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CSkills levy exemption could open floodgates

The future of the Construction-Skills training levy has been questioned after a multinational company won exemption from payment ahead of a major consultation on the scheme.

An appeal was brought by a major supermarket shelving supplier and installer, and the lawyer representing the firm believes the out-of-court settlement paves the
way for numerous organisations to follow suit.

Wright Hassall senior associate for construction Stuart Thwaites said the outcome was significant because it highlighted the “grey area” in the legislation surrounding
the levy.

He said the result was “very rare” but urged other firms to take note as there were numerous companies peripheral to construction that could follow suit.

“Given that the cost of paying the levy can run to tens of thousands of pounds, any company that falls into this grey area would do well to consider challenging
their obligation to pay,” he said.

“ConstructionSkills may have to prepare itself for an increased number of appeals, and the first thing it will need to do is to clear up the legislation and eliminate
such grey areas, as well as ensuring the assessment process is fair.”

ConstructionSkills played down the claims, arguing it routinely worked with construction firms to assess their levy contribution. A spokesman said: “In this
instance, once we received the full information from the employer, our assessors quickly established that they were not liable to pay.

“In line with standard procedure, this was settled outside of court and without any payment being made to ConstructionSkills.”

Industry concerns

But construction barrister professor Rudi Klein suggested the appeal was important, as numerous segments of the industry “have very real concerns with
ConstructionSkills”.

Mr Klein pointed to the Federation of Plastering and Drywall Contractors, which has previously said the levy system is “hugely inefficient and a disincentive
to training”.

And he argued there may be scope for a judicial review on the grounds that the training board was acting beyond the scope of legislation in the way it manages
the levy.

“Giving [some] companies significantly less in grant than they put into the levy surely can’t be an appropriate way to manage a statutory power,” he added.
The debate comes ahead of a major consultation on the future of the levy, which takes place every three years.

ConstructionSkills will consult with the 14 federated bodies that contribute to the levy, as well as 1,000 organisations that are not represented within them.
The survey will be conducted over the summer with the results fed through to the government to make a decision on the levy’s future by the following March.

The Civil Engineering Contractors Association has already voted heavily in favour of retaining the levy while arguing for minor reforms. But members of the concrete
structures group Construct - part of the National Specialist Contractors Council - have made clear their concerns, arguing they are inadequately provided for by
ConstructionSkills.

Funding imbalance

Executive secretary Robin Holdsworth said Construct members contributed approximately £3.5m to the levy but received just £700,000 in grant payments.
The head of one of the federated bodies said it was too early to comment on the likely outcome of the consultation process but added it would be an “extremely
interesting one”.

All construction companies with a wage bill over £80,000 are required by law to pay the levy, which is then redistributed around the industry in the form
of training grants.

The levy generated £167 million from 80,000 companies in 2010. There were 152 appeals against paying it, of which 113 were resolved between CITB and the
companies and 39 went to tribunal.

Of those 39 cases, 28 were dismissed and three were successful.

Training grants boosted

ConstructionSkills has moved to garner support for the levy, announcing an extra 12 per cent supplementary payment on grant claims for the next three years.
The extra cash will be added to claims from 1 August, topping up the 10 per cent rate introduced last year.

The temporary rate is designed to boost skills and training activity and help businesses prepare for forecast growth in the sector from 2013.

The decision came at a meeting of the organisation’s employer-led board, which last month agreed to invest an additional £25 million over the next three years in specific skills and training activities to support the sector following better than expected financial results in 2010.


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