Draft Industrial Training Levy (Construction Industry Training Board) Order 2026
(1 day, 7 hours ago)
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The Parliamentary Under-Secretary of State for Work and Pensions (Andrew Western)
I beg to move,
That the Committee has considered the draft Industrial Training Levy (Construction Industry Training Board) Order 2026.
It is a pleasure to serve under your chairship, Ms McVey. The statutory purpose of the Construction Industry Training Board—I shall refer to it as the CITB from now on—is to make better provision for training across the construction industry. The 2023 independent review of industry training boards by Mark Farmer confirmed the ITBs’ continued value in addressing persistent and structural workforce challenges within their industry. The review also found that a statutory levy remains the most effective model for industry-wide investment in training. This draft statutory instrument gives effect to the CITB levy proposals for 2026, 2027 and 2028. The levy remains the CITB’s primary source of funding, and the order is required for the board to raise mandatory assessments on in-scope employers.
The funding raised through the levy will enable the CITB to continue its essential work to tackle skills shortages and market failure in training in the construction sector across England, Scotland and Wales. Recognising the differing views within the sector, the CITB continues to receive strong support from employers. The draft order is built on industry consultation, consensus and stability. During the formal consensus process about the proposals in spring 2025, the CITB consulted all 14 prescribed organisations in its industry, alongside a structured survey of non-represented employers. More than 67% of levy-paying employers supported the proposals, representing almost 72% of total levy value—comfortably above the statutory thresholds required for consensus to be achieved.
Before we consider the levy proposals in further detail, I take this opportunity to return to the findings of the Farmer review. I am pleased to confirm that the Government intend to consult industry on a proposal to bring together the CITB and the Engineering Construction Industry Training Board, or ECITB, to create a single unified body to support the combined skills needs of the construction and engineering construction sectors. That proposal delivers on the recommendation of the Farmer review, which the Government accepted subject to further scoping. It builds on the ITBs’ existing collaborative approach to working together, as demonstrated through initiatives such as the Sizewell C skills charter: a set of commitments between the ITBs, the local councils and Sizewell C to help ensure the skilled and inclusive workforce needed to deliver that vital nuclear power station.
The consultation is expected to launch shortly, and the views expressed by industry will inform a decision on how to proceed. We cannot prejudice the outcome of the process and, in any case, the earliest the change would be likely to take place is April 2027. Should the Government choose to proceed with the proposed reform, any new levy order will come to the House through the proper parliamentary process. In the meantime, it is vital to the continuity of CITB support for employers that the draft levy order that we are debating today continues as planned.
I return to the proposals for the draft levy order. I give my thanks to the Joint Committee on Statutory Instruments for its detailed review. This order retains the levy assessment rates that have remained unchanged for four years. Despite employer demand for CITB services having risen by 36% since 2021, levy rates have been deliberately held steady to support businesses still navigating difficult trading conditions at home and globally.
The draft order also raises the exemption and reduction thresholds to protect small and micro businesses from unintended levy burdens caused by wage inflation. Employers with wage bills of up to £149,999 will be exempt, and those with wage bills between £150,000 and £499,999 will receive a 50% reduction. Those thresholds will ensure that about 69% of eligible employers pay no levy at all, while a further 15% benefit from reduced rates. All those employers remain eligible for CITB grants and support. The CITB estimates that the proposals will raise about £243 million per year, to be invested in supporting the skills needs of the construction industry. That investment will fund vital programmes to widen participation, raise skills levels, tackle disadvantage and set occupational standards for the industry.
In 2024-25, the CITB supported over 30,000 apprentices and 20,000 vocational qualification achievements; provided almost £130 million in grant funding—including £60 million for small businesses and microbusinesses; and committed up to £40 million to support fast-track training and apprenticeships in areas of high demand for home-building skills. That funding directly underpins our broader economic priorities.
The construction sector contributes over £211 billion in total output each year and employs more than 2 million people, but the fragmented nature of the industry, which has a high rate of self-employment and complex supply chains, makes voluntary investment in training less likely to occur. Without a statutory levy, the skills that the industry urgently needs will simply not materialise at the scale required. If the draft order is not approved, the CITB will be unable to collect levies in 2026, with potential impacts on apprenticeships, vital industry qualifications, employer support programmes, training standards and the future capability of one of the UK’s most economically significant sectors.
The UK requires an estimated 240,000 additional construction workers by 2029, with the largest pressures felt in home building, infrastructure, and repair and maintenance. Approving this draft order therefore plays a critical role in delivering the Government’s commitment to deliver 1.5 million safe and decent homes during this Parliament, as set out in our plan for change, and in supporting major infrastructure and clean energy projects across Great Britain that are vital to economic growth and increased opportunity.
