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Government must act as construction apprenticeship starts drop by 44%

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.”

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CITB sets out solutions to construction industry skills challenges

The Construction Industry Training Board (CITB) has set out its plans to help the industry meet critical skills challenges and secure its future workforce.

CITB’s business plan for 2019-2021 responds to industry’s demands for it to become more strategic and better focused.

The plan outlines the ‘Big Six’ skills challenges, based on research and insight from construction employers across Great Britain.

They include:

  • making construction an attractive career to a broader range of recruits
  • developing a ‘site-ready’ workforce
  • getting more construction learners to join the industry
  • growing the number and diversity of apprentices
  • helping smaller firms invest in the training that can transform their business
  • boosting the number of assessors for vocational qualifications

With an ageing workforce and the potential of losing EU workers, the industry critically needs a new generation of skilled, motivated workers. So CITB is launching a nationwide careers campaign that will attract and inspire many more recruits from all walks of life.

This big, bold campaign will highlight the many fantastic and well-paid career opportunities available, reaching groups who have traditionally been underrepresented in the industry. It will provide clear information on how to get into construction, including through apprenticeships and work experience, and will showcase the support available, such as higher CITB funding rates for apprenticeships.

Construction firms also say they struggle to find site-ready recruits. CITB will tackle this head-on by expanding the Construction Skills Fund initiative launched last year, which is funded by the Department for Education and delivered by CITB.

With 26 onsite hubs now running across England, CITB will use industry funding to create a further 20 hubs to extend the scheme to Scotland, Wales and other regions in England. These new hubs will give thousands of local people valuable onsite experience, and deliver the work-ready candidates employers need.

Construction now has more than a million small and medium sized employers, making them essential contributors to the sector and the economy. Yet many smaller firms operate on wafer-thin profit margins, making it hard for them to invest in the training that can transform their business.

In 2018 CITB helped over 1400 smaller employers access £6m in training support through its Skills and Training Fund. In the coming year, we will continue to invest by growing this fund to £8m, reaching 1900 firms.

CITB Chief Executive Sarah Beale said “Our Business Plan identifies the most pressing skills challenges we face as an industry, and sets out the detail of how CITB will work with partners to address them.

“We’ve built the plan by listening to employers and their needs, and making sure CITB is focused on a small number of really critical projects that it is best placed to deliver, whilst improving our services too.

“Working with employers, learners and education, I’m confident that this plan will help transform construction and make it fit for the future.”

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Housing delivery will be hampered by skills shortage, warns experts

Small house builders predict that skills shortages in the building industry will hamper housing delivery and will eventually overtake access to finance as a bigger barrier to building new homes, according to recent research conducted by industry experts, the Federation of Master Builders.

Key results from the FMB’s House Builders’ Survey, the only annual assessment of small and medium sized (SME) house builders in England, include:

  • A lack of available and viable land tops the list as the most commonly cited barrier (59%) to increasing housing delivery and almost two-thirds of SME house builders (62%) believe that the number of opportunities for small site development are actually decreasing (up from 54% in 2017)
  • The percentage of SME house builders saying that a shortage of skilled workers is a major barrier to their ability to build more new homes rose to 44% (up from 42% in 2017)
  • Nearly half of small house builders (46%) say access to finance is a major barrier to their ability to build more new homes
  • More than half (51%) of SME house builders view the planning system as a major constraint on their ability to grow and ‘inadequate resourcing of planning departments’ was again rated as the most significant cause of delay in the planning application process for the third year in a row
  • When asked to look ahead over the next three years, more firms cited skills shortages as a likely barrier to growth than access to finance

Brian Berry, Chief Executive of the FMB, said “Nearly half of builders believe the skills shortage is a major barrier to their ability to build new homes. The construction sector is heavily reliant on EU workers with just under one in ten workers in the sector born in the EU. Brexit, coupled with the end of free movement, threatens to further intensify the skills shortages we already face. Given that the UK will leave the EU in less than six months, house builders are understandably concerned that skills shortages could worsen and choke housing delivery. In order to combat this skills crisis, the construction industry needs to encourage more entrants into the industry and develop higher quality qualifications. It is critical therefore that the Government doesn’t pull the rug out from under the sector by introducing an inflexible and unresponsive immigration system.”

“Our research also shows that the Government must continue to address the issue of access to finance for SME house builders. Although concerns over access to finance have eased slightly in recent years, in part thanks to the Government’s funding schemes such as the Home Building Fund, there is more that can be done. Our research suggests that it is the low percentages of project cost that builders are able to borrow that remain the greatest financial barrier to increasing their levels of house building. This latest research suggests that if firms were able to borrow 80 per cent, rather than the current 60 to 65 per cent of project cost, SME builders would be able to bring forward on average 40 per cent more new homes. Given the ambitious house building targets the Government is working towards, we cannot afford to ignore such a chance to significantly increase housing delivery.”

