House of Commons - Environmental Audit Committee

Green Jobs and Skills - Environmental Audit Committee Contents

Memorandum submitted by SummitSkills

SUMMARY

— SummitSkills represents employers in 61,000 building services engineering businesses, which include the electrotechnical, heating and ventilating, refrigeration and air-conditioning and plumbing industries. — Businesses within our footprint design, install, commission, service and maintain domestic and industrial/commercial systems, which have begun to incorporate current and emerging microgeneration and renewable energy technologies. — These technologies have potential to make a significant contribution to the achievement of the 2020 renewable and 2050 energy reduction targets. Our submission concentrates on green jobs and skills relative to these activities.

— Microgeneration and renewable energy technologies skills need to be integrated into the traditional skills of existing building services engineering workers.

— The number of workers needed in the sector will increase, but they will need the full set of building services engineering skills rather than just the specific skills for environmental technologies.

— Employers are reluctant to top up the skills of their workforce without a clear indication of client or legislative demand.

— Employers need to be able to develop an entrepreneurial and enterprise culture and to raise client awareness of the range of suitable microgeneration and renewable energy technologies available.

— Financial incentives and legislative changes are likely to provide some stimulation to the market.

— The client's decision on a particular system, appliance or technology is often heavily influenced by the chosen installation business.

— Financial incentives are needed to support building services engineering businesses develop into effective advocates and installers of microgeneration and renewable energy technologies.

— It is essential to consider the impact on the training provider network, of encouraging building services engineering businesses to develop their workforce and plan accordingly.

CONCLUSIONS

— The building services engineering sector has potential, through micro generation and renewable technologies, to make a significant contribution to the achievement of the 2020 renewable and 2050 energy reduction targets. — Businesses within the sector need:

— to be convinced that the microgeneration and renewable technologies market is viable;

— support in the development of skills in entrepreneurship and the enterprise culture; and

— financial support to extend the skills of their workforce.

— Financial incentives for clients will be a more effective stimulus if they make a significant contribution towards:

— cost of the installation;

— reduction in payback time; and

— reduction in energy usage cost.

SUMMITSKILLS

1. SummitSkills Is the Sector Skills Council for the building services engineering sector. We have been created by employers, for employers, to address six key objectives:

— Offering expertise, safeguarding standards.

— Enhancing quality and delivery.

— Raising ambition.

— Effectiveness and evolution.

— Partnership approach.

2. The employer-led approach of SummitSkills gives businesses in the sector a key role in increasing their own and the country's productivity and profitability.

3. Through the establishment of Sector Skills Councils, employers have a direct route to influence strategic planning relating to skills and training. SummitSkills sees submission of evidence to this committee as part of fulfilling that role.

THE BUILDING SERVICES ENGINEERING SECTOR

4. The building services engineering sector covers the following industries:

— heating, ventilating, air conditioning and refrigeration (HVACR);

— plumbing industry; and

— represents 61,000 companies as shown below:

Industry	Number of companies
Electrotechnical	23,000
HVACR	13,000
Plumbing	22,000
Consulting Engineers	3,000
Totals	61,000

5. There are 613,000 employees across the above industries and the sector accounts for approximately 3% of GNP (Gross National Product) with £20 billion of work being carried out each year.

MICROGENERATION RENEWABLE ENERGY TECHNOLOGIES WITHIN THE BUILDING SERVICES ENGINEERING SECTOR

6. Businesses within our footprint design, install, commission, service and maintain domestic and industrial/commercial systems, which incorporate current and emerging microgeneration and renewable energy technologies. Currently these technologies include:

— solar photovoltaics;

— ground and air source heat pumps;

— combined heat and power;

— biomass and bio—liquid;

— micro/small scale wind energy;

— micro hydro generation systems; and

— fuel cell technology.

7. The building services engineering sector, through these technologies, has potential to make a significant contribution to the achievement of the 2020 renewable and 2050 energy reduction targets. Our submission concentrates on green jobs and skills relative to these activities.

THE SKILLS REQUIRED

8. Invariably, these technologies are installed to or as part of a primary system. For example, solar panels are normally installed to support the primary hot water heating system in a dwelling or commercial property and micro wind generators supplement the primary electrical power source drawn from the national grid although they may also contribute any spare power back into the national grid.

