Industrial Training Levy (Construction Industry Training Board) Order 2026

Considered in Grand Committee

Moved by

That the Grand Committee do consider the Industrial Training Levy (Construction Industry Training Board) Order 2026.

My Lords, I thank the Secondary Legislation Scrutiny Committee and the Joint Committee on Statutory Instruments for their scrutiny of this draft order, laid on 2 February 2026.

The statutory purpose of the Construction Industry Training Board, or the CITB, is to secure better training provision across the construction sector. The 2023 independent review of the industry training boards, led by Mark Farmer, reaffirmed their continuing value in addressing persistent and structural workforce challenges. Crucially, the review concluded that a statutory levy remains the most effective model for securing the level of skills investment that the industry requires.

This statutory instrument gives effect to the CITB’s levy proposals for 2026, 2027 and 2028. The levy remains the CITB’s primary funding source and, without this order, the board cannot raise mandatory assessments on in-scope employers. Levy funding enables the CITB to deliver essential support to tackle skills shortages and market failures across England, Scotland and Wales. Although views in the sector can vary, the levy proposals continue to command strong employer support. These proposals are the result of detailed consultation and a robust consensus process. In spring 2025, the CITB consulted all 14 prescribed organisations, or sector federations, alongside a structured survey of non-represented employers. Over 67% of levy-paying employers supported the proposals, representing almost 72% of levy value—well above the thresholds for consensus to be achieved.

Before we consider the levy proposals in further detail, I will return to the findings of the Farmer review. I am pleased to confirm that the Government intend to consult industry on bringing together the CITB and the Engineering Construction Industry Training Board to create a single unified body, supporting the combined skills needs of construction and engineering construction. This reflects a key recommendation of the Farmer review, accepted by the Government subject to further scoping. It builds on existing ITB collaborations such as the Sizewell C charter: a joint commitment by the ITBs, local authorities and Sizewell C to ensure a skilled and inclusive workforce for delivering this vital nuclear power station.

The consultation will launch shortly and the views expressed by industry will inform a decision on how to proceed. No outcome can be prejudged and the earliest that any change could take effect is April 2027. Any future levy arrangements arising from reform would come before Parliament in the usual way. Until then, maintaining the CITB’s ability to operate effectively makes approval of this statutory instrument essential.

To turn to the levy proposals, this SI maintains current levy rates. Despite a 36% increase in employer demand for CITB services since 2021, rates are held steady to support businesses navigating difficult trading conditions. The order also raises exemption and reduction thresholds to protect small and micro-businesses from levy pressures linked to wage inflation. Employers with wage bills up to £149,999 will be exempt, while those with wage bills between £150,000 and £499,999 will receive a 50% reduction. Approximately 69% of eligible employers will therefore continue to pay no levy, with a further 15% paying a reduced rate. All these employers remain eligible for CITB support.

My Lords, I thank my noble friend for her helpful and informative remarks. Skills and training are crucial for Britain, struggling to keep her place in a very competitive global market, and this board is a great and important player in British skilling. It is a good measure and I think that £243 million are involved somewhere in the helpful notes that the department has offered us.

I have some questions that I think might be answered by officials. Very briefly, what is the current grand total of construction apprenticeships for the latest year available? Are there graduate apprenticeships in this industry, and in what numbers? Is the department satisfied with its health and safety record, given the nature of the industry that we are considering?

I find that this proposal brings memories which I think are relevant to anyone considering the future of this great industry. It was the case that, in the early 1980s, big changes were made in these boards. I recollect that, in the other place, the Secretary of State, James Prior, was helped by a Parliamentary Secretary by the name of Morrison.

Time and again, after 10 pm and with three-line Whips, we had orders to abolish board after board—to the point where, although the Opposition of whom I was a part always voted against abolition in this instance, the Government usually had their way. All that was left of these training boards were the great engineering board and the construction industry board. It seems that the start of the problems that Britain now faces around skills and training relates to the decisions taken by the then Government in voting that always happened after 10 pm and went on until midnight. The Government of the day had a good majority, so they got their way.

