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The Government must review its approach to apprenticeships following new statistics published which show that construction apprenticeship starts have plummeted by almost half.

According to the Federation of Master Builders (FMB), in March 2019 there were only 694 Construction, Planning and the Built Environment apprenticeship starts compared with 1,247 in March 2018.

Brian Berry, Chief Executive of the Federation of Master Builders, said “Construction apprenticeship starts have suffered a serious hit and we now need decisive action from the Government in order to reverse this decline. The Government must accept the recommendation made in the Review of Post-18 Education and Funding, to make provision for full funding, at all ages, for first qualifications at Level 2 and 3. The Government is uniquely placed to drive the apprenticeship agenda, and if Ministers want to achieve their target of three million apprenticeship starts by the end of next year, they must review apprenticeship policy, including the Apprenticeship Levy.”

“Of course the construction industry itself must do more to rally around a shared ambition to promote the industry and all its merits, such as innovation, design and entrepreneurship. The drop in starts by almost half should sound the alarm that we aren’t doing enough to get the message out there. If we don’t address the skills shortage by increasing training and apprenticeships, the construction industry won’t be able to expand and grow. Introducing a mandatory licensing scheme for UK construction could help create the culture change our industry needs by improving our reputation through increased quality and professionalism and thus make us more attractive to new entrants.”

The Apprenticeship Levy is exacerbating the construction skills shortage and must be reformed urgently. The latest statistics released by the Department for Education show that the number of new construction apprenticeship starts for January 2019 has fallen to 950 compared with 1,216 the previous year. In particular, the number of starts for Level 2 apprenticeships, that is equivalent to GCSE level, has dropped to 555 in January 2019 from 712 in January 2018.

Brian Berry, Chief Executive of the FMB, said “These latest statistics point to a serious failure of the Government’s Apprenticeship Levy. Their publication comes at a time when 64 per cent of construction firms are already struggling to hire carpenters and joiners, and 61 per cent are struggling to hire bricklayers. The Government needs to make the Apprenticeship Levy work for small construction firms by increasing the proportion of Apprenticeship Levy vouchers that are permitted to be passed down the supply chain from large to small companies from 25 per cent to 100 per cent. After all, small and medium-sized construction firms train two-thirds of all apprentices in our sector and more importantly, they offer training in the skills the industry actually needs – the onsite trades like plasterers and plumbers.”

“Looking ahead, as part of its post-Brexit immigration proposals, Ministers want to close the door to Level 2 tradespeople by dubbing them ‘low skilled’ and preventing them from entering and working in the UK for more than 12 months at a time. It takes years to train quality tradespeople to become a Level 2 worker and even if we did have the time to train at this scale, there aren’t enough UK-born workers to go around as we are almost at full employment. The construction industry is facing a cliff-edge when it comes to skill shortages, and I’m concerned that we will not be able to continue growing and delivering on the Government’s housing and infrastructure targets if this state of affairs continues. The Government must fundamentally rethink the Apprenticeship Levy and its post-Brexit immigration proposals, or else the construction sector will not be able to deliver what’s required.”

A OnePoll survey commissioned by the Royal Institution of Chartered Surveyors (RICS) found that while reception of the apprenticeship levy looks positive, findings indicate concern for the more immediate pipeline of skilled workers in the construction industry.

Findings in brief

  • 42% of construction workers feel more confidence for the growing talent pool as a result of apprenticeship levy
  • 43% have felt a positive impact from apprenticeship levy
  • However, there are still concerns over skills available in UK as 56% think Government and construction workers should help skilled workers from abroad remain post-Brexit
  • 86% of construction workers agree that businesses should focus on skills and abilities for new hires

Is the levy working?

Though the apprenticeship levy only came into force in April 2017, indicators show that it has been well received so far. 43% of construction workers have noticed a positive impact and 42% say that they feel more confident in the growing talent pool as a result of the levy.

Since the introduction of the Levy, a third (36%) have noticed an increase in the number of apprentices employed, and 30% have also seen an increase in the number of apprenticeship applicants, although 15% said they now have more paperwork to fill in. And it would seem those in the south of England are the most positive about the levy, with more than the national average reporting positive impact. This rose to almost two thirds (63%) of construction workers in London and over half (52%) in the South West.
Are apprenticeships enough?

