CITB strengthens commitment to ensuring that the Levy system operates fairly 

The Construction Industry Training Board (CITB) has announced today its strengthened position on ‘passing on the Levy’. The move reflects the CITB, Levy Strategy Committee, three Nation Councils and the 14 Prescribed Organisations’ ongoing commitment to ensuring that the Levy system operates fairly and equitably across the construction industry.

As part of CITB’s commitment to addressing the issue of Levy-registered employers passing on the Levy to subcontractors, a new anonymous online reporting system has been introduced. This platform is designed to better understand the scale of the practice and gather valuable insights to help bring an end to it. Subcontractors affected by these deductions can use the platform to report instances confidentially and completely anonymously. For those who wish for further action, CITB can make contact with the contractors involved and formally request that they cease making deductions.

This initiative is part of a broad effort to ensure fairness across the construction industry and uphold the integrity of the Levy system. CITB is committed to supporting subcontractors and ensuring that all industry participants are treated equitably.

The Levy is imposed on Levy-registered construction employers who meet the criteria and is used to fund training and skills development within the industry. Contractors are not authorised to deduct money from workers’ wages (both PAYE and Net CIS) on CITB’s behalf. There have, however, been instances of construction businesses or principal contractors ‘passing on the Levy’ to their subcontractors in order to raise funds to pay their own Levy.

Deb Madden, Executive Director of Nations Engagement at CITB, said: “Passing the Levy down the supply chain reduces the overall investment in workforce development, undermining the purpose of the Levy. We are currently in a climate where we need to grow a highly skilled workforce to meet demand and get Britian building again. We need support from Levy-paying employers to help us to provide longevity in careers within the sector and provide more opportunities for entry.

“We believe that the best way to resolve the issue of passing on the Levy is through industry self-regulation. Collaboration between CITB, employers, and other stakeholders is essential to developing sustainable solutions which foster a culture of fairness and responsibility in the sector.”

Now more than ever a fair Levy system is needed to ensure that CITB can play its vital role in upskilling and training the construction workforce, providing access to funding for every registered employer and helping the industry deliver to the highest standards with the necessary knowledge and experience.

CITB is focused on maintaining a level playing field, where all Levy-registered employers contribute appropriately to industry training and development without shifting undue financial burdens onto often smaller businesses. In highlighting the negative impact of passing on the Levy, CITB is encouraging industry-wide self-regulation with a cooperative effort to ensure fair practice.

CITB urges those affected by the practice of passing on the Levy to report incidents through an anonymous feedback form, which can be found on the CITB website

STATEMENT:

Passing on the CITB Levy

Deducting CITB Levy from Sub-Contractors or other Workers

The Construction Industry Training Board (“CITB”) is aware that the practice of ‘passing on the CITB Levy’ is a topical issue within the construction industry. Accordingly, at the request of the Levy Strategy Committee, CITB, Prescribed Organisations and Nations Councils have jointly developed the following statement regarding this.

CITB is (and has been since 1964) the body appointed by Parliament to raise and collect the industrial training Levy from construction employers across England, Scotland and Wales. This statutory levy (“CITB Levy”) is then used in line with CITB’s statutory purpose to, amongst other things, provide training and support to the construction industry. No other organisation has a statutory right under the Industrial Training Act 1982 (“1982 Act”) to raise and collect the CITB Levy. Responsibility for the CITB Levy rest solely with CITB. However, it should be noted that in February 2019 CITB outsourced a number of its operational functions to Shared Services Connected Limited (“SSCL”), and since then, SSCL is authorised by CITB to collect the CITB Levy on its behalf.

The CITB Levy is assessed in accordance with a formula set out in legislation (known as a Levy Order). Currently the CITB Levy is raised at 0.35% of payments to direct employees plus 1.25% of payments to Net paid CIS sub-contractors.

Despite CITB being the only organisation authorised under the 1982 Act to raise and collect the industrial training Levy (CITB Levy) from construction employers, CITB is aware that some employers within the construction industry are making deductions from their sub-contractors or other workers as a way of raising funds to pay their own CITB Levy assessments, calling it ‘a deduction for CITB Levy’, or ‘amounts in respect of CITB Levy’ or similar. These deductions can often be at higher rates than are set in a Levy Order and collected by CITB direct. Construction employers have no statutory power or authority to do this under the 1982 Act.

Moreover, the CITB Levy is not like PAYE or CIS which an employer has legal authority to deduct from their workers and then pay over to HMRC. In contrast, liability for paying the CITB Levy falls on, and remains with, the construction establishment assessed to Levy by CITB.

These deductions, made by some construction employers, are not payments of CITB Levy but are a way of raising funds to pay or reduce their own CITB Levy assessments/liability. CITB firmly opposes this unfair and unauthorised activity under the 1982 Act.  This activity not only undermines CITB’s legal requirement to support small employers, it also has a negative impact on the individual sub-contractors that make up a large proportion of the workforce, particularly those that under the Levy Order may not be due to pay the CITB Levy. In these instances where ‘passing on’ occurs, a Levy (not the CITB Levy) is being ‘imposed’ on small employers by others.

CITB appreciates that the majority of construction employers display good values by accepting their responsibility to pay any CITB Levy and do not attempt to deduct or misguide contractors to accept deductions from the sums properly due for their work.

CITB has no power to intervene where two or more parties contractually agree between themselves to such deductions, although the absence of such an agreement may be deemed unlawful including under the Employment Rights Act 1996. Any contractor who has had payments of this sort deducted without agreement may wish to seek independent legal advice.

This statement has been agreed by the Levy Strategy Committee, Prescribed Organisations and  Nation Councils involved in reviewing the Levy and is for information purposes only.