, I find, turning again to Merseyside, that Bowaters closed down with the loss of 1,500 jobs, and we now have Courtaulds—nobody can argue that they are a thoroughly inefficient firm—closing factories throughout the North at a speed which frightens the life out of many of us.

I have heard noble Lords talk today about the modern industries, and the computer industry is depicted as the example of modern industry. Certainly they train many highly skilled workers, but ICL, the most successful British computer company, is closing its Winsford, in Cheshire, plant with the loss of 2,500 jobs. GKN have told us that they are losing a great deal of money in their British plants. I could go on almost indefinitely with this sorry story. The noble Earl, Lord Gowrie, must therefore begin to reassess the point he makes about those firms which will go being the old, inefficient ones producing goods nobody now requires. ICL makes nonsense of that theory at once, as do some of the others I have mentioned.

In the annual report of the Manpower Services Commission for 1979–80, for the period ended 31st March of this year, Sir Richard O'Brien told us in his introduction to the report:
"This was a difficult year for the Commission. The plans we had made for 1979–80 had to be rapidly and radically changed after the first three months, when the Government announced a cut of 16 per cent. in our planned expenditure and 3 per cent. in staff levels, and the cuts subsequently announced for 1980–84 have made necessary the substantial changes in the plans we had prepared for those years".
Later in the report he said:
"Nevertheless, the cuts in 1979–80 were not achieved without a reduction in some services and we made clear in our 'Manpower Review' that further cuts in staffing and expenditure scheduled for 1980–84 will seriously affect our ability to meet the needs of job-seekers and employers in an increasingly difficult labour market".
That was the position outlined in March of this year, but if we glance at the Manpower Services Commission's quarterly report for the period up to November of this year, which is the latest we can get, we see a number of points which I will summarise.
"The decline in manufacturing employment is still accelerating. The total fall in the 12 months to 1980 amounted to half a million jobs".
The Minister was telling us that there had been an expansion in the services sector to make room for all this, but we see:
"Employment in the service sector is also falling, with the loss of some 50,000 jobs in the first half of 1980 … The rate at which redundancies are being notified to the Department of Employment continues to increase … Unemployment is rising more quickly than ever; the increase of more than 100,000 (seasonally adjusted) between September and October was the largest ever recorded. School-leavers, other young people and the ethnic minorities have been particularly badly affected … As foreshadowed in previous reports, long-term unemployment has started to rise … The number of unfilled vacancies at employment offices has fallen below 100,000 and there are less than 8,000 vacancies notified to Careers Offices for young people".
Let us look at one other item in this report:
"Over the first six months of 1980 the average monthly rise in unemployment (excluding school-leavers, seasonally adjusted) was 40,000, but this doubled to about 80,000 per month in the third quarter and increased further to a rise of more than 100,000 between September and October—by far the largest monthly increase ever recorded".
Against that background, it is difficult to say what we are training people for. For example, will the engineering industry as we now know it survive? If we cannot make an assessment of the kind of skills we shall need in the immediate future—not in the distant future; we missed that chance long ago—it is difficult to know how either the Manpower Services Commission or the other efforts being made will bring the kind of results we now require to see.

We have also believed that our problems will cease to exist when the world recession goes away. But are we not seeing a cutting away of the very roots of our industrial base as large numbers of manufacturing firms go to the wall? One must pose the question: how can we recover without the vehicles of recovery? We have been asked to believe that modern industries will replace out-dated ones and that the service industries will automatically replace manufactures, but, as I was saving, the numbers in the alternatives, the service industries, are now falling.

Let us consider a few of the other tragedies, as I call them. The National Enterprise Board has been deprived of many of its functions, but we were all hopeful that its remaining one—that of looking after the interests of science-based industry—still had a very key role to perform. Now, however, we have witnessed the grim spectacle of one-and-a-half boards resigning in 12 months. I do not wonder why some of the eminent industrialists have got out, beginning to make for safer quarters, because it seems to me that while we are looking to the board to assist with science-based industries there can be no future whatever for people investing their working lives in that sort of board. I will not go through the names of some of the eminent people who have left it, and really one cannot blame them. I blame the Secretary of State; he has brought that situation about and I, for one, should hate to try to work for the man. I am sorry to have to be that way about it, but that is my feeling at the moment.