9. Integrating them into existing primary systems can be complex—ensuring the equipment is the correct size and the controls that operate it are installed and calibrated correctly requires a comprehensive understanding of the primary system.

10. Through stakeholder consultation and research, SummitSkills has identified that the sector views microgeneration and renewable energy technology skills as being an integrated component of existing sector occupations and job roles. Existing sector workers in skilled, technical and professional occupations have the threshold of competence required to participate in renewable energy technology related upskilling (eg plumbers installing solar water heating panels and heat pumps, building services engineering consulting engineers designing renewable technologies into new and refurbishment projects).

11. Employers in the sector have been slow to top up the skills of their existing workers, not allowing them to work on the environmental technologies. Our research has shown that 90% of businesses employ less than 10 people and they are not natural entrepreneurs. They are very cautious about spending money to upskill their existing workforce without a clear need to do so. As a consequence they are waiting for client demand or legislation to drive their business into the environmental technologies market.

12. SummitSkills Sector Skills Agreement (SSA) Key Issues: 2008 Update[76] highlighted that businesses in the sector are largely reactive rather than proactive. The update also highlighted that there is a general lack of entrepreneurial culture resulting in many sector businesses not identifying and responding to new business opportunities. Therefore, when considering how to increase deployment of microgeneration and renewable energy technologies it is essential not to just focus on the need for technical and design skills but to also focus on the need to develop an entrepreneurial and enterprise culture and to raise client awareness of the range of suitable technologies available.

The key points here are:

13. Environmental technologies skills and competence need to be integrated into the traditional skills and competence of existing workers.

14. The number of workers needed within the sector will increase, but they will need the full set of building services engineering skills and competence rather than just the specific skills and competence for environmental technologies.

15. Employers are reluctant to top up the skills of their workforce without a clear indication of client or legislative demand.

16. Employers need to be able to develop an entrepreneurial and enterprise culture and to raise client awareness of the range of suitable microgeneration and renewable energy technologies available.

DRIVERS OF CHANGE

17. The key driver for any business is customer demand. The client's decision to select a particular system, appliance or technology is often heavily influenced by the chosen installation business.[77]

18. Secondary drivers include legislation and incentives. If however, demand is stimulated before businesses have extended their workforce skills, clients will look to other countries where businesses already have these skills.

19. The deployment of microgeneration renewable energy technology systems is likely to be driven to some extent by future amendments to the Building Regulations/Scottish Building Standards.

20. Financial incentives such as the introduction of feed-in tariffs in 2010 and the introduction of the Renewable Heat Incentive in 2011 will also help, but only if they make a significant contribution towards:

— cost of the installation;

— reduction in payback time; and

— reduction in energy usage cost.

21. SummitSkills believes that the installation of microgeneration renewable energy technology systems in sufficient volume to make a significant contribution to the 2020 and 2050 targets, is unlikely without the engagement and support of UK building services engineering sector businesses. We also believe that installation businesses have huge potential to stimulate the market and create customer demand as outlined above (paragraph 17).

22. SummitSkills considers that drivers, linked to encouraging sector installation businesses to engage with renewable energy technologies and to stimulate the market, are essential. We consider funded training for upskilling, particularly in the current economic climate, is likely to be an effective driver.

The key points here are:

23. The client's decision on a particular system, appliance or technology is often heavily influenced by the chosen installation business.

24. Financial incentives and legislative changes are likely to provide some stimulation to the market.

25. Financial incentives are needed to support building services engineering businesses develop into effective advocates and installers of microgeneration and renewable energy technologies.

TRAINING DELIVERY INFRASTRUCTURE

26. When considering skills development, it is essential to look not only at the skills needs of both the current and future workforce but also the capacity in the education and training system to develop a trained and competent workforce. The SSA Key Issues: 2008 Update also highlighted that due to the sector's current participation in formal renewable energy training being very low, any market stimulation will generate significant uptake in some technologies, which may exceed the supply network's ability to cope with training needs. It is essential not to overlook the need for appropriate capacity[78] in the supply network to deliver high quality training solutions.

27. Additionally, building services engineering sector businesses can easily find themselves the victim of rogue training providers, particularly when there are emerging markets or other drivers to participate in training. Key feature of the skills development is the need for economically valuable, industry recognised training that is based upon the relevant National Occupational Standards and develops the skills and competence required for the various industry schemes (such as Building Regulations Competent Person Schemes and the Microgeneration Certification Scheme). Clear signposting to the recognised training solutions is essential.

