Employment and Training

I beg to move, That the draft Industrial Training Levy (Engineering Construction Industry Training Board) Order 2026, which was laid before this House on 1 June, be approved. In my view, the provisions in this statutory instrument are compatible with the European convention on human rights. The statutory purpose of the Engineering Construction Industry Training Board is to make better provision for training throughout the engineering construction industry in England, Scotland and Wales. Engineering construction is critical to the Government’s wider ambitions for economic growth, clean energy and energy security. The industry provides the skilled workforce to build, maintain and operate major energy, manufacturing and industrial infrastructure across the country. The continued value of the ECITB and the Construction Industry Training Board was confirmed by a 2023 independent review, which found that a statutory levy remains the most effective model for industry-wide investment in training, and is needed to address persistent structural workforce challenges within the industries covered by the industry training boards. This order gives effect to the ECITB’s levy proposals for 2026, 2027 and 2028. The levy remains the board’s primary source of funding, and the order is required for the board to raise mandatory assessments on employers that are in scope. It continues to receive strong support from employers: more than 85% of levy-paying employers supported the levy proposals, representing nearly 98% of total levy value—well above the statutory threshold of more than 50% support required from industry. A 12-week Government consultation has just closed on a proposal to bring the two ITBs together into a single, unified body to support the combined skills needs of the engineering construction and construction sectors. The Government are now carefully considering the views expressed before making decisions on reforms that may be needed to ensure that the system delivers the support that employers need. I cannot prejudge the outcome but, in order to maintain the ECITB for support for employers, we need this levy order. If the Government chose to proceed with the proposed reform, the earliest that a single body could be in place would be the spring of 2028. If reform required a new ITB levy order, it would come to the House through the usual parliamentary process. I thank the Joint Committee on Statutory Instruments for its detailed review of this levy order. The order retains levy assessment rates from the Industrial Training Levy (Engineering Construction Industry Training Board) Order 2023 and retains the exemption threshold to protect small businesses and microbusinesses that are still eligible for ECITB grants and support. An estimated £137.9 million will be raised in levy between 2026 and 2028. It will be invested in meeting the skills needs of the engineering construction industry. It will fund programmes to widen participation, raise skill levels, increase opportunity and maintain occupational standards for the industry. It includes targeted grant support for employers to develop the skills pipeline in engineering construction. Since 2023, more than 5,000 apprenticeship starts have been supported through ECITB employer funding, including electrical, mechanical and nuclear-specific apprenticeships. That support includes direct grants for employers, travel and accommodation costs, and costs of additional qualifications that are required. The funding raised by the ECITB levy directly underpins broader economic priorities. More than 90,000 people are employed in the leviable workforce, contributing an estimated £33 billion in gross value added, which rises to £100 billion when we include the wider sectors serviced by the engineering construction industry. However, the industry faces big, long-standing challenges in recruiting and retaining a skilled workforce, which makes voluntary investment in training harder to secure. Only a statutory levy can guarantee that the skills that industry urgently needs will be provided at the scale required. If this order is not approved, the ECITB will be unable to collect the levy in 2026. That would hit apprenticeships and other vital industry qualifications, employer support programmes, training standards and the future capabilities of one of our most economically significant sectors. It is estimated that the UK needs an additional 40,000 engineering construction workers, and this order will play an important part in supporting major infrastructure projects nationwide. 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 we do, that the ability of the ECITB to raise and invest levy income is vital to ensuring that employers across all three nations can access the engineering construction skills that they need. I commend the order to the House.

I call the shadow Minister.

