Industrial Training Levy (Engineering Construction Industry Training Board) Order 2026
House of Lords · Grand Committee · 14 Jul 2026 · 23 speeches · Official Report
Considered in Grand Committee
Moved by
That the Grand Committee do consider the Industrial Training Levy (Engineering Construction Industry Training Board) Order 2026.
My Lords, I am grateful for the opportunity to debate this instrument today. In my view, the provisions in the instrument are compatible with the European Convention on Human Rights. The statutory purpose of the Engineering Construction Industry Training Board-ECITB-is to make better provision for training across the engineering construction industry in England, Scotland and Wales. The engineering construction industry is critical to the delivery of the Government’s wider ambitions for economic growth, clean energy and energy security. It provides the skilled workforce needed to build, maintain and operate major energy, manufacturing and industrial infrastructure across Great Britain. The ECITB’s and the Construction Industry Training Board’s continued value was confirmed by a 2023 independent review. It found that a statutory levy remains the most effective model for industry-wide investment in training and is needed to address persistent and structural workforce challenges within the ITBs’ industries. This statutory instrument gives effect to the ECITB’s levy proposals for 2026, 2027 and 2028. The levy remains the ECITB’s primary source of funding, and this order is required for the board to raise mandatory assessments on in-scope employers. The ECITB continues to receive strong support from employers. Over 85% of levy-paying employers supported the levy proposals, representing almost 98% of total levy value, exceeding the “more than 50%” statutory threshold for support...
Returning to this levy order, I give my thanks to the Secondary Legislation Scrutiny Committee and the Joint Committee on Statutory Instruments for their scrutiny of the regulations laid on 1 June 2026. It would be fair to say they have a clean bill of health from those committees. This order retains levy assessment rates from the 2023 levy order and retains the exemption threshold to protect small and microbusinesses, which are nevertheless still eligible for ECITB grants and support. An estimated £137.9 million will be raised in levy over 2026-28, which will be invested in supporting the skills needs of the engineering construction industry. That investment will fund vital programmes to widen participation, raise skill levels, increase opportunity and maintain occupational standards for the industry. This includes targeted grant support to employers to develop the skills pipeline in the engineering construction industry.
Since 2023, over 5,000 apprenticeship starts have been supported through ECITB employer funding, across vital disciplines including electrical, mechanical and nuclear-specific roles. This could include direct grants to employers, travel and accommodation costs, or costs for any additional qualifications required. The funding raised by the ECITB levy directly underpins the country’s broader economic priorities. Over 90,000 people are employed in the leviable workforce, with an estimated contribution to our economy of £33 billion in gross value added, rising to £100 billion when including the wider sectors serviced by the engineering construction industry.
The industry faces significant long-standing and future challenges in recruiting and retaining a skilled workforce, which makes voluntary investment in training less likely to occur. Without a statutory levy, we cannot guarantee that the skills that industry urgently needs will materialise at the scale required. If this order is not approved, the ECITB would be unable to collect levy in 2026, with potential impacts on apprenticeships and vital industry qualifications, employer support programmes, training standards and the future capability of one of the UK’s most economically significant sectors.
According to the ECITB, the UK faces an estimated requirement for an additional 40,000 engineering construction workers, and agreeing this order will play a critical role in supporting major infrastructure projects across Great Britain. In addition to industry support, the proposals before the House today have received the full support of the devolved Governments of Scotland and Wales. They recognise, as do we, that maintaining the ECITB’s ability to raise and invest levy income is vital to ensuring that employers across all three nations can access the engineering construction skills they need. I commend this order to the Committee.
My Lords, I do not seek to oppose this order today, but I have a number of questions. I again start by praising the Government, and I strongly support the move to the DWP and the CITB, as well as, more broadly, the changes that the Government have made to the apprenticeship approach. I fully support the merger of the two bodies, which is under consultation, and I hope that that consultation review will be concluded quickly. One thing that the Minister mentioned was that 85% of the levy payers, who contribute 98% of the levy, are supportive. I was interested in paragraph 33 of the impact assessment, which said that the independent “customer satisfaction survey in 2024 … found that 65% of employers agreed or strongly agreed that without the levy and grant system the training would not take place”. As it says elsewhere in the impact assessment, we have a situation where, in order to generate more income, the ECITB has started increasing its training of overseas learners. I do not really understand where this is going. I am sure the Minister has been diligent more broadly in thinking about what is happening with the amount of people going on to training who do not complete the training or do not continue into work. That is very worrying, given the amounts of money being invested and what is happening with the follow-up. The Government are using powers, as this is an executive non-departmental public body, so is there an element here of thinking about how this could get a bit...
My Lords, I thank the Minister for producing this order and giving us such welcome information. It is a key job of any Government to grow the economy, and productivity is central to that. This levy is a proven way to fund skills in the construction sector, because the market alone has not invested enough in training. The 2023 review confirmed that this problem still exists, so the case for keeping the levy is strong. Turning to the detail, the order keeps the current rates in place: 0.35% on directors’ pay and 1.25% on payments to subcontractors. These rates have not changed since the pandemic-era reductions ended. I welcome the extra help for small firms. The exemption threshold is rising from £135,000 to £150,000, which means that 69% of employers will now pay nothing at all. There is also a 50% reduction for firms with wage bills of between £150,000 and £500,000, helping around 10,000 small businesses, I believe. This strikes a reasonable balance: it protects small firms while larger employers continue to pay their fair share, with no cap on their contributions. The Minister has given lots of statistics. There are so many statistics going around, some of which are contradictory. As Liberal Democrats, we believe in partnership between employers and educators, and that is exactly how this proposal was developed. As we have been told, the CITB ran a formal consultation last year, called “Consensus”, and over 67% of levy payers backed the plans. Those firms represent almost...
