Breaking Down the 2025 Industrial Training Levy Order: What You Need to Know

In a bid to bolster skills and training within the UK's construction industry, the government has introduced the Industrial Training Levy (Construction Industry Training Board) Order 2025. This legislation aims to secure funding for the Construction Industry Training Board (CITB) by imposing a levy on employers within the sector. Here's a simplified breakdown of what this means for the industry and its stakeholders.

What is the Levy Order?

The Levy Order is a legal mechanism enabling the CITB to collect funds from construction employers. These funds are crucial for supporting training and development within the industry, addressing skill shortages, and ensuring a competent workforce.

Who Does It Affect?

The Order applies across England, Wales, and Scotland, impacting employers in the construction sector. Notably, small businesses with a wage bill under £134,999 will be exempt, while those with bills between £135,000 and £449,999 will receive a 50% reduction in their levy liability.

Why is it Necessary?

Despite the industry's efforts, there remains a significant gap in skills development that market forces alone haven't addressed. The levy ensures collective investment in training, vital for meeting the industry's evolving demands.

Levy Rates and Collection

For 2025, the levy rates are set at 0.35% for direct employment and 1.25% for indirect employment, unchanged from the 2022 order. These rates are calculated based on the emoluments (salaries, wages, etc.) paid by employers.

Funding Utilization

The funds raised will finance various CITB functions, including apprenticeships, qualifications, and short-duration training. In the previous financial year, £202 million was collected, supporting numerous training initiatives across the sector.

Impact on the Industry

While charities are exempt, the levy will raise approximately £223.7 million in 2025-26. These funds will directly and indirectly benefit businesses by enhancing training opportunities, supporting recruitment efforts, and elevating industry standards.

What's Next?

The CITB will need to propose further levy arrangements post-2025, following consultations with industry stakeholders and approval from the Secretary of State. This ensures the levy remains aligned with industry needs and economic conditions.

Conclusion

The Industrial Training Levy Order 2025 is a critical step in addressing the skill gaps within the UK construction industry. By mandating collective investment in workforce development, the government aims to secure a robust future for the sector, ensuring it remains competitive and capable of meeting the challenges ahead.