This draft order will allow the Engineering Construction Industry Training Board, known as the ECITB, to continue collecting a levy on employers in order to fund training and address skills shortages. The engineering construction industry underpins many of the services that we rely on every day: heating our homes, supplying clean drinking water, or providing the energy and fuels that keep our economy moving. The levy helps to ensure that we have the skilled workforce needed to build and maintain critical infrastructure, a workforce essential to the UK’s future energy security and economic growth. The order continues the board’s established approach of setting levy orders for a three-year period. Under the proposals before us, the levy rates for employees working on site will remain at 1.2% of total enrolments and rates for off-site employees will remain at 0.33%. That is unchanged from the 2023 levy order. As we have heard, exemptions will continue to be in place for smaller employers. This draft order is particularly relevant to my constituency. Devonport dockyard, in the neighbouring Plymouth Sutton and Devonport constituency, and its supply chain provide thousands of highly skilled engineering and construction jobs across Plymouth and the wider south-west. Indeed, the UK’s continuous at-sea nuclear deterrent has been maintained from Plymouth for over 70 years and will need a trained workforce—something that Team Plymouth is working hard to deliver. As major investment continues in defence and nuclear infrastructure, it is critical that we maintain a steady stream of skilled engineers, technicians and apprenticeships. I can confirm that we Conservatives will not oppose the order. However, this debate is a useful opportunity to scrutinise the Government’s plans to address the issues with recruitment and retention. As the Minister has already said, the training levy clearly commands industry support, with 85% of levy-paying employers voting in favour of it in 2025, representing 98% of the levy paid. The levy system plays a vital role in developing a consistent pipeline of home-grown engineering construction workers. According to research commissioned by the ECITB in 2024, 65% of employers felt that, without the levy and grant system, the training would not take place. In an increasingly fragile geopolitical climate, it is vital that we have a well-trained domestic talent pool across those sectors. The levy works because it is driven by industry need. Companies understand their workforce requirements far better than Whitehall ever could, and we should be empowering businesses to create jobs, not burdening them with ever greater costs and then attempting to compensate through Government schemes that seek to manage the consequences of labour shortages after they have arisen. One reason levy rates are not being increased is that employers are already facing higher operating costs, not least because of Labour’s damaging national insurance hikes. That is classic Labour economics: making it more expensive to hire people, then intervening with subsidies to solve a problem of the Government’s own making. As I have said before, most employers would rather keep more of what they earn and invest it themselves than have the Government take with one hand and give a little back with the other. I believe such details are included in the explanatory note. The levy proposals are expected to raise a total of £137.9 million over the levy periods between this year and 2028. We must ensure that this levy delivers the workforce that the industry needs. More than 70% of employers are now experiencing significant hiring challenges, up from 53% in 2021. According to the ECITB’s 2025 report, the main reasons for skills shortages include “a shortage of qualifications and skills among candidates, a mismatch between candidate expectations and what employers can offer, a limited applicant volume, mobility and location issues, and increased competition among employers and other sectors.” To make matters worse, the engineering construction industry faces an upcoming wave of retirements. Almost 15% of the workforce are already over the age of 60. Workers in craft roles, in particular, are in short supply. Concerningly, about one in four welders and one in five pipefitters are over 60. Although the number of workers under 30 has slightly increased since 2021, from 14.7% to 16.8%, new entrants are not yet arriving quickly enough to offset experienced workers leaving the industry. We know that the ECITB invested £28 million in training grants and new entrant programmes in 2024, supporting more than 2,000 new entrant starts, including 1,000 apprentice starts and more than 500 graduates. That is to be welcomed, but those numbers must keep growing if the industry is to replace retiring workers while simultaneously expanding the workforce needed for future projects. The industry will face peak demand for workers in four years’ time, and 40,000 extra workers will be needed for major projects by 2030, according to ECITB forecasts. That does not even take into account the demand in manufacturing sectors not covered by the ECITB. I accept that the Minister said that 5,000 places have been filled but, given that 40,000 figure, we will need further work on this. Can the Minister outline what further steps the Government are taking, alongside the ECITB’s work, to attract new entrants into the workforce? Given the significant training costs that employers incur, does he believe that current ECITB grant support is sufficient to incentivise employers to expand recruitment, particularly in occupations facing the greatest shortages? We know that retention is equally critical, so could he confirm what proportion of apprentices, graduates and new entrants supported through the ECITB are still working in the industry 12 months after completing their training? The Government have recently consulted on proposals to bring together the Construction Industry Training Board and the ECITB in a single body. As those responses are considered, I would welcome further clarification from the Minister on how the specialist needs of the engineering construction sector will be protected. Constituencies such as mine rely on highly skilled engineering and technical workers to support major defence and nuclear infrastructure, but we also need construction workers to build new homes and the like, and it is important that those skills are not overlooked within a larger organisation. I want to ask the Minister another question, if I may. Since the removal of local training groups by the Construction Industry Training Board, I have heard that money for regional employer networks has not been found in certain regions, and as a result those networks have not been properly set up. We have debated that point in the past, and I appreciate that it is not entirely related, but it is about employment and training. How is the Department working to mitigate the apparent failure of the regional employer network hubs that were being set up? To conclude, the engineering construction industry requires a strong pipeline of skilled workers. There is clear evidence that employers continue to support the levy system, but I would welcome the Minister’s response to the points I have raised about recruitment, retention and the future direction of the ECITB. If we are serious about delivering our ambitions on energy, infrastructure and industrial growth, we must be equally serious about investing in the workforce that will make those ambitions a reality.

