House of Commons - Energy and Climate Change

The future of Britain's electricity networks - Energy and Climate Change Contents

Memorandum submitted by Energy and Utility Skills/Power Sector Skills Strategy Group

Please find attached a copy of the Energy & Utility Skills/Power Sector Skills Strategy Group's (PSSSG) submission to the Energy and Climate Change Committee inquiry into the future of Britain's electricity networks. Energy & Utility Skills is the sector skills council representing the Power, Gas, Water and Waste Management sectors. The PSSSG represents all major stakeholders in the power sector responsible for the generation, transmission, distribution, supply and metering of electricity on strategic skills matters.

We established the Power Sector Skills Strategy Group (PSSSG) in July 2007 as the power sector-wide collaboration group on skills strategy. Members include major power sector companies, contracting organisations, supply chain companies, Government partners, trade associations, trade unions and professional bodies. In this manner, all industry stakeholders are working together, to address the serious skills challenges facing the sector. Members hold strategic positions in their representative organisations and are able to contribute to the strategic debate on skills in the power sector.

EXECUTIVE SUMMARY

1. This submission addresses the skills issues around the electricity networks challenges over the medium to long term.

2. Whilst the energy sector in the UK has traditionally developed through its own procedures and training systems a well-trained and highly-skilled workforce, providing excellent career opportunities to people from a diverse range of social backgrounds, the current economic and regulatory context has placed significant pressures to reduce recruitment and training. As a result, the sector is dependant on legacy skills embedded in an ageing workforce.

3. The opportunity to develop a greener power sector, offering a more sophisticated and less expensive energy services requires positive action now to address skills shortages. Without the key skills to drive change across the sector we, as a nation, face a crucial skill shortage from 2015 to 2025 that will make power supplies less reliable and more expensive. If this process does not take place, ultimately consumers and businesses will pay the long-term price of a less efficient, costly power sector, which struggles to meet targets for environmental protection and stifles innovation.

4. In recent years, despite the commercial rivalry between operators in the sector, we have strived to create an industry-wide response to the skills crisis within the power sector. Whilst the various industry stakeholders are confident that we can deliver on our commitment to revitalise the skills base of the power sector, we believe that Government and industry regulators, such as Ofgem, need to work with the industry to create a supportive framework for training and development. The potential benefits of a greener, more innovative power sector providing tens of thousands of highly skilled jobs, and boosting the UK's economic performance, are such that we believe that nobody should shirk the duty to achieve a robust and effective framework for training across the sector.

POWER SECTOR SKILLS STRATEGY GROUP

5. Overview: We established the Power Sector Skills Strategy Group (PSSSG) in July 2007 as the power sector-wide collaboration group on skills strategy. Members[62] include major power sector companies, contracting organisations, supply chain companies, Government partners, trade unions, trade associations and professional bodies. In this manner, all industry stakeholders are working together to address the serious skills challenges facing the sector. Members hold strategic positions in their representative organisations and are able to contribute to the strategic debate on skills in the power sector. A senior representative of a major power company, who is also a non-executive director of the industry skills sector council, Energy & Utility Skills, chairs PSSSG and secretariat resources are provided by E&U Skills.[63]

6. Purpose: PSSSG's sole purpose is to develop a strategy to address the strategic skills gaps across the power sector with particular emphasis on the potential for medium (2-5 years) and long term (5-20 years) collaborative action. The PSSSG will support the sector-wide delivery of a long-term, sustainable skilled workforce to meet the environmental, social and commercial challenges of the next 20 years.

7. National Skills Academy for Power: EU Skills and the PSSSG put a successful bid into DIUS in July 2008 for a National Skills Academy for Power (NSAP). The NSAP is currently in business planning phase, due to be complete in the summer 2009, and is currently financially supported by 14 power sector companies, including five Distribution Network Operators and seven significant contractor organisations. It is anticipated that on acceptance of the business plan, the National Skills Academy for Power will start operation in October 2009.

8. Role of engineering and technical skills in UK Society: Power sector engineers and technicians are vital to the continued economic success of the UK and to meeting our commitments on climate change. The power sector provides essential infrastructure for all industrial, commercial, public and voluntary services and homes across the UK. Even though the sector is commercial, there remains a very strong ethos of public service and a profound pride in meeting customer expectations.

9. Given the natural monopoly status of some parts of the sector and the strategic importance of energy prices even where competition is viable and working, the industry is robustly regulated. This regulation has focused on reducing prices and increasing competition but has so far failed to recognise the benefits to the commercial and domestic consumer of a robust framework for skills that maintains and improves the skills base of the sector.

10. Without the broad skills of all participants within the sector, the UK faces a dirtier, more expensive and less efficient future. Some short-term investment in skills will have significant rewards for employers, employees and suppliers but more importantly such investment now will provide the skills that provide the commercial and domestic consumers with lower prices and a wider range of services in the medium and long-term future. In addition there is a strong global market for power sector services and investment in skills is essential if the UK is to become an exporter of new technology services rather than an importer.

