Memorandum submitted by the CBI
1. CBI welcomes the inquiry undertaken by
the House of Commons Trade and Industry Committee into the UK
construction industry.
2. As the UK's leading business organisation,
CBI speaks for some 240,000 businesses that together employ around
a third of the private sector workforce. A proportionate number
of these are companies active in all aspects of construction from
civil engineering to housebuilding. Most of the construction sector
associations are also in CBI membership. Our special strength
for our construction member companies lies in the fact that we
speak for business across the sectors, including businesses at
every stage of the construction supply chain, from materials suppliers
to users of industrial and office property.
3. The CBI believes that the construction
industry is:
— delivering improved public services,
partnering with the public sector;
— helping improve public sector procurement;
— offering flexible employment opportunities;
— working to raise skill levels, but
gaps and shortages remain;
— making progress tackling health and
safety concerns; and
— encouraging sustainability in property
development.
DELIVERING IMPROVED
PUBLIC SERVICES,
PARTNERING WITH
THE PUBLIC
SECTOR
4. The UK construction industry has a long
history of helping to deliver public services through public-private
partnerships (PPP). Governments world-wide are seeking new ways
of engaging with the private sector. The UK leads the world here
and has the potential to deliver significant economic benefit
to the country through a thriving public service industry, in
which the construction industry plays a key role. But keeping
that lead—and the benefits it brings—requires the
government to recognise and promote public service markets drawing
on the latest innovations in design, construction, management
and technology.
5. The Private Finance Initiative (PFI)
is the most established and successful PPP model in the UK, with
more than 500 projects now operational. There is significant evidence
to show that the principles of transparency and accountability
that underpin the PFI have provided radical improvements to the
way services are delivered to the public.
6. The construction industry plays an integral
role—often as part of a consortium of companies—in
delivering PFI schemes such as, hospitals, schools, prisons, highways
and leisure facilities. Evidence compiled by the Treasury shows
how integral the industry is to delivering projects on time and
to budget. 70% of non-PFI projects surveyed were delivered late
compared to only 20% of PFI projects; and 73% of non-PFI contracts
ran over budget compared to 20% of PFI projects (and these were
due to the public sector changing its specification).[11]
In addition, all new PFI prisons have been delivered on time or
earlier than scheduled compared with construction overruns under
traditional procurement averaging 13%. No PFI prison has cost
the government more than budgeted: by contrast, seven traditionally
procured prisons finished in the early 1990s overran their budgets
by 18%.
7. Indeed the introduction of PFI has resulted
in new prisons being completed on time and on budget. Construction
times under PFI have fallen by more than 40% and cost savings
appear to be more than 20%. Competition is currently saving the
taxpayer between £40 million and £60 million a year.
8. Payment throughout a PFI contract is
conditional on the consortium reaching the required service levels.
This incentivisation to provide a good service has been shown
to be working successfully by a Partnerships UK report that surveyed
all 500 operational PFI projects that exist in the UK.[12]
The report found that while payment deductions have been low,
reflecting the general levels of high performance, almost all
projects report satisfactory levels of service after a deduction
has been applied, and 72% report good or very good performance.
9. The PFI, and the construction sector's
underpinning role, is integral to the modernisation of the UK's
public services and is helping ensure taxpayers receive better
value for money. But it is not just about the capital assets—the
schools, hospitals and other public buildings. Its success also
lies in bringing together design construction and service delivery
for long-term benefits. Unlike in the past, when buildings were
constructed and their upkeep left to others, the PFI means service
providers are responsible for designing and constructing buildings
and then running many of the services themselves. This approach
encourages innovation, such as environmental sustainability and
rigorous planning that allows for changing user needs over the
course of the contract.
10. The UK construction industry leads the
world in terms of PFI investment and many countries are designing
public services and developing PPP projects based on UK models.[13]
However, other countries are catching up and the international
PFI market is growing. For instance, the Italian Ministry for
Finance has set up a PPP unit based on the UK Treasury's PFI taskforce—Unita"
Tecnica Finanza di Progetto (UFP). The aim of the UFP is to help
meet the challenges of public sector investment, to help identify
projects suitable for private sector involvement, and to provide
assistance for central, regional and local administrations on
PPPs. In addition, PFI markets are developing in various sectors
across Europe, for instance, a PFI transport market in Portugal,
Spain, Ireland and Greece, healthcare in Italy, schools in Germany
and custodial projects in France.
