The proposal would see the PAYE levy on the direct workforce cut from 0.5% to 0.35%. There would be no change in the net (CIS) levy charged at 1.25% on the subcontract workforce.
CITB said that the new levy offer had been developed with input from the industry and in agreement with the industry’s levy working party. Subject to support from industry, the new levy would come into effect from April 2018.
CITB acting chief executive Sarah Beale said: “We have been listening to our industry and are confident that this Levy offer is the best option. It will provide the funding required to deliver the support that industry needs, is simple to administer, and is straightforward for levy payers.
“Next month we kick off the next stage of engaging with our industry. We will discuss with employers our proposals for how we support them better and consult on how we fund this through the levy. We want to ensure that our offer is relevant, makes a real difference and delivers value for money.
“We want as many as employers as possible to share their views and we will shortly be sharing details on how to get involved in the consultation.”
Claimed advantages of the levy proposal include:
- all employers are treated equally, and benefit equally from a reduced CITB levy
- it is simple to implement and legislate, requiring only one change in the levy rate across the board
- it is based on an approach that employers already know and understand.
To renew its levy order from the government, the CITB must demonstrate there is industry consensus for it to continue. Construction employers will therefore be asked to vote on the issue between August and September, with a government decision expected by February 2018.
The Building Engineering Services Association (BESA) interpreted the proposed levy cut as the CITB making a last ditch 'bid to survive' and it questioned whether there should be a CITB levy at all, given the impending apprentice levy coming into effect in April 2018.
“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,” said BESA training director Tony Howard. “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.
“Every so often it needs to reduce the embarrassing amount of money it has sitting in the bank, so it builds websites and does roadshows trying to engage SMEs in obtaining grants from a system they don’t understand.”
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.”