To recoup previous losses, the training levy mechanism is being revamped, with details to be announced in the next few weeks.
Chairman James Wates said: “We had planned for a £5.5m surplus, in the event, better than expected commercial income, a large fall in grant claims as the industry scaled back its training activity and internal cost efficiencies, including a 20% reduction in headcount, has resulted in a £9m surplus in working capital in 2010 and a deficit recovery at the beginning of 2011 rather than the end.
“While the last two years have been particularly tough for industry and CITB-ConstructionSkills, we are now in a better position to add value to industry by reinvesting this surplus. We know levy income will drop between 2011 and 2013 - just as the demand for grant will increase as the industry moves out of recession.”
Speaking about measures to give a helping hand to recession-hit businesses in the short term, Mr Wates added: “What is clear is that we need to be agile and get this skills funding to where it is needed as quickly as possible to safeguard new entrant recruitment and other training activities and support the industry as it returns to growth. The details of the new funding arrangements will be communicated to federations and employers over the coming weeks to ensure there is good take-up of what’s being made available.”
The board has also agreed to invest an additional £25m over the next three years in specific skills and training activities which will support the industry as it comes out of the recession.
Proposed investment includes:
- A cash injection of £2m in 2011/12 to the oversubscribed Management and Supervisory Development Programme
- Approximately £2m in 2011-13 to support specific training programmes for the specialist sectors not currently supported through the mainstream grant scheme
- A further £11m of funds for the grant scheme in 2011-13 - details to be ratified by the board in April
- £10m in 2011-12 to support business growth and prepare the industry for the upturn. This will be aimed at supporting activities such as collaborative working through supply chains, upskilling the workforce to take advantage of the low carbon economy and pump priming investment in emerging technologies and new work practices.
Applications for funding will be invited from companies, federations and training groups.
The funding, which is designed to increase skills and training activity and help businesses prepare for forecasted growth in 2012, comes after two difficult years at CITB-ConstructionSkills, where unprecedented demand for grants and falling levy income resulted in the organisation recording a £24.7m deficit over two years.
In 2010, following calls from the government to restore its working capital, CITB-ConstructionSkills’ board implemented a four-point plan to put the organisation on a firmer footing. The plan included cost savings and efficiency measures, a drive to secure income from sources other than the levy to cover operating costs, and steps to make the grants scheme more affordable.
In its financial forecast for 2010, CITB-ConstructionSkills outlined plans to return all employer funds back to industry in the form of grants and other direct support and to generate a £5.5m surplus from commercial activities to help restore working capital. The aim was to address the deficit by the end of 2011. Deficit recovery has now been started a year ahead of that schedule.
Mr Wates said: “Our projections, based on current analysis, show that demand for Employer Funds will outstrip levy in both 2012 and 2013 so we need to start taking a longer term view and ensure that some of the 2010 surplus can be made available further down the line to support employers when they will really need it. The good news is that we are now in a strong position to help employers at a time when they will need our support the most.”
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