“A lack of available and viable small sites tops the list of frustrations for SME house builders for the fourth year in a row. Worse still, nearly two-thirds of these small builders believe that the number of opportunities for small site development are decreasing. However, the recent reforms to the National Planning Policy Framework, which specify that 10 per cent of a local authority’s housing delivery must be on sites no larger than one hectare, will help to address this problem. This will help to speed up the delivery of homes and lead to a more diverse and resilient housing supply.”

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Apprenticeship levy is exacerbating construction skills shortage

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.”

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Over 50% need help to keep skilled workers post-Brexit

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.”

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Government backs plans to create new homes and jobs over next five years

Plans for public-sector land to be developed, which aim to bring forward 10,000 new homes, 14,000 new jobs and save taxpayers £37million in running costs.

Development plans which could see more than 10,000 new homes built across England and 14,000 new jobs created by 2024/25 are to be brought forward through a £15million government project.

The One Public Estate programme was launched in 2013 to make better use of public-sector sites, free up space for new homes and create jobs.

It encourages the emergency services, local councils and government departments to work more closely together by sharing sites and creating public-sector ‘hubs’ – where services are delivered in one place. So far, the programme has saved taxpayers £24million in running costs, created 5,745 new jobs and released land for the development of 3,336 new homes.

The latest round of the programme will see money and support given to more than 100 local public-sector partnerships across England, to bring forward proposals for a range of new projects on public-sector sites.

These include:

  • £680,000 for projects in Waltham Forest, including proposals to bring forward the redevelopment of the 100-year-old Whipps Cross Hospital and sites in public and private ownership for housing development in the Forest Road Corridor
  • £505,000 for projects in Devon and Torbay, including the regeneration of land around St David’s station in Exeter
  • £405,000 for projects in Northamptonshire, including plans to release land around Kettering railway station for the development of new houses and station improvements
  • £410,000 for projects in Worcestershire, including delivering new housing and regeneration around Redditch station, as part of the Rail Quarter development

The Minister for Implementation, Oliver Dowden, said “Getting the best use out of publicly-owned land can help to regenerate our towns and cities and give people improved access to the services they need.

“This programme shows that when government works smarter, with public authorities coming together, taxpayers get better value for money, new jobs are created and space is freed-up for vitally needed new homes.”

The One Public Estate programme is a joint initiative between the Cabinet Office, the Ministry of Housing, Communities & Local Government and the Local Government Association. It now covers 95% of all local authority areas in England.

Funding for the latest round of the programme will help with the creation of feasibility studies and masterplans for the potential development sites.

It is hoped the work will bring forward savings of £37million in public-sector running costs and allow the redevelopment of a large number of brownfield sites.

The Minister of State for Housing, Kit Malthouse, added “This government is committed to helping more people get on the housing ladder and restoring the dream of home ownership for a new generation. The One Public Estates programme will not only help more people find a home of their own, but also help create jobs and save taxpayers’ money.

“The latest projects to share £15million of funding will make a real difference to local communities and provide better services to residents.”

Lord Porter, Chairman of the Local Government Association, concluded “I’m pleased to see One Public Estate continue to grow from strength to strength. This latest round will see the programme now deliver more than 650 projects in total, all of which support councils to work with the wider public sector to deliver the best public services and place for their local communities.

“The delivery of new homes remains a national priority and with 95% of councils now part of the programme. It’s clear to see that local government remains committed to building the right homes for the places they serve.”

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New skills needed to harness true potential of offsite construction

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Offsite construction could revolutionise the construction industry and provide a solution to the UK housing shortage, but only if the sector develops the right skills.

Faster, Smarter, More Efficient: Building Skills for Offsite Construction shows that 42% of construction industry employers with over 100 staff expect to use offsite methods in five years’ time.

When asked about the use of offsite-specific construction materials and products, 100% said they expected the use of precast concrete panels to increase; 91% anticipated the use of precast concrete frame to rise.

At present however, offsite construction accounts for just 10% of industry output.

The report – which follows the recommendations set out in industry expert Mark Farmer’s government-backed review of UK construction – also reveals that nearly 50% of construction industry clients expect the use of offsite construction to increase over the next five years.

Offsite processes save time and money and can improve quality through pre-fabrication of components – from panels to fully fitted rooms.

Mark Farmer said “The urgency for modernisation has never been greater, set against an insidious backdrop of an ageing workforce and increasing concerns about the impact of Brexit.

“Any strategic shift towards pre-manufacturing and offsite construction creates an immediate requirement to define our future skills needs through collaboration between industry, educators, training providers and government.

