Hudson Contract Services Ltd, R (On the Application Of) v The Secretary Of State For Business, Innovation And Skills

A statutory levy order is lawful if its charging mechanism falls within the broad discretion conferred by the enabling Act and is not expressly or impliedly prohibited. Previous levy orders do not establish a binding requirement to charge by reference only to labour costs, to impose the levy once on the last payer, or to avoid recovery from different employers for the same work.

The presumption against double recovery is an aspect of the general presumption that Parliament intends reasonable consequences. It is readily rebutted where the scheme has statutory industry support, parliamentary approval, administrative advantages and a legitimate funding purpose. A court should also exercise caution when reviewing a polycentric resource-allocation decision in an area of limited judicial expertise.

The claimant provided contracting and payroll services for self-employed construction workers. It challenged the Industrial Training Levy (Construction Industry Training Board) Order 2015, principally article 7(2), read with article 7(3) and (4), which changed the levy formula for the third levy period.

The claimant argued that the new formula was ultra vires because it could produce recovery from more than one employer for the same work, could include plant and materials as well as labour, and could result in levy being charged in relation to work also attracting an engineering construction industry levy. Permission had been granted on the first three grounds of challenge.

The central issue was whether the Industrial Training Act 1982 authorised the Secretary of State to adopt that charging method.

1. The claim was dismissed. The challenged provisions of the Industrial Training Levy (Construction Industry Training Board) Order 2015 were within the statutory power.
2. The statutory purpose was not confined to funding particular training courses. The levy could fund the Board’s expenses, including administrative expenses and courses provided overseas or to workers in other industries. The 1982 Act did not prescribe a particular levy formula.
3. Previous legislation and levy orders did not establish a settled or customary restriction requiring levy to be calculated only by reference to emoluments or direct labour costs, or requiring an offset mechanism so that only the last employer in a payment chain paid levy. The historical use of per-capita systems reinforced that conclusion.
4. The possibility of double or multiple recovery from different employers did not make the scheme unlawful. No individual employer paid twice for the same work. Applying the approach in R (Edison First Power Ltd) v Secretary of State for the Environment, Transport and the Regions, the presumption against double recovery was weak and was rebutted by the statutory scheme, consultation, industry support, parliamentary approval and administrative simplification.
5. The levy could lawfully be calculated by reference to CIS contract payments, including elements attributable to plant or equipment. The statutory references to relevant emoluments imposed caps and defined parameters, but did not require the levy to be raised only from direct labour payments.
6. The same reasoning applied where work could generate a CITB levy and an ECITB levy payable by different employers. The 1982 Act did not expressly or by necessary implication prohibit that result. The fact that the two boards served different industries did not invalidate the CITB levy.

The levy’s uneven impact, absence of tax-style trueing-up and commercial burden on the claimant did not establish unfairness, oppression or ultra vires action.