The levy proposals may sound technical, but at their heart they are about investing in people and in Britain’s future, because, let us be honest, everything we touch and see is supported, repaired and built by these industries. As the Labour MP for Portsmouth North, this debate matters deeply to me. Portsmouth is proud of its industrial heritage. Our city once helped to build and maintain the ships that defended our country. Skilled engineering and trade shaped our communities for generations, but many people in my constituency also know what it feels like to be left behind.

Too many of those skilled industrial jobs have disappeared and too many young people today do not see the same opportunities that previous generations had. When we talk about levies like this, we are really talking about whether today’s young people will be given the opportunities that their parents and grandparents had. It is about creating the next generation of engineers and skilled workers who will build, maintain and modernise the infrastructure our country depends on. For many young people, particularly those who do not choose the traditional university route, apprenticeships offer a pathway into secure, highly skilled and well-paid work. By supporting the levy, we are investing in those opportunities and in the workforce our economy will need for decades to come. We need to ensure that the levy enables maximum opportunity and flexibility, for example by supporting those in the construction industry to use the levy creatively for transport by maybe providing driving lessons, as it is not easy to get public transport to building sites at the hours and times that people need to be attending. Will the Minister work with me to consider how we can use the levy flexibly across the sector? The truth is that our ambitions for clean energy, advanced manufacturing, industrial decarbonisation and major infrastructure projects will succeed only if we have the skilled workforce to deliver them. No single employer can solve the skills shortages alone. A collective approach allows industry to invest together in training, ensuring we develop not only the workforce we need today but the workforce for tomorrow. We need to find a way to ensure that larger businesses who do not use their full levy work to support the smaller businesses that need it. Earlier today, the all-party parliamentary group for tradespeople held a roundtable with Checkatrade, presenting new research into young people’s attitudes towards careers in the trades. The findings were encouraging. Almost half are considering becoming a plumber, builder or electrician, while 40% of under-25s now say an apprenticeship is more appealing than a degree. Just 10 years ago, that stood at 3%. An apprenticeship is slowly becoming their first choice. That is a remarkable shift, but it also creates a responsibility. If more young people want to pursue skilled trades, we must make sure the training and opportunities are there. That is particularly important when more than 1 million young people are currently not in education, employment or training. Will the Minister support cross-party, cross-Government working to ensure that this opportunity is available in Portsmouth, where it is much needed and much wanted? I also know there has been a consultation taking place on the future of the ECITB and the CITB. I ask the Minister to engage with the APPG for tradespeople on those discussions and on the progress that will be made. Finally, there is a wider national interest at stake. Engineering construction underpins our critical national infrastructure, from our energy networks to defence facilities. In an increasingly uncertain world, Britain cannot rely solely on importing the skills we need. We must develop the home-grown talent, and indeed the city-grown talent, that strengthens both our economy and our national resilience. To do that, we must recognise the barriers to taking up and completing apprenticeships, and ensure we remove them. For communities such as Portsmouth North, this is about restoring opportunity. It is about giving young people the chance to learn a trade, earn a good wage, build a rewarding career and take pride in contributing to Britain’s future, as they once did in my city.

I commend the hon. Lady for her comments. On opportunities for apprenticeships, whether in construction or whatever they may be, they should also be available in, for instance, fishing and farming. Does she agree that there should be equality of opportunity for women and men to seize apprenticeships, because both can do the job equally well?

As someone who studied STEM—science, technology, engineering and maths—subjects at college, I agree with the hon. Member. We need to ensure that our young people have the maximum number of opportunities to give our country resilience, whether that is in defence, farming or maritime—also something close to my heart—so I whole heartedly agree with him. For those reasons, I am pleased to support the proposals.

I call the Liberal Democrat spokesperson.

Growing the economy is one of the essential duties of the Government, and the levy is a key part of ensuring that productivity is part of that agenda. The levy gives the opportunity to grow core industries and infrastructure, and to change our economy so that we become more environmentally sound, tackle climate change and have a cleaner economy, which is essential. Many of the jobs included in the levy help achieve that. Colleagues have already alluded to the more than 1 million NEETs that are in our communities, and we know that this issue can be tackled through the levy. As Liberal Democrats, we believe in working in partnership with employers and educationalists, and we know that this can be achieved through the levy. Torbay is one of five core areas of opportunity for electronics and photonics across the United Kingdom. Companies such as Bay Photonics and Gooch & Housego work in partnership with South Devon college to ensure that there is a pipeline of opportunities for young people in Devon. As Liberal Democrats, we warmly welcome the proposals before us.

