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Hirers seek a showdown over CITB training levy


Small plant and tool hirers say they are part of the rental industry, while the CITB says they are part of the construction industry - and as such must pay its training levy. David Taylor reports

IT IS HARD to criticise any measure designed to propagate construction site skills and safeguard health and safety; but a growing band of disgruntled plant and tool hirers feel they have got a rough deal from the statutory levy, the main source of funding for the Construction Industry Training Board's training provision.

The Hire Association Europe, a trade body that represents a large proportion of the UK's tool hire companies, is challenging the right of the CITB to require tool hirers to pay the levy.

On the face of it, the HAE has a strong case - namely that the training provided by the CITB is largely irrelevant to its members, whose line of business has more in common with retailing than construction. But the CITB invokes a higher moral principle - that those who serve and profit from construction should share the burden of training its people and thereby safeguard the future of our nation's greatest industry.

It is not unusual to hear people grumble about the CITB levy. It is, after all, human nature to dislike any form of taxation, which is how the levy is seen by many of those who pay it. But the HAE is doing more than grumble. It has conducted a vigorous campaign over several months, commissioning research into the effect of the levy on its members, recording their experiences and opinions and lobbying Members of Parliament and the minister responsible, Secretary of State for Education and Skills Ivan Lewis.

Its target is to intercept Statutory Instrument 3048, the parliamentary mechanism that empowers the CITB to raise the levy, when it comes up for renewal this spring. HAE wants MPs to push through amendments that will exempt those hire firms that the HAE believes should not be paying to train other companies' employees. It will be the climax of a disagreement that has been brewing for a long time.

'We first became aware of problems in the late 1980s, ' says John Coyne, chief executive of the HAE. 'There was a shift in the CITB levy collection process - we think that, like a lot of other public bodies at that time, it had its public sector cash resource reduced by the Government and it needed to find a way of making up the shortfall.

That's when we started getting letters from members.'

Throughout the 1990s, the CITB became more assiduous in pursuing firms it thought should be paying the levy. According to Mr Coyne, at least one unsuccessful challenge to the CITB ended with the board issuing a winding-up order. But things really came to a head in November 2001 when an attempt to challenge the CITB failed in the Court of Appeal. HAE had championed a member, Welsh hire firm Gibbon Equipment Hire, in its legal fight against the levy.

'We hire to the domestic and engineering sectors and all the training we actually need in areas like customer service, computers and driving lorries is specifically excluded by the CITB, ' argued the company's owner, Des Gibbon.

Over a period of almost three years, Gibbon took its case from an industrial tribunal, through the High Court to ultimate defeat in the Appeal Court. It failed for the simple reason that the CITB was acting within the law in pursuing HAE members for the levy.

'The law will only look at what is in play - in this case, the statutory instrument. The judge looked at the instrument and decided the CITB was following it as laid down by the Government, ' admits Mr Coyne.

The HAE campaign has not been helped by the stance adopted by the other leading trade body in the hire sector, the Construction Plant-hire Association - until now. With a large body of members hiring large operated machines aimed squarely at the construction industry - such as earthmoving equipment and cranes - the CPA is an enthusiastic supporter of the levy system and a close ally of the CITB. John Coyne knows this only too well: he estimates that a top plant hire company with a national network of depots might pay up to £250,000 in levies but be eligible for up to £2 million in training grants.

But although the CPA has been heard to make disapproving noises in response to the HAE campaign, there are signs of a significant shift in its approach. CPA director Colin Wood says: 'We're not as friendly with the CITB as you might imagine. We're here fundamentally for our members.'

He admits that, since the Gibbons case, the CPA's 100 or so small plant and tool-hire members have come under mounting pressure from the CITB.

'In the past, they could argue they weren't in scope for the levy if construction made up less than a certain proportion of their work, ' says Mr Wood. 'But since the court case, the emphasis has been on whether the equipment they hire out can be classified as construction equipment.'

The powered access sector in particular seems to have come in for special attention.

'Several members who hire out access platforms have contacted me saying 'we weren't in the scope of the levy before, but now we're being approached by the CITB, which says we hire out contractors' plant and therefore we're in scope, ' says Mr Wood.

Although pressure is mounting on the CITB to justify the way it administers the levy, the board is sticking to its guns. Fiona Kane, head of communications and marketing, says: 'We believe everybody in the construction industry should contribute to ensuring we have a safe industry with a competent workforce.'

