We take a look at the Building skills: Tackling the built environment skills crisis report, which examines the workforce and skills crisis facing the construction industry and sets out key policy recommendations to address these challenges.
The construction and built environment sector – which brings together the design, construction, management and maintenance of homes, buildings and infrastructure – is crucial to the UK economy. It provides millions of jobs and plays a critical role as an enabler for the wider economy by delivering and maintaining the homes, buildings and infrastructure we need.
However, it is currently grappling with a significant workforce and skills crisis, with the highest proportion of skills shortage vacancies of any industry. At present, it is believed 37,000 jobs in construction and the built environment remain unfilled due to a lack of skilled workers.
The Building Skills: Tackling the built environment skills crisis report, written by Joe Dromey, General Secretary and Sasjkia Otto, Senior Researcher both at the Fabian Society, sets out key policy recommendations to address the skills crisis and outlines how to develop the skilled workforce needed to deliver the homes and infrastructure we need.
Skills crisis and growing demand
The crisis is escalating, with the number of skills shortage vacancies increasing fivefold (419%) since 2011. It is likely to worsen in the coming years for at least two reasons. The workforce is ageing: 36% of construction workers are over 50, and around 700,000 are due to retire by the early 2040s. At the same time, demand is set to increase, with an additional 48,000 construction workers needed annually up to 2029 to meet rising demand.
Weak training pipeline
The sector suffers from underinvestment in training for several reasons. Firstly, employers are less likely to train their workers and employer investment per employee is falling by 28% since 2017 despite rising skills shortages. Secondly, there are low apprenticeship starts and completions, with starts down 29% following the introduction of the levy (driven largely by SMEs), creating a bottleneck that limits career entry for young people and with 42% of apprentices failing their end-point assessment. This is the highest rate of any sector subject area. Thirdly, there are challenges in further education, where many construction and built environment graduates do not enter the industry due to insufficient apprenticeship opportunities, alongside high levels of teacher vacancies driven by below-industry-average pay.
Structural challenges
These acute problems are attributable in large part to several structural challenges facing the sector, including unpredictable demand and short-termism, where regular downturns lead to high levels of attrition and reduce employers’ incentives to invest in training. There is excessive reliance on self-employment, with 27% of workers in the sector self-employed (double the average). Further, self-employed workers being half as likely to undertake training. There is fragmentation and reliance on small and medium-sized enterprises (SMEs), however, while the sector is dominated by SMEs the skills system struggles to meet their needs. Moreover, there are cost and return-on-investment pressures, where rising costs have weakened employer perceptions of the value of training investment.
Economic impact and need for action
The workforce and skills challenge are not just an issue for the sector itself; it has a wider impact on our economy and it should be a major concern for the government. Skills shortages undermine quality, safety and productivity, and increase costs. Without bold action, skills shortages risk becoming the main factor limiting our ability to build the homes and infrastructure we need, holding back growth and slowing decarbonisation.
The government introduced a £625 million construction skills package a year ago. While this was welcome, we are yet to see further action of how this is more coordinated, at a greater scale, and targeted at the drivers of the skills crisis.
The government should work with industry and providers to develop a cross-department workforce and skills strategy for construction and the built environment. Led by the Construction Skills Mission Board, the strategy should be based on the following themes:
Train
We need to improve incentives and support for employers to boost investment in training, with a focus on SMEs.
- Strengthen industry-provider partnership by supporting industry placements and setting up local skills boards for the sector.
- Introduce an apprenticeship grant for employers, targeted at SMEs, and worth up to £9,000 per apprenticeship.
- Introduce an apprenticeship grant for providers, worth up to £2,500 to incentivise providers to support SMEs in the sector.
- Pilot a construction progress premium to incentivise colleges to support students into jobs or apprenticeships in the sector.
- Make training and funding more flexible by expanding experienced worker routes and the shared apprenticeship scheme.
- Support the recruitment of more teachers, including through increasing the ‘targeted retention incentive’ to £10,000.
Attract
We need to make the sector a career of choice for young people and attract back skilled workers who have left the sector.
- Develop a coordinated campaign, Building Britain’s Future, to broaden the appeal of careers in the sector.
- Develop a new employment programme, Re-Build, to support skilled workers who are unemployed or inactive back into the sector.
- Make the sector more appealing for women and minority ethnic communities by improving workplace culture.
Retain
Alongside attracting and training new entrants, we need to retain skilled workers in the industry for longer.
- Develop an occupational health strategy for the sector focused on making workplaces healthier and broadening access to support.
Reform
We need to address the underlying causes of the skills crisis by reforming how the industry works.
- Boost, smooth, and improve the predictability of demand through further planning reform and counter-cyclical investment.
- Use planning and procurement to drive training, improving the use of Section 106, and introducing minimum training requirements through the Social and Affordable Homes Programme.
- Reducing the reliance on self-employment by rebalancing the CITB levy and tackling bogus self-employment.
Immigration
We need to ensure ongoing access to skilled migrants in the short term and reduce the skills gaps that drive migration in the medium term, by linking immigration and skills policy.
- Invest all funds raised by the immigration skills charge in skills.
- Expand the immigration salaries list and link it to training incentives to improve access to skilled workers and drive investment in shortage occupations.
- Introduce a Work and Train Visa to provide a route to skilled migrants who can both help build the homes and infrastructure we need and build the skills of the next generation.
These changes could be funded through increasing the growth and skills levy over time, reducing the threshold to £1 million, or restricting the use of levy funds to non-graduates. Each measure would have a limited impact on the sector, while unlocking the investment that could fix the skills crisis.
To read the report in full visit: https://fabians.org.uk/publication/building-skills/
