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18 January 2017

CITB offers to cut training levy in bid to survive

The Construction Industry Training Board (CITB) is proposing to cut the training levy it charges firms next year in a bid to prevent its closure.

It has offered to reduce its bill from 0.5% to 0.35% of an employer’s payroll ahead of an industry vote on its future later this year.

While the reduction in charges will be welcomed by those firms in scope to CITB, the creation of the separate Apprenticeship Levy means some firms are now being asked to pay twice.

BESA training director Tony Howard said: “The big question for employers [including those BESA members who have to pay the levy] is whether there should be a CITB levy at all. The CITB has not been able to spend all the money it raises through the levy for years and cannot get funding to more than 9% of SMEs.”

Mr Howard said the one third cut was a “gimme” as the organisation could afford to reduce its income by that amount without any impact on its current level of activities.

“Many employers would say it is not necessarily the amount of levy that is being raised from them that is the problem, but the effectiveness of the support derived from it,” he said. “I think the time is right for the CITB to explain how it will give employers a real tangible return on their investment through the Levy that is innovative, clear, concise and easy to access.”

He added that the principle of a training levy remained sound as it levelled the playing field for all employers and ensured that vital training did take place – pointing out that many training levies in different parts of the world were very successful. However, the pressing need for targeted funding for apprenticeships in key industry sectors gave the Apprenticeship Levy a clear mandate.

“The future relevance of the CITB is less clear,” said Mr Howard. “Later this year, all employers will get the chance to exercise their democratic right and vote on the future of the CITB Levy,” he said. “As we now have an Apprenticeship Levy, the obvious question is whether there should be two funding streams.”

To renew its Levy Order from the government, the CITB must demonstrate there is industry consensus for it to continue. Employers will, therefore, be asked to vote on the issue between August and September, with a Government decision expected by February 2018 and the new (Apprenticeship) Levy coming into effect in April.

The CITB’s chief executive Sarah Beale said she was “confident that this Levy offer is the best option”.

She added that the organisation was embarking on a process of “engaging with our industry” to ensure “that our offer is relevant, makes a real difference and delivers value for money”.

“It is for the construction industry to decide what type of support they want for skills and training from CITB in the future,” added Ms Beale.

The CITB has also set up an employer-led Levy Working Party to look at how the CITB Levy could work alongside the Apprenticeship Levy from 2018. However, companies with a payroll over £3m and who are in scope of the CITB will have to pay both levies for a year.

Under the body’s temporary ‘Transition Package’ these firms will be able to claim CITB funding “at an enhanced rate, capped at their level of Apprenticeship Levy contribution”, according to the training body’s website.

 

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