Tony Howard, Director of Education and Training at BESA
The Building Services Engineering Association is the UK’s leading trade organisation representing the interests of firms in all aspects of engineering systems and services in buildings.
Skills gap or skills gulf?
Tony opened by defining the new term ‘skills gulf’ as a way to describe shortages in the construction industry.
He set the scene with some research from Arcadis, the consultancy firm:
- Employers may have to double wages they pay to key trades
- The sector will need to recruit 400,000 people every year between 2017 – 2021
- There is the need for 26,400 construction directors.
Tony highlighted the fact that if we do nothing, we will be in a Catch 22 situation. If demand is not met, then vital projects may not be completed, and if demand is met with unskilled labour, quality will suffer.
The evidence of this can be seen in the national media, which is reporting on how house builders are writing off millions of pounds to fix problems on new developments caused by poor workmanship.
Tony highlighted the facts that since the financial crisis of 2008 investment in training has fallen off a cliff and that today the UK is in 17th place in the investment league table of developed economies.
Since 2008 the construction industry has reduced in size by 15%.
Tony put the question: Does that mean we are facing relegation and the prospect of falling out of the “Big League” of developed economies around the same time that we depart the EU?
By contrast Tony pointed out that those in the training industry and whose job it is to monitor and shape training strategies are actually excited about the future. With new trailblazers, apprenticeships and the latest innovation from the government, “T Levels”, he believes that we are on the right track to tackle the skills gulf.
Tony also pointed out that we are turning away from traditional-style university education and towards the vocational model. This is down to better job prospects and the added benefit of being able to avoid incurring a potential £36,000+ in student debt.
He highlighted that this new system is not just aimed at young people; it offers opportunities to re-skill, upskill and move existing workers of all ages into areas they are most needed, while getting the funding to do it.
The new Apprenticeship Levy starts in April 2017. Here is an overview:
- Employers with payrolls above £3 million will pay into the new levy.
- Employers in England will receive 90% of the cost of training an apprentice.
- Those paying into the levy will do so via their digital account and non-levy payers by co-investment.
- Scotland, Wales and Northern Ireland will remain using their current models.
- Employers with fewer than 50 employees will receive 100% of the cost of training an apprentice between the age of 16 and 18.
- This arrangement also applies to 19 – 24 year olds who have been in care or with an Education or Health Care Plan.
Here is a summary of the recent Institute for Fiscal Studies (IFS) report that has come out against the Apprenticeship Levy:
- The Government’s aim of creating three million new apprenticeships by 2020 via the new levy will be poor value for money
- £2.8bn raised from the levy will not be spent on apprenticeships.
A question was asked, “what value can you put on creating new career opportunities for thousands of people, improving social mobility, and building our country’s skills base in key technical professions?”
Tony answered this by outlining the concerns some people have about the way the Apprenticeship Levy will operate, but the business community recognises the need for a radical change in the way we develop skills.
Research carried out by BESA’s training department has found that:
- 83% of apprentices believe their career prospects have improved as a result of securing a place on an apprenticeship scheme;
- 70% of employers say their productivity and therefore their business prospects are improved by taking on apprentices;
- Every £1 of taxpayers’ money invested in apprenticeships at Levels 2 and 3 pays back between £26 and £28 in long-term economic benefits.
Tony highlighted the fact that funding for STEM subjects has also increased, and that employers now have 2 years to access their funds and can transfer training funds to companies in their supply chains.
Tony made it clear that almost anyone at any stage of their career path can now start an apprenticeship, and this opportunity prevents people from falling through the net and being left out.
Tony went on to explain that the regulatory compliance culture that dominates construction and construction-related professions has also forced skills in the industry down to the level of basic competences; these often simply aim to ensure that boxes are ticked, rather than on focussing on developing high levels of competences that can contribute to better-performing buildings.
As a result, there are now short courses designed simply to get people into the industry (gas in particular) and this has undermined the existing skills base. The result of this is that lots of people are only capable of carrying out basic activities; plumbing has suffered in particular.
Tony stated that BESA is in a strong position to monitor these issues through its management of the Skills Cards system. And thanks to digital smart cards, it’s easier than before to check qualifications are appropriate and up to date. Tony made it clear that when qualifications are not up to date, instead of people having to be removed, the new system allows BESA to point them in the right direction to receive the right training for the job.
BESA is working closely with employers in the sector to develop and deliver new Trailblazer Apprenticeships at all levels – from initial technician grades right up to degree equivalence – to ensure the sector grasps this opportunity.
Trailblazers are designed to deliver training appropriate to the needs of employers struggling to find the skilled workers needed to keep up with demand.
Focussing efforts on professions that are critical to the country’s future development in areas such as infrastructure and house building can build a pipeline of talent that will deliver a financial return for decades into the future. And by creating career paths and focusing funding where it is most needed, this new programme should deliver value for money for generations to come.
Tony finished by sketching out the bright prospect of enrolling people on a Trailblazer Apprenticeship designed to take their career in the right direction; this means that they are no longer unemployed and they contribute towards the government’s target of three million new apprenticeships by 2020.
Everyone is happy…and the Minister is a hero!
Q & A’s
Are the unions in agreement?
Yes, they are. Initially they were concerned that the Trailblazer Apprenticeship scheme would change levelling and therefore national agreements would be affected. BESA are keeping an eye on the levelling to ensure it does not affect the union position or national agreement.
Is there a minimum wage that these apprentices are paid? Does it fall below minimum wage of £7.20?
Quite fortunately, in the sector the national agreement with the unions does have a pay grading: the lowest pay grade is £6.40.
Most of your talk is about the construction industry. But does that extend out to skills shortages and therefore apprenticeships within manufacturing and other sectors that feed into the industry?
Absolutely. This levy is across the board. It’s down to sectors to engage. There are some sectors that do not engage so well. The Facilities Management sector is a perfect example, with a high wage bill but very few employees.
You talk about opportunities, but how do you engage with young people? A lot of these people have no idea about which direction to follow.
Traditionally the sector has only engaged with and employed people above the age of 18. This has changed a lot in the last 2 years. BESA have a sphere of communication with young people that never existed before. BESA communicates with these “Millennials” using social media to engage with them and using videos that “speak” to them. Areas such as retail is also targeted: too often young people go into such sectors and find it’s a dead end. BESA can move these young people across into careers that can help make their lives fulfilling.