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Government industrial strategy light on construction skills

The deadline for responses to the UK Government’s industrial strategy green paper (published on 23 January 2017) passed last week, and it’s been interesting to monitor some of the responses that are now being published (here is what the Open Data Institute had to say, for example).

Little mention of construction

But before we look quickly at two of the responses, what did the green paper set out to do for construction? Well, it mentioned construction just seven times (excluding notes and photo acknowledgements) in 138 pages. And the pressing challenge of construction skills shortages is only fleetingly addressed on page 53:

“There have also been problems with the delivery of schemes. Projects have been delayed by years and provided at excessive cost. There has been improvement in recent years, but the local planning and consent system still remains a contributing factor in some instances. There has also been fragmentation in the construction sector and its supply chain, with businesses often unable to deliver long term investment at large scale. This is combined with shortages in key construction skills.”

However, it does highlight some “acute and urgent skills shortages in key industrial sectors including infrastructure and the nuclear industry”, noting that in some sectors (road and rail, for example) action is already being taken through the creation of sector-specific national colleges. But it highlights:

“… previous efforts by the Government and industry to forecast skills shortages have lacked the accuracy to enable timely and effective action, and that further action could be taken to ensure that we can better identify and address future shortages.” (p.45)

Clearly, we feel these are areas where SkillsPlanner could help, particularly if central and local government, plus industry and training organisations, collaborated better.

Developing skills

The subject of ‘skills,’ on the other hand, is a central theme in the consultation paper. The document discusses ten pillars to its strategy, of which the second is Developing skills:

Developing skills – we must help people and businesses to thrive by: ensuring everyone has the basic skills needed in a modern economy; building a new system of technical education to benefit the half of young people who do not go to university; boosting STEM (science, technology, engineering and maths) skills, digital skills and numeracy; and by raising skill levels in lagging areas.” (p.11)

On these ‘lagging areas’, it points out that we have a shortage of technical-level skills, that we rank 16th out of 20 OECD countries for the proportion of people with technical qualifications, and that we have particular skills shortages in sectors that depend on STEM subjects (p.16). Alarmingly, when, within the next two decades, 90 per cent of jobs will require some digital proficiency, 23 per cent of adults lack basic digital skills.

It also suggests that industry has to help shape qualifications and the curriculum – for technical qualifications in particular – to ensure they are useful to future employers (p.37). Much of the skills strategy reflects thinking already shared in the July 2016 Skills plan (post).

AoC and ICE responses

One of our partners on the SkillsPlanner project is the Association of Colleges (AoC), and its response (delivered jointly with the Open University) to the consultation paper strongly welcomes the focus on developing skills. It calls for:

“a coherent national skills strategy, designed with flexibility to meet individual’s needs and circumstances and those of employers; one that pulls together and builds on the best of what is already out there through collaboration and partnership.”

Given the importance placed on infrastructure in the consultation paper, the Institution of Civil Engineers’ response is particularly pertinent, and in the first of its three key recommendations, puts “demand scenarios” and “foresight on skills needs” right at the heart of future planning:

Regional infrastructure pipelines should be developed to address skills gaps
Realising growth through infrastructure requires improved skills provision. To give a fuller picture of demand scenarios, regional infrastructure pipelines identifying upcoming projects and providing foresight on skills needs, should be put in place.

Construction “on a knife-edge”

The latest Construction Skills Network report from the Construction Industry Training Board (CITB) suggests the health of the construction industry over the next five years is on a knife-edge, heavily dependent of a few politically sensitive infrastructure projects of huge scope, according to new industry forecasts.

Industry fortunes depend on smooth progress for big projects like the £18bn Hinkley Point C and £14bn Wylfa Newydd nuclear power stations, and the £55bn HS2 rail project.

The 2017-2021 Construction Skills Network (CSN) report predicts growth of 1.7% over the next five years, with 179,000 jobs to be created, reports The Construction Index this week.

Arcadis Brexit imageA year ago (read our blog post), before the EU referendum, CSN was forecasting 2.5% average annual growth and 232,000 new jobs needed. After the referendum, CSN downgraded its growth forecast to 2% a year and industry-wide recruitment need to 157,000 (we noted the potential Brexit impact in June 2016, and highlighted the Brexit views of Arcadis in November 2016 too).

The new CSN forecast suggests the fortunes of the post-Brexit construction industry are heavily dependent on the big politically sensitive infrastructure projects starting main works on time as infrastructure represents 45% of all predicted construction growth over the next five years.

Brexit impact

With the UK withdrawing from the EU, job growth in the UK construction industry will be slower than indicated in last year’s report, but construction overall still needs 35,000 new workers every year.

As these projects are particularly politically sensitive, the report makes clear that the forecasts are heavily qualified, making it unclear what weight should be put upon them. “All predictions for the construction sector are made against a backdrop of ongoing political and economic uncertainty. The impact on the construction pipeline of Britain’s vote to leave the European Union is one of the most significant unknowns,” the report says.

Infrastructure key

It adds:

“As wider economic turbulence can affect many parts of construction, the commitment to infrastructure is helpful to the forecast. But, with output growth so reliant on these major projects, any shifting of the goalposts on, for example HS2 or nuclear new build could be felt throughout the industry. If, for example, Hinkley was taken out of the pipeline, total construction output for 2021 would be 0.8% lower than currently predicted. And the reliance on large infrastructure projects means that forecasts, particularly those made over the longer term, are less balanced than in the past.