11. The UK government must ensure the conditions
for the national PFI market to flourish. If it fails to do so,
the UK market will suffer from a skills and investment drain as
construction and services businesses and personnel take their
business abroad. Countries thinking about PPPs are looking out
for skilled people with UK PPP experience to help advise and develop
their models. If the right conditions are in place, this new market
need not present a threat, but rather an opportunity—for
UK public service companies to provide services in other countries
and to lead the market in terms of new developments and innovations.
12. Ensuring the environment for UK construction
and services companies to flourish in an international PFI market
should be a key priority for government, but this can only be
achieved when there is a clear understanding of the benefits of
PFI and how the PFI market can be developed and strengthened in
the future.
13. Construction companies have been at
the heart of harnessing the underpinning principles of PFI and
developing alternative PPP models. This means that when the PFI
route is not appropriate for a particular service, an alternative
PPP model can be considered in order to achieve the benefits available
from such partnerships.
14. For example Local Improvement Finance
Trusts (LIFTs) in the health sector, and the Building Schools
for the Future (BSF) programme. Both programmes provide a long-term
strategic framework for planning and delivering investment. The
individual projects undertaken under the LIFT and BSF programmes
are structured in ways similar to PFI projects and some of the
companies entering into LIFT agreements are also involved in PFI
projects. The key differences between these two models and a typical
PFI model is that they are joint ventures, taking strategic planning
and procurement decisions that were previously the sole responsibility
of the public sector. This allows private sector partners to contribute
project planning and design expertise at an earlier stage. The
LIFT and BSF programmes are also supported by a national programme
management organisation, and by central co-ordinating bodies,
Partnerships for Health and Partnerships for Schools, which assist
with procurement and knowledge transfer across projects.
15. At the time of its inception the aims
of the BSF programme were explicitly outcome-focussed. The programme
envisaged using a 10-15 year programme of investment to drive
up educational outcomes for children. The CBI welcomed this aim
and we still support it. We share the widespread belief, however,
that the core educational objectives of BSF were not sufficiently
prioritised during the pathfinder stage of the programme. In part,
this may have been due to an understandable desire to start rolling
out the programme quickly. But pressure for delivery has led to
many commissioners putting greater emphasis on the school construction
aspects of the programme rather than the educational outcomes
BSF was designed to deliver.
16. In recent months, however, Partnerships
for Schools (PfS) has emphasised that educational transformation
remains at the heart of BSF and is taking steps to ensure that
it will be central to future waves of BSF. We believe that a key
factor in reinvigorating the BSF educational agenda should be
a more rigorous approach to the Educational Vision process. Local
authorities need to be clearer about the outcomes they want and
identify the key drivers needed to achieve them, by identifying
their existing capacity and ensuring affordability. Delays in
a significant number of cases is due to a lack of capacity and
procurement skills within the local authority which has resulted
in Educational Vision statements being produced that are neither
realistic nor affordable.
HELPING IMPROVE
PUBLIC PROCUREMENT
17. Many public authorities have become
adept commissioners of services from the private sector, including
construction companies, using it to drive innovation and improve
provider performance. But aborted contracts and long-drawn out
procurement processes continue to impose additional and unnecessary
costs on the taxpayer, undermine the confidence of providers from
all sectors—public, private and voluntary—and delay
the introduction of improved service delivery.
18. In November 2006, the CBI published
a report, Realising best practice in procurement and contract
management, which sets out key steps the public and private
sector need to take to ensure commissioning and delivery of complex
projects achieve a variety of service outcomes. Key to realising
improvement is a need for public bodies to set out a clear vision
of what service is required, and for clients and providers to
take joint ownership of all stages including initial strategic
planning, the procurement process and contract management. The
recommendations in the report draw on a number of CBI consultations
with public sector officials and CBI members, and propose steps
to ensure:
— competitive supply markets managed
by skilled professional staff;
— transparency and rigour in the tendering
process; and
— governance arrangements that are
fit for purpose.
Competitive supply markets managed by skilled
professional staff
19. The first step to improving public services
is to ensure contracting authorities have the capabilities to
harness the benefits of the supply market. A comprehensive understanding
of markets requires a constant process of market engagement, including
ongoing dialogue with suppliers outside the tendering process.
This is essential for building trust and certainty in public service
markets and encouraging innovation in service design. More interaction
between the public and private sector will allow the sharing of
expertise and lessons learnt.
20. Developing skilled commercial and procurement
staff able to complete deals is a complex process, with very different
solutions now in place in different parts of the public sector.
Large government departments with a significant spend on major
projects are able to afford, and have the need for, a permanent
pool of staff with the full range of delivery skills. But smaller
departments and many local and regional authorities have not been
able to build up substantial cadres—nor is this desirable.