11. Whilst we can produce many examples of the benefits of skills development across the power sector to the economy as a whole, one example is the development of distributed generation. Traditionally, generation has been concentrated in areas where fuel is easily accessible and power then transmitted across the UK through high-voltage transmission networks; with the growth of smaller distributed renewable power sources such as small-scale renewable power and combined heat and power networks, there is increasing amounts of intermittent lower voltage generation embedded in distribution networks.

12. This has environmental and economic benefits but it requires the development of new craft, technical and engineering skills across the sector in manufacturing, connecting and operating such plant and managing its interaction with local distribution and national transmission networks. As with other examples that we could explain in a wider evidence session, the development of new technology requires a deep skills base across the UK.

13. Due to social trends that have led to a decline in the number of students studying science subjects from 16 to 18 and a dramatic reduction in the number of engineering graduates, the UK is particularly poorly-placed to meet the skills challenges facing the power sector.

14. Unfortunately there are a number of factors that have driven this, but the three most prominent are as follows:

— the perception that the industry has lower status and lower pay as there is media speculation that the industry should cut prices deeper;

— job security as dramatic cuts to meet regulatory requirements have created a reputation of job insecurity in a key infrastructure service; and

— crucially, the lack of visibility for young people and career advisers of the virtues of the power sector that deters students from bearing the financial costs required to obtain a degree.

15. The industry is attempting to tackle this perception and has developed initiatives such as the Power Academy and the Engineering Diploma to encourage students to opt for a career in the sector. Through the National Skills Academy for Power the attractiveness of the sector (or lack of it) will be tackled head on across a broad range of potential recruitment markets, from school children to engineering graduates currently working in the financial services sector. In order to deliver this we need the support of other stakeholders such as government, regulators, schools and universities if we are to tackle this decline and provide the services the UK needs in future.

16. Looking to the future, if skills are not coordinated and standardised the problem of skills shortages will worsen, new technologies will lead to further specialisms and shortages of suitably competent resources will increase. This in turn will raise costs across the industry. The questions posed in the "call for evidence" are primarily focussed on technical innovations and investment. However, human resources are also in need of significant investment and future regulation should stimulate innovations to ensure the future and sustained attractiveness of the sector to new recruits.

ROLES OF INDUSTRY, UNIVERSITIES, PROFESSIONAL BODIES, GOVERNMENT, UNIONS AND OTHER IN PROMOTING SKILLS AND DEVELOPING CAREERS IN ENGINEERING

17. There is already a significant gap in skills across the power sector. Generally the energy sector workforce is highly skilled once we consider the currently skewed age profile and related experience but with the substantial lead-time to ensure full competence in highly technically sophisticated sector there is a widening skills gap. Given the nature of our business, any attempt to speed up the training by short-cutting the transfer of crucial technical knowledge and experience carries significant commercial and safety risks.

18. At present, the energy sector predominantly employs white, middle-aged male staff. We first employed the bulk of our current staff population in the 1970s when social expectations restricted equal opportunity. In recent years, the industry has made significant progress on establishing a more diverse workforce, but a programme to attract a more diverse population into our sector is key to our strategy. We need to work with schools, colleges and universities to attract a broader range of students into scientific subjects that underpin skills in the power sector.

19. We believe the industry's tradition of providing extensive training and promotion to all staff regardless of their entry point to the organisation is a particular strength of the industry and that this provides significant opportunities for individuals from social groups with less access to high-quality formal academic qualifications and promotes greater social cohesion. The industry's experience is that diversity of entry routes with different formal academic requirements for entry to the industry has served the various businesses in the industry well by creating a variety of experiences amongst middle and senior managers, and openness to innovation. However this creates higher training costs than other sectors that impose more stringent entry standards: we believe that government and industry regulators should recognise this when assessing operating costs.

20. In light of the issues of demographic change identified by Leitch we recognise the need to retrain adults in power sector skills given the shortage of school and college leavers in future. However we are concerned that the focus of Government training policy is at NVQ level 2 when the need for Britain to maintain and improve competitiveness requires the power sector to develop the overwhelming bulk of its staff to NVQ Level 3, 4 and 5. The domestic and export success of the UK power sector depends upon developing these higher-level skills and we believe that this a priority for the sector that Government should support.

CONCLUSION

21. The power sector uses and develops crucial technical, craft and engineering skills that are vital to the competitiveness of the UK. Whilst the industry has taken a lead in developing these skills, we believe that Government, regulators and the educational system have a vital supporting role in helping the industry develop these skills over the long term so the sector can continue to provide highly-skilled and fulfilling careers to individuals from a wide range of social backgrounds. Having the right skills at the right time is essential to the successful operation of Britain's electricity networks. Support for the National Skills Academy for Power in addressing the future skills gaps will be key to delivering the electricity networks skills strategies.

APPENDIX 1

The following organisations are members of the Power Sector Skills Strategy Group:

— E.ON UK;

— Scottish & Southern Energy;

— Scottish Power;

— RWE npower;

— United Utilities;

— National Grid;

— Western Power Distribution;

— CE Electric;

— Northern Ireland Electricity;

— Alstom Power Services;