The key points here are:

28. It is essential to consider the impact on the training provider network, of encouraging building services engineering businesses to develop their workforce and plan accordingly.

CONCLUSIONS

29. The building services engineering sector has potential, through micro generation and renewable technologies, to make a significant contribution to the achievement of the 2020 renewable and 2050 energy reduction targets.

30. Businesses within the sector need:

(a) to be convinced that the microgeneration and renewable technologies market is viable;

(b) support in the development of skills in entrepreneurship and the enterprise culture; and

31. Financial incentives for clients will be a more effective stimulus if they make a significant contribution towards:

(a) cost of the installation;

(b) reduction in payback time; and

26 May 2009

Annex 1

KEY ISSUES: 2008 UPDATE

EXTERNAL INFLUENCES

Business and Economic Performance

The Euro

— The sector is opposed to UK entry to the Euro in principle. — A larger minority, however, believe that membership of the Euro would benefit business.

— Adoption of the Euro would provide larger BSE companies wishing to work in Europe with fixed exchange rates, and a level playing field for tendering. Conversely, it would facilitate further European BSE entry to the UK domestic market. With the UK productivity deficiencies identified in this research, this may create a more competitive domestic market which, while good for clients, may cause difficulties for UK firms.

Finance

— The sector believes that interest rates are generally too high. — Currently it does not use finance significantly as a means of purchasing plant and equipment.

— As the most heavily financed region, London would appear to be the most sensitive to interest rate changes. A financial squeeze in that region may impact on the ability of the sector to recruit apprentices, when this is compared with their current judgement of the performance of the sector in their region.

Globalisation

— Globalisation theory suggests that "clustering" is one approach that businesses take to globalisation. This is where companies work together to develop or promote specialisms and/or specialist skills. — The development of specialist skills to meet clustering business needs does not yet appear to have impacted significantly on the BSE sector.

— Most BSE companies are experiencing little or no change in their workloads or work types.

— Where there is clustering activity within the sector from a globalised perspective, this is to be found in areas where there has traditionally been foreign inward investment by multi-national companies.

— Currently the BSE sector shows no sign of being affected by globalisation. This could, however, be a factor in the sector's future development, if an increase in specialised manufacturing leads to a need for specialist buildings and skills to install the building services.

Materials Cost Price Rising

— International copper and lead prices continue to increase the costs of BSE contracts. — The sector is currently passing on those costs directly to the consumer, which can contribute to inflationary pressure on the economy.

— Slowdown of the economy generally may mean that the BSE sector has to absorb these costs to remain competitive, which could create and exacerbate potential liquidity problems.

Overall economic conditions might put pressure on the BSE sector's recruitment of apprentices, as the training budget (not currently a priority for the sector) is usually the first to be cut.

Environmental Issues

— The Stern report suggests that the proliferation of greenhouse gas emissions is causing a worldwide temperature increase. This leads to melting ice caps and adverse weather conditions, with a reduction in the living space available to the increasing world population. This could result in a 15% reduction in GDP in developed countries. — The UK is currently moving from being an energy exporter to an energy importer, which could further aggravate economic slowdown. Any sudden reduction in the supply of oil or gas to the UK from foreign exporters would significantly damage the UK's GDP.

— Currently the use of power from renewable energy is 40% behind government targets.

Building Services Response

— The sector's current exposure to and competence within environmental technologies is limited. — There is certain clustering of technologies around regions, with some areas showing interest in certain renewables technologies and some in others. But engagement overall is low.

— Given the current low level of engagement in combined heat and power installation, the sector will be unable to adequately support the Government's ambitions for this technology.

— A high number of companies are waiting for stimulation of the market before they invest time and money in skills development and branching out into new technologies.

— The current supply of training opportunities is inadequate, both in quantity and in relation to formal qualification and measurement against national standards. Training in renewables remains largely the preserve of manufacturers.

— A sudden increase in the use of environmental technologies will create a heavy demand for training, which the supplier network will be unable to meet. London is particularly vulnerable in this respect because of the high commitment to developing new technologies, the Olympics, and the high number of proposed prestigious buildings in London which are likely to incorporate the most "high tech" environmental solutions.