The challenge here is to make effective use of the talented public
sector staff that do exist and share them between different bodies
as appropriate.
Transparency and rigour in the tendering process
21. Procurements need to be driven by outcomes
not processes. Strategic commissioning must include a clear identification
by the public authority of what is required, and procurement processes
which are rigorous and consistent with a high degree of transparency
and trust. Robust reviews must be applied before the tendering
process and should guarantee intervention in failing projects
where necessary.
22. Procurement delays are a problem across
public service markets. In April 2006, a CBI report Buying the
best from the NHS, found that the average costs of delay on health
PFI schemes was 1% of the capital cost, amounting to £2.45
million over each deal and resulting in total losses of £98
million in delays over the health PFI programme. A survey conducted
by the Major Contractors Group in 2005 found that the average
delay to published schedules was just under eight months: school
projects were for example, being delayed by 7.5 months. Such delays
are costly to bidders and the taxpayer and seriously undermine
the drive for value for money and efficiency in public services,
as well as having implications for the achievement of stated social
and economic policy outcomes.
Governance arrangements that are fit for purpose
23. Partnerships are evolving into complex
models for flexible contracts which deliver complicated outcomes.
Senior level leadership is vital for partnerships to succeed,
along with robust governance mechanisms and excellence in relationship
management.
24. In complex partnering arrangements,
it is important that the spirit of partnership is established
and maintained at a strategic level. This could be through increased
use of memorandum of understanding, which provide a context in
which the legal contract should be interpreted.
25. Complex delivery models such as joint
ventures operate under constitutions which serve a similar purpose,
to build ongoing trust and long-term relational partnerships.
Public bodies should be encouraged to explore other forms of contracting
models for delivering flexibility which draw partners into long-term
relationships with the prospect of future business models, such
as incremental partnering.
26. The use of end-to-end shared project
plans should also be standard practice. These plans take the project
from design through to operation and ensure that risk is identified
and managed appropriately. They ensure continuity and focus, and
align public and private partner outcomes more closely.
27. The recommendations from the CBI's report
in November 2006 include:
— The private sector should build links
with public sector commissioners in central and local government
and share best practice, through existing programmes and more
informally.
— All central government departments
and large strategic-level public bodies should have commercial
directorates, or their equivalent.
— Public bodies should improve the
detail of project specifications.
— Central government should establish
a mechanism by which bidders can raise concerns about the way
procurements are progressing.
— Quantitative and qualitative evaluation
criteria should be published at the start of all procurements.
Authorities must show evidence that they have used rigorous methods
for evaluating bids and be prepared to publish the results to
bidders and auditors.
— Above a certain threshold, all projects
must go through gateway reviews. These reviews must trigger external
interventions by central or regional procurement teams as appropriate
and should be widely available.
— All projects should have a named
sponsor at the highest level to provide strategic vision and a
point of accountability.
— All projects should develop an end-to-end
project plan at the outset, setting out the obligations and dependencies
on both sides and stipulating how resourcing challenges will be
met.
28. The government has since recognised
these recommendations and has announced changes to the Office
of Government Commerce (OGC) to create a government procurement
function that is adaptable, flexible and knowledgeable about the
commercial world. A slimmed-down OGC will now focus on putting
procurement and innovation at the heart of delivering public service
outcomes and raising the level of procurement skills across Whitehall.
Among the recommendations are plans for:
— Rigorous external scrutiny for complex
projects.
— An outcome-based and whole-life value
approach to procurement.
— Raising procurement capacity within
departments.
— Introducing a clear procurement framework
setting cross-departmental standards for procurement.
— An informal complaints procedure
for suppliers to report concerns about the failure of departments
to follow standard procedures.
OFFERING FLEXIBLE
EMPLOYMENT OPPORTUNITIES
29. The number of companies offering flexible
working patterns to their staff has grown substantially in recent
years—and both employers and employees are benefiting. Companies
find that adopting a flexible approach to working patterns allows
them to react quickly to peaks and troughs in demand, to changing
consumer habits, and to increased business activities across timezones.
It's good news for employees too—working flexibly allows
them to achieve a work-life balance.
30. The right to request flexible working
is operating well in the construction industry. Construction remains
a largely male dominated industry with women making up only 10%
of the workforce—possibly resulting in a lower number of
requests. However the CBI Employment Trends Survey found that
three-quarters of requests that were made had been accepted by
construction firms. Despite the fact that construction work can
only be carried out during certain hours of the day, firms said
granting flexible working hours had had no major impact on their
business. Construction firms were also offering flexible working
patterns such as part-time work and job sharing.