However, while the long-term talent pipeline outlook looks promising, there are concerns over home-grown talent being able to fulfil the demand for skills needed in the construction industry in the shorter term. Output in the construction market is expected to grow over the next 12 months, yet 53% of construction workers say that labour shortages are an issue for business.

With a predicted 8% of the UK’s construction workforce made up of European nationals[2], over half (56%) of construction workers across all levels feel that construction companies and Government should work together to ensure skilled workers in the sector can remain in the UK. This rises to over two thirds (66%) in London and is most keenly felt among senior and middle managers in construction (71% and 67%, respectively).

An RICS report found that 30% of construction professionals said that hiring non-UK workers was important to the success of their businesses. And this shows when it comes to priorities for hiring within the industry.

Barry Cullen, RICS Future Talent Director said “It is great to see such a positive reaction to the apprenticeship levy from the industry so early on and RICS is working with members and employers on schools programmes, to engage and inspire more young people into surveying, to fill a more diverse pipeline of talent. Encouraging the next generation and ensuring there is fresh and skilled talent to meet the demands of the future is vital to any industry’s success, and it’s clear that the construction industry is united in this belief.

“However, with Britain set to leave the European market we must ensure that we are not left in a skills vacuum. An estimated 176,000 EU citizens are employed in the construction business, so it is vital that government and businesses work together to ensure they are able to remain or risk leaving the industry short of the people they need.”

The 28% fall in apprenticeship starts between August 2017 and March 2018 compared with the same period the previous academic year suggests the Government needs to look again at the way the Apprenticeship Levy is working, according to the Federation of Master Builders (FMB).

Commenting on statistics published by the Department for Education (DfE), Brian Berry, Chief Executive of the FMB, said “The Government’s own statistics show a 28% plunge in apprenticeship starts over the current academic year so far. The Apprenticeship Levy was introduced in April 2017 to boost apprenticeship training across all business sectors but so far it seems to be having the opposite effect. Some reforms are obvious and need to be looked at more urgently now. The Government should allow large companies to pass more of their Levy vouchers down through their supply chains if the company itself is not in a position to train apprentices. Currently large firms are only permitted to pass 10% of their Levy funds down to their sub-contractors and others in their supply chain. There needs to be much greater flexibility than this. In the construction sector, larger firms often do not directly employ on-site tradespeople or directly train apprentices and so there is a real danger this industry and others will continue to fail to take advantage of the Apprenticeship Levy if we can’t change this.”

“These figures have been published shortly after the FMB’s latest research which shows that small construction firms are experiencing record highs in terms of skills shortages. In the long term, the only way we will be able to address the chronic skills crisis is by recruiting and training more new entrants. We know that 58% of builders are struggling to hire bricklayers and 55% are having difficulties finding carpenters and joiners. We need to iron out the flaws in the Apprenticeship Levy and reverse this decline in apprenticeships to give us the best chance of tackling these skills shortages.”

In a report, Consultancy firm Arcadis suggest that around 400,000+ new workers will be needed each year up until 2021, in order to keep up with ambitious plans within the construction sector – that’s the equivalent of one new person every 77 seconds!

Housebuilding

Plans outlined in the recent Housing Whitepaper are extremely positive for house builders, who will have government support and reduced restrictions to help them deliver the sheer volume of housing needed in Britain today. However, could the lack of skilled people in the sector prove to be a hindrance if left unaddressed?

The report says “When it comes to the much maligned ‘housing crisis’, there is no doubt that the sheer lack of people to physically build the homes we need is evident.

“Between now and 2026 the UK needs to build an additional 110,000 homes per annum on top of those currently projected in order to keep pace with our growing and ageing population.

“Housebuilding is a particularly labour intensive industry and although new technologies and increased off-site production are being implemented to reduce costs and increase productivity, the supply of labour is still one of the binding constrictions on output.

“Existing evidence suggests that the relationship between labour and number of houses that can be built is close to being linear. Therefore, in order to increase the number of homes being built the labour force employed in housebuilding needs to increase by the same share.”

Infrastructure

The report also touches on infrastructure. Britain currently has one of the most ambitious national infrastructure programmes in Europe. With HS2 and Crossrail underway and much more planned, companies in the industry will draw heavily on the common talent pool.

“Despite the uncertain outlook for the UK economy following Brexit, the government under Theresa May seems committed to drive the largest projects forward.

