Sep 20, 2017 Last Updated 11:00 PM, Sep 10, 2017

The skills shortage

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Steve Hale of Crofton explains why we need to start dealing with skills and training problems immediately – if we don’t we will hinder growth not only of the construction industry, but the wider economy as well.

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Speak to anybody in the construction industry and they will tell you the same thing, the work is back.

However, recruiting the skilled people required to significantly increase capacity and actually deliver more sizeable jobs is near impossible for most firms. There is no doubt that construction skills shortages are significantly affecting the delivery of public sector projects across the industry and hindering growth.

Skills to Build, a report published by the London Chamber of Commerce and KPMG in November 2014, raises some frightening facts about the skills shortage. It states that £95.7bn worth of construction output is currently in planning and due to occur in 2014-17, although this is expected to be substantially higher as more projects come into the system. The report estimates that 20% more workers will be required on average to meet this pipeline demand in 2014-17, than were needed in the 2010-13 period.

A 51% average increase in training provision will be required to meet demand for construction labour between 2014-17, to plug a gap of over 14,800 trainees. A significant increase in competency-based training is needed to meet demand for construction managers, roofers, bricklayers, roofers, scaffolders, electricians, labourers and non-construction operatives.

We all constantly hear about targets relating to housing, and other areas of infrastructure that need to be met. However, we must appreciate that targets such as 250,000 homes a year will never be met with the construction labour market in its current state. We need to start dealing with skills and training problems immediately – if we don’t we will hinder growth not only of the construction industry, but the wider economy as well.

Issues surrounding public sector procurement for housing, schools and healthcare projects, need addressing to deal with the problem. Central and local government contracts could include skills and employment requirements to promote long term training within the industry. However, it must be well thought through, and any training needs to have a real link to the construction workplace, and preferably lead to a full-time job. Encouraging contractors to fund training that has little relevance to construction, just so they can win public sector work is not sensible.

I also suspect that a lack of skilled people working in public sector procurement roles is costing local authorities serious money. Too many tenders are clearly written by people that lack technical skills, which means poor procurement strategies that lead to increased costs, project delays, and a lower quality product.

If politicians understood the amount of money that was being wasted they might start taking the skills and training issue in construction more seriously.

Quantitative research

Politicians tend to only hear anecdotal evidence of public sector construction inefficiencies, which they hardly ever act on. One way to resolve this could be by undertaking quantitative research to compare the performance of public sector procurement teams with private sector teams to the number of skilled people, such as engineers, surveyors and architects that they employ.

For example, the research could measure the costs of projects per square meter, project overruns and add on costs for private and public sector teams (most of this information would be available under The Freedom of Information Act, and many private organisations would provide data for the common good). I suspect the research results would undoubtedly show that private sector procurement teams with more skilled people, deliver projects for significantly lower costs, on time, and on budget.

The research would essentially measure the value of qualifications, and just might ensure that politicians take the skills and training issue more seriously and inform policies that address it. Cutting skilled people from public sector procurement teams will not save money. The public and private sector should come together as a body to conduct this research and influence policy. A university or industry organisation could conduct research.

Both the public and private sector urgently need to take steps to address the skills shortage, increase training and attract young people to the industry. Problems have built up over a generation and will take a generation to resolve unless we act fast.

In my opinion, one key problem that is rarely mentioned in debates concerning skills and training is the misuse of HMRC’s Construction Industry Scheme (CIS) to avoid taxes. Construction firms recruit tradesmen to work for them long-term but the tradesmen are technically self-employed. The firms employing them pay little attention to employment rights and entitlements such as holiday pay, sick pay, pensions and, of course, training.

A firm employing self-employed tradesmen for the long-term won’t fund training due to the tax implications. Although the rules are well meaning, and aim to create a flexible labour market, misuse has led to real unintended consequences for an industry facing a vast skills shortage.

It is estimated that up to 50% of people working in construction, are essentially falsely self-employed. With a figure this high, one can see why a systemic lack of training has become a problem. The government needs to undertake a fundamental review of the tax rules to remove false self-employment. This will promote training, and put good firms that do provide training, on equal terms with the ones that do not.

Another key cause of the skills shortage is the cyclical nature of the construction industry. People leave it in recessions, and slowly come back in the good times – but as we can see currently, certainly not fast enough. Many would claim that nothing can be done about the industry’s cyclical nature, and would argue that’s the way it is. But surely part of a resolution lies in improving the image of construction as a career choice.

Long term commitment from government and private sector firms to fund training and apprenticeships, will help attract young people to the industry and enable them to develop the skills that make them want to work in it for life. Currently construction is seen as a poor career choice.

Crucial collaboration

We need to become better at engaging with and supporting organisations such as the Construction Youth Trust, a charity that helps young people access training. This is in addition to working with schools to promote the industry as a career, so students understand the difference between an engineer, architect, quantity surveyor and so on. More also needs to be done to ensure that schools prioritise employment and vocational training in addition to academic qualifications.

Also, many construction focused college courses include elements that are out-dated and not relevant to current methods of construction. The government should work with industry bodies to develop training and apprenticeship frameworks that support more modern building methods.

If the major public sector building projects that the UK so badly needs are to ever be delivered, the public sector and the construction industry need to pull together. Without trained, skilled people on both sides we will never be able to raise capacity to the necessary level.

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