“However, the changing of the guard at the top of government in the UK has, so far, not affected its commitment to the National Infrastructure Delivery Plan. The government is still pledged to invest over £100 billion in infrastructure by 2021.”

It continues:

“Profitability remains a concern, with the volatility of material and labour costs squeezing margins. The situation is not helped by deteriorating levels of productivity, and there is also the prospect of a potential gap in the labour market resulting from any changes to immigration policy.”

The CSN report shows there will be job opportunities in particular for carpenters (+3,850 per year), electricians and insulators (+2,250), process managers (+2,150) and a range of IT and other technical workers (+5,240).

CITB director of policy Steve Radley said:

“We expect construction to keep defying the economic headwinds, with almost half of its growth coming from Hinkley, HS2 and Wylfa and other infrastructure projects.  These huge projects give our industry a great chance to seize the initiative on skills and start investing in the next generation and upskilling the current one. So it’s vital that we don’t throw this opportunity away by allowing these projects to slip or get squeezed together and worsen the pressure on key skills.”

CITB interim chief executive Sarah Beale said:

“While we are forecasting slower growth for our industry than we were last year, employers will still be creating tens of thousands of new jobs. We will be working with employers to attract new talent into our industry and to train them for rewarding careers in the sector.

“While we have factored Brexit into this forecast, there remain many unknowns to life after leaving the EU. We will be working with our industry to understand what it means for our migrant workforce and what we must do to attract and grow more of our own.”

Housing white paper: little new on skills

Fixing our broken housing market

The Government’s new Housing White Paper, Fixing our Broken Housing Market, mentions skills 20 times (most of the mentions are on page 41) in a largely underwhelming document over 100 pages long. However, it doesn’t say anything particularly new or radical about skills – though this is perhaps to be expected from a Conservative Government writing about an inherently conservative industry (and house-building is, arguably, the most conservative sector within construction).

It makes a passing mention of Mark Farmer’s review, Modernise or Die, published in October 2016 (read our post), touching on his advocacy of offsite fabrication (read this Construction Index summary, for example), and acknowledges that the industry faces particular challenges in certain regions, such as London and the South East, as Brexit looms. It continues:

“This is an important moment and we should make the most of the opportunity for industry to invest in its workforce, alongside tackling the issues raised by the Farmer Review. The larger companies need to take responsibility for ensuring that they have a sustainable supply chain, working with contractors to address skills requirements.”

Three areas are singled out for Government action. It says it will:

  • Post-16 Skills Plan“change the way the Government supports training in the construction industry” – This will include the conclusion of an ongoing review, chaired by Paul Morrell, of the Construction Industry Training Board’s purpose, functions and operations, with the government looking to “ensure that developers benefitting from public funding use the projects to train the workforce of the future.”
  • “launch a new route into construction in September 2019” – as announced in the Skills Plan produced in July 2016 (blog post), it says it will “streamline the number of courses available and improve quality and employability”
  • work across Government, with the Construction Leadership Council, to challenge house builders and other construction companies to deliver their part of the bargain.”

The white paper then highlights what can be achieved from investing in training as part of major construction programmes such as Crossrail, to see whether this approach can be applied more broadly in the construction sector, particularly by holding developers and local authorities to account. This is mainly about improving transparency of the end-to-end house building process, and identifying where blockages lie (encouragingly there are three mentions of “transparent data”). This could be an areas where SkillsPlanner’s modelling of supply and demand of construction skills could play a crucial role, as Mark Farmer pointed out last year.

farmer review cover“The increasing importance of data means that such approaches would better enable the business case for investment in training and new ways of delivering by better aligning investment to a demand pipeline. … The culture of ‘data silos’ within the industry needs to be broken as part of the wider societal democratisation of data.”

 

SkillsPlanner Launch

Tideway Andy Mitchell at SkillsPlanner launchThe SkillsPlanner project was formally launched on 24 February 2016 at the Institution of Civil Engineers in London. Over 130 guests listened as programme director Rebecca Lovelace introduced the project, followed by keynote speakers Andy Mitchell CBE, CEO of Tideway (right), and Sir Nigel Shadbolt, founding partner of Seme4 – both organisations are SkillsPlanner partners.

Videos


Launch presentations

The launch presentations (mainly comprising Sir Nigel Shadbolt’s slides) are available via Slideshare, or click the image (below) to open a PDF version (7.4MB) – this will open in a new tab.

SkillsPlanner launch title slide

Listen to our podcast of Tideway’s Andy Mitchell talking about the importance of investing in skills to support our major infrastructure projects (Click on image below – SoundCloud will open in a new tab).

Tideway Andy Mitchell at SkillsPlanner launch

Panel discussion

Following the launch presentations, an expert panel fielded questions from the audience.

Other content

  • Twitter stats SkillsPlanner 24 FebDuring the evening, #SkillsPlanner featured heavily on Twitter, with over 200 tweets from more than 50 contributors. Read our Storify stream from the evening.
  • Read our blog post about the event, and about the buzz it created.
  • See how some SkillsPlanner partners marked the event – like SERIO.