Industrial Training Levy (Construction Industry Training Board) Order 2026

Baroness Blake of Leeds Excerpts

Monday 9th March 2026 Grand Committee

Moved by

[Baroness Blake of Leeds]

That the Grand Committee do consider the Industrial Training Levy (Construction Industry Training Board) Order 2026.

[Baroness in Waiting/Government Whip (Baroness Blake of Leeds) (Lab)]

My Lords, I thank the Secondary Legislation Scrutiny Committee and the Joint Committee on Statutory Instruments for their scrutiny of this draft order, laid on 2 February 2026.

The statutory purpose of the Construction Industry Training Board, or the CITB, is to secure better training provision across the construction sector. The 2023 independent review of the industry training boards, led by Mark Farmer, reaffirmed their continuing value in addressing persistent and structural workforce challenges. Crucially, the review concluded that a statutory levy remains the most effective model for securing the level of skills investment that the industry requires.

This statutory instrument gives effect to the CITB’s levy proposals for 2026, 2027 and 2028. The levy remains the CITB’s primary funding source and, without this order, the board cannot raise mandatory assessments on in-scope employers. Levy funding enables the CITB to deliver essential support to tackle skills shortages and market failures across England, Scotland and Wales. Although views in the sector can vary, the levy proposals continue to command strong employer support. These proposals are the result of detailed consultation and a robust consensus process. In spring 2025, the CITB consulted all 14 prescribed organisations, or sector federations, alongside a structured survey of non-represented employers. Over 67% of levy-paying employers supported the proposals, representing almost 72% of levy value—well above the thresholds for consensus to be achieved.

Before we consider the levy proposals in further detail, I will return to the findings of the Farmer review. I am pleased to confirm that the Government intend to consult industry on bringing together the CITB and the Engineering Construction Industry Training Board to create a single unified body, supporting the combined skills needs of construction and engineering construction. This reflects a key recommendation of the Farmer review, accepted by the Government subject to further scoping. It builds on existing ITB collaborations such as the Sizewell C charter: a joint commitment by the ITBs, local authorities and Sizewell C to ensure a skilled and inclusive workforce for delivering this vital nuclear power station.

The consultation will launch shortly and the views expressed by industry will inform a decision on how to proceed. No outcome can be prejudged and the earliest that any change could take effect is April 2027. Any future levy arrangements arising from reform would come before Parliament in the usual way. Until then, maintaining the CITB’s ability to operate effectively makes approval of this statutory instrument essential.

To turn to the levy proposals, this SI maintains current levy rates. Despite a 36% increase in employer demand for CITB services since 2021, rates are held steady to support businesses navigating difficult trading conditions. The order also raises exemption and reduction thresholds to protect small and micro-businesses from levy pressures linked to wage inflation. Employers with wage bills up to £149,999 will be exempt, while those with wage bills between £150,000 and £499,999 will receive a 50% reduction. Approximately 69% of eligible employers will therefore continue to pay no levy, with a further 15% paying a reduced rate. All these employers remain eligible for CITB support.

The CITB estimates that the levy will raise around £243 million per year to invest in supporting skills needs. In the most recent year, the CITB supported over 30,000 apprentices and 20,000 vocational qualification achievements and provided nearly £130 million in grants, including £60 million for small and micro firms. It also committed up to £40 million for fast-track training and apprenticeships in areas of high demand for homebuilding skills.

This funding directly underpins broader economic priorities. The construction sector contributes over £211 billion annually and employs more than 2 million people. Yet its fragmented nature, characterised by high self-employment and complex supply chains, makes voluntary, industry-wide investment in skills unlikely to occur. Without a statutory levy, the workforce needed to deliver the UK’s economic ambitions simply would not materialise at the required scale. If this order were not approved, the CITB would be unable to collect levy in 2026, impacting apprenticeships, qualifications, employer support programmes, training standards and the future capability of an industry fundamental to growth, housing delivery and national infrastructure.