I drew a comparison some time ago, in opening a debate about training for skill, between the position on day and block release for apprentices of ourselves and various countries. I had the figures for West Germany and the Scandinavian countries, and they were far and away superior to anything we were showing. I am sorry I have not had a chance to give the Minister notice of this question, but can he say how the comparison is today? I was hopeful that after the debate we had there would be an improvement in our position compared with that of West Germany and the Scandinavian countries. I should be grateful if he could say what the position now is, because this is a vital issue. One noble Lord said he looked upon training as a continuation of education, and so do I.

Let us look at the whole of the British industrial scene. The private sector seems to be severely handicapped not only by the world slump, but by Government restrictions which destroy its potential markets and by interest rates which restrict investment and modernisation. One also looks at municipal activities. It seems to me that the principal lament of the Secretary of State for the Environment is that the local authorities are not contributing sufficient numbers to the list of unemployed, despite his efforts in that respect by forbidding such anti-social activities as building houses, and nonsense of that kind.

I turn now to the nationalised sector. I do not want to go into a lot of detail, but, my Lords, the training record of most of the nationalised industries is second to none, really outstanding. But now wherever nationalised industries are guilty of making a profit, attempts are made to introduce private investment.

I speak as I do because I am trying to find some speck of light on the industrial scene. Unless the noble Earl can give us some reassurance when he winds up, it will be difficult to know where to look for that speck of light. I do not at this stage want to go too deeply into the economic aspects. But one keeps on hearing about the virtues of the monetarist approach. I know that I am biased from a political point of view, but I should be very happy indeed if anyone in the Government could convince me that we are now seeing any success at all being achieved by Professor Friedman and all that he stands for. At the moment one cannot see even a speck of light. Yet we keep hearing from the Prime Minister that that is the only way. It reminds me of Sir John Martin-Harvey and the melodrama "The Only Way", in which he took off Sydney Carton—and he came to a very sticky end, let us remember.

I do not wish to delay the House any longer, but I must mention what The Times stated today about the figures for the money supply. The Times pointed out:
"Figures for the money supply and Government borrowing rose sharply in November, dealing a double blow to the Conservatives' economic strategy. Money supply last month grew by 2 per cent., double what was expected, and Government borrowing totalled £2,699 million, much higher than most forecasts",
bringing the increase over the last year to 24 per cent., more than double the 7 to 11 per cent. rate which they had in mind.

It is not a nice picture to paint. I should love to see the nation leading in the creation of new, highly modernised, technically-based industries. For many years some of us have advocated this both in this House and in the other place. This country has dropped hopelessly behind. I cannot for the life of me see how restricting the money supply—or trying to do so and failing—and taking merely the negative attitude of preventing the nation from producing the wealth upon which alone we can live, will get us out of the crisis, and the impact of it, that we are now talking about.

7.44 p.m.

My Lords, this has been an extremely good and, in the main, very unpartisan debate. I have certainly learnt a great deal from it, and I can assure the House that in all our provisions for training we shall take account of what is said. There will be a very direct input from my department there. I totally acquit the noble Lord, Lord Lee of Newton, in regard to the anxieties that he mentioned because of course we share them very much. If he will do me the kindness of reading my opening remarks, he will I think see a fairly precise analysis of the present industrial crisis—and he apologised to the House for using that word, but I used it, too, without apology, since quite clearly that is what we are in.

When the noble Lord made his remarks about the money supply and monetarism I felt, as one so often does on these occasions, a great wave of sadness and irony coming over me because of course monetarism is really only common sense. It is about spending money that you have, or that you can raise, rather than money that you create artificially to meet the needs that you have, and as such it is very old-fashioned, rather than being anything doctrinaire or trendy, if I may use that word.

If it is any consolation to the noble Lord, I would say that one of the sternest critics, among many, of the Government's policies is Professor Friedman, because he thinks that one should not make money expensive as a way towards discouraging people from spending it. He thinks one should simply cut it off at the source; and that is a matter of some debate between economists at the moment. However, I do not want to get into a general economic debate—we have had many of them. I tried to deal with some of these points in my opening remarks, and I should be grateful if the noble Lord would look at them.

One of the ironies is that various noble Lords from all sides of the House, with a mixture of expertise and passion, which is always very difficult for the Minister to withstand, have urged that the Government should spend more money, but as I said in my opening remarks, the difficulty is that we are a very money-hungry society. We want to maintain our spending, not only on social benefits, not only on things for the future, such as training—we all agree on the need for training—but also on real material benefits and on ourselves in the form of wages.

