The Construction Industry Training Board (CITB) training levy that all construction firms must pay was suspended for three months April-June to help alleviate financial pressures during the Covid-19 lockdown. This suspension is now being extended for another three months, until September, and rates will then be temporarily cut.
However CITB’s formal consultation with industry to ensure that it has support – called the consensus process – is also being put back. It was meant to take place this summer and is a legal requirement under the legislation that enables CITB to collect the levy.
The economic situation justifies emergency powers, it seems.
The CITB has agreed with the Department for Education to seek a new one-year levy order without the consent of the industry. The CITB confirmed that it will seek another one-year levy order in 2021, for the 2022-2023 financial year, again without the consent of industry.
CITB said that its Skills Stability Plan 2020-21 would protect apprenticeships and provide direct funding to employers to adopt new ways of working needed in the wake of Covid-19.
Employers will continue to have a payment holiday on the levy until September and then up to a full year to pay the 2020/21 levy. In addition, CITB will propose a 50% discount on the 2021/22 levy rate. This means employers will pay 18 months’ levy out of 24, making an overall saving of 25% across two years.
This will impact on CITB’s finances, with levy income over the two-year period 2020-22 falling by £166m. CITB’s cash reserves, which stood at £95m, will fall to £17m by the end of August and to just £8m by the end of March.
Despite this, CITB insists that the Skills Stability Plan will protect apprenticeships, funding to employers and the grants scheme.
CITB has earmarked £8m from its Skills & Training Funds for small and micro businesses, £3.5m for medium-sized businesses, and a £3m Leadership & Management Fund for large firms.
The National Federation of Builders (NFB) welcomed the levy reduction but said that the plan raised “significant governance and oversight questions” as the CITB is set to spend almost £60m in reserves by the end of the financial year, despite cutting numerous programmes – and all without the consensus process to underpin its legitimacy.
NFB national chair Nick Sangwin said: “The CITB has announced a major shake-up in its approach to delivering skills and training, cutting swathes of projects and programmes without giving industry any say in its approach, either this year or next. While the temporary cut in levy is warmly welcomed and will be helpful, CITB’s plans for its future support of industry will be critical and must be put to industry. We cannot have a situation whereby the CITB avoids accountability at the most crucial time in our industry’s fragile recovery. Two years is too long to wait and we will be making that representation to the government”.
CITB chief executive Sarah Beale said that, although the consensus process had been put off for two years, she was still consulting with industry informally. She said the emergency plan was “the result of hundreds of conversations with employers across the length and breadth of Britain and I’m confident it meets the sector’s immediate needs”.
Sarah Beale said: “We have spoken to employers and federations and most have suggested that they want us to focus full-time on helping the industry meet the challenges posed by Covid. We have confirmed with the Department for Education that we will not run the usual consensus process and instead we will speak to employers and industry groups to seek their views on our plans for next year.
“We will continue to be responsive and collaborative, working closely with the sector and government to return the industry to growth. We will listen to industry and respond to its priorities and give every employer the confidence that we wish to understand and learn from their concerns and ambitions.”
Mark Reynolds, the Mace chief executive who heads the skills sub-group at the Construction Leadership Council (CLC), reckons the CITB has got it right and has no problem with the suspension of democratic process. He said: “Our industry has come together to develop an effective plan to come back from the effects of Covid-19, as detailed in the CLC’s Roadmap to Recovery document. CITB’s Skills Stability Plan builds on this work and clearly outlines how they will play their part in delivering the skills we need. We very much support efforts made by the CITB to substantially reduce the levy. It is right that consensus is delayed so we can work together to make sure that our recovery, still in its early stages, is as strong as possible.”