Most big companies shed their direct labour force after the boom and bust of the last decade, relying instead on casual labour. The building industry is the only one to impose a training levy.
The Construction Industry Training Board charges 2 per cent for casual workers and 0.25 per cent for directly employed labour. The levy reflects the amount spent on pension, sick pay and national insurance.
Three-quarters of the levy is based on armies of subcontracted casual workers. Much of this cash is supporting courses that colleges would otherwise have to abandon.
The crackdown by the Department of Social Security on the VAT evaders will see a swift return to direct employment, the CITB forecasts.
While not condoning evasion, Hugh Try, CITB chairman, said this threatens the board's role in funding college courses and developing new national vocational qualifications.
"We get Pounds 25 million through the TECs each year and we raise Pounds 60m through the levy," he said. "Any drop in the levy income will affect our ability to fund college construction courses, work placement and private training providers. It would hit our advisory service and threaten the 20 or so NVQs we are developing across a wide range of construction occupations. "
By redistributing money raised from labour-only subcontractors, the CITB is also able to subsidise training among the 25,000 or so small building firms that make up a third of its corporate membership. Firms whose annual turnover is below Pounds 61,000 are exempted from the CITB's levy.
A CITB working party is studying how the changes in employment will affect training. Mr Try claims to have the full support of the industry for increasing the direct employed levy to 0.75 or 1 per cent from 1998. "We are talking of hundreds of thousands of people moving back into direct employment, so we've got to adjust the percentages employers are paying," he said.
Mr Try said companies should have room to take apprentices and increase training on the job. This should reverse the slide in entrants which dropped from 12,700 to under 11,000 this year. But there is still concern over the loss of wider skills training offered by college courses. College leaders say the Government must plough cash from the crackdown into training.