If at this moment I were to come to this Box and, in the language of the early 'sixties and of Mr. Macmillan, say to your Lordships that you have never had it so good, you would, very understandably, be cross with me and accuse me of an outrageous complacency in the face of an agreed industrial crisis. But one of the difficulties that we are facing in this country is that in wage terms those people who are in work—and they are still representing 92 people out of every 100 statistically—have in fact never had it so good, and our general levels of wages overall—I make no accusation in regard to any particular group about this—are far outstripping our productive capacity.

The other point that I tried to make in my opening remarks, and which I would remind the House of, is that in the West we are all in trouble. Now I am not blaming external circumstances. We are all to some degree to blame, and I said that demand was running out of the Western economies like air out of a balloon. The reason for that is that when the OPEC crisis came we shielded our electorates from its consequences, we inflated, and now we are all engaged in competitive deflation, which is a very uncomfortable position to be in. I believe that that more than anything else explains the particularly acute squeeze on industry at the moment. It certainly is not anything doctrinaire in terms of the Government's position.

If the Government did what the noble Lord, Lord Lee, and other members of the present Opposition would like, and reflated, more jobs would go in their thousands a little later on, though the situation would be relieved at the moment. If your Lordships think that is a purely subjective view, or the view of someone who is paid to go into bat for a particular Administration and their policies, then one of the last ironies of our national position at the moment that I would mention is that politics become more intense and—though not in the House today—most vitriolic as the policies of the two parties draw close together. The policies that we are pursuing are very analogous to those of Mr. Healey's chancellorship during the IMF period, when he managed to succeed in getting £4,000 million off public spending in one year, and inflation duly started to come down pretty rapidly. Of course, the advantage that Mr. Healey had over ourselves was that he had the capital programmes still to cut. We do not now have these capital programmes to cut; and the cutting of the capital programmes at that time is reflected in some, not all, of the unemployment figures at this time. I do not think that is contentious. Anyone in, for instance, the construction industry would agree with it.

We are spending large sums of money on training—I think that I have demonstrated that—and in particular on the programmes for youth employment, but of course these large sums of money are at the expense of sums elsewhere. I think that probably what we as a Government miscalculated more than anything was the speed, size, and scale of the deficits of a handful of major nationalised industries. That factor certainly put the calculation off course. We argued that there would be a crisis, that there would be a great problem of transition and alteration, but that we had a cushion, due to our energy surplus, to tide us through those events. As I said in my opening remarks, an enormous part of this cushion—happily, we still have some of it left, but an enornous part of it—is going to meet the deficits of a handful of public sector industries which have been hit very hard by the international and the domestic squeeze.

Perhaps I may come back on to the main and substantive part of the debate, which was on training. The noble Baroness, Lady Seear, who kindly gave me notice she could not be here at this time, and Lord Granville of Eye, said that I might have been a little rapid in skating over electronics and microelectronics. I think the point I was trying to make is that these are now very pervasive technologies; they get into all aspects of industry. The point of concentrating on training in them is that it gives you the fast footwork to move from one industry to another. Under our TOPS scheme, 17 technician-level courses in electronics and microelectronics are supported at colleges, and it is planned to expand this number to 30 by the end of this year. So we are trying to get on with them.

One of the things that I feel passionately about as the Minister with responsibilities for ethnic minorities is that we are sometimes dazzled by the playfulness and the excitement of the computer into thinking that one needs to have a very advanced level of initial or basic training in order to cope with these technologies. That is not in fact the case, except in certain areas of software; and I am glad to say that the MSC is providing electronics training bit by bit (these are early days yet, and the sums of money are still smaller than we would like) for people of disadvantaged backgrounds in educational terms.

The noble Lord, Lord Scanlon—and I have already said how good we on this side of the House thought his speech was—asked me about the need for the MSC sector-by-sector review. The Secretary of State has invited the MSC to proceed urgently into this review, so that we have a sound basis on which to make decisions next summer on the future of particular boards. He wrote to the commission on 26th November setting out the issues that he would like the review to cover, and he expects the outcome in the early summer of next year. Earlier consultations in connection with the review were not designed to elicit the views and information necessary to reach decisions on the need for statutory organisations in individual sectors, and I think it would be inappropriate to rely on them for this kind of purpose.

