Transforming Infrastructure Skills for the UK’S Megaprojects
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Transforming infrastructure Skills for the UK’s megaprojects May 2019 Transforming infrastructure | Skills for the UK’s megaprojects 3 Foreword The construction and infrastructure industry is rapidly scaling up Achieving this calls for a laser-like focus and improved for some of the most ambitious infrastructure schemes in the industry-coordination on some of the things we should be doing UK’s history: the third runway at Heathrow; HS2; the new nuclear anyway, such as improving the sector’s diversity, increasing its power plant at Hinkley Point C; and the £6bn a year Highways productivity and making it as easy as possible for skilled workers investment programme. Meanwhile, the industry is losing workers to move between schemes. All available opportunities must be faster than it is recruiting new ones1. We simply do not have leveraged. But the Government must also play its part in making enough engineers, construction workers or new entrants coming sure that the immigration system is flexible enough to allow the into the industry. industry to access the skilled workers it needs to build these hugely complex, challenging schemes where there is a shortfall The sheer scale of these schemes and the fact that they will be of UK workers – which there will be; that the way in which it in construction at the same time means that they could easily procures schemes ensures a robust, viable construction industry; compound the skills shortages which exist across the sector in and that the Apprenticeship Levy is fit for purpose and delivering almost every technical discipline. But with proper planning they the future talent pool needed. could be used to address the skills gap and transform the industry for the better, for good, enabling us to export skills rather than It looks devastatingly simple written down. But these complicated, import them as we do currently. interconnected factors must all be tackled head-on in order to ensure the delivery of these critical schemes without spiralling To reach that goal, the Government and the industry must be wage-costs or project delays. clear-eyed about the situation and what is required to fix it. We must pull together to tackle these skills shortfalls. There is little doubt that the UK’s domestic construction skills base needs strengthening as a priority. We must ensure that the army of skilled engineers and construction workers needed over the next twenty years to deliver these schemes simultaneously is Leo Quinn ready – and that they are trained in the new skills that the industry Group Chief Executive is coming to rely on. All of us must work harder to update the image of the sector, redoubling existing efforts. We must do more to upskill and reskill those already in the industry. And, as outlined in the Construction Sector Deal2, more must also be done to adopt innovative ways of reducing demand for on-site workers, learning from other industries including automotive and manufacturing. 1 CIOB, The impact of the ageing population on the construction industry, December 2015 2 Industrial Strategy, Construction Sector Deal, HMG, July 2018 Transforming infrastructure | Skills for the UK’s megaprojects 5 Mega projects Key points and recommendations 1. While public perception is still that these mega projects are 7. We welcome the fact that the Government will consult on far off, the reality is that the industry is scaling up for them the £30,000 minimum salary threshold suggested in the now, so we must speed up actions to address skills shortfalls. Immigration White Paper, and encourage an approach which allows the construction industry to access the skilled workers 2. To help ensure that the workforce is ready, decisions on it cannot source domestically. large infrastructure schemes must be made more quickly and in a way which delivers certainty to companies and enable 8. There are many positions in the industry which do not workforce planning and investment in training. command £30,000 salaries yet which face shortages, including many of the trades, which are essential on-site. 3. Specialist skills need to transfer to similar projects otherwise The definition of “low skilled” is inaccurate in these cases, those skills will be lost as people move into other sectors, as many of these essential roles, such as electricians and leave the industry or move abroad. Unscheduled delays such plumbers, require specialist skills, training and experience. as that currently impacting HS2 will effect current agreements to phase work on concurrent mega projects. Mega projects 9. The threshold is likely to prevent those talented, dynamic should therefore be planned and sequenced by Government people starting out in their careers from coming to the UK. In as a programme or pipeline of work to avoid ‘feast & famine’ many cases, it is precisely these people that the construction in the supply of skilled labour. and infrastructure industry could benefit from as it modernises and transforms itself. 4. Government and the industry must make it as easy as possible for skilled individuals to move between schemes, via a single, 10. We encourage the Government to consider the need for a coordinated passport scheme covering the whole construction robust domestic construction industry when contemplating and infrastructure industry. the nature of risks that can be reasonably transferred to the private sector in its review of the Government’s guidance on 5. Apprenticeships can and should play a core role in addressing risk which is due to take place this year. these skills gaps although this is not a short-term fix. However, the failure of the Apprenticeship Levy to drive the 11. In order to speed up the adoption of modern methods of delivery of more apprentices has led to mounting frustration construction, more must be done to educate and inform - across the economy. both to build the evidence base about the benefits of offsite and modular building, and also to improve understanding 6. Government and industry agree that the Apprenticeship Levy about elements which are key to success, such as the need is not working. Now that the Government has agreed to to aggregate schemes over a longer-timeframe rather than evolve the Levy, the reform must be swift and far-reaching to dealing with each scheme individually; and the importance of ensure that it works for the construction and infrastructure building in repeatability. industry, and the economy more broadly. Transforming infrastructure | Skills for the UK’s megaprojects 7 Context Brexit and the domestic skills base These mega projects are at the heart of the Government’s plans 6. Significantly increasing the industry’s productivity and Brexit has sharpened the focus on ensuring that the UK is as This is particularly the case, in our view, as the Apprenticeship to improve the UK’s connectivity and energy security, to maintain efficiency, by moving more quickly to modern methods of competitive as possible and that our economy has the high-quality Levy, which aimed to increase the number of young people its competitiveness post-Brexit and to build on its impressive construction and digital solutions; infrastructure needed to underpin strong economic growth. Making choosing technical and vocational routes, has not done so. For engineering legacy and develop its exportable infrastructure sure that the strategically important large infrastructure projects example, with the Apprenticeship Levy now having been in 7. Coordinating better and collaborating across the industry to know-how. The industry is keen to deliver – the key question is the country has planned are delivered, is now more relevant than place for a year, Balfour Beatty has not increased the number ensure that we learn from each other. whether it has enough skilled people to construct four of the most ever in terms of ensuring the UK’s place as a global economy of apprentices it trains. Indeed, the numbers of apprentices our challenging projects in several generations concurrently, as The Government must prioritise: outside the EU. industry and others are taking on this year is lower than it has well as delivering on other priorities such as addressing the been in previous years. 1. Making sure that the Apprenticeship Levy is redesigned so it However, Brexit has also compounded the existing skills challenge housing shortage. is fit for purpose and helps us to attract and train people in the by severely restricting, and maybe ending completely “freedom Apprenticeships can and should play a core role in addressing The skills gap the sector is facing is well-documented and getting skills the industry needs, rather than serving, as it currently of movement” and therewith the UK’s ability to rely on migrant these skills gaps although this is not a short-term fix. However, worse across the country. The much-cited Farmer Report3 outlined does, as an additional tax; labour from the EU to plug skills gaps: over 7% of workers in the the failure of the Apprenticeship Levy to drive the delivery of more 5 the scale of the issue in stark terms. The report described the skills 2. Ensuring the immigration system meets the needs of an construction industry are from elsewhere in the EU – 28% in apprentices has led to mounting frustration across the economy. 6 shortage as a “ticking time bomb”, predicting a 20-25% decline in industry which has relied on EU workers to fill significant gaps London . In an industry with existing skills shortages, a significant The time has come to look again at how the Levy is implemented. the available construction workforce within a decade. which - due to record levels of employment, ongoing skills pipeline of infrastructure to deliver, and 50% of its workforce likely We therefore welcome the Prime Minister’s announcement that to retire or reduce time spent at work in the coming decade7, this the Government will be considering how to evolve the Levy.