My Lords, I thank the Minister for introducing this order. We support the continuation of the Engineering Construction Industry Training Board levy for the 2026, 2027 and 2028 levy periods. This provides continuity for the industry without imposing additional costs. As others have said, the levy system clearly commands the support of the vast majority of those who pay for it. It works precisely because it is driven by industry need. Companies understand their workforce requirements far better than Whitehall ever can. The role of government should be to create the conditions in which businesses can invest, recruit and train, rather than to control industries with centrally designed employment schemes. But it is important to look at the levy in the context of both current and likely future pressures. The scale of the challenge is considerable. The Minister cited estimates of a need for another 40,000 workers by 2030. Demand is rising in nuclear construction and decommissioning, offshore wind, hydrogen, carbon capture and storage, industrial decarbonisation, and the maintenance of existing energy infrastructure. The industry is competing for workers with other infrastructure sectors that need the same skilled trades and technical professionals. The central challenge is how to make sure that the country has the capacity and skills to deliver projects that are already planned. Employers are facing considerable difficulties in recruiting and training. The workforce is ageing and...
Engineering construction is also project based and cyclical. A business may have a substantial future pipeline but be justifiably reluctant to take on permanent workers or apprentices when projects are repeatedly delayed, paused or rephased. Businesses are just less able to make long-term workforce investments when they have little certainty about their order books.
The sector is contending with tight margins, high borrowing costs, wage pressures and material inflation. Many specialist contractors and subcontractors simply do not have the financial headroom to recruit and train workers significantly in advance of confirmed work.
The pressures have of course been made worse by the Government’s increase in employer national insurance contributions and the substantial additional burdens imposed by the Employment Rights Act. It is disingenuous for Ministers to express concerns about skills shortages while simultaneously making it riskier and more expensive to employ workers.
I would be grateful if the Minister could address several questions in addition to those already put by my noble friend Lady Coffey. First, what assessment have the Government made of the effect of the policies that they have implemented so far on recruitment, apprenticeships and permanent employment in the engineering construction industry?
Secondly, how are they working with the ECITB and employers to align skills provision with the actual timetable for major nuclear, energy, carbon capture, hydrogen and infrastructure projects? In particular, how will Ministers ensure that delays and uncertainty in government-backed projects do not discourage employers from investing in training and recruitment?
Thirdly, what outcomes will the Government use to judge whether the levy is delivering value for money? Can the Minister provide figures showing how many apprenticeships, qualifications and training places have been supported by the levy and grant system, and how successfully these interventions have addressed shortages in the occupations where demand is greatest?
Finally, what steps are being taken to ensure that the levy system remains responsive to employers, administratively proportionate and focused on training that leads to genuine employment opportunities?
As I have explained, we support the levy order, but the levy cannot succeed in isolation. Its effectiveness will depend upon a stable infrastructure pipeline, a strong vocational education system and a wider economic environment in which businesses are encouraged to hire and retain rather than penalised for it. The Government must now ensure that their wider policies properly support employers to recruit, train and retain their workforces.
I thank the Committee for its contributions to the debate, and I welcome the noble Baroness, Lady Spielman, as this is the first time we have faced each other in her new role. I congratulate her on that. The debate has underlined not only the importance of the ECITB’s work but the scale of the challenge facing one of our most economically vital industries, with a core workforce of 90,000 people and responsibility for £33 billion of output. As noble Lords have recognised, the industry plays a vital role in supporting our energy security, manufacturing capability and critical infrastructure. As has come through clearly today, the engineering construction industry cannot meet the skills demands of the coming decade without a stable collective system of investment in training, alongside government support. I will return to this in a moment. The evidence is consistent that market forces alone will not deliver the pipeline of skilled workers that the industry urgently needs to meet the demand for new major infrastructure projects. The ECITB’s levy is the mechanism that enables the collective benefits of a focused skills strategy for the engineering construction industry. It ensures that employers can access support for training and share the benefits of a skilled, competent and resilient workforce. It also opens opportunity, helping apprentices and other new entrants to complete high-quality training and helping existing workers to reskill or upskill to progress their careers. I...
Can the noble Baroness address my question about the impact of government policies enacted over the last two years on the engineering construction sector, particularly increased national insurance and employment rights?
I spelled out some of the impacts of the Government’s policy on the numbers of apprenticeships, the shift to vocational and technical education, the support this Government are providing to turn around the decline we have seen, and the £800 million of sector skills support we are providing for the industry. Is the noble Baroness genuinely arguing that this Government should now reverse the national insurance increases, which is where the investment in the National Health Service, which is also of considerable importance to employers, will come from? If she got her way and we reversed that, I think engineering employers, along with others, would not want their employees to be sitting on the waiting lists we inherited from the last Government.
Motion agreed.