31. Despite the flexible working time provisions,
employers in the construction sector need to utilise the individual
opt-out from the Working Time Directive. Loss of the individual
opt-out would have a negative impact on construction where its
use is common. In some construction firms as many as 45% of employees
had signed an individual opt-out—the highest rate for any
individual sector (across business 30% of employees had signed
an opt-out). Just under three-quarters of construction firms felt
the loss of the opt-out would have an impact on their business—with
a third feeling it would undermine their ability to meet customer
needs, and a quarter worried about increased staffing costs.
32. Employers recognise that soft skills
and "people factors" are a unique source of competitive
advantage that can have a positive impact on business performance.
The CBI's Employment Trends Survey found that this was strongly
the case in the construction industry where effective use of human
resources was considered more important than other factors such
as management of capital resources. Our survey found that 59%
of construction firms said "effective people management"
was key to current competitive advantage—compared to just
19% who cited "better use of existing capital". This
compares to the situation across business as a whole, where 40%
cited "effective people management" and 24% "better
use of existing capital".
33. In considering the impact of particular
people management practices, firms across the economy agree that
management skills (52%) and workforce skills (50%) are the key
factors. This was amplified in the construction industry where
67% of firms cited management skills, 52% workforce skills, and
30% reward strategies. As globalisation and technological change
continue to intensify, management skills will become even more
crucial as businesses try to get the best out of their workforce
and utilise all resources to the best possible advantage.
WORKING TO
RAISE SKILL
LEVELS, BUT
GAPS AND
SHORTAGES REMAIN
34. Availability of skilled labour is key
to business performance. Employers recognise the importance of
skills and are committed to raising the skills levels of their
workforce—they already spending £33 billion annually
on training and development. The construction industry invests
considerably in skills and the spend via the training levy alone
was £113 million per last year alone.
35. The construction sector needs a workforce
with the correct mix of skills and the ability to be flexible
to adapt to changing demands. The vital skills mix includes good
levels of literacy and numeracy and basic employability skills,
craft and technical skills, higher qualifications and management
and leadership skills.
36. Difficulties in recruiting sufficiently
skilled labour are affecting the performance of the construction
industry. LSC data[14]
indicates that the sector's skills problems are significant. Many
(48%) unfilled vacancies are defined as "hard to fill"
and over a third (35%) were vacancies with a shortage of candidates
with the right skills/qualifications or work experience applying.
For the sector, the problem is most pressing amongst the "professional"
(31% of vacancies compared with 10% nationally) and "skilled
trades" categories, rather than lower skilled positions.
The CBI's Employment Trends Survey makes a similar finding with
shortage of skilled labour identified as a key issue with nearly
two-thirds (60%) reporting a moderate/significant impact, compared
with an all-sector average of 44%.
Migration has helped address deep seated skills
shortage—particularly for skilled workers
37. Migration cannot solve the construction
sector's long-term skills needs, and training UK workers must
be a priority for government and employers. However, migration
has helped in addressing short-term problems, and a recent CBI
survey found that over a fifth of employers anticipate recruiting
from abroad in the next year, a figure which matches 2005 and
confirms the value of migration to UK employers. The survey also
found a strong link between anticipated recruitment of migrants
and reported skills shortages in the construction sector,[15]
where only one in ten (10%) of respondents thought skills shortages
were having no impact on their business. Unsurprisingly, over
a quarter (27%) of respondents from this sector anticipated recruiting
migrant workers to deal with the problem—which was in sharp
contrast with other sectors, such as transport and communication.
38. Certain sectors showed demand for specific
types of migrants, matching their need to recruit the best talent
globally. Almost a quarter of employers across the sectors expect
to hire from the EU15 states in the next year (21%) or from the
newer member states that joined in 2003, such as Poland or the
Czech Republic (22%). But demand for skilled workers is as high,
and higher in sectors such as construction than demand for unskilled
labour. Four out of ten firms (41%) anticipate hiring skilled
migrants compared with only 29% for unskilled labour.
39. Last year, while the number of employers
who anticipated hiring from outside the EU almost halved in the
last year from 19% to 10%, demand remained high in the construction
sector, where the most sought-after group were migrants with managerial
or professional skills (18%), followed by skilled migrants (6%).
Only 3% of companies in the construction sector anticipating the
recruitment of unskilled non-EU migrants. This undermines the
stereotype of that employers in sector are seeking low-skilled
workers when recruiting from outside the UK.