“Moreover, it is expected that the government will set aside more money for road and rail works in order to support the UK economy over the coming years.

“According to figures from the Construction Products Association, the infrastructure sector is projected to grow only by 1.2 percent in 2016. However, for the years from 2017 to 2020 it predicts a pick-up in infrastructure output of 30 percent. Increased demand for people in the infrastructure industry is calculated by assuming that the workforce has to expand in line with this growth.”

To read the full report, click here.

Construction apprenticeship starts in Great Britain are at a record high, according to figures released by the Construction Industry Training Board.

Since 2012 the figure of those joining a construction apprenticeship has continued to rise steadily each year from 17,528 in 2012 to 26,195 in 2017, a rise of 49%. This is the highest figure since the present way of recording apprenticeships began in 2003.

Recent figures for England show apprenticeship starts have dropped by a quarter across the whole economy during August to November 2017, from 155,600 to 114,380. Construction apprenticeships saw a marginal decline of just 150 starts, from 10,900 to 10,750.

The figures suggest that construction has bucked the overall trend in apprenticeships following the introduction of the Apprenticeship Levy.

Up to £10,250 of CITB grant funding is available to employers for every apprentice they employ. And with CITB research released last month predicting that over 158,000 new workers are needed in the next five years, there is no better time to encourage people to join the industry.

Mark Noonan, Industry Relations Director at CITB, said “Construction has faced a challenging time with Carillion’s unfortunate liquidation, but the industry response has shown how committed employers are to helping to develop young talent.

“While the overall picture for apprenticeship starts looks good at the moment, there is no room for complacency. We now need more employers to step forward to offer apprentices places so that they can start a rewarding career in construction and help build a better Britain.”

The Spring Budget includes plans that will be undoubtedly welcomed by professionals working within the construction industry.

The announcement of new funding to build 110 free schools and the allocation of £103 million to tackle infrastructure issues in the midlands and the north of England indicates that there is money being spent and the government will be calling on us as an industry to support their plans.

Also mentioned in the Budget, was a stronger growth forecast for the UK economy to 2% in 2017 which will likely have a greater positive impact upon the industry’s fortunes over the coming year.

Tackling the skills gap

Labour supply and skill shortages have long been a major concern for construction; an issue that has been thrown into sharper relief following the Brexit vote. The Government’s efforts to raise the status of vocational training, with the introduction of T-Levels, are a welcome step towards tackling this long term issue. The government will increase by more than 50 per cent the number of programme hours of training for 16-19 year olds on technical routes to more than 900 hours a year on average. This includes the completion of a high quality three-month industry work placement.

Responding to this topic, Brian Berry, Chief Executive of the Federation of Master Builders (FMB) said “The Chancellor clearly understands that the UK won’t address the productivity challenge unless we rethink our approach to technical and vocational education. T-Levels could be the answer if they genuinely rival A-Levels in the eyes of parents, teachers and young people. UK society as a whole has been guilty of putting too much emphasis on the academic route – this has made it more difficult for vital sectors like construction and house building to attract the talented people we need. In construction, we are suffering from a severe skills shortage and this is likely to worsen once we leave the EU and no longer have easy access to European labour. This £500 million funding announced today for T-Levels is therefore a welcome and much-needed boost.”

Construction professionals have stressed how despite the fallout following Brexit, we must focus our efforts on combatting the looming skills crisis by prioritising the introduction of new initiatives to attract workers into the various sectors that span the construction industry.

Thinking ahead

Chris Wood, CEO of Develop Training Limited, the UK’s leading training specialist in the utilities sector, commented “The skills shortage in the UK is a catastrophe waiting to happen, one that literally threatens to turn out Britain’s lights. A solution to the twin problems of a chronic skills shortage in our utilities industry and high youth unemployment is obvious – train young people to take the places of the ageing workforce, but it just isn’t happening at anything like the rate that it needs to be. The new PM and her Cabinet must make it a government priority to look into ways to correct this issue as a matter of extreme urgency.

“As householders and businesses in the UK wonder about a post-Brexit future, they should remember that the utilities sector is still facing a potentially devastating skills shortage. The sector is constantly on a recruitment drive but is simply not receiving the response it requires.

“We all need confidence that our lights will stay on, our heating will continue to keep our houses warm and our taps keep providing running water, but the day is fast approaching when there will simply not be enough workers to do these vital jobs.”