The noble Lord, Lord Scanlon, and also the noble Lord, Lord Howie of Troon, raised the issue of Finniston. On 7th August my right honourable friend Sir Keith Joseph announced the Government's intention to constitute a new body by Royal Charter later in the year, with central responsibilities very similar to those recommended by Finniston, centring on the accreditation of engineering education and training and the registration of qualified engineers. Much of the body's work will be delegated to nominated institutions, the new body determining standards.

Officials have consulted widely on these proposals, and the helpful comments received reflect, I think, a consensus in favour of the new body; few dissent from the body being established, therefore, by Royal Charter. The Industry Bill, which received its Second Reading in another place on 1st December, contains the powers for the Secretary of State for Industry to provide the financial support, but, as noble Lords have mentioned, in this context and, indeed, in the case of other training boards, the body is expected to become self-financing.

I am glad that the noble Lord, Lord Howie of Troon, who I think also told me that he could not be here at this time, seemed to go into that subject a little bit from the Government's position, in that he said that industry must pay for training, even if he echoed the noble Lord, Lord Scanlon, and others, in saying that it would not be able to pay as much as quickly as we might have hoped; and he drew our attention to the French levy system. Perhaps the noble Lord, Lord Rochester, who was critical on this score, might have a look at the remarks that the noble Lord, Lord Howie, made in this regard.

My Lords, the Bishops' Bench is very well represented on the MSC. There is not only the Bishop of Worcester, who spoke today, but our new Bishop, David Sheppard from Liverpool; and noble Lords will remember a remarkable maiden speech by Simon Phipps, the Bishop of Lincoln, commending the MSC's work. On the subject of maiden speeches, I should of course like to add my tribute to the enormously sensible, eloquent and concise contribution by my noble friend Lord Boardman; and, while I will say conventionally, though sincerely, that I hope to hear him again, I very much hope that he will (and I shall do my best to require that he will) contribute on training and employment issues whenever possible, because we really need his experience and wisdom.

The right reverend Prelate the Bishop of Worcester made a remark of which I should like to remind your Lordships. He said that the special programmes are avenues to wider and deeper training. We could not have put that better; that is exactly how we look at them. We do not look at them as a substitute for the advance of skilled training that we desperately need and on which the debate has really focused, but we do look at them as an initial training in a variety of work situations which leads one to that point. I am also glad to join the right reverend Prelate in paying tribute to the work of the careers service, for which I am responsible in our department and whose work I value very highly.

My noble friend, in his maiden speech, echoed what I think was initially thought of as rather a bee in the bonnet of my department, and of my Secretary of State, indeed—the question of the "open tech.". As I, as the Minister in our department with responsibilities for high technology, go round to the newer industries that the noble Lord, Lord Lee, and others cited—computer industries, and the like—I find that they share this enthusiasm and see a lot of commercial as well as practical possibilities in it. Nearly everybody in this country has a television, and that is a marvellous piece of plant if we can develop the products to fit into it—and they certainly exist. It is a matter of getting people excited by the idea.

I was very pleased that the noble Baroness, Lady Lockwood, took up a point I was making, that the newer industries are by definition and by their very nature unisex. They are much more agreeable to work in; they are not full of noise and people throwing hammers at each other, and the rest. In my trips round the country, where they are developing I have been very pleased and excited to see a much greater distribution between the sexes in industrial work.

The trouble is, as the noble Baroness knows and as she mentioned, that to get into industry you need to have kept up in a fairly simple O-level way with basic mathematics and sciences, and many girls who are indeed quite good at these subjects voluntarily abandon them at a very young age, at 11 or 12, and do not go on. So one of my duties is to go up and down the country urging girls to take more mathematics and sciences. This is a particular burden to me, because I was singularly bad at mathematics at school, and one of these days one of my old masters is going to hear these ministerial pronouncements and there will be a major scandal within the Government. But, seriously, it is obviously an important issue. I can say in my defence that I think the teaching now is better than perhaps it was, and, with the noble Baroness, I urge that girls continue to look at industries, particularly at those where we have shortages of skills.

My Lords, I regret to say that I have been unable to obtain from my officials a view on the substantive point raised by my noble friend Lord Morris about the Advisory Council on Applied Research and Development, but I will look into it and write to him if I can find the answer. On the issue of information technology, we now have a Minister with responsibilities for this—my honourable friend Mr. Butler in the Department of Industry—and I am involved in this field within my own department, as well.