Raising literacy and numeracy skills among school
leavers—employers hope the new school diplomas will help
40. Employers in the construction sector
report—as with their colleagues in other sectors—that
too many school leavers lack the basic skills necessary for success
in work and in life. A recent CBI survey showed that 45% of employers
were disappointed with school leavers' basic literacy and 44%
with their basic numeracy.[16]
Of course, this is not just a problem that affects school leavers—a
sixth of working-age adults do not have the basic literacy expected
of an 11 year old (6 million), and 46% do not have the numeracy
skills (17m).[17]
The impact of poor basic skills is huge—hindering productivity
across the economy and holding back the individuals.
CASE STUDY—THE
ESH GROUP
WORKING WITH
SCHOOLS
Around 120 youngsters from socially and economically
deprived areas are given the opportunity each year to join the
construction experience programme with Esh. What makes it unique
is that twenty full time jobs are on offer to those within the
cohort who meet the benchmarks and show the desire to work in
the Group. In the past, 20-25% of young people here have failed
to make it into employment, education or training (NEET = Not
in Employment, Education or Training). Since the introduction
of the Fit for Employment Scheme this has dropped massively to
only 3%. What a testament to its success.
41. The CBI report "Working on the
3Rs" defined, for the first time, what employers meant by
functional literacy and numeracy in the workplace. The findings
were not surprising—they highlighted the importance of being
able to communicate confidently in the workplace both orally and
in writing, mental arithmetic and being able to calculate probability.
The research included a number of case studies which illustrate
the impact of poor basic skills.
42. The CBI hopes that the new 14-19 Diplomas
could provide a way of tackling these problems across all sectors,
but the construction sector will get off to an early start. The
Diploma in Construction and the Built Environment will be available
in the first areas from 2008 and a national entitlement from 2013.CBI
members have welcomed the Diplomas and many have been involved
in their development. We hope that the new qualifications will
embed basic numeracy and literacy skills. While members have expressed
concerns over the capacity to provide sufficient good quality
work experience in these sectors in every geographical area, should
the Diplomas prove successful, many firms are already actively
involved with local schools. Specialist teachers and facilities
will also be required to teach the Diplomas—which will need
to be properly resourced and lack of experienced teaching staff
may well prove an issue in a sector already experiencing skills
shortages.
CASE STUDIES—BASIC
SKILLS GAPS
IN THE
CONSTRUCTION INDUSTRY
Ideally, foremen working in road building operations
need measuring and arithmetic skills to calculate areas and volumes.
For example, given the weight of a cubic metre of asphalt, a foreman
may be required to determine the weight of material needed to
lay rectangular, triangular or circular shaped areas of road surface
to a given depth. Although some foremen may be able to estimate
this with a degree of accuracy relying on sight alone as a result
of many years' experience, others need to make calculations. Mistakes
could be costly as a typical day may involve laying 1,000 tons
of asphalt at a cost of approximately £50,000. In reality,
only a small number of foremen have been found to carry out physical
measuring or to calculate volumes using simple trigonometric principles.
Trainees struggle with maths and science across
the board, with algebra and conceptual maths being big gaps. "You
can comfortably get a C in intermediate maths without ever looking
at an x or y in the view of the management, and this causes problems
in a business where formulae are used all the time. And young
people at school are also no longer taught the electrical diagrams
or basic electrical symbols that are used in industry. As there
are not enough job applicants with a grade C in maths GCSE, the
company sometimes has to accept people with a D, which causes
problems further down the line".
43. The new diplomas are also designed to
develop the vital employability skills employers need. Generic
employability skills such as teamworking, problem-solving and
self-management skills are also vital for success in the workplace,
but again are a source of dissatisfaction with 52% of employers
expressing concern with the levels of these skills amongst school
leavers.[18]
The CBI has recently published a report,[19]
defining these skills and making recommendations about how they
can be best developed during work experience.
Poor workforce basic skills are also being tackled
44. Poor basic skills among the workforce
are also being addressed. CBI members speak highly of the Construction
Skills Certification Scheme (CSCS), administered by Construction
Skills. This provides a simple way to prove skills competence,
including health and safety awareness. Introduced over ten years
ago, it has done much to ease the upskilling of the workforce
to improve safety and quality. It is effective as it has responded
directly to the needs of the sector—and the scheme has been
spread through the supply chain of contractors.
Good apprentice schemes have a role to play in
addressing intermediate level skills problems—but poor completion
rates need to be addressed . . .
45. Apprenticeships have a role to play
in raising the skills levels in the UK and Lord Leitch has recommended
that the number of apprentices increase from 255,000 to around
500,000 a year by 2020. Many CBI members have very successful
apprenticeship programmes in the construction sector but completions
rates in this sector are low—26% for construction apprenticeships,
compared with the national average of 40%.