— The proliferation of rogue trainers who take advantage of the lack of accredited training must be considered.

— In some English regions, the wholesale development of training in certain new environmental technologies will be inappropriate, due to lack of demand. The clustering effect discussed above will need to be further investigated and action taken to match demand with supply.

Failure to engage in this renewables market will damage the sector's profitability and encourage international competition to enter the market. Productivity performance in the sector may well fall further behind foreign competition, as craft operatives become less skilled compared to their overseas counterparts.

BUSINESS & WORKFORCE DEVELOPMENT

Leadership and Management

— Leadership and management is viewed as a major area of weakness in the sector, and one where specific action is needed to improve knowledge and skills. — The BSE sector does not strategically train its staff in management and leadership techniques and is reluctant to allow managers time off to take management courses. — Where managers have formal qualifications, these range from level 1 to level 5 and vary greatly in their degree of relevance to the sector. Employers appear to have no knowledge of the fitness for purpose of these qualifications, or whether they add to managers' skills levels.

— The current plethora of management qualifications is damaging to the sector as it creates the illusion that managers may actually be suitably qualified for management in the sector, where the evidence suggests this may not be the case.

— Currently engagement in BSE-specific management qualifications is about 1% of the total sample surveyed.

— Rather than skills deficiencies in craft operatives, it could be the chaotic nature of management qualifications, combined with the sector's attitude to management training, that is the primary cause of productivity deficiencies against international competitors.

Entrepreneurship

— Most BSE companies believe that they display no entrepreneurial characteristics and focus group members were wary of applying the term to the sector. — However a significant proportion thinks that entrepreneurial skills are not necessarily innate, but can be taught. This suggests it may be possible to market the concept of entrepreneurship to raise levels of knowledge and understanding.

— The lack of understanding about entrepreneurship is part of an overall lack of thinking on leadership and management issues. The underlying concepts of leadership, management and entrepreneurship have a significant degree of natural convergence.

— Although the BSE sector at the moment is not required to develop new specialisations to meet globalised clustering (although this position may change), the failure of the sector to identify entrepreneurial opportunities may damage their potential business competitiveness and affect productivity.

Business Acumen

— SummitSkills' Sector Needs Analysis and Assessment of Current Provision used Porter's model for competitive advantage to assess the BSE sector's performance. — A focus group also investigated if the model could be developed into a productivity and skills improvement model for the sector. Generally it was considered to be suitable, although the role of capital investment and information technology was thought to be overemphasised.

— Due to its origins in the manufacturing sector, the model does not currently reflect the importance of the "people" function to the BSE sector, which has a large number of specialist one-off contracts and greater labour intensity. More work is needed to develop this concept further.

Information Technology

— The sector makes significant use of IT for all the major business functions. — Manufacturers of products that require a high level of IT knowledge do not offer formal training, although sales staff can offer support as part of a sales and after-sales service.

— It is difficult to map the IT skills needed to maximise productivity gains from investment in new technology and equipment against existing IT training courses. This is because the skills required to effectively operate BSE sector IT equipment are specialised, whilst general IT courses tend to focus on main software package manipulation such as Microsoft Office.

— Smaller companies are more likely not to utilise IT to its maximum extent and to need support, whereas larger companies often employ their own IT specialist.

Curriculum Relevance

— Use of skill cards is not widespread and remains concentrated primarily in the medium to large companies. — Many of the skills that employers say that they need from apprentices are more behavioural in nature such as life skills and respect. However, these are behavioural aspects of an individual that have to be developed and cannot be taught or specifically delivered through National Occupational Standards or qualifications.

— The plumbing industry is recording the greatest instance of skill gaps of any of the industries. However the reported gaps appear to be more attitudinal factors than definable skills gaps. Only solar panels make the list of skills that are definable and actionable by providers. More work needs to be done with trade associations representing plumbing companies to accurately highlight actual skills needs.

— Less than 50% of the UK BSE sector invested in either on-or off-the-job training for their employees in the last 12 months.

