Industrial training boards are one of the few bodies that can compulsorily take your money. The annual levies may not be universally popular but calls for alternative ways to finance training should be resisted
Acouple of years ago, Building’s excellent legal columnist Tony Bingham wrote an article about the compulsory levy raised annually by CITB–ConstructionSkills. In it, he suggested that I, as chairman, might want to find other ways of financing training. Having been in post for more than four years, I have often thought about that. I respect the views of those who say that levies are not the right approach. But, from experience, I believe they are the only practical way forward for this very diverse industry, which has a large number of tiny firms and a great deal of self-employment and subcontracting.
The rise and fall of training boards
In 1964, the outgoing Conservative government passed a law setting up large numbers of industrial training boards (ITBs), of which CITB was one. During the 1980s, another Conservative government, led by Margaret Thatcher, abolished all but two of them: CITB itself and the Engineering Construction ITB. Thatcher really wanted to scrap them all, but she was prevailed upon by construction employers to keep CITB and Engineering Construction. Her agreement came with reluctance, and only on the basis of rigorous controls and visible industry consent.
Levy needs majority support
Since 1982, CITB and ECITB have had to show every year that they have majority support from their industries for the levy system. The wording of the 1982 Industrial Training Act effectively requires that consent be given by the industry’s trade federations. Once that has been achieved, the boards can write to the education secretary saying that hurdle has been jumped. The minister then lays an order authorising a statutory levy before both Houses of Parliament. This order, unlike most others that come before parliament, requires approval of both Houses, and always produces valuable debates. Only after both Houses have agreed the order can either CITB or ECITB collect their levy.
Some time ago, some senior civil servants asked me if this was still necessary. I stressed that it must be. Today there are only five organisations that can still compulsorily take your money – central government (taxes), local government (rates and council tax), the BBC (licence fee), CITB and the ECITB. You can nowadays change your gas, telephone and electricity suppliers, if you so wish.
Such obligatory fundraising powers require strong accountability to the people, through their elected representatives. I stressed to the civil servants that if ministers wished to change the law, that was up to parliament, but CITB, under my chairmanship, would certainly not be asking for a less accountable structure. CITB has its accounts audited by the National Audit Office, and is ultimately answerable to the Public Accounts Committee of the House of Commons. Having served on that committee from 1983 to 1992, I know that it is a fierce watchdog.
Obligatory fundraising powers require strong accountability to the people, through their elected representatives
Raising the payroll threshold
Over the past couple of years, CITB–ConstructionSkills has come near to falling below the 50% figure for industry backing. This is not because the industry has ceased to support it. All the external independent opinion surveys show a level of support of about 70% from employers and no statistical difference between federated and non-federated firms.
The problem is that large numbers of the potential levy payers are very small firms that do not belong to the industry federations and therefore cannot be counted as part of the industry consensus under
the wording of the 1982 act. The ECITB actually fell below 50% three years ago, but extricated itself by sharply raising the payroll threshold for coming within levy scope. CITB–ConstructionSkills is just over 50%, because of declining federation membership, and has been raising its own threshold over the last two years. It had been at £61,000 payroll since 1994, but was raised to £64,000 in 2004 and will probably be £73,000 next year.
We are in discussion with the government, along with ECITB and the Learning and Skills Council, to find a modern way forward, which may involve amending the 1982 law. With the welcome emphasis on skills, other Sector Skills Councils are looking at compulsory levies, so the law may need changing anyway. In my next article, I will look more closely at what the levy – and the grants that it finances – actually achieve.
It is a lot.