When I was in the other place, I found that builders were very much against what was proposed in having these issues put on them. I found that, in an era of mass unemployment in the early 1980s, it was very obvious that the apprenticeship boards were being closed down. Even the great companies of Courtaulds, BAE and British Steel pretty well decided not to have apprenticeships. The bottom line was: what was to be made if there were to be any chances of what I would call advantages from the great loss to Great Britain and to our young people? If we look back to those years—the late 1970s and, in particular, the early 1980s—there were great problems.

My Lords, it is a pleasure to follow the noble Lord, Lord Jones; his long and extensive memories of the issues here really highlighted the depth and length of the problem that is the background to this statutory instrument.

I thank the Minister for her introduction, which was very clear. I also commend the impact assessment—my plaudits go to the people who prepared it—because it is far better than those that we see for many of these SIs. It sets out a picture of an industry, the construction industry, which is in deep trouble when we need it to be tackling the incredibly poor quality of housing stock in particular and building stock more generally, for which the building in which we are standing might be taken as a symbol. We have here an SI whose proposals, to quote the impact assessment, “include little change” for 2026 compared with 2025. The problems are much broader; an industry training levy can tackle only so much.

I have some questions for the Minister; I will understand if she wants to write to me rather than respond from the Dispatch Box. Paragraph 13 of the impact assessment highlights the heavy reliance on subcontracting and self-employment. This is associated with very poor levels of mental health in the construction sector. The figures on suicide and attempted suicide among employees in the sector, who are often on very low wages and in very insecure employment, are deeply concerning.

That is a huge human problem, but it is also a huge problem for the workforce. As the impact assessment says:

“The industry is very cyclical, with drops in output and employment when there is an economic downturn”.

I recall being at a National Insulation Association conference, in 2011, I believe, when it basically said that the industry was closing down because government funding for it had stopped, and that all its most skilled people were going off to do something else and probably would not come back when there was an uplift.

Are the Government taking any steps and measures to look at the long-term structural problem, whereby a handful of giant contractors employ subcontractors, who also employ subcontractors, and so on, in this fragmented, broken-down, unstable and insecure system? Are the Government taking any steps to consider how we might create a more stable and healthy working environment that would help us secure the skills that we need?

It is also worth looking at paragraph 87 of the impact assessment on the long-term issue of the lack of women workers and workers from minoritised communities in the construction sector. As the Minister said in her introduction, we will need 240,000 extra workers by 2029, so we need to draw on a much broader pool of people than we have been doing up to now. What are the Government looking to do about that? If there are to be significant steps in the next 12 months, is it enough for there to be only a modest change to the levy? Allowing for inflation, it is, in effect, a continuation of last year’s levy. Should we not be doing more about this?

Finally, the impact assessment focuses very much on new homes and buildings. The refurbishment of our incredibly poor housing stock is a huge challenge. In some ways, that is an even more fragmented part of the industry, but it also has the potential to be a steady, continuing source of employment, given that the demand is enormous. I talked about this once at a public meeting, and someone said to me, “What are you going to do with these workers when they run out of houses to insulate and repair?” I said, “That’s a problem for a couple of generations’ time. It won’t be a problem any time soon”. What are we doing to make sure that we are equipping our workforce? In many ways, refurbishing old homes—Victorian homes or older—is a particularly complex task that really needs skills. What are we doing to inject those skills into our workforce?

My Lords, I join the noble Lord, Lord Jones, and the noble Baroness, Lady Bennett of Manor Castle, in thanking the Minister for introducing this order and setting out its purpose so clearly. I confirm at the outset that the Opposition support it.

As the Minister outlined, the order enables the Construction Industry Training Board to continue raising the levy for a further year in order to support training across the construction sector. As the noble Lord, Lord Jones, reminded us, the levy system has a long history, originating in the Industrial Training Acts of 1964 and 1982. The system exists to address a well-recognised challenge within the sector—namely, without co-ordinated action, investment in training and skills can fall far short of what is required. This is particularly important at a time when the construction industry faces significant workforce pressures. The sector employs around 2.6 million people, yet, as the Minister explained, thousands of additional workers will be required each year to meet future demand.

