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Parliament Approves Changes to CITB-ConstructionSkills’ Levy Order

MPs voted unanimously in favour last night of keeping the construction Levy for a further three years. They also approved a number of industry-led revisions to the CITB-ConstructionSkills Levy Order.

This underlines the important role of skills and training while firms continue to struggle in a difficult economic climate.

Following the debate in Parliament, MPs supported the proposed amendments to the skills body’s statutory funding system including reductions to levy payments for some small businesses and changes to make the application of the levy more closely aligned to industry’s wishes.

The Levy Working Party, comprising several employer federations, led the development of the changes which were widely supported by industry and will come into force this year.

The approval for the Levy Order comes six months after thirteen consensus federations pledged their continued support for the CITB-ConstructionSkills Levy.

Mark Farrar, Chief Executive of CITB-ConstructionSkills said: “We are delighted that the changes to the Levy have been approved giving continued to support the important work of CITB-ConstructionSkills.

“Over the last 18 months we have been working hard with industry to revise the Levy, ensuring that it reflects the desire of both employers and industry federations for a simpler and more consistent system.

“The Levy is as vital today as it has always been and by reinvesting it through grants and training it will help the industry return to growth - so it can play its part in improving the overall economic health of the nation. The Levy will also support the industry as it adapts to a time of unprecedented change.

“To help firms respond to the rapidly evolving agenda, CITB-ConstructionSkills has reviewed its Business Strategy to ensure we engage with more closely and continue to add value to the industry; something which is reflected in the Business Plan for 2012-2014 – which can be viewed online.

Skills Minister John Hayes said: “I am delighted that Parliament has approved the 2012 Levy Order which this department has been working closely with CITB-ConstructionSkills to develop.

“The Levy is an important measure to safeguard skills and training in construction by ensuring the cost of training is shared among employers more evenly.

"CITB-ConstructionSkills has a strong track record of supporting employers and employees with a wide range of services including setting occupational standards, delivering vocational qualifications and driving up apprenticeships, and it continues to play an important role in putting in place the skilled workforce to drive the UK economy to long-term sustainable growth.”

The changes to the Levy Order include:

●The introduction of a Small Business Levy Reduction: employers whose salary bill (for staff and payments to labour-only sub-contractors) is between £80-100k will receive a 50% reduction on their levy payments

● Ironing out historical inconsistencies: employers will now pay levy on catering, agricultural and part-time staff

● Revision of the definition of a Labour Only Agreement (LOA) to more closely align with industry’s views

Sections of the Levy that will remain the same are:

● The Levy Rate will remain at 0.5% on payments to directly employed workers (PAYE) and 1.5% on payments to labour-only sub-contractors (LOSC)

● The threshold for the Small Business Levy Exemption remains at £80k

The Levy Working Party will continue to work with the industry to simplify the levy process and it will now be looking at further changes for the 2015 Levy Order.

Notes to editors

1. All employers will be notified of the changes in the 2012 Levy Order in the 2012 Levy Return mailing in April/May

2. Revisions to the LOA will mean that contracts that require substantial use of plant or specialist equipment will no longer fall under LOA which could alter firm’s levy assessments

3. Employers that may be affected by the change to the LOA definition have already been contacted. They have been given the chance of re-submitting their LOSC figures if they have included payments in their 2011 Levy Return that they no longer need to under the new labour-only definition

4. Industrial Training Levy: CITB-ConstructionSkills is an Industrial Training Board, which is empowered under the Industrial Training Act 1982 to raise a levy on employers in the industry. We use our employer funds to ensure the construction industry has ‘the right skills, in the right place, at the right time’ in order to be a world class industry which continues to support economic growth. In 2011, CITB-ConstructionSkills annual turnover was £249 million - £134 million of which was levy-income

About CITB-ConstructionSkills

CITB-ConstructionSkills is the Industrial Training Board (ITB) for the construction industry in Great Britain (Scotland, England and Wales). We are working to ensure that construction employers have the right skills, in right place, at the right time by investing funds and providing a wide range of industry-led skills and training solutions.

We are also a partner in ConstructionSkills, the Sector Skills Council (SSC) for the UK construction industry, and we are raising employer engagement in training, providing labour market insights on future skills needs and developing standards and qualifications for the sector.

As an ITB and SSC, we are providing vital support to a sector which is central to the UK economy.

For more details on our work please visit