Construction skills sector prepared for two levies for the price of … two

Building sector firms have been paying into the Construction Industry Training Board (CITB) levy for half a century, so might have a rough idea what to expect from the government’s large employer apprenticeship levy. However, it hasn’t been clear jst how they feel about the possibility of having to fork out for two training levies — until now, as Steve Radley explains.

With the deadline for the government’s consultation on its proposed apprenticeship levy passing today, we will soon hear what businesses think about the plans. Finding this out has not been easy.

Apart from the short timeframe allotted, details remain sketchy about how it will work, who will pay it — with the government not yet clear on how it defines a large employer (usually 250 employees and upwards) — and what rate they will pay.

Despite this, our conversations with construction employers and a survey of the larger ones have told us quite a lot.

Their views have important implications for how to ensure the apprenticeship levy meets the government’s objectives.

In many ways construction is quite different from other industries. In particular, nearly half (46 per cent) of the sector’s apprenticeships are delivered by firms employing nine people or fewer.

But there’s much to learn from construction firms, which have been contributing to the CITB levy for the past 50 years.

Both levies relate to apprenticeships and it’s rare to find anyone who’s happy to pay for the same thing twice

Not surprisingly, only a minority of firms — a quarter of those who felt able to express an opinion — were prepared to pay both the new apprenticeship levy and CITB’s at its full rate.

The two levies are quite different. The government’s will fund the costs of training apprentices in large firms, while CITB’s covers all the other costs of an apprenticeship, supports firms of all sizes and the full range of training that the industry does.

Yet both levies relate to apprenticeships and it’s rare to find anyone who’s happy to pay for the same thing twice. Indeed, we believe that this figure would drop well below 25 per cent once large firms realise that they must meet the full cost of training an apprentice via the new levy, and when the government sets out the rate.

More interestingly, only 17 per cent wanted to pay just the apprenticeship levy and the most popular option favoured by nearly six out of ten (59 per cent), was to pay the new levy plus CITB’s levy at a reduced rate, with a modified level of CITB services.

This might seem an odd result given the potential costs and administration associated with paying two levies. But with the survey also showing that nine out of ten large firms (88 per cent) support CITB’s levy-grant system, the results are not that surprising.

Beyond the exact future of the construction levy, there are some important lessons to learn in implementing the apprenticeship levy.

The first is that employers need to see what they pay going back into training. The body running the new levy should aim to match the 2.1 per cent rate it costs to collect and distribute CITB’s system.

Employers must also be confident that the money raised will be ring-fenced to support training as it is in construction’s.

Second, as with CITB’s levy and grant, industry must feel a sense of ownership.

With the apprenticeship levy, industry should decide on the design of new standards and the price of different frameworks.

As with CITB’s levy, this is industry’s money and it should decide how it is spent.

Finally, support for CITB’s levy reflect employers’ shared interest in developing a skilled workforce for the construction industry. In the same way, the apprenticeship levy must not get in the way of how large firms in a variety of sectors seek to work with their supply chains to train apprenticeships.

The final lesson, and a hard-learned one for CITB, is to keep the apprenticeship levy simple.

Over the past year I have spoken to countless employers who are frustrated by our bureaucracy and we are now working hard to strip it out. But better still to stop it getting there in the first place.

The apprenticeship levy is a new measure that will have to work hard to win friends, just as has CITB’s to keep them. But by making it ring-fenced, industry-owned and simple, the government can give it a fighting chance.

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