The noble Baroness, Lady Bennett of Manor Castle, identified one or two key questions. I join her in expressing concern about the mental health aspect that she outlined; it raises deep concern and needs to be addressed. In addition, if we are to have a strong and sustainable skills pipeline, the noble Baroness was right to draw attention to paragraph 87 of the draft impact assessment and the need for a pipeline that will be diverse and wide-ranging to ensure that we deliver wider economic and infrastructure priorities. The work supported by the levy clearly plays an important role in that effort. Grants for apprenticeships, qualifications and short course training, as well as initiatives such as the travel to train grant and the new entrant support scheme, provide valuable support to employers and learners right across the industry. It is also encouraging to see that a large proportion of the support reaches the vital small and micro-businesses that form such a significant part of the construction sector.

I start by saying how grateful I am for the contributions to this debate and for the thoughtful scrutiny. I have learned a lot from my noble friend Lord Jones about the background and I thank him for his input on that. It is important that we all understand where we have come from and where we are hoping to get to in this important debate. All the contributions have highlighted the scale of the challenge facing us. As the noble Lord, Lord Hunt, outlined, this is one of our most economically vital sectors, responsible for £200 billion of output and the employment of over 2 million people. The future of our economy and our ability to grow depends on this.

As shown in the tenor of the contributions today, we need to make sure that over the coming decade we have a stable and collective system of investing in training, as well as looking at new initiatives. What we can all absolutely say is that market forces alone will not deliver the pipeline of skilled workers that the industry urgently needs, whether in meeting the demand for new homes or, as the noble Baroness, Lady Bennett, quite rightly said, for the complex issue of retrofitting, which sounds straightforward but we know is not—it is exceptionally challenging. Against the bedrock of the need for economic growth, the transition to net zero is a fundamental driver in our ability and our attempts to make the progress that we need to.

There is a focused skills strategy now. It recognises that the construction industry is at its centre and, as has been raised by all, it must benefit and bring support for all sizes of business. It is that unique make-up of the sector that provides opportunities but also presents enormous challenges. We have to make sure that where we offer training it is of the highest quality. It is not just about young people; it is about retraining and upskilling the existing workforce to make sure that they can progress in their careers.

Construction is one of the key sectors benefiting from the new foundation apprenticeship programme, with employers receiving up to £2,000 for every foundation apprentice they take on and retain in the construction industry, which recognises the challenges for smaller enterprises in particular, as has been raised. More widely, we are investing £140 million to pilot new approaches through the mayoral authorities, as I have said, but particularly targeting those who are currently NEET, adding across a range of priority sectors on top of the additional construction skills package investment. We are also investing £820 million through the youth guarantee, reaching almost 900,000 young people, expanding youth hubs, creating 300,000 opportunities for training and work experience with 55,000 guaranteed jobs.

I hope that noble Lords will recognise that an enormous amount of work is taking place and that the support needs are immense for some of these young people both to encourage them to come in in the first place but also to retain them and take them through the training packages. Of course, mental health issues have to be taken exceptionally seriously. A relative of mine works very intensively in health and safety—that is her specialism—and it was chilling to hear that a death factor is included in contracts in some parts of the world. That is the scale of failure in too many parts of the world. We face very serious issues, which reflects the fragmented nature of the issue, as the noble Baroness, Lady Bennett, picked up on. I hope noble Lords recognise that we are taking a holistic view to support those.

In 2026, the CITB will continue to use levy funding to equip businesses to embed fairness, inclusion and respect training into recruitment and retention activities, investing £4 million into continuing its on-site experience hubs, local one-stop recruitment solutions with KPIs to increase numbers of underrepresented individuals accessing information and support. That is recruitment from different communities but it is also attracting young women into the business.