46. CBI members report rates as high as
90%—which they attribute to a dedicated and highly qualified
training staff who mentor and support young people through the
schemes and associated self-development and team building activities.
Employers also recognise the importance of involving parents in
the recruitment and support of young apprentices.
47. Good careers advice will also help tackle
the gender imbalance in apprenticeships—in 2005 99% of apprentices
in the construction sector were men (and 97% of those on engineering
apprenticeships).
. . . and improved careers advice for young
people is essential
48. CBI has called for guaranteed careers
advice for young people at 11, 14, 16 and 18—when they are
making crucial decisions regarding subject choices or whether
to remain in education or training. Such advice must be offered
by independent, experienced individuals, with knowledge of the
labour market and the world of work. Careers advice is currently
biased towards academic routes, providing a serious obstacle for
achieving parity of esteem between academic and vocational education.
Poor careers advice goes some way to explain the low apprenticeship
completion rates in that sector. An EEF/SEMTA survey (2004) revealed
that 83% of students were given little or no information on apprenticeships.
CASE STUDY—N
G BAILEY AND
WORK EXPERIENCE
The company has built strong links with local
schools and is actively involved in helping young people to gain
an insight into career opportunities in engineering. The work
experience scheme, which has been running for at least 20 years,
plays an important part in achieving this objective. The company
takes on about ten students each year for two-week placements,
most of whom are 16 years old. In addition to its work experience
activity, NG Bailey runs an engineering apprenticeship programme,
with some 120 apprentices recruited in 2005 to its four-year training
scheme. One work experience student commented, "I realise
now why maths is important in the world of work and for a career
in engineering". The practical experience at the company
motivated the student to improve his performance and he achieved
a grade C in his maths GCSE.
49. Employers in the sector are already
playing their part. Inspirational work experience, talks from
employers and site visits can do much to tackle the perception
of careers in construction or engineering, and to encourage more
women to consider the sector. There is a considerable pool of
talent available—and ConstructionSkills has launched schemes
to help address the problem including National Construction Week
which focuses on encouraging more young people to consider the
sector, especially young women.
Intermediate workforce skills may be higher than
international comparisons of qualification may suggest
50. The UK ranks 20th across the 30 countries
of the OECD for its intermediate skills levels; in Germany for
example, 63% of the workforce is qualified to Level 3 compared
with just 40% in the UK. However, this may be because other counties
are more successful in turning competency into qualifications.
CBI members report that many employers are competent at Level
3 (A Level and equivalent) but lack formal qualifications.
51. This is because employers tend to train
to competency rather than qualification. Many firms provide employees
with high quality training but it is estimated that around two
thirds is not captured within the qualifications system and is
therefore not always taken into account when assessing the UK's
skill levels. Some estimates are that up to 80% of the construction
sector workforce is highly competent in this fashion, and the
remaining 20% would benefit from top-up courses to reach an appropriate
skills level, which could then be assessed on-site in a practical
way.
52. The CBI has therefore called for reform
of the system, which currently employers find overly complex,
with too many qualifications that are not economically valuable
or fit for purpose. Reform of the system will be essential in
encouraging employer engagement with publicly-funded training
provision and to ensure progress against the Government's qualifications
targets. Accrediting employer-provided training could benefit
business by recognising the significant investment employers already
make in training their staff—and ensure rapid progress towards
raising the qualification levels of the workforce.
53. The QCA is currently developing a new
qualifications system which could introduce greater flexibility
by breaking down qualifications into units, allowing employers
to be able to choose those parts of a qualification most relevant
to their business. More radical reform of the system is necessary
to speed accreditation of employers' good quality in-house training,
based on the Australian model where employers are licensed to
deliver and award qualifications.
CASE STUDY—CITB-CONSTRUCTIONSKILLS
ASSESSING AND
ACCREDITING COMPETENCE
CITB-Construction Skills has developed an assessment
model that accurately reflects the skills being tested. Many in
the sector are already highly competent and experienced—so
the qualifications system must recognise these existing skills
and assess them in an appropriate manner. Much of the process
to gain a vocational qualification involved compilation of portfolios
of paper documentation and photographs to demonstrate competence,
rather than assessing the skills in the context in which they
were developed. CITB have replaced this system with a model of
a one-day on-site competency test, which assesses the skills in
context, for example, a plasterer plastering walls.