The UK requires an estimated additional 240,000 construction workers by 2029, with particular pressures in infrastructure, repair and maintenance, and homebuilding. Agreeing this order is therefore critical to delivering the Government’s commitment to 1.5 million safe and decent homes this Parliament and to supporting major infrastructure and clean energy projects across Great Britain. The proposals have the full support of the devolved Governments in Scotland and Wales, who, like industry, recognise the importance of maintaining the CITB’s ability to raise and invest levy income. For these reasons, I commend the instrument and I beg to move.

[Lord Jones (Lab)]

My Lords, I thank my noble friend for her helpful and informative remarks. Skills and training are crucial for Britain, struggling to keep her place in a very competitive global market, and this board is a great and important player in British skilling. It is a good measure and I think that £243 million are involved somewhere in the helpful notes that the department has offered us.

I have some questions that I think might be answered by officials. Very briefly, what is the current grand total of construction apprenticeships for the latest year available? Are there graduate apprenticeships in this industry, and in what numbers? Is the department satisfied with its health and safety record, given the nature of the industry that we are considering?

I find that this proposal brings memories which I think are relevant to anyone considering the future of this great industry. It was the case that, in the early 1980s, big changes were made in these boards. I recollect that, in the other place, the Secretary of State, James Prior, was helped by a Parliamentary Secretary by the name of Morrison.

Time and again, after 10 pm and with three-line Whips, we had orders to abolish board after board—to the point where, although the Opposition of whom I was a part always voted against abolition in this instance, the Government usually had their way. All that was left of these training boards were the great engineering board and the construction industry board. It seems that the start of the problems that Britain now faces around skills and training relates to the decisions taken by the then Government in voting that always happened after 10 pm and went on until midnight. The Government of the day had a good majority, so they got their way.

When I was in the other place, I found that builders were very much against what was proposed in having these issues put on them. I found that, in an era of mass unemployment in the early 1980s, it was very obvious that the apprenticeship boards were being closed down. Even the great companies of Courtaulds, BAE and British Steel pretty well decided not to have apprenticeships. The bottom line was: what was to be made if there were to be any chances of what I would call advantages from the great loss to Great Britain and to our young people? If we look back to those years—the late 1970s and, in particular, the early 1980s—there were great problems.

I hope that the questions I have asked will be answered before the end of the debate.

--- Later in debate ---

[Lord Hunt of Wirral (Con)]

My Lords, I join the noble Lord, Lord Jones, and the noble Baroness, Lady Bennett of Manor Castle, in thanking the Minister for introducing this order and setting out its purpose so clearly. I confirm at the outset that the Opposition support it.

As the Minister outlined, the order enables the Construction Industry Training Board to continue raising the levy for a further year in order to support training across the construction sector. As the noble Lord, Lord Jones, reminded us, the levy system has a long history, originating in the Industrial Training Acts of 1964 and 1982. The system exists to address a well-recognised challenge within the sector—namely, without co-ordinated action, investment in training and skills can fall far short of what is required. This is particularly important at a time when the construction industry faces significant workforce pressures. The sector employs around 2.6 million people, yet, as the Minister explained, thousands of additional workers will be required each year to meet future demand.

The noble Baroness, Lady Bennett of Manor Castle, identified one or two key questions. I join her in expressing concern about the mental health aspect that she outlined; it raises deep concern and needs to be addressed. In addition, if we are to have a strong and sustainable skills pipeline, the noble Baroness was right to draw attention to paragraph 87 of the draft impact assessment and the need for a pipeline that will be diverse and wide-ranging to ensure that we deliver wider economic and infrastructure priorities. The work supported by the levy clearly plays an important role in that effort. Grants for apprenticeships, qualifications and short course training, as well as initiatives such as the travel to train grant and the new entrant support scheme, provide valuable support to employers and learners right across the industry. It is also encouraging to see that a large proportion of the support reaches the vital small and micro-businesses that form such a significant part of the construction sector.