NEW ENTRANTS

Migrant Workers

— London and the East of England have the highest percentage of migrant workers. — There is no evidence that poor English is affecting migrant workers or compromising health and safety. — Labour agencies contacted as part of this research confirmed a number of issues:

— they were not aware of migrant workers being paid below normal labour rates;

— they did not offer training for migrant workers, but helped them to get skill cards, and checked foreign qualifications for their UK equivalence; and

— the numbers of migrant BSE workers is expected to increase over the next few years.

— Migrant workers are traditionally perceived to have higher skills and a better work ethic than indigenous workers. This research suggests this perception is changing, with fewer employers expressing such a view.

— If migrant workers do not have the higher skill levels and better work ethic previously assumed, their contribution to productivity gains may not be as significant as once thought.

— If the renewables market develops strongly within the UK, the sector may suffer from decreased productivity measures compared to international competitors, as many migrant workers are skilled in environmental technologies that the current UK BSE sector does not have.

Diversity

— Due to difficulties with accessing students through their training providers, the experience of ethnic minority learners working in the BSE sector remains under researched. — The BSE sector has traditionally used a blanket approach to targeting ethnic minority groups for recruitment, which research by the Institute of Public Policy Research for Channel 4 suggests may be misplaced as different groups have differing career expectations.

— Certain ethnic groups tend to have a high level of skills, with aspirations towards professional roles and higher income levels, while other ethnic groups have lower average salary expectations. Specifically targeting the latter groups as well as the former, may be more advantageous, if they are more likely to enjoy an income rise by joining the sector as well as having numerous career opportunities available to them that will meet high levels of career aspiration.

Key Skills

— Although existing literature suggests that BSE sector employers are reluctant towards Key Skills, only a minority of those surveyed found them to be irrelevant to the apprentice programme. — Employers generally think that Key Skills should remain part of the apprenticeship scheme, and this view is shared by providers.

— In this research SummitSkills profiled two exemplar Key Skills providers and compared issues in existing literature with the actual practice of the providers. The research discovered that the providers:

— have experienced dedicated Key Skills staff, with one having a Key Skills department;

— demonstrate good practice in having regular formal and more frequent informal meetings between Key Skills staff and those teaching main curriculum subjects to discuss learner performance;

— ensure that all Key Skills assignments are relevant to the main curriculum of the learner; and

— use stand-alone classes and assignments to teach Key Skills rather than integrate into the general curriculum.

— Key Skills remain a vital element of the apprenticeship programme, which apprentices must achieve if they are to progress. The exemplar providers generally demonstrate the good practice featured in the literature, which might be seen as the beginnings of a "blueprint" for good Key Skills delivery for all providers to adopt.

OUR KEY RECOMMENDATIONS

1. The sector's participation in formal environmental technology training is very low. Also very few companies are currently working with the various technologies. Market stimulation will generate significant uptake in some technologies, which may exceed the supply network's ability to cope with training needs. To create a balance of training supply and employer demand, work needs to take place with providers to ensure that the relevant technologies are offered in the relevant regions and nations.

2. Management skills remain poor and there is no coherent set of management qualifications on offer for the sector to improve its skills. Poor leadership and management skills could be the major cause of sector productivity deficiencies. A clear suite of management qualifications that is suitable for the BSE sector need to be identified.

3. More work is required to create a business model based on Porter's model, from which the sector can begin to measure its own business performance. There remains a need to encourage employers to use formal KPI and benchmarking techniques to develop improved business and management performance.

4. The sector is not training sufficient numbers of its employees, and in many instances is unable to articulate its skills needs effectively. An increase in the skills knowledge of the sector is needed, to help employers understand and subsequently describe their current and future skills requirements.

5. Employers are still unsure of the content of apprenticeship courses and what they can rightly expect a provider to teach an apprentice. SummitSkills and partners should raise employer awareness about the content of apprenticeship programmes as well as the general curriculum.

6. The sector remains unsure of the benefits that creating an entrepreneurial culture within their organisations will bring. If factors driving globalisation continue, this may have a significant affect on the sector's ability to respond to new business opportunities. Communication with employers is needed to stress the value of taking a strategic approach to their business thinking and becoming more entrepreneurial in practice, to respond to changing markets over the coming years.

76 SSA Key Issues: 2008 Update-See Annex 1. Back

77 In 71% of decisions according to Energy Saving Trust research. Back

78 Appropriate capacity: sufficient capacity within each region/nation for each technology. Back



© Parliamentary copyright 2009	Prepared 16 December 2009