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

Neil O'Brien Excerpts

Tuesday 11th March 2025 General Committees

[Neil O’Brien (Harborough, Oadby and Wigston) (Con)]

It is a pleasure to serve under your chairmanship, Dr Allin-Khan. This statutory instrument effectively kicks the can down the road for a year while the Government come to a decision on the CITB’s future. That is obviously not ideal from the sector’s point of view, but I can see that it gives the Government time to think.

The Opposition thank Mark Farmer for his thorough and very frank review, and for his analysis of the big challenges facing the sector in building a proper skills pipeline. His recommendations for a “fundamental reset” were very clear, including merging the two remaining ITBs into a single workforce planning and development body for both construction and engineering, supported by a statutory levy. The Department for Education has already said in response that it will not merge the two ITBs.

I have some questions I would like answered today. I appreciate that it can be difficult for Ministers to answer everything in these short debates, but I would be very grateful if the Minister undertook to write on some of these issues if there is no time to answer today.

In its briefing for this debate, the CITB explained that £143 million, or more than 12% of all the funds raised from the levy over the lifetime of this Parliament, will be spent on

“running the business, including grant and levy administration”.

That equates to about £28 million a year. Does the Minister think that kind of share—£1 in every £8—is appropriate? If not, what share would be appropriate?

My second question is about the Government’s emerging thinking on the CITB. The Farmer review noted that the CITB had delivered useful training, but

“it is not delivering the level of strategic forward thinking, scale and pace of influence or tangible bottom line impact that the industry now requires”.

Specifically, the review said that the CITB had too little focus on upskilling the existing workforce, did not police well enough how levy funds were used, and needed a clear, modular, unitised system of qualifications. Can the Minister say anything about her emerging thinking on the future of the CITB?

A third question is about the growth and skills levy. The Government have said that they will allow employers to take funds out of the current apprenticeship levy to spend on things that are not apprenticeships. The Secretary of State for Education has recently talked about allowing 50% of funds to be spent in that way.

Other things equal, of course, we will end up with fewer apprenticeships if we take a lot of money out of apprenticeships. What is the Government’s assessment of the impact of allowing employers to take 50% out of their levy funds to spend on non-apprenticeships in, for example, construction? What will that do to the number of apprenticeship starts and participation? There is an overlap between the apprenticeship levy and the CITB levy for firms in this industry. If, for example, it turns out that employers are allowed to take out 50%, what would that do to the number of apprenticeships in construction? I ask not least because the CITB has identified apprenticeships as a key route into the sector.

Fourthly, what assessment has the Minister made of the extraordinary joint appeal by the Royal Town Planning Institute, the Royal Institute of British Architects, the Chartered Institute of Building and the Royal Institution of Chartered Surveyors for level 7 apprenticeships in the built environment to be exempt from the Government’s plans to cut level 7 apprenticeships? Those organisations say that they are “deeply concerned” by the Government’s plans and that cutting level 7 apprenticeships in this sector will be bad for upskilling existing workers and will be particularly bad for access to the profession for less well-off people.

Will the Minister heed those warnings from a sector that is very worried about the Government’s plans by protecting level 7 construction apprenticeships from the planned cull so that less well-off people can get top-level jobs in these very important professions? I hope the Minister can answer some of these questions today, but if not, I hope she will write to us.

[Janet Daby]

I will endeavour to answer those four questions. As the shadow Minister has suggested, if there are any questions I am unable to answer, he is welcome to write to me, or I can write to him.

This mission-led Government are kick-starting economic growth, delivering on net zero commitments and breaking down barriers to opportunity. The Government have committed to building 1.5 million homes in England during this Parliament for the growth mission, delivering the biggest boost to social and affordable housing in a generation.

In 2023, as the shadow Minister is aware, Mark Farmer was commissioned to carry out an independent review of the two remaining industry training boards, the engineering construction ITB and the construction ITB. That was part of the standard cycle of Cabinet Office reviews of public bodies. As I have said, the review’s publication was delayed until 30 January 2025 due to a lengthy fact-checking process and the need to consider our response in the light of our missions following the general election. A headline finding was that the construction and engineering construction sectors face common strategic workforce challenges. The review recommended merging the ITBs to focus on improving workforce resilience across both sectors.

As we press ahead with delivering 1.5 million homes, now would be the wrong time to distract the construction sector by consulting on changes to legislation. What the sector needs now is continued investment in skills and training to create a larger and more effective workforce. We are driving that through increased voluntary collaboration between ITBs, initially focused on the commonality of purpose in infrastructure, as demonstrated by the recent signing of the skills charter by both ITBs and Sizewell C. There is no immediate plan to legislate to merge the ITBs.

The CITB levy is specific to the construction industry. It has a wider remit on the types of training that can be funded, such as providing grants to deliver training to existing staff to meet any construction-related training needs, as well as setting sector occupational standards to assure the quality of qualifications.

The CITB has also used its levy funding to address barriers specific to the construction industry, including the creation of a new entrant support team. This mainly supports smaller businesses to identify appropriate training, and it provides mentoring and other support for learners. In less than a year, NEST has supported 2,506 distinct employers and 5,230 apprentices. Of those apprentices, 96.6% remain on their training or have achieved their apprenticeship, which is an excellent result. The ITBs are working with the Department for Education as the growth and skills offer is further defined, to ensure that ITB levy-funded training complements that provision. As I have already said, there are no immediate plans to legislate to merge the ITBs.

The CITB’s running costs are currently at 15% and include the cost of administering the levy, grants and funding schemes for employers. Its underlying corporate costs—including human resources, finance and other back office services—are at 10%. The 2023 ITB review recommended that there should be more transparency on the ITBs’ funding costs, that their corporate service costs should be benchmarked against suitable comparators, and that both ITBs should look to make 5% efficiency savings. In 2023-24, the CITB made efficiency savings of 11.3%. The Government agree with those recommendations, and a steering group will be convened to monitor their implementation.

The Department for Education’s response to the ITB review is on the Government website. We have accepted the majority of the review’s recommendations. Where the Department has partially accepted the recommendations, or accepted them in principle, it is because the recommendations are complex and are likely to require additional scoping of form and function. In some cases, consultation with the industry is likely to be required.

We must see a step change in construction skills delivery to achieve many of the Government’s infrastructure and housing ambitions. Over the next 12 months, we will work with ITBs and other Government Departments through a cross-departmental steering group to scope the different ways of implementing the more complex recommendations. All that work will need to be carried out before final policy decisions can be made on whether to fully accept and implement the recommendations. I am happy to write to the shadow Minister on his other financial points.

This draft order is designed to enable the CITB to concentrate on its job at hand, which is turning the dial on the provision of a growing and skilled construction workforce, alongside everything else this Government and industry will also bring to the table. The CITB levy ensures that the construction industry invests in training and skills. It provides businesses of all sizes with access to ringfenced funding estimated at almost £224 million over the next financial year. Hon. Members will know that we cannot afford to turn down such investment, given our ambition for growth and our ambition to build 1.5 million homes during this Parliament.

[Neil O’Brien]

I think the hon. Lady has already covered this, but is she happy to write to me about the level 7 apprenticeships?

[Janet Daby]

I thank the hon. Member for raising that again—I had it in my notes. Further information on the level 7 apprenticeships will shortly be made available to the House.

Question put and agreed to.