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'Simpler and clearer' national apprenticeship levy calls CITB system into question

The CITB levy, the main source of funding for training in the construction industry for more than half a century, could be scrapped amid government plans for a national apprenticeship levy.

The plan, announced in chancellor George Osborne’s Budget last week, is designed to help the UK reach a target of three million apprentices by 2020.

The construction industry is one of the few sectors whose training board has the power to collect annual levy payments from companies to invest in training and apprenticeships, along with the engineering and film industries.

In construction, contractors are required to pay 0.5 per cent of their total PAYE spend for the year, plus 1.5 per cent of all labour-only subcontractor payments, to the CITB.

However, the Confederation of British Industry told Construction News that construction firms had reported finding “uneven benefits in the system” and pointed to “difficulties navigating the CITB grant system”.

The current system has also led to reports of confusion over how much companies that do not count construction as their main business, such as developers, have to pay into the levy.

The introduction of a national levy has now raised questions over the future of the CITB system, with the government saying the new levy would be “simpler and clearer for businesses that operate across multiple sectors”.

The Department for Business, Innovation and Skills told Construction News that the national levy “would remove the challenges faced by the current industry training boards in ‘policing’ the boundaries of the sectors they serve”.

BIS added that it will assess the new levy’s “interaction with existing levy regimes ahead of the spending review in October”.

The proposal leant heavily on a recent report by public policy think tank the Social Market Foundation which championed a new national apprenticeship levy as the solution to the skills crisis.

The report was referenced in the Treasury’s Fixing the foundations productivity plan, published in the wake of the Budget.

It proposed that “individual government contracts with ‘training providers’ to find and deliver ‘completed’ apprentices would cease”, with all apprenticeships instead funded through the national fund.

Speaking to Construction News this week, the report’s author Alison Wolf said that “a single national fund” was the most efficient way to secure the “high level training” the UK economy required.

Prof Wolf said: “Lots of separate funds means more bureaucracy and more admin costs.”

The King’s College academic added: “[Lots of smaller funds] make it harder to adjust to changes in the labour market and sectors, or to spread risk and ups and downs in demand.”

In his Budget speech, Mr Osborne said: “There are too many large companies who leave the training to others and take a free ride on the system. So we are going to take a radical and, frankly, long overdue approach.”

However, the announcement left many contractors and industry figures confused about how it would work.

According to one industry source, it was initially felt that the CITB levy would render the construction industry exempt from being affected by the new national levy, but it now seems that this will not be the case.

The CITB levy makes up more than 60 per cent of the organisation’s income. It is feared that removing the source of funds could have a major impact on the way the body operates in the future.

CITB director of policy Steve Radley said its work extended “beyond apprenticeships” and called on government to show how the new system would affect other work carried out by training boards.

“There would be question marks over how much a national apprenticeship levy would provide in practice,” he told Construction News.

“Would you be setting up a system where companies would be covered by an economy wide levy for apprenticeships and then on top of that [be] covered by a training board for the rest of the training they did?

“Do you want a one-size-fits-all approach for apprenticeship training across the economy?”

Mr Radley confirmed that the CITB was planning to hold talks with government to discuss the new levy.

Readers' comments (4)

  • citb is an unfair tax on small business who only have a self employed workforce you only get "taxed" on the wages for labour only subbies which does not take into account any profits if any during a recession!!And as for the grants you can try and claim back have a TRY!!To sum up Unfair Tax

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  • The way the CITB Levy is calculated above is incorrect. Since 5th April 2015, the CITB levy is not calculated on Labour-Only subcontractors, it is now calculated on ALL contractors who are registered "NET" for CIS. This includes Labour & Materials contractors such as plumbers & electricians.

    The CITB Levy now unfairly targets smaller contractors, as a contractor can register as "Gross" for CIS if his income is over £30,000, and would incur no CITB Levy.

    This is grossly UNFAIR to contractors with income less than £30,000. The CITB Levy should be scrapped immediately!

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  • A CITB board member told me in 2014 that the CITB resembled a big ship and any changes would take a long time to turn round. Well, if the Chancellor's recommendations come to fruition the removal of the CITB levy, in its current form, will bring the CITB "ship" into port, for a long overdue, and major refit. My lifetime's work has been linked to, "plant operations" and the training and testing of those operatives. I have never understood why the CITB, with "training" in its title, enshrined in an act of parliament, could deregulate plant operator training, as per CPCS, in 2008?
    Mick Norton

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  • Totally agree with Nick Simmonds! The CITB levy is a farce. All the main contractors get out of it and push it down the line to us, the trades. We are allowed to pass it on to the trades people that work for us but that is so unfair and completely ruins a relationship with the sub-contractors built on loyalty. The CITB say we can claim it back but half the time we can't afford to undertake any training, let alone claim it back. It's about time all employers paid a levy towards training and about time the CITB didn't squander it away. Too many people not having a clue what they are talking about when you call them!

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