Draft Industrial Training Levy (Construction Industry Training Board) Order 2025

John Lamont Excerpts

Tuesday 11th March 2025 General Committees

[The Parliamentary Under-Secretary of State for Education (Janet Daby)]

I beg to move,

That the Committee has considered the draft Industrial Training Levy (Construction Industry Training Board) Order 2025.

This draft order was laid before the House on 5 February. It is a pleasure to see you in the Chair, Dr Allin-Khan.

The scale and urgency of the skills challenge, which my noble Friend the Minister for Skills and I have been debating with Members in this House and the other place over recent weeks, are clear. It is also clear that the solution lies not just with the Government, but in working in partnership with everyone who can scale up the necessary skilled workforce to deliver the growth, opportunity and homes needed by all.

The Construction Industry Training Board is one of those essential partners. I say “essential” because Mark Farmer’s recently published independent review of both remaining industry training boards reinforces the need to continue with the levy-funded model of construction skills provision. The levy remains important to a fragmented industry that is characterised by high levels of self-employment, contracting and project work, which often create a disincentive for employers to train and develop their workforce.

If approved, the draft order will generate almost £224 million in 2025-26, which will be ringfenced for construction training and will support an estimated 67,000 assessable employers. Established in 1964 with a remit across England, Scotland and Wales, the CITB is energised by our ambition to build 1.5 million homes, provide up to 5 million home upgrades and provide a skills system that provides opportunity for all.

I thank the Joint Committee on Statutory Instruments for its detailed review of the draft order. Little has been amended in the previous 2022-23 year order: levy assessment rates, which were heavily consulted on, remain the same. Companies that directly employ workers will continue to pay 0.35% of those employee earnings. It is right that companies that contract workers, and so do not bear associated staffing costs, pay a greater share towards the pool of trained individuals. Their levy rate remains at 1.25% of the contract payments paid to indirectly employed workers.

What have changed are the thresholds that ensure that smaller organisations that employ fewer people are exempt from the levy or given a 50% reduction in levy fees. The increases in exemptions and reductions in thresholds are designed to avoid penalising companies whose staff wages have increased since the previous order in 2022. Employers with an annual wage bill below £135,000—the CITB estimates that this is 69% of in-scope employers—are exempt from paying any levy at all. A further 15% of employers will be eligible to pay just half of their levy rate, and this applies to companies with a wage bill between £135,000 and £449,999.

A laudable feature of the CITB levy is that exempt employers, or those that pay reduced levy rates, are still eligible to claim full CITB support. The few larger construction companies support the many sole traders and small and medium-sized enterprises that make up the majority of the sector. Put simply, 84% of in-scope employers are either exempt from paying the levy or will pay just half of the levy, but they can still benefit from the full training support available.

I know hon. Members will be keen to understand how those in scope of these payments feel about the additional levy that the law puts upon them. Last year’s general election delayed the publication of the much-anticipated Mark Farmer review, which I have mentioned. The CITB felt it was unreasonable to complete its usual engagement with the industry through its in-depth and lengthy consensus process while the outcome of the review was still unknown. Instead, the CITB sought views on the one-year proposal from its 14 prescribed organisations, sector federations representing around 30% of all levy-paying employers and the nation councils for England, Scotland and Wales. The vast majority were supportive, and neither the CITB nor my Department has encountered opposition since that targeted engagement. With the ITB review and the CITB’s “Strategic Plan 2025-29” now published, the industry is in a much stronger position to reach a consensus on the 2026 proposals and make informed decisions.

[John Lamont (Berwickshire, Roxburgh and Selkirk) (Con)]

The draft order’s preamble mentions that the Government have consulted Scottish Ministers. Can the Minister say whether the Scottish Government support these proposals? Did they make any contrary suggestions?

[Janet Daby]

I can confirm that both the Scottish Government and the Welsh Government were consulted, and neither objected.

This draft order will enable the CITB to continue raising extra revenue from those in the construction sector who benefit most from its growth. This will be reinvested into our skilled construction workforce to support the sector to build Britain’s future.