Higher level skills are good—but there is
no room for complacency
54. The UK's future competitiveness also
needs high level skills—including leadership and management
skills. Effective leaders are, of course, central to ensuring
that a business has an effective strategic vision and a culture
of continuous improvement. Managers play a pivotal role in ensuring
that the strategic aims and direction of the organisation are
achieved. CBI research shows that at present, half (52%) of employers
believe that management skills are the most significant factor
contributing to competitiveness.[20]
55. Foundation Degrees provide a good opportunity
for employers to help their staff attain high level vocational
qualifications with the technical content focused on the particular
needs of the sector. The CBI has welcomed the work of "Foundation
Degree Forward" in working with employers to develop new
courses and accrediting existing employer training. In the construction
sector the foundation degree in construction, offered by the University
of Central Lancashire and nearby colleges including Preston College,
was developed in conjunction with employers and the CITB. This
"co-funding" approach is also being piloted in the HE
sector and the CBI hopes that the construction industry will be
involved.
56. Within the HE sector, the falling popularity
of engineering degree courses, particularly civil engineering
is a concern. Over the last 10 years there has been a 15% decline
in numbers taking civil engineering from nearly 12,500 in 1997
to 10,845 in 2006 with an all time low of 8,835 in 2001-02.[21]
More recently, there has been an increase in numbers taking civil
engineering, but numbers are still too low and there is a considerable
gender imbalance with only 15% of the students in 2005-06 being
female. Much needs to be done to improve careers advice to ensure
that young people of both sexes feel confident and interested
to pursue construction and engineering degrees.
57. Employers in the construction sector
are aware of, and are seeking to, tackle these problems, particularly
through raising awareness of careers in the sector amongst young
people. They recognise there is a poor perception of the construction
sector, and initiatives such as employees acting as Construction
Ambassadors by visiting schools and colleges, giving talks and
acting as role models for young people are starting to bear fruit.
This model is also used successfully in engineering through the
Science and Engineering Ambassadors scheme. Events such as the
annual National Construction Week, with activities from work shadowing
to building challenge for 200 school children, showcase the sector
and do much to raise the profile of opportunities.
INVESTING IN
HIGH LEVEL
SKILLS—ESH
GROUP
Esh considers itself a people business; with
the achievement of Investors in People award for the individual
companies within the Group. A rich tradition of "growing
our own" means many of the senior team first joined as trainees
and apprentices. Because of continuous training and support for
training at Esh employees can start at the bottom of the career
ladder and reach the top, allowing the company to retain valuable
talent and knowledge. Stephen Wilkie, for example, joined Lumsden
& Carroll (part of the Esh Group) as a trainee Engineer in
1988. He attended college and university on a day release basis
where he obtained his ONC and HNC qualifications. In 1991, Stephen
became a trainee Quantity Surveyor and attended the University
of Leeds to study a degree in Project Management, again on a day
release basis. From then on Stephen quickly climbed the ladder
and has been the Company's Construction Director since 2004, looking
after £15-20 million worth of turnover and overseeing approximately
150 employees as well as subcontractors.
The training levy works in construction
58. The sector is an example of how a training
levy can work effectively where there is employer buy-in and it
is not an approach that has commended itself to other sectors.
The levy rate is currently set at 0.5% of the wage bill for direct
employees, with smaller employers (with wage bills under £73,000)
exempt from the levy and qualifying instead for grants, advice
and support. Each year CITB-ConstructionSkills must demonstrate
to Government that employers support the levy.
59. In construction, the levy works because
it suits the particular situation of the industry, particularly
the large proportion of subcontracting. The smaller firms, exempt
from payment, employed nearly 11,000 new entrant trainees in 2006
and received £26.7 million in support for training. In total,
more than £113 million was distributed in training grants
in 2006, funded by levy subscriptions and additional funds accessed
by CITB. The real benefits in terms of grants and support were
estimated in 2004 to equate to £1.79 for every £1 paid
in the levy.
MAKING PROGRESS
TACKLING HEALTH
AND SAFETY
CONCERNS
60. The CBI works closely in partnership
and is involved in consultations with the Health and Safety Executive
and Commission. We represent all the business interests in the
construction process from construction companies, professional
service providers, clients, subcontractors and supporting trades,
financial and legal interests. The construction industry has a
close interest in health and safety legislation and practice.
Official statistics show that of the 212 fatal injuries to workers,
92 (43%) occurred in the two industries of construction (59) and
agriculture, forestry and fishing (33). The industry has taken
proactive steps to tackle the challenges and at a 2001 Construction
Summit set itself more stretching performance targets for health
and safety than those set for all other industries.