“This is crucial to ensuring we can transition to a higher productivity, digitally enabled industry which inherently attracts more of the young talent we so desperately need. It should also set out clear opportunities for the existing construction workforce and indeed workers from other industries to reskill through a new family of career pathways.”

Steve Radley, Director of Policy at CITB, said “There is massive potential for offsite construction. The Government recently announced an additional £1.4bn of funding for affordable homes, with an increase in offsite construction set as an objective, representing a clear opportunity for growth in this area.

“The greatest potential currently lies within the housing and commercial sectors, where mass customisation can create the buildings we need more quickly and to higher standards. There are also opportunities to bring the benefits of offsite to large-scale infrastructure projects – some high profile examples include HS2 and Hinkley Point, which are already using offsite techniques.”

The report outlines six key skills areas related to offsite construction:

  1. digital design
  2. estimating/commercial
  3. offsite manufacturing
  4. logistics
  5. site management and integration
  6. onsite placement and assembly

Increasingly, workers will need the skills to move between offsite and onsite environments and so the training for these six areas must evolve to meet the changing demand.

Currently, significant barriers exist which prevent the delivery of training and skills to meet the needs of these crucial areas. These include:

  • Existing training does not include the required offsite content
  • Lack of awareness and suitability of available training and qualifications – companies are delivering their own ‘in-house’ training, which leads to non-standard approaches
  • A shortage of qualified training providers and assessors

Steve Radley concluded “Successful offsite management hinges on the effective integration of both onsite and offsite functions – and this requires a comprehensive understanding of both aspects.”

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Construction industry needs 1.5m new recruits by 2021

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.
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One in three British construction firms reliant on migrant workers

A major CITB (Construction Industry Training Board) report into migration and the construction industry has revealed that a third of firms employ migrant workers, saying they have comparable skills to British workers and are more readily available. Some employers (22%) also said they have a better work ethic. But only 1% of firms said they specifically look to recruit migrants.

The large-scale, GB-wide research, by CITB, IFF Research and the Institute of Employment Research at Warwick University, is the first to bring together the views of construction firms, employment agencies and migrant workers. Researchers conducted over 600 interviews to provide a detailed and up-to-date picture of the role migrant workers play in the construction industry.

Over a third of employers who employ staff from outside the UK say they do so because there are not enough skilled applicants from the UK, rather than for cheaper labour. The issue is magnified in London where one in two employers say they are ‘very dependent’ on migrant workers, compared to around one in six in Yorkshire and the Humber.

The study dispelled some common misconceptions around migrant pay, skills levels and occupations. It showed that only 1% of employers say that migrants are cheaper and that the majority of non-UK construction workers are skilled, with over two-thirds holding a construction-related qualification. Two-thirds of employment agencies reported that migrant workers have similar skills to their UK counterparts.

Professor Anne Green who carried out the research at Warwick University’s Institute of Employment Research, says “The UK construction sector relies on migrant labour alongside UK workers to meet demand. This is especially the case in London. Migrant labour plays a key role in offering flexibility for the sector to respond in a timely fashion to project requirements. This means that the future immigration policy matters, as does training of UK workers.”

The research also showed that while the largest number of migrant workers (22%) are general labourers (22%), there is a wide spread across many skilled areas such as architects (15%), carpenters/joiners (13%), plasterers (13%), bricklayers (11%), and directors/managers/supervisors (9%). A similar spread of occupations was reported by non-UK workers themselves.

The workforce is still mainly British, however, with only 1 in 8 construction workers born outside the UK. One in 15 or 140,000 overall come from the European Union (EU). The majority come from Poland (39%) and Romania (26%) and is largely London-based.

The research found that three-quarters of migrant workers surveyed expect to be working in the UK in 12 months’ time, with only 1 in 20 expecting to move abroad, and over half expecting to work in the UK until retirement.

Recruitment agencies reported that EU nationals are more commonly placed than non-EU migrant workers and two in five agencies are expecting staff shortages due to Brexit. One quarter of employers reported at least one impact of Brexit on their company to date, with the most common being increased costs (12%), followed by project delays due to uncertainty and a lack of client investment.

London-based construction firms were more likely to report impacts because of Brexit including a lack of client investment (23%), project delays (19%) and staff shortages (13%).

Steve Radley, Director of Policy at CITB, says “Our detailed look at migration labour in construction illustrates how it gives employers the flexibility to respond rapidly to a range of skill needs. It shows that the construction workforce is still largely home-grown but migrant workers play a critical role, particularly in major projects and in London.

“While most firms are not reporting an impact from Brexit, those who employ migrants are concerned about the future availability of EU workers. But with over three quarters of construction workers expecting to stay in the next 12 months, we have breathing space to adapt to any changes in migration policy. While construction employers work with government on its future approach, we will support them to find new and better ways to attract, train and retain the workforce they need.

See the full report here.

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