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CITB wins High Court battle over new levy system after company challenges legality

The Department for Business, Innovation and Skills and the CITB have won a judicial review challenging the legality of changes to the CITB’s levy system.

The CITB was named as an “interested party” in the case brought against BIS by payroll company Hudsons Contract Services.

Hudsons claimed that the changes made last year to the levy system, which included the introduction of a 1.25 per cent charge on payments made to Construction Industry Scheme subcontractors, did not comply with the Industrial Training Act.

In 2015, the CITB decided to simplify its levy system after complaints from firms that it was unfair and costly.

Besides the introduction of the 1.25 per cent subcontractor levy, changes included an increase of the Small Business Levy Exemption from £100,000 to £400,000 and the freezing of levy payments to labour-only subcontractors.

At the High Court yesterday, Mr Justice Kerr ruled in favour of BIS and the CITB, dismissing Hudsons’ claims and ordering the firm to pay the CITB’s legal costs.

CITB director of policy Steve Radley said: “This outcome is good news for the construction industry. It confirms that the 2015 CITB Levy Order and levy simplification are legal.

“We worked with industry for two years to make the levy simpler and fairer, and deliver more for construction firms. We are pleased that the benefits of these changes will be felt right across our industry, as planned.

“We can now deliver on our commitment to return a greater share of levy funding to employers and make it work better for them.”

BIS said it welcomed yesterday’s High Court judgement.

A spokesman for Hudsons said: “The CITB and the levy system need urgent reform. These proceedings have shown just how wide-ranging and unaccountable the CITB’s powers are.

“The levy is intended to fund training, yet the CITB admits that there is no requirement that they actually spend a single penny on training. If they choose, they can use all the money to cover their board’s expenses.

“SMEs who are vital to our economic growth are getting short-changed, and the country is failing to train as many young workers as it could.

“This is quangoism at its most pernicious and destructive.”

 

 

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