Breaking point

Years of under-investment in construction skills in the UK, so far masked by the availability of migrant labour, risks being exposed as Brexit takes hold. What must the government and businesses do to build a better construction industry for the future?

As Britain makes plans to leave the EU, the government has promised that the UK economy will be boosted by major infrastructure projects like High Speed 2 and the promise to build one million homes by 2020.

According to the Construction Industry Training Board (CITB), this promised project pipeline will mean an extra 179,000 jobs created between 2017 and 2021 as the industry grows.

This might sound like good news, but the additional demand for construction jobs comes on top of an estimated 430,000 industry workers retiring between 2010 and 2020 – the Department for Work and Pensions says that nearly a third of the 2.3 million people working in UK construction are aged over 50.

Former Chief Construction Adviser to the government Paul Morrell says the proportion of over-50s in the workforce would be even higher without EU immigration.

“If you look at the average age for a typical trade in the UK, they are in the higher 50s,” says Morrell, who has acted as adviser to the government’s review of construction-related Industrial Training Boards, published in November 2017.

“That average age is only brought down by migrant labour.”Across the UK, EU migrant labour accounts for just under a tenth of the workforce, according to the Building on Brexit report, published in July 2017 by the All Party Parliamentary Group for Excellence in the Built Environment (the APPG report).

It points out that there are huge regional variations in levels of migrant labour: in London, 54% of construction workers are migrants (189,000 of the 350,000), of whom about half (94,500) are from the EU.  “We have a perfect storm developing,” says Adrian Williamson QC, Honorary Senior Research Associate at The Bartlett. “There is a long-standing failure to train people domestically.

Combine this with potentially stopping all immigration from the EU and a major housebuilding programme, and we have got to be heading for a difficult situation.”

“We don't build supply chains and we don't build skills. We wait for the phone to ring and then cobble something together”

Turn of the screw

Brexit may prove the flashpoint, but the storm over UK construction skills has been brewing for some time. For Morrell, the chief culprit must be the industry itself. “There is a market failure because of the extremely fragmented nature of construction,” he says, referring to the industry’s reliance on large supply chains comprised of SMEs, each specialising in one particular area of construction.

“Training has always been ‘somebody else’s job’.”For an industry where some projects can last up to a decade, construction is, adds Morrell, surprisingly short-sighted. “It’s a very reactive industry,” he says. “We don’t build supply chains and we don’t build skills. We wait for the phone to ring and then cobble something together.”

Morrell’s views are backed up by the government-commissioned Farmer Review of the UK Construction Labour Model, published in 2016. The report highlights how construction has the second-lowest investment level of any sector in the UK – ahead only of agriculture.  

It says that a CITB levy – the only industry-wide training funding scheme until the government’s introduction of an Apprenticeship Levy in April 2017 – that collects just £180 million in an industry with annual revenues in excess of £100 billion“does not bode well in terms of ability to have any scalable impact”.

In October 2017, following the CITB’s biggest-ever consultation with industry, employers voted in support of the CITB levy. The government’s Building Support: the review of the Industry Training Boards, published the following month, endorsed the levy but called for radical reforms in the way the CITB engages with industry to steer it away from a “money in, money out”culture, towards a “money in, skills out” approach to training.

“Why would you make a commitment to an industry for the next 40 years of your life when there isn't the job security there?”

Some argue that there are a number of contributory factors as to the chronic underinvestment in the industry, including a lack of certainty of future work and a low-margins/high-risk approach by clients, including the government. Skanska UK’s Group HR Director Harvey Francis says “the project pipeline is short and sensitive to the economic environment.”

Francis was a member of the inquiry team that produced the  APPG Report. It acknowledges that government, as one of the largest purchasers of construction services, has its role to play, and should avoid simply hiring the lowest bidder: “Public projects need to avoid a ‘race to the bottom’ procurement mentality and ensure that firms that do offer proper training and greater social value are rewarded.”

As well as leading the way in its procurement, government must provide certainty over the long-term project pipeline. The publication of the National Infrastructure Delivery Plan in 2016, which committed £100bn of public spending up to 2021, was an attempt to do this.

However, major projects as politically charged as High Speed 2 always carry some political risk. Likewise, in the private sector, the building of office blocks  and private residential accommodation is extremely sensitive to vagaries of the  property market.

This uncertainty is a key reason why, in a recession, “people leave, and they don’t come back”, says Francis. Uncertainty and lack of job security is also a major stumbling block to attracting new recruits, says Dr. Kumar Aniket, Research Associate in the Economics and Finance of the Built Environment at The Bartlett School of Construction and Project Management.

“Why would you make a commitment to an industry for, say, the next 40 years of your life when there isn’t the job security there?” he asks. Aniket’s work at The Bartlett is investigating why it is that, unlike in normal market situations, a pay rise cannot attract people into the construction industry.

As well as the job insecurity traditionally associated with the sector, Aniket says he suspects there is also a fear that, in the longer term, certain trades or skills could disappear from construction sites and even move overseas, thanks to offsite construction and automation.

Raising the roof

For all the storm clouds gathering over UK construction industry’s skills base, there is the odd ray of light. This includes an embracing of digital skills through Building Information Modelling and the first steps towards automation through offsite construction.

Offsite construction might be perceived as a negative if, as Aniket suggests, jobs are seen to move overseas, but if facilities do remain in the UK, it could prove a boon to attracting those previously put off by a career in construction.

Part of the industry’s challenge in recruiting the necessary skills, as the Farmer Review highlights, has been an image problem. For those who view a career in the industry as something low-skilled, working outside in a cold, dirty environment, offsite offers the tantalising possibility of turning this perception on its head.

Offsite construction offers the prospect of the low-skilled repetitive work being done by machines, while humans take on the highly-skilled roles in a clean and warm factory environment. Legal & General’s modular construction factory in Yorkshire was highlighted by the Farmer Review as a glimpse into construction’s future.  

At the facility, a trend seen in other industrial environments has also emerged – using multi-skilled workers, rather than those with just one trade.“This is something that trade unions, training bodies and employers have all resisted in UK construction industry,” says Morrell.

And yet, multi-skilled workers are seen on plenty of UK construction sites. “We need more transferable skills,” he says. “It is something many of the eastern Europeans working on UK sites have. Most of them can do most of the jobs.”If the construction industry can reshape its training towards a multi-skilled approach, its workers will become more flexible and adaptable, and more likely to stay with businesses in the long term as the demands of the market change.

Meanwhile, the government’s promise to unify vocational qualifications under so-called ‘T-Levels’ may help to increase the supply of young people signing up for construction-industry apprenticeships.

There is also potential to bring in people already in the jobs market and retrain them for construction. For example, companies such as Skanska and Persimmon Homes run schemes to retrain ex-armed forces personnel for careers in construction, helping them transition to civilian life. “We find our ex-military recruits come to us with a wealth of transferable skills,” says Francis.

“For example, they have good self-discipline, know all about following a programme and the importance of working safely.” The Farmer Review put the challenge for the construction industry in stark terms: modernise or die. It may be that Brexit turns out to be the catalyst for resurrecting the construction industry, rather than its kiss of death. 

Read the research 

• “Modernise or Die: An independent review of the construction labour market in the UK”(M. Farmer, Construction Leadership Council, 2016) 
• “Industry Insights: Construction Skills Network Forecasts 2017-2021” (CITB/EXperian, 2017)
• “Building on Brexit” (Report of APPG for Excellence in the Built Environment, HMSO, 2017) 

Download

Grab a printable copy of The Bartlett Review 2017 (pdf)

The Bartlett Review 2017