Draft Industrial Training Levy (Construction Industry Training Board) Order 2018
(Limited Text - Ministerial Extracts only)
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The Minister for Apprenticeships and Skills (Anne Milton)
I beg to move,
That the Committee has considered the draft Industrial Training Levy (Construction Industry Training Board) Order 2018.
It is a pleasure to serve under your chairmanship this evening, Sir Henry.
The Construction Industry Training Board plays a central role in training the construction industry workforce. It is led by industry and provides a wide range of services and training initiatives, including by funding strategic industry initiatives and by paying direct grants to employers who carry out training to approved standards. Its core activity, established under the Industrial Training Act 1964, is to invest the money that it receives from the levy in skills training for the construction workforce. It develops the skills of the existing workforce and of new entrants into the industry by providing training grants and implementing strategic initiatives that will benefit industry in the long term and secure a sustainable pipeline of skills.
The construction industry recognises the important role that the CITB will play in helping to achieve its ambitions of increased investment in skills development, a more strategic and co-ordinated approach to recruitment, and equipping workers with the skills they need for the future. The draft order will enable the CITB to raise and collect a levy on employers in the industry. The CITB provides grants that incentivise employers to take on apprentices and that support travel and accommodation costs. In 2016, it helped to support over 8,400 employers and train more than 24,600 apprentices.
The construction sector will be at the forefront of the delivery of T-levels, with three pathways available from September 2021. The investment of £500 million per year for the delivery of T-levels underlines our support for reforming technical education. In the autumn Budget, we also announced a new retraining scheme, including an additional £34 million to help adults to retrain and develop the necessary skills to work in the construction industry. We expect to launch this construction skills fund in the coming months.
The Government also want the construction sector to increase the gender and ethnic diversity of its work- force and to ensure opportunities for all those who wish to pursue construction careers, regardless of their background. The CITB has taken practical steps by developing a cross-industry fairness, inclusion and respect programme, which will invest in activities to make the sector a more attractive place to work for people of all backgrounds. The funding will be used to grow a network of 500 ambassadors, who will promote that fairness, inclusion and respect. In addition, the CITB’s careers hub, “Go Construct”, provides online guidance and case studies for prospective employees and employers on a range of diversity topics, including gender and race. We are working with the industry to see how further improvements can be best achieved, which we expect to be driven forward through the sector deal for construction that we announced in our Industrial Strategy White Paper.
Under the draft order, the CITB proposes to continue with the levy assessment method used for the levy period ending 31 March 2015, which was approved by the House in 2015. Recognising the prevailing economic conditions and skills needs of the sector, however, it proposes to decrease the levy arising from emoluments relating to people directly employed by the employer from 0.5% to 0.35%. The liability for levy arising from indirect employment will remain at a rate of 1.25%, and the CITB will continue to use information about net construction industry scheme payments to determine it.
The draft order will give effect to a proposal submitted to us for a levy to be raised by the CITB for the levy periods ending 31 March 2018, 31 March 2019 and 31 March 2020. The order can be made only if the Secretary of State is satisfied that the amount of levy is appropriate in the circumstances, that the proposals are necessary to encourage adequate training in the industry, and that more than half the employers who together are likely to pay the majority of the levy also consider the proposals necessary to encourage adequate training in the industry. The Secretary of State is satisfied that those conditions have been met.
The Industrial Training Act 1982 requires the board to include in its proposals an exemption from the levy for small employers. The order can be made only if the Secretary of State is satisfied that the thresholds set out in the proposals exempt employers who ought to be exempted in view of their small number of employees. The Secretary of State is satisfied that that condition has been met.
As I said earlier, small firms are not required to pay the levy, and therefore employers whose combined payroll and net expenditure on subcontract labour is less than £80,000 will not have to pay. Of all the establishments that are considered leviable by the CITB, it is expected that about 40% will be exempted from paying the levy. In addition, with the support of industry, the CITB has tried to mitigate the impact on employers who are just above the small firm threshold by applying a 50% reduction in the levy payable if an employer’s expenditure on payroll and subcontract labour is between £80,000 and £400,000.
In line with the requirements of the 1982 Act, the Secretary of State is also satisfied that the CITB has taken reasonable steps to ascertain the views of employers who are likely to be liable to levy payments in consequence of the proposals. The CITB consulted on its proposals and obtained the support of the majority of employers in their respective industries. Some 76% of companies in scope of paying the levy, who together are likely to pay 69% of its value, are in favour of the CITB proposal.
Over three years, the CITB’s proposals are expected to raise about £600 million of levy income. The draft order will enable the CITB to continue to carry out its vital training responsibilities, and I commend it to the Committee.
Anne Milton
Although we have strayed slightly from the levy, I will pick up some of those important points. The shadow Minister’s point about future-proofing is really important—even more so in industries such as the digital sector, where there is almost constant change. I have had discussions with the Institute for Apprenticeships to ensure that we continually review standards. There needs to be a continual cycle of auditing what is needed in the sector.
In 1964, when the levy was brought in, the world was a very different place. The construction industry has possibly been one of the last to realise what it needs to do—Brexit highlights that to some extent. I assure the shadow Minister that I have already had those conversations with the IFA, and we need to ensure that it continues to operate well. There is a lot of talk about new ways of building houses, for example, and the in-depth knowledge of the CITB and its contacts in the industry will be very important.
The shadow Minister rightly raised the issue of funding for 16 to 18-year-olds, as did several other hon. Members. Apprenticeships offer opportunities. I was at an apprenticeship fair last Friday, and I was massively impressed by people from the construction industry picking up young people who were not sure what career they wanted to go into. We all know that we need to build more homes, so there is a fantastic opportunity in construction for young people and for people who are retraining, possibly because their job is disappearing because of automation.
The shadow Minister also mentioned the critical interface between the industry and the Careers and Enterprise Company. Construction tends to be the last option for somebody who does not know what to do, but we want young people to think of it as the first option, particularly if they want to enter a growing area, because we want more construction to happen around the country.
The shadow Minister rightly praised the CITB for its help with the collapse of Carillion. The CITB has been absolutely brilliant, but I will not go into the details here. I was not sure whether he was referring to the apprenticeship levy or the CITB levy, but obviously some of the big employers will pay the apprenticeship levy. From April, their ability to transfer 10% of their funds into their supply chain and elsewhere will be very important.
I praise the work of organisations such as Women into Construction, which have done a great deal to ensure that we include people who would otherwise not have thought of going into the construction industry, perhaps because they are from black and minority ethnic backgrounds or because they are women. Those opportunities are really wide open now.
It continues to be the collective view of the majority of employers that training should be funded through a statutory levy. I commend the order to the Committee.
Question put and agreed to.