15 Oct 2017

CITB for at least 3 more years

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The Construction Industry Training Board levy is payable by all companies who are engaged wholly or mainly in construction industry activities. Construction companies are encouraged by the CITB to register with the body and start paying the levy, alternatively if the CITB identify that your business is in construction they can write to you and raise the levy assessments which you are required by law to pay.

The amount of the levy is currently 0.5% of what you pay in PAYE (although this is to change to 0.35% in 2018) and 1.25% of anything you pay to subcontractors (it only applies to subcontractors that are paid net, subcontractors that are registered under gross payment status will not fall within the scope of the levy). It also does not apply if your wage bill (PAYE and CIS is under £80k per annum) and it will be reduced by 50% if your wage bill is between £80k and £399,999 per annum.

The idea behind the levy is that companies pay the levy and the levy will go towards increasing skills and training in the industry in the form of companies applying for training grants thereby encouraging construction companies to invest in their people by offering further training and development.

This is great in principle provided the money is readily made available for training and fulfils its objectives however there is a great deal of discontent in the industry over the CITB and of all the companies I have spoken to over the years I am yet to find a single company that believes they get more or even an equal benefit from the levy than they pay in. Many in fact do not actually apply for grants because the application process is too cumbersome and the effort of actually applying outweighs the amount likely to be received in a grant.

To continue to operate, the CITB must get industry approval every three years to continue for the following 3 years. The last one was in fact in 2017 and the results announced in October 2017. For some of the reasons mentioned above there was a growing feeling that this might be much closer than in pervious years and there was at times the very real possibility that the CITB could be abolished. The results however gave the CITB the authority to continue operating for the next three years however many large companies and bodies made it crystal clear that they will only vote in favour of the CITB if it is subject to a significant review and overhaul. The CITB effectively have another three years to action this overhaul and ensure it can fulfil its purpose otherwise in all likelihood the next vote will reach a very different outcome.

This was acknowledged by Sarah Beale, Chief Executive of the CITB:

“We know, however, that this vote wasn’t a ringing endorsement of CITB. There was in fact a united call for Change. This is a vote that says “Yes, continue. But only if you change significantly”…. CITB is an organisation that, as an absolute necessity, must reform.”

The number of companies and organisations canvassed for opinion to vote on the future of the levy was broadened this year to include many more smaller businesses (which is fundamental given that the CITB levy and training grants will mainly effect them). Our own view is that this sample of organisations is still far to small

In our opinion the CITB are effectively on borrowed time and we do not feel they will get the support require in three years time. The introduction of the Apprentice Levy raises further questions as to whether the CITB is necessary and what role it should play. It is perfectly possible that the CITB will take this lifeline and reform sufficiently so that companies feel there is a sufficient benefit of the levy system but at the moment from what we see the perception is that the levy provides no return for those that could actually benefit from it and the levy paid is swallowed up in bureaucracy and an unnecessary squeeze of tight margins by the companies that can least afford it.