61. Statistics released by the Health and
Safety Executive for 2005/06 show the rate of fatal and major
injuries in the construction industry is continuing to fall. The
Health and Safety Statistics 2005-06 report shows:
— the rate of reported fatal injuries
(to all workers, including the self employed) in construction
between 1999-2000 and 2005-06 has reduced by around 36%;
— the rate of reported major injuries
to employees in construction between 1999-2000 and 2005-06 has
reduced by around 22%; and
— the rate of reported over three day
injuries to employees in construction between 1999-2000 and 2005-06
has reduced by around 31%.
62. In 2003, the most recent year for which
comparable data are available, the rate of fatal injury to workers
in Great Britain was the lowest of European member states.
ENCOURAGING SUSTAINABILITY
IN PROPERTY
DEVELOPMENT
63. The CBI supports the Government's target
to reduce total UK CO2 emissions by 60% by 2050 alongside
its wider commitment to sustainable development. We also recognise
that the built environment is responsible for 45-50% of the UK's
carbon emissions.
64. We believe all aspects of the development
supply chain have a role in helping to promote more sustainable
ways of living through for example more efficient land use and
the design and construction of more energy efficient buildings.
Businesses in every level of this supply chain are already developing
ways of making a positive contribution to these challenges and
the construction industry will play a significant part in these
efforts going forward.
65. We acknowledge that there has in the
past been a vicious circle which has precluded the development
of more sustainable buildings (both in quantity and quality) because
there was at least a perception that:
— developers could not find investors
for sustainable buildings;
— investors lacked confidence in there
being a demand for sustainable buildings;
— occupiers struggled to find sustainable
buildings and have been reluctant to pay a premium for those buildings;
and
— delivery of sustainable buildings
by the construction industry was slow to emerge.
66. However, the CBI believes that there
is evidence that this circle is beginning to reverse:
— some developers eg British Land and
Stanhope are declaring ambitions to become carbon neutral;
— there is some greater confidence
that sustainable buildings will in the longer term carry a higher
value and may in time be able to command higher rents;
— some of the UK's largest occupiers
such as Marks and Spencer have also set carbon neutral goals;
and
— construction companies such as NG
Bailey, which recently received the highest ever BREEAM rating,
are also seeing opportunities in delivering more sustainable construction
methods and products.
67. While these are positive signs, Government
and Parliament must be aware that investment in sustainable construction
and development comes at a higher cost (estimated to be around
a 5% increase on normal costs) and that returns on this investment
will be not be immediate.
68. Clearly the construction industry has
a role to play in encouraging greater sustainable living and the
scope to make improvements in this field is significant. Mechanisms
such as insulation, thermally efficient facades, heat recovery
systems and energy efficient air conditioning/heating can all
help to reduce the carbon footprint of construction in both commercial
and residential sectors.
69. Government also has a role in creating
the environment in which these activities can prosper. Building
regulations are a useful mechanism to encourage energy efficiency
in construction and BREEAM design standards provide a helpful
marker for prospective tenants. However on certain schemes developers
and contractors will be able to go further. For example Stanhope
aims to reuse or recycle 80% of construction waste on new commercial
buildings in the future.
70. Planning permission is also likely to
encourage sustainability in the built environment (planning applications
for large commercial buildings in London already have to show
consideration of sustainability). However there is already some
concern that the line between development control and building
regulations is blurring for example with regard to on-site renewable
targets. Government must therefore resist the temptation to over-regulate
in this area.
71. Moving forward the UK's construction
industry will need to be supported in its efforts. Sustainability
in construction can only be improved if there are the right skills
within the construction industry, if the technology is on-stream
to enable that delivery and if the regulatory regime is flexible
and proportionate rather than prescriptive.
72. The CBI looks forward to assisting a
range of Government departments in finding the best ways of helping
the UK's construction industry achieve greater sustainability
alongside both Government's and industry's aims to deliver greater
sustainable economic growth.
May 2007
11 HM Treasury (2003) PFI: Meeting the investment
challenge. Back
12
HM Treasury (2006) PFI: Strengthening long-term partnerships. Back
13
See forthcoming CBI publication on the opportunities for British
companies in the international PPP market. Back
14
National Employer Skills Survey (2005), LSC. Back
15
CBI/Pertemps, Employment Trends Survey, 2006. Back
16
CBI/Pertemps, Employment Trends Survey (2006). Back
17
DfES Skills for Life Survey (2002-03). Back
18
CBI/Pertemps, Employment Trends Survey (2006). Back
19
CBI, Time well spent (March 2007). Back
20
CBI/Pertemps, Employment Trends Survey (2006). Back
21
HESA data. Back
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