At the outset, I draw attention to my membership of GMB and Unite, both of which organise workers in the engineering construction sector. It is a pleasure to speak in this SI debate, which may be auspicious as, depending on the Government’s future reform of the sector, we may be moving towards longer-term settlements for levy changes on account of the consultation that closed two weeks ago. Industrial training boards once covered a much wider share of the economy, before many of them were sadly scrapped in the early 1980s. It is difficult to imagine a role in the modern economy for the Wool, Jute and Flax Industry Training Board, but it is worth reflecting that, in the past, training boards oversaw some important skills transitions—particularly the Gas Industry Training Board’s role in the highly successful conversion from town gas to natural gas. As we think about the future of home heating, perhaps we would be in a stronger position today if that body still existed. Thankfully, both the CITB and the ECITB have survived, and are now modern, 21st-century institutions. Engineering construction refers to that aspect of the construction industry that crosses beyond design into implementation, covering everything from bridges to tunnels, and from energy from waste-plants to High Speed 2 and new nuclear sites. In other words, if we are to build the infrastructure that the UK needs, we need that steady pipeline of skills. Industry training boards are not the whole of the answer, but they are an important part of it. Construction productivity is lower in the UK than in some comparable countries, such as Germany and the Netherlands. The problems in our country are deep seated: 38% of engineering construction workers are aged 50 or over, rising to 40% in the oil and gas sector. Although some progress has been made, there are still critical shortages for skills such as plating and welding. That is an issue that the Transport Committee, of which the Opposition spokesperson, the hon. Member for South West Devon (Rebecca Smith) is a member, looked at. We repeatedly heard that shortages in those key skills are holding back the UK’s ability to deliver major products, as well as raising costs for taxpayers. This statutory instrument is necessary to continue the provision of essential skills training. It carries forward an effective 1.2% levy on on-site net labour costs and 0.33% on off-site costs—rates unchanged since 2023. There is clearly a good level of satisfaction in the quality of individual courses, because the share of employers who voted in favour of the levy went up slightly in this round. This statutory instrument should raise around £138 million over the next three years. To give an idea of the scale of the training that it delivers, in 2024, the ECITB supported almost 2,200 new entrant starts, and 64,000 people were trained on ECITB courses and other products. We have heard a lot, rightly, about employment in the North sea oil and gas sector. Many workers in that sector feel a great sense of frustration because they know that their skills are transferable, but there has not always been sufficient recognition across related sectors of the transferability of those skills. Indeed, attempts to create a skills passport under the previous Government ran into some frustrations and ran over in terms of timing. I think it is important to quote the three North sea trade unions—GMB, Unite and RMT—in respect of the ECITB’s connected competence programme: “The Trade Unions have been calling for a standardised, fair and transparent approach to competence and skills assessment for several years and we welcome Connected Competence. We sincerely hope this initiative is adopted and utilised by all contractors and industry bodies… This would truly enable workers to transition around the energy sector and help maintain and develop a…skills base. This is good news for both workers and the wider UK economy.” Clearly the value of the ECITB does extend beyond the provision of training courses, as important as that is. We have heard about the Government’s reform programme, which, in fairness, was prompted by the independent review commissioned under the previous Government. At the heart of those proposals is the proposed merger of the CITB and the ECITB, with the justification being more effective long-term planning and strategic decision making on which courses should receive investment. I am sure that the whole House will agree that it is important that we realise those aims. At the same time, however, while the construction industry and engineering construction are allied trades, they do have important differences. I think it would be helpful if we could hear about how the distinctive nature of engineering construction skills requirements would be protected should the merger go ahead. The consultation, as we have heard, has closed only recently, but it would be appreciated if the Minister was able to give any information on when he anticipates that the Government will respond in full. I wonder whether in the short time left I might make a point about workforce representation on the ECITB—I have previously raised a related point about the CITB. When these boards were established in the 1960s, there was equal 50:50 representation on the boards of the industry training schemes for trade union representatives, representing the workers, and employer representation. Over the years—it was not an immediate process—the trade union representatives were gradually squeezed off both boards to the point where there is now no trade union representation on the boards of either the CITB or the ECITB. The trade unions are represented on a subsidiary advisory board, but this is of lesser status, and it means that they are not in the room when the core decisions are made. As we approach the point of potentially wholesale ITB reform, I wonder whether we could take this opportunity to right what was, I think, a mistake, which was removing that direct worker voice from the boards of these organisations, whether through the continued stand-alone, separate existence of the ECITB or CITB or otherwise. I wonder whether the Minister would provide some information on that proposal either in writing or when he sums up.