Home-grown talent

Brian Berry of the Federation of Master Builders has also echoed concerns post-Brexit regarding the retention of skilled EU workers and the training of new talent. Berry said “We need to ensure that we invest in our own home-grown talent through apprenticeship training. We need to train more construction apprentices so we are not overly reliant on migrant workers from Europe or further afield. That’s why it’s so important that the Government gets the funding framework right for apprenticeships – when you consider that this whole policy area is currently in flux, and then you add Brexit into the mix, it’s no exaggeration to say that a few wrong moves by the Government could result in the skills crisis becoming a skills catastrophe. The next few years will bring unprecedented challenges to the construction and house building sector, and it’s only through close collaboration between the Government and industry that we’ll be able to overcome them.”

Diversity

Skanska, who recently won the Judges’ Supreme Award and Diversity Champion of the Year Award, have suggested that we need ensure the culture of our industry is both inviting and nurturing in order to alleviate the shortage long-term.

Mike Putnam, President and CEO Skanska UK, said “We believe that a diverse and inclusive culture is key to creating a successful and sustainable business. It will help us to create teams where people think differently, while making them better placed to understand the needs of the communities in which we work.

“It is through the way that our people embrace diversity and create an open and welcoming environment that we are able to work collaboratively – with our customers, joint venture and supply chain partners.”

Guest post from Managing Director of TDM Recruitment, Tom Morris:

At its pre-recession peak in 2008, the UK’s construction workforce was 2.58 million; a staggering amount. However even more confounding is the fact that by the end of quarter four last year, this had dropped by nearly 13 per cent to 2.25 million. The big problem is that those that were forced to leave the industry at the start of the recession have left a gaping skills gap behind them which is continuing to cause issues.

Before the recession hit, a variety of industry graduate training programmes were being run by contractors and developers in the residential sector and money was in plentiful supply. It was common practice for us to be arranging around 15 first interviews a week which now seems somewhat ridiculous given the way the industry has changed. Salaries were high and construction job openings were plentiful.

When the credit crunch hit in 2008, and the banking sector went into freefall, graduate training programmes were cut as being ‘non-core.’ They really didn’t get going again until 2013, and the old ways of actively promoting to universities to attract the best talent wasn’t until 2014.

The result was a four-year gap after the last tranche of graduates came into the industry before the crunch, and many of those arriving in 2007 and 2008 were shown the door when the recession hit. Now we are faced with an industry where those experienced late twentysomething and early thirtysomething graduates needed to team lead on projects are missing, and junior guys with perhaps only two or three years’ experience are being over promoted to fill the gap.

The worst irony is that now there is a lot of work to do to deliver on demand, particularly in the residential sector, but the new professionals aren’t there to deliver it, and many don’t want to return to the industry having been through a traumatic time in the late 2000s. At the same time there are lot of senior people who now want to step up to board level, meaning there is a excess of applicants for each position, and an oversupply of freelancers who left the industry during the recession and now command high rates and benefit from flexibility. This perfect storm has only begun to dawn on people relatively recently, but what can be done?

The way that some firms have tried to deal with this shortage in management skills is to throw money at the problem. However, it is hard to justify a £20,000 jump in salary for the same Senior Surveyor position in 12 months when the rest of the economy hasn’t kept pace. This sort of inflation-busting rise isn’t sustainable because the rest of the team is likely to want something similar and be demotivated if it isn’t given.

The construction industry had to make hard-headed commercial decisions as the recession bit into their profit margins, but some of those decisions are now coming home to roost in the form of the skills gap. Many staff were treated brutally, and some professionals with good experience are now reluctant to go back to work for the larger organisations which made large numbers of staff redundant, sometimes at very short notice.

The mind-set of candidates has changed and as a ‘sellers’ market’ employers need to be acutely aware of how. Before the recession they may have just looked at whoever was making the highest offer as salaries were very healthy, however graduates who have come into the industry since 2008 or perhaps knew people who went through a traumatic time have a different mind-set.

The experienced young candidates the sector desperately needs are much more focused on achieving genuine work-life balance and being part of an organisation with a strong set of values beyond simply making money. Recent graduates are from Generation Y and are asking employers ‘why would I want to work here?’ As the new graduate programmes will take some time to bed in, employers facing the challenge of delivering construction projects now need to be able to answer that question.