The introduction of the apprentice levy this year has raised doubts about the viability of the construction-specific levy but ministers consider the two to be compatible and capable of operating side by side.
But althought they want the CITB to continue, they warn that it may have to close if the construction industry decides not to support the levy.
In a letter to James Wates, chair of the CITB, skills & apprenticeships minister Anne Milton writes: “Having reviewed the options for making sure that the construction industry has the skills it needs, we have concluded that the CITB should be retained.”
She also endorses the current reforms that are in train at the CITB. However, it will be a new chair that will be taking them forward. James Wates has said that he will stand down after completing his second term in March 2018. The process of selecting a new chair will begin in the autumn.
The government’s review of the CITB was meant to have been published in the spring but the general election got in the way. It now plans to complete the review in the autumn, publish the report of the review in October.
By putting on record the government’s support for the continued existence of the CITB, the letter appears to be an attempt to persuade industry organisations to vote in favour of the construction levy.
In her letter to James Wates, the minister writes: “As Mark Farmer set out starkly in his report last year, the construction industry faces some very significant challenges over the coming years, including improving productivity, increasing house-building, and making sure it develops the workforce with the skills it will need in the coming decades. We support his conclusion that the CITB has an important role to play in supporting the industry to meet those challenges, and also that the industry needs to provide stronger leadership to make sure it gets what it needs from the CITB, both informing and supporting its plans. We have, to that end, encouraged closer dialogue between the Construction Leadership Council and the CITB.”
She continues: “We also know that some firms have expressed concern about paying the apprenticeship levy as well as the construction levy. We understand that concern, and the issue of affordability. But the purpose of the apprenticeship levy is quite different from the industry training levy: it is specifically to support and incentivise investment in apprenticeships. The CITB may wish to consider whether there is more you can do to help the industry to get the most from the apprenticeship levy, and we will of course continue to discuss with you any particular issues you find as the new apprenticeship arrangements bed down. I hope we can agree that the real test for both levies, though, is whether they provide value for money in delivering the skills the industry and its customers need.
“On that subject, we also have to acknowledge, as I am sure you do, that there is concern across the industry about the effectiveness, efficiency and responsiveness of the CITB. I know you and your colleagues at CITB have now started to implement a major reform programme to reduce the size of the organisation and make it more focused on those aspects of the skills agenda where there is clear market failure, or where a collective approach to training can deliver real benefits to employers, including small businesses. We are grateful to you for sharing your plans with officials. We support the direction of these reforms, and we encourage you to continue to develop and refine them in discussion with the industry and government. Our continued support for the CITB depends on your reform programme being seen through.”
“Our final review report in the autumn will set out more details of the arrangements we will put in place to make sure that CITB is more clearly accountable to the industry it serves, and the specific expectations we have of it. We will also set out what we think government and the industry need to do in support of the reform programme and CITB’s ongoing delivery of its objectives.
“We hope that the CITB’s reform programme will be enough to persuade industry colleagues to support the CITB’s levy proposals this summer. If the industry decides not to support the levy, CITB may have to close. That would have significant financial costs, and we would have to consider carefully how those costs should be met: we do not think it would be fair for the industry to expect the taxpayer to bear the lion’s share. There would, of course, be an ongoing need for skills development and analysis in the construction industry, and we would consider what options there might be for doing that in future and how it should be funded. Whatever happens, the investment being made in skills and training cannot be allowed to fall at a time when there is concern amongst so many in the industry and beyond about how its future skills needs will be met.
“Finally, we are aware that your term of office as chair expires in March 2018, and you have indicated that you do not wish to be considered for a third term as chair. We are grateful for the leadership that you have provided to CITB over the last few years. We will be setting in hand the process of appointing your successor in the autumn, once the final review report has been published, and look forward to working in partnership with CITB to find your successor. We look forward to continuing to work with CITB over the coming years.”
Industry response
The government’s decision to conditionally support the continuation of the CITB is the right decision, according to the Federation of Master Builders (FMB).
FMB chief executive Brian Berry said: “We now have some official indication of the government’s position following its review of the CITB and the FMB supports the general direction of travel. Most people agree that the CITB had lost its way but scrapping it all together would only make the construction skills crisis worse. What we now want to see is for the CITB leadership to embrace a culture of change until we’ve reformed the organisation from head to toe.”
Mr Berry continued: “It’s slightly frustrating that we won’t see the detailed content of the government’s CITB review until after the consensus process has come to an end. We are particularly keen to see some recommendations regarding the need for a governance review as the current structure is not fit-for-purpose. When you look at the make-up of our industry, 99% of firms are small and medium-sized (SME) companies but we don’t see that reflected on either the board or the council. We recognise and support the need for a streamlined board of competencies but the CITB will continue to flounder until it is properly representative. For too long, major contractors have called the shots and although they have an important role to play, their role has been inflated – especially when you consider that it’s the small firms that carry out the bulk of the training in our industry.”
Mr Berry concluded: “Other important reforms include the need for employers and their trade federations to break away from the ‘tit for tat’ mind set. The CITB levy and grant system is about each employer making a proportionate financial contribution towards the overall skills needs of the construction industry – it is not about individual organisations trying to draw down every penny it has paid in levy for their own gain. For the levy and grant system to work effectively in addressing the construction skills crisis, and for the industry to work constructively with the CITB exec, we need to break away from this detrimental mind-set.”
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