Thousands more to escape training levy

Thousands more small firms are set to escape the statutory training levy as the Construction Industry Training Board (CITB) plans to raise the annual payroll exclusion level for the first time in 10 years.
For its 2005 levy, the CITB wants to peg rates at 0.5% of PAYE payroll and 1.5% of payments to labour-only subcontractors. But it is proposing to raise the annual payroll threshold below which firms are exempted from levy from £61,000 to £65,000. And that threshold may in future be index-linked.
The board is said to be reluctant to raise the payroll threshold. But the move comes as the whole legal basis of the statutory levy is under threat.
The CITB is consulting with the industry on the 2005 levy
recommendations. The plan to raise the threshold is bound to cause controversy as many contractors believe that the exclusion of the smallest firms already creates unfair competition and that all should contribute to the cost of training.
The proposal has been prompted by the fact that the CITB is in danger of falling into the same trap as that which has ensnared its engineering construction counterpart.
Current legislation requires the industry to show that a compulsory levy has the support of more than 50% of those who are liable to pay. Such a consensus has been demonstrated in the past by consulting with the key trade federations. However, the federations have been steadily losing members.
Thus it is reckoned that the federations represented only about 51% of the industry supporting the last levy. And a further decline may mean the level of support is likely to fall below the 50% level over the next couple of years.
The board believes the smallest firms are least likely to be federation members. So excluding more of them can lead to majority backing for the levy being
maintained.
The present £61,000 threshold has been in force since 1994. Inflation over the past 10
years means that the number of levy payers has increased by 10,000 over that period to about 24,000.
Some two-thirds of these additional levy-payers firms are thought to be non-federation members.