The case for reforming the CITB

Brian Berry says that the Construction Industry Training Board (CITB) still has a key role to play, but changes are necessary to make it fit for purpose, going forward.

The importance of training and recruitment has rarely been more important in the housebuilding industry, as the industry again finds itself struggling with severe skill shortages in many areas. Who trains and who pays is very much a live issue. Under the Industrial Training Act 1982 and subsequent Levy Orders any employer engaged ‘wholly or mainly’ in construction work is required to register with the Construction Industry Training Board (CITB) and pay a levy on the payroll, precisely in order to make sure that more training happens.

In October 2017 CITB confirmed the successful conclusion of its latest consensus process, by which it asked the industry to endorse payment of the CITB industry levy for a further three years. The Federation of Master Builders (FMB), along with many other major UK construction trade bodies, has said that confirmation that the CITB levy will continue must act as the green light for reforms demanded by industry. Although the FMB and its members decided to give their backing to CITB to continue, opinion among FMB members was divided. Some wanted to see it continue and others wanted to see it abolished, but all agreed that it is not currently working as well as it should for the industry’s smaller firms. So, the FMB has sent a clear message to CITB that it must reform and it must demonstrate a better return on investment for the industry than we are currently seeing. In particular, we have highlighted changes in governance and changes in the grant system that we think will be crucial to turn the situation around.

Crucial to the future success of the CITB is a shakeup of its governance structure. It is unacceptable that the CITB Board contains only one representative from an SME firm and no one from a typical SME construction background. Given that SME firms make up the vast majority of firms who pay the levy and it is SMEs that train two-thirds of all apprentices, the FMB wants to see this reflected at board level with at least half of its members coming from smaller, independent firms. In this light, we are pleased that in the Government’s Industry Training Board Review, published in November 2017, there is a recommendation to appoint to the CITB Board people with direct experience of small business.

This is particularly important as the CITB’s grant scheme also needs to be simplified to be more accessible to smaller employers. Too few SME levy payers are claiming back CITB grants and this is primarily because the process is too complicated and bureaucratic. The CITB needs to make all of its processes as simple and straightforward as possible. Unlike larger firms, most SMEs cannot afford to employ people who dedicate their time to drafting CITB grant applications in order to ensure their firm maximises opportunities to claim back grants. If we want SMEs to train more apprentices and upskill their workforce, all forms of CITB grant funding pots need to be as easy to access as the new CITB Flexible Fund, which is proving successful in making sure that small firms can access funding to train.

However, the wider picture remains clouded by the recent introduction of a second levy – the Government’s new Apprenticeship Levy, which applies to all firms with a payroll of over £3m. Large firms in the industry are now finding themselves hit with two levies. This might not be such a bad thing, if it was certain to drive up apprenticeship training in a way that would benefit the industry. Yet, though the Apprenticeship Levy will raise a significant amount of money from large firms to spend on apprenticeship training, due to the prevalence of subcontracting and self-employment in our industry, there is a likelihood that huge amounts of this funding pool will be lost to the industry and will not end up funding apprenticeship training. As such, we have strongly urged the Government to revisit the possibility of allowing greater flexibility on the spending of Apprenticeship Levy vouchers on supply chain partners, specifically raising the cap of 10 per cent of Apprenticeship Levy funds being spent in a firm’s supply chain.

The FMB has decided to give its support for the continuation of the CITB levy, but this support shouldn’t be interpreted as support for the status quo. The status quo can’t continue and the stakes couldn’t be higher. Unless we get this right, the construction skills crisis will continue to worsen, the industry will struggle to grow, the wider economy will suffer and delivery of much-needed housing and infrastructure will be hindered.