She points out that the majority of hire companies that pay the levy are 'major hire businesses that serve the construction industry' and argues that the smaller firms benefit the most.

'If they are in scope and registered with the CITB, but have a wage bill less than £61,000, they are exempt from the levy but can still claim training grants, ' she says.

Ms Kane adds that tool hirers the CITB considers liable to pay the levy comprise a small minority.

She says: 'In 2001 the HAE had 592 tool and equipment hire businesses in membership. Of these, 173 were in scope but only 65 should have been paying the levy.'

The remaining 108 fall below the wage-bill threshold.

By contrast, the CPA has 871 members that are in scope, 579 of which pay the levy.

The HAE response is to cite its own research, which shows that, while 35 per cent of hirers (including nonHAE members) have at some time paid the CITB levy, only 15 per cent have received a training grant. HAE also points out that only about 1 per cent of CITB training grants go to hire companies.

There are indeed few CITB courses of any relevance to the hire sector. There is a plant mechanic's course (although this focuses more on larger equipment than on hand tools) and there are more general courses to help employers set up health and safety programmes and training plans. 'But Business Link and the HSE would give us grants for that training, ' declares Mr Coyne.

Despite the apparent logic of this argument, CITB remains steadfast. 'We believe that companies that hire out equipment without operators should not be allowed to avoid paying the levy, ' says Fiona Kane.

But someone must eventually yield. The HAE could agree to its members paying the levy in return for the CITB recognising relevant non-CITB training such as that provided by the International Powered Access Federation (IPAF) and HAE itself. But John Coyne says he is not ready to compromise: 'Parliament has a duty to ensure that statutory instruments are accurate, and we don't believe this one is accurate. It is unfair and is being used to exploit our industry.'

Ms Kane says the CITB is willing to talk (although Mr Coyne says that attempts to negotiate with the CITB in advance of the Gibbons case foundered because of CITB's 'entrenched' attitude). The CPA - caught in the middle - is for its part hopeful that it can use its ongoing relationship with the CITB to gain more value for its members, through an increase in the number of relevant courses. 'The levy is an excellent principle for funding training; an awful lot wouldn't get done without it, ' says Colin Wood. 'But part of the levy appraisal should be to ask 'what are these guys going to get back?' There has to be a quid pro quo, otherwise, how can you justify it?

In the past year, the HAE has enlisted the support of MPs to raise the issue in the House of Commons and write to the minister Ivan Lewis on the matter. John Coyne has had high level meetings with senior civil servants in the Department for Education and Skills, and Colin Wood has discussed the problem with CITB chairman Sir Michael Latham and md Peter Lobban.

Statutory Instrument 3048 will soon come up for renewal along with a whole bunch of other SIs. The HAE is doing all it can to make sure it will not be simply waved through as a formality as it has in the past.

Getting heavy with the levy

GORDON Leicester, managing director of fast-growing access hire company Facelift, is not the sort of person to keep his opinions to himself. And when it comes to the CITB levy, he has very strong opinions.

'The whole meaning of the CITB is to make the construction industry safer. But they've got nothing to offer me and by demanding the levy they're effectively attacking my safety budget, ' he says.

Facelift does not currently pay the levy, nor does it receive CITB grants for its training.

Instead, Mr Leicester spends about £40,000 a year training his staff (including 30 operators) at Facelift's own training centre approved by the International Powered Access Federation. He also offers the same training to third parties.

'In the past the CITB argued that we should pay the levy but as long as we could prove that the majority of our work is nonconstruction, they accepted that we didn't have to. But since the [Gibbon] court case they've started saying that we have to pay, because our equipment is construction equipment.'

Mr Leicester adds that the CITB has cited Facelift's appearance on the pages of Construction News as proof that he's in the construction industry. 'But they don't read CCTV Today or Cleaning & Hygiene magazine, and we've been in those as well.

About 30 per cent of my customers are window cleaners, for God's sake, ' he says.

Mr Leicester says that if he paid the levy, it would cost Facelift between £10,000 and £15,000 a year and that would have to come off his training budget.

'If I paid the levy and got something back that I could use to make my business better and safer then yes, I'd pay it. But at the moment that is not the case.'