ECITB has welcomed government approval of proposals aimed at supporting transition skills and training via a levy on engineering construction businesses.
The Engineering Construction Industry Training Board (ECITB) said its levy proposals for 2023-25 had already received “overwhelming” backing from industry, and would now help to upskill and train workers in support of net zero.
Proposals were unveiled as part of the board’s three-year strategy update last year, which sought to address skills shortages and to invest in the training required to deliver the country’s net zero and energy security ambitions across sectors including oil and gas, renewables, power generation and nuclear.
It comes as the energy sector grapples with how to address the potential shortage of talent to support key sectors such as carbon capture and storage, hydrogen and offshore wind.
The draft order was tabled by Minister for Skills, Apprenticeships and Higher Education Robert Halfon in the House of Commons, and later affirmed by the Commons and House of Lords, without opposition.
The legislation came into force on 21 July.
What is the Industrial Training Levy?
The ECITB works to ensure the engineering construction workforce has the specialist skills required by industry, funding training via a levy on firms working in engineering construction.
Employers over a certain size are required by law to pay this training levy, though all in-scope employers, regardless of size, are eligible to receive grants for training undertaken by their workers.
The industrial training levy is calculated by applying the appropriate levy rate to the employer’s total annual labour payments based on employees and labour-only contractors who mainly work on sites in Great Britain or its offshore waters
The 2023-25 order maintains the levy rates of 0.33% of the earnings paid by employers to off-site employees and 1.2% of the earnings paid by employers to on-site employees for businesses liable to pay the levy.
The rates will be applied to levies raised in 2023-25 and will be payable in 2024, 2025 and 2026 respectively.
In a nod to aiding smaller businesses, the latest order also retains current exemption thresholds, meaning construction employers with an annual wage bill of less than £1m for off-site employees will not pay any levy – a threshold lowered to £275,000 for on-site employees.
These employers will nevertheless continue to be eligible to receive training grants if they are in-scope.
More skilled workers needed
Mr Halfon said: “The Government are clear that engineering construction is integral to achieving the objectives set out in the ‘Powering Up Britain’ strategy announced in March.
“However, the industry will need to continue to increase the volume of skilled workers coming into the industry in order to deliver on the key projects needed to achieve our objectives.
“That includes, but is not limited to, the retrofitting of industrial sites with carbon capture and hydrogen production technologies; the further expansion of offshore wind; and increasing our plans for the deployment of civil nuclear to provide up to 25% of our projected electricity demand by 2050, as envisaged in last year’s ‘British Energy Security Strategy’.”
He also warned that were the levy were to cease, there would likely be a “serious deterioration” in the quality of training and skills capacity which would hamper efforts to deliver key projects.
Over the next three years strategy period, the ECITB will allocate up to 48% of its grant funding on new entrants, while the remaining 52% will be directed towards upskilling existing workers.
ECITB chief executive Andrew Hockey added: “The ECITB received the overwhelming backing of industry for its levy proposals last November with engineering construction companies voting resoundingly in favour of its proposed levy rates for the next three years.
“Approval of the levy order now gives us the financial underpinning to deliver on our three-year strategy.
“Delivering against this strategy will support growth in the engineering construction industry by helping employers to recruit a more diverse workforce, training and certifying them against industry standards and addressing labour shortages and skills gaps.”
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