Industrial Training Levy (Engineering Construction Industry Training Board) Order 2026

Lord Palmer of Childs Hill Excerpts

Tuesday 14th July 2026 Grand Committee

[Baroness Coffey (Con)]

My Lords, I do not seek to oppose this order today, but I have a number of questions. I again start by praising the Government, and I strongly support the move to the DWP and the CITB, as well as, more broadly, the changes that the Government have made to the apprenticeship approach. I fully support the merger of the two bodies, which is under consultation, and I hope that that consultation review will be concluded quickly.

One thing that the Minister mentioned was that 85% of the levy payers, who contribute 98% of the levy, are supportive. I was interested in paragraph 33 of the impact assessment, which said that the independent

“customer satisfaction survey in 2024 … found that 65% of employers agreed or strongly agreed that without the levy and grant system the training would not take place”.

As it says elsewhere in the impact assessment, we have a situation where, in order to generate more income, the ECITB has started increasing its training of overseas learners. I do not really understand where this is going.

I am sure the Minister has been diligent more broadly in thinking about what is happening with the amount of people going on to training who do not complete the training or do not continue into work. That is very worrying, given the amounts of money being invested and what is happening with the follow-up. The Government are using powers, as this is an executive non-departmental public body, so is there an element here of thinking about how this could get a bit more refocused, working independently but also in partnership with the department, given that 47% of young people are dropping out? The figures of people who just do the course and, within so many years, drop out of this industry entirely are even higher.

I know that there is work on how to help employers onboard people into apprenticeships, traineeships and the like, but I suggest that some more focus could perhaps help with that. I suggest thinking about how the objectives and key performance indicators for this board could perhaps be published more regularly. On that, 9 July 2025 is when we last saw the annual report and accounts for 2024, so when does the Minister expect the report and accounts to be laid for 2025? As I say, there is a lot of value in this body and its sister body.

I do not expect the Minister to have an answer to this today, but this body is also a charity, and I am unclear about why that is still needed. Is that limiting what can happen in trying to make this more effective? As I say, a good number—65%—of businesses interviewed said that all this training stuff probably would not happen without this board. But, again, on some of the link-up with the other organisations involved in this, including the Government and particularly the Department for Work and Pensions, I think this is a better home for it than where it was, the DfE.

I would be interested in getting some further understanding on the need for this to be a charity. According to the Charity Commission accounts, it is not eligible for gift aid. There is a lot of complexity in why someone is a trustee, when actually they are all appointed by the Secretary of State. The Minister may not have the answer today, but I would be grateful for a follow-up more broadly.

[Lord Palmer of Childs Hill (LD)]

My Lords, I thank the Minister for producing this order and giving us such welcome information. It is a key job of any Government to grow the economy, and productivity is central to that. This levy is a proven way to fund skills in the construction sector, because the market alone has not invested enough in training. The 2023 review confirmed that this problem still exists, so the case for keeping the levy is strong. Turning to the detail, the order keeps the current rates in place: 0.35% on directors’ pay and 1.25% on payments to subcontractors. These rates have not changed since the pandemic-era reductions ended.

I welcome the extra help for small firms. The exemption threshold is rising from £135,000 to £150,000, which means that 69% of employers will now pay nothing at all. There is also a 50% reduction for firms with wage bills of between £150,000 and £500,000, helping around 10,000 small businesses, I believe. This strikes a reasonable balance: it protects small firms while larger employers continue to pay their fair share, with no cap on their contributions. The Minister has given lots of statistics. There are so many statistics going around, some of which are contradictory.

As Liberal Democrats, we believe in partnership between employers and educators, and that is exactly how this proposal was developed. As we have been told, the CITB ran a formal consultation last year, called “Consensus”, and over 67% of levy payers backed the plans. Those firms represent almost 72% of the total levy value. This is a genuine mandate from the industry itself, not something imposed from above, and it is the right way to build support for a levy like this.

The sums involved are substantial. I believe the levy is expected to raise around £243 million a year between 2026 and 2028. Last year, the CITB raised £228.1 million and used it to fund £129.8 million in grants and £53.4 million in other schemes. This supported around 30,000 apprentices and, I believe, nearly 20,000 people in gaining a qualification. This is a serious investment in skills, and it costs the taxpayer nothing, since the CITB receives no grant from the Government.

The noble Baroness, Lady Coffey, mentioned charities. I should say that charities are exempt from the levy, but I would welcome hearing anything that the Minister can say in answer to the questions raised about them.

I have one question for the Minister: how will the Government check that this money is working? We need to see real gains in skills and productivity, especially given the scale of the construction skills gap across England, Scotland and Wales. I would welcome the Minister’s thoughts on that. As a nation—or, as the Minister said, nations—we need to up our game in providing training and reduce our reliance on imports to address skills shortages.

On the whole, we on these Benches support this order. It keeps a levy system that the industry itself backs, protects small businesses through a fairer approach and funds real training for a skilled workforce.