Draft Industrial Training Levy (Construction Industry Training Board) Order 2022

Debate between Alex Burghart and Margaret Greenwood

Tuesday 26th April 2022 General Committees

[Alex Burghart]

Let’s try again. The construction industry is obviously vital to our country because its success is the UK economy’s success. The construction sector contributes about £155 billion to the economy, which represents 9% of our gross value added. The industry is made up of about 3.1 million workers, equating to 9% of the UK’s employment.

The Government are clear that construction is integral to achieving two of our main priority objectives in our plan for growth: levelling up and reaching net zero carbon emissions by 2050. Skills interventions will be critical to addressing current skills deficits and looking ahead to meet future construction labour market demands. However, the increased need for skills is not a challenge that the Government can address alone.

The Construction Industry Training Board was set up in 1964 and continues to play an important role by helping to shape interventions and communication to employers. I thank the CITB for working with my Department on this issue.

The draft order will enable the CITB to continue to raise and collect a levy on employers in the construction industry. The levy funds increased provision of skills for individual workers and employers in the sector. Over the coming three years, the CITB expects to raise around £505.2 million of levy funding to be invested in skills training.

[Margaret Greenwood (Wirral West) (Lab)]

As the Minister knows, the CITB has said that one of the things it will do to address the barriers to training the current workforce is develop a strategy to influence local provision to meet employers’ needs, linking to local skills improvement plans. It seems to me that if someone who wants to get into construction lives in an area where there are few construction companies, and none is involved in developing LSIPs, they may well struggle to find a relevant course. Will the Government ensure that people, particularly young people, who want to get into construction work can do so, even if opportunities in the area where they live are limited?

[Alex Burghart]

The hon. Lady makes an important point. Obviously, a lot of the skills work that we are putting forward is employer led. By that, we mean that we want students who are studying construction, or indeed another technical skill, at whatever level, to have the opportunity to do on-the-job training. That might be through T-levels or apprenticeships. At the moment, many colleges around the country are finding people who can offer that training, to give students the chance to step up through either a level 2 course or a T-level construction course. So although the availability of placements is to a certain extent limited by the nature of the industry in the area, it is essential that students have the chance to study on the job wherever possible. I hope that answers the hon. Lady’s question, but if she would like to come back, I am happy to respond again.

Members may recognise that small local construction firms in their constituencies say that the CITB pays out grants to cover the cost of certain construction training. Indeed, that is a significant percentage of its activity. It provides a grant system to employers to enable workers to access and operate safely on construction sites—for example, through health and safety training—to drive up skills and to incentivise training that would otherwise not take place.

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[Alex Burghart]

As the hon. Lady will have heard me say to the hon. Member for Chesterfield, this is just one of the things we are doing. Our bootcamps are a new innovation that offer people of all ages a rapid route into employment. The construction route was very popular. It is important that the hon. Lady sees this in the round. She raises Brexit, but in my seven months in this job I have had the great pleasure of talking to further education colleges around England, and many principals have told me that there is new enthusiasm from employers to look at skills training in their areas, which did not exist before we left the EU. Lots of companies used to advertise internationally for skills as their first port of call, and people came in. They did not have to invest in training in their own areas. I am pleased to say that that is changing for the better for young people in England.

The work of the CITB will support strategic initiatives to help maintain vital skills in the industry and create a pipeline of skilled workers.

[Margaret Greenwood]

The Minister is being very generous. A point was raised in the other place about paragraph 10.1 of the explanatory memorandum and the small group of industry representatives that the CITB consulted to examine the current levy arrangements and how the levy should operate. The Minister there said:

“it is up to the CITB as to who it engages with.”—[Official Report, House of Lords, 25 April 2022; Vol. 821, c. GC9.]

I think it is important that the CITB engages with relevant unions on the levy. Can the Minister tell me whether he has any expectation, even though it might not be prescribed in law, that the CITB will consult with the unions?

[Alex Burghart]

I very much hope that the CITB will engage with all relevant stakeholders.

I will try to make some headway. The remit is broader still. The CITB develops and maintains occupational standards so that employees and employers are assured training is of sufficient quality. That also means that construction skills become more readily transferable, benefiting both employees and employers. The CITB has a critical role in horizon scanning, too. It uses research and labour market intelligence to understand the skills needs of the sector and to work with industry and Government to help ensure that construction has the right skills both now and in future.

Before turning to the details of the draft order, I want to highlight that the most recent levy order—the 2021 order—was for one year, not the usual three years. As we discussed a moment ago, a 50% reduction was prescribed in that year relative to the 2018 three-year order. That was to accommodate the CITB’s decision to allow levy payers a payment holiday in response to cash-flow pressures the industry was facing during the first covid lockdown. This three-year 2022 order returns to the levy rates prescribed by the three-year 2018 order: 0.35% of the earnings paid by employers to directly employed workers, and 1.25% of contract payments for indirectly employed workers such as contractors, for those businesses that are liable to pay the levy.

The industry, having been consulted on the CITB’s delivery strategy and levy rate, supported the retention of the higher exemption and reduction thresholds for smaller employers contained in the 2021 order. To run through those very quickly, construction employers with an annual wage bill of up to £119,999 will not pay any levy, while still having full access to CITB support. It is projected that approximately 62% of all employers in the scope of the levy will be exempt from paying. Larger companies will carry the burden. Employers with a wage bill between £120,000 and £399,999 will receive a 50% reduction on their levy liability, while also receiving full access to CITB services—that covers about 14% of employers.