While we support the continuation of the levy, I would be grateful if the Minister could clarify a few points, as well as answering the specific questions that the noble Lord, Lord Jones, and the noble Baroness, Lady Bennett of Manor Castle, have asked. First, given the scale of the projected workforce shortfall in construction, how confident are the Government that the current level of the levy will be sufficient to meet the sector’s future skills needs? Are there ongoing discussions with the Construction Industry Training Board about how the levy and its associated programmes might evolve to respond to these pressures?

Secondly, one of the long-standing challenges in construction is the industry’s aging workforce and the difficulty of attracting new entrants. Can the Minister say a little more about how the Government see the levy supporting efforts to bring more young people into construction careers? The noble Lord, Lord Jones, reminded me that he and I used to face each other across the Dispatch Box in the House of Commons, when I was the Minister and he was the shadow—a reverse of what had happened a little earlier when he was the Minister and I was the shadow. We have a combined wish to see an increase in apprenticeships. The noble Lord, Lord Jordan, came up with the concept of a new form of apprenticeship and I was happy to play a part, with my noble friend Lord Clarke of Nottingham, in launching the modern apprenticeships. It would be helpful to know from the Minister exactly what is happening with the need to increase those modern apprenticeships and their availability.

Finally, given the high proportion of small and micro-businesses in the sector, will the Minister tell us what steps are being taken to ensure that these firms are able to access the support available through the levy as easily as possible?

With those brief questions, I reiterate that we support the order and the continuation of the levy. Ensuring that the construction sector has access to the skilled workforce it needs will be essential in the years ahead. The mechanisms such as this levy have an important part to play in that effort, so I am happy to support the Motion.

[Baroness Blake of Leeds (Lab)]

I start by saying how grateful I am for the contributions to this debate and for the thoughtful scrutiny. I have learned a lot from my noble friend Lord Jones about the background and I thank him for his input on that. It is important that we all understand where we have come from and where we are hoping to get to in this important debate. All the contributions have highlighted the scale of the challenge facing us. As the noble Lord, Lord Hunt, outlined, this is one of our most economically vital sectors, responsible for £200 billion of output and the employment of over 2 million people. The future of our economy and our ability to grow depends on this.

As shown in the tenor of the contributions today, we need to make sure that over the coming decade we have a stable and collective system of investing in training, as well as looking at new initiatives. What we can all absolutely say is that market forces alone will not deliver the pipeline of skilled workers that the industry urgently needs, whether in meeting the demand for new homes or, as the noble Baroness, Lady Bennett, quite rightly said, for the complex issue of retrofitting, which sounds straightforward but we know is not—it is exceptionally challenging. Against the bedrock of the need for economic growth, the transition to net zero is a fundamental driver in our ability and our attempts to make the progress that we need to.

There is a focused skills strategy now. It recognises that the construction industry is at its centre and, as has been raised by all, it must benefit and bring support for all sizes of business. It is that unique make-up of the sector that provides opportunities but also presents enormous challenges. We have to make sure that where we offer training it is of the highest quality. It is not just about young people; it is about retraining and upskilling the existing workforce to make sure that they can progress in their careers.

Specifically, I say to my noble friend, there were 24,470 apprenticeships in construction for the year 2024-25, representing 7% of all starts. I am afraid that we do not have the number of graduate apprenticeships, so I cannot answer that specific question.

I will move on to the wider package of support. From a personal perspective, having worked in this space in my previous role, I know that the initiatives aimed at supporting the mayoral authorities are fundamental, making sure that the approach can be delivered locally as well as being supported from the centre, and having a real understanding of the local jobs market, environment and training needs and the relationships that need to be built to do that.

The Government are delivering major investment to strengthen construction skills and the wider skills system. The £625 million construction skills package includes £100 million to expand the construction skills boot camps, £98 million for industry placements and around £100 million to establish 10 technical excellence colleges, boosting opportunities for young people through a £90 million uplift for construction courses for 16 to 19 year-olds and £75 million for adult retraining. This recognises the immediate needs and the fact that we need to bring new young people in and make the whole area attractive to young people. We have been through a phase where it has not been so attractive, but the opportunities are enormous.