In addition to industry support, the proposals before the Committee today have received the support of the devolved Governments of Scotland and Wales. They recognise, as do we, that maintaining the CITB’s ability to raise and invest levy income is vital to ensure that employers across all three nations can access the construction skills they need. For those reasons, I commend the draft order to the Committee.
Rebecca Smith (South West Devon) (Con)
It is a pleasure to serve under your chairmanship, Ms McVey. I rise to speak on behalf of the official Opposition.
The draft order that we are debating will allow the Construction Industry Training Board to raise one more year of levy on the construction sector for the specific purpose of funding training. The purpose of the levy is to support the construction industry to have a skilled, competent and inclusive workforce for the future. The levy equates to 0.35% for pay-as-you-earn employees and to 1.25% for those with net payment status under the construction industry scheme, and it is reinvested in the industry by the board.
In 2024-25, the CITB provided nearly £130 million in grant support to construction employers and learners. That has helped to confront the training challenges that persist due to the high number of self-employed workers in the sector. The CITB estimates that 48,000 extra construction workers will be needed each year until 2029 to meet demand—a gap that could grow to 160,000 to fulfil the Government’s housing and retrofit ambitions. The industrial training levy will be vital to bridge that gap, and I welcome this opportunity to scrutinise the Government’s plans.
Nearly 60,000 potential new entrants leave the industry each year. What specific steps is the Minister taking to improve workforce retention alongside efforts to increase recruitment into the construction industry? Employer demand for CITB support has increased by 36% since 2021 while levy rates have remained unchanged, with demand now exceeding levy income. Given the financial pressures and the projected workforce requirements, can the Minister clarify the extent to which the reforms will not only meet the demand, but support the Government’s housing and infrastructure ambitions? We welcome the support provided to apprenticeship starts through the National Employment Savings Trust, but can the Minister say what proportion of those apprentices remain in sustained employment after 12 months?
I should have declared an interest at the beginning: I have family members who have worked for a local construction industry training group. On the restructuring of how training is funded, I highlighted in an Adjournment debate on 4 January that local training groups, which have played an enormous role in training in the construction industry over many decades, are being sidestepped under the new plans, and their local knowledge of the sector could be lost as delivery changes.
In that debate, I asked how funding will be allocated to areas that do not have a strategic local authority, such as my constituency of South West Devon. That is a key part of how this draft order will be delivered, and I would welcome further clarification from the Minister on this issue, together with assurances that areas without a strategic local authority will not be disadvantaged in any way as the transition takes place. We will not oppose the regulations, but we would appreciate it if the Minister addressed the concerns that I have raised.
Matt Western
I am grateful to the hon. Member for South West Devon for her contribution and for the thoughtful scrutiny applied to the draft levy order. The evidence is consistent: market forces alone will not deliver the pipeline of skilled workers that the industry urgently needs, which I suspect is what is driving her questions about how the Government will tackle that. Whether it is meeting the demand for new homes, retrofitting and repairing existing properties, or delivering the critical infrastructure needed for economic growth, there is work to do.
The levy is the mechanism that enables the collective benefits of a focused skills strategy for the construction industry and ensures that employers of all sizes can access support for training and share the benefits of a skilled, competent and resilient workforce. It also creates opportunities to help apprentices and other new entrants complete high-quality training, and enables existing workers to reskill or upskill to progress their careers. If it is okay with the hon. Lady, I will write to her with the specifics on the percentage of apprentices still in meaningful employment, as well as on her question about workforce retention.
On the question of recruitment, particularly through the mechanism of apprenticeships, the hon. Lady will have noted the changes the Government are bringing forward to apprenticeship funding to introduce new foundation apprenticeships, of which construction apprenticeships form a key component. We think that will be essential to driving more young people towards construction apprenticeships and meeting the skills demand that we face if we are to deliver on the 1.5 million homes target.
Clearly, it is our intention to ensure that areas without a strategic authority are not disadvantaged in any way. The number of areas for which that is the case is changing all the time. I represent an area within a combined authority, but it is certainly not our intention for anybody to miss out on opportunities as a consequence of their local governance arrangements.
I am grateful to the hon. Member for South West Devon for her questions and for the opportunity to participate in this debate. I will come back to her, as I said, on the specifics. For the reasons set out in my opening speech, with which the Opposition spokesperson largely agrees, I commend this levy order to the Committee.
Question put and agreed to.