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Contractors criticised for passing levy fee costs to suppliers

Supply chain members are being advised to seek legal advice if they are having levy payments deducted from their pay by main contractors.

In a joint statement today from CITB-ConstructionSkills and ten of its Consensus Federations, the group has warned that contractors should not be saddling extra costs onto subcontractors by passing on levy payments.

The partnership points out some employers were labelling the charges: ‘deduction for CITB levy’ or ‘amounts in respect of CITB levy’ and have in some cases found the deductions to be set at higher rates than the CITB-ConstructionSkills levy.

The statement is the latest in a series of concerns raised by supply chain members and highlighted by Construction News after clients including BMW, Vodafone and Emcor and contractors including Laing O’Rourke and Carillion were found to be squeezing suppliers through large retention fees, lengthening payment terms and demands for rebates.

The statement is signed by:

Federation of Master Builders; UK Contractors Group; National Specialist Contractors Council; Scottish Decorators Federation; Home Builders Federation; National Association of Shop fitters; British Woodworking Federation; Construction Plant Hire Association; National Federation of Demolition Contractors and the National Federation of Builders.

CITB-ConstructionSkills chief executive Mark Farrar, said: “CITB-ConstructionSkills is the body appointed by Parliament to raise and collect the Industrial Training Levy from employers in the construction industry under the Industrial Training Act.

“The Act does not give authorisation for employers to make deductions from any amounts paid to a labour-only sub-contractor or other worker.

“If your employer is making these types of deductions without your consent, you may wish to seek independent legal advice. CITB-ConstructionSkills is working to deliver the right skills for economic growth locally and nationally and the levy we collect provides the funds to help employers up-skill their workforce and make their businesses succeed and grow.”

The levy money raised is used to provide training grants and other benefits which help employers train their staff and develop their businesses. Last year, 19,058 employers benefitted from £113m of grant funding.

The CITB levy is assessed in accordance with the Industrial Training legislation at 0.5 per cent of payments to employees, plus 1.5 per cent of payments to labour-only subcontractors in respect of the provision of services, less 1.5 per cent of all payments received from employers in the construction industry for work carried out for the provision of services.

Readers' comments (1)

  • Sadly, this practice has been going on for years and years everyone involved knows that it is clearly not ethical. The problem is, as a supplier in today's marketplace, what can you do ? Stand your ground and say you're not paying ? I think we all know where that would lead....

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