May I come quickly to the substantive and, in the main, critical points made by my noble friends Lord Mottistone and Lord Lucas about the continued use of the Manpower Services Commission for advice. I accept that my noble friends are directly experienced here in the same way as is the noble Lord, Lord Rochester, but I am glad to say that he took a slightly different view. I have every confidence in the work of the MSC. It has the function, subject to our overall control, of supervising and co-ordinating the industrial training boards. Both sides of industry are represented on the commission and its staff have the necessary expertise to carry out a sensible review. Therefore, I do not accept what my noble friend Lord Mottistone has said, that it is an airy-fairy body. I can say that, as the Secretary of State has made clear to the commission, the decision as to whether particular boards continue on a statutory basis will rest ultimately with the Government. This is why we intend taking powers to enable us to abolish a board where we judge it right to do so and not simply on the basis of an MSC recommendation.

My noble friend Lord Mottistone, echoed by my noble friend Lord Lucas, suggested that we abolish the levy system altogether in the interests of fairness. I would remind them of what the noble Lord, Lord Rochester, said about whether a crisis is the best moment in time to conduct a lot of structural changes. We intend to retain statutory ITBs only where they are necessary in our judgment to achieve key training objectives or where needs are not properly met elsewhere. In these circumstances, it will be necessary for the boards to have the means to encourage training of the right quantity and quality. The Government believe that the levy system is one means of doing it, but, as in transport, we believe, where possible, in mixed systems and that one can destroy the effectiveness of the systems by concentrating too exclusively on one or two structural arrangements. I shall take seriously what criticisms both noble Lords have made, and we shall feed them into part of our review.

The noble Lord, Lord Energlyn, has had some private meetings with me. I have always found his remarks inspirational, and certainly as the Energy Minister in this House, I agree with him that offshore technology provides great chances of employment, including chances in our traditional heavy industries—although they will have to innovate to meet the new challenges—for many years to come. This is not only because we have our own offshore field, the largest on stream in the world at the moment in the North Sea, but because it is clear that energy exploration for the foreseeable future all round the world will be offshore. We have little excuse if we cannot adapt our existing industries; and I am glad to see many Scottish industries are adapting. If you look at the grim employment figures, you will see that traditionally the Scottish figures always fell faster than anywhere else; but now the position is better, no doubt because of the greater industrial capacity now on the east coast of Scotland. The noble Lord, Lord Energlyn, used a phrase that I should like to commend to your Lordships: "When you are in a world of innovation you cannot afford restrictive practices". The noble Lord, Lord Scanlon, made a courageous speech on this and he is obviously determined to get rid of them in engineering industry apprenticeships. I commend the remarks made by the noble Lord, Lord Energlyn.

Training is not something that stops. We are carrying out this review and we are, in very difficult times, putting in rather larger resources than we originally thought we would be able to find. We have given it a very major priority. The problem is not going to, and should not, run away. I would suggest, although perhaps it is not my particular business to do so, that your Lordships keep our intentions, and the intentions of this innovating industrial economy in transition up to scratch by returning to this subject, perhaps in early summer, as the progress of our review becomes revealed.

8.5 p.m.

My Lords, I resist the temptation to join in the wider political issues that arose in the latter part of this debate. I thank all noble Lords who have contributed so much during our discussion. I would be pragmatic enough to say to the noble Earl, Lord Gowrie, that from all sides of the House there seems to me to have been one dominant message. It is simply that in connection with those key factors of our industry which, hopefully, will be defined as a result of the review that is being undertaken, the plea is: "Do not destroy, do not diminish, do not break down those institutions". I refer particularly to the training boards and to the principle of the levy, which, in my view—and, I would think from the contributions that have been made, in the view of many noble Lords—will do much and will play a vital role in bringing about that revitalisation of those wealth-producing industries that we so much desire.

I am not going into any long speech—which has been known to be an ominous thing to say, particularly at this time in the evening. I had a sneaky, unprincipled thought that if I did a volte face and called for a speedy vote now, I might just win the day. I was rapidly corrected by my noble friend Lord Lee, who told me that lurking within these portals is a reserve power that would make a nonsense of any such manoeuvre. In these circumstances and also because I should like to wallow in the very nice thoughts that many noble Lords have expressed; and because a long speech might tempt your Lordships to operate your own voluntarism and withdraw those remarks—for all those reasons and content in the knowledge that this debate has, I hope, impressed the noble Earl, Lord Gowrie, I beg leave to withdraw the Motion.

Motion for Papers, by leave, withdrawn.

Judicial Pensions Bill Hl

Reported from the Joint Committee without amendment, and recommitted to a Committee of the Whole House.