Apprenticeships

APP 35

Written evidence submitted by West Northamptonshire Development Corporation

1. EXECUTIVE SUMMARY

1.1 The delivery of apprenticeships is particularly challenging in the construction sector. It is a very segmented industry, with high levels of sub-contracting. In addition, the supply and demand of skills is dramatically affected by the impact of economic cycles, while there is a fractured connection between academia and industry. As a result, the level of construction apprenticeships is still relatively very low, despite an increase in government funding.

1.2 In Northamptonshire, an innovative solution has been successfully established, at nil cost to the Exchequer. It is called Construction Futures and involves using the planning and procurement system to secure construction apprenticeships on new developments.

1.3 Construction Futures is the only scheme of its kind in the UK and was launched in 2009. There is evidence to suggest that its approach has major implications for the way construction apprenticeships can be increased and improved across the country. Based upon this evidence and the experiences of the Construction Futures team, a number of recommendations are made.

1.4 The recommendations are as follows:

· Harness the planning system – local planning authorities can embed the requirement for construction apprenticeships on new developments into their local planning policy frameworks, including the community infrastructure levy.

· Set realistic targets in partnership – using industry led software, local planning authorities can accurately and realistically forecast apprenticeship opportunities on proposed developments and agree the opportunities in partnership with developers.

· Make obligations contractual – once planning permission is provided the apprenticeship opportunities can be made contractual and embedded in legal agreements.

· Delivery support – it is crucial to provide delivery support to all parties. Local coordination teams can help to ensure that potential apprentices are sourced from local training providers and other agencies, placed on a skills database and selected in partnership with contractors.

· Monitoring – the contractor’s obligations should be enforced and monitored by the coordination team.

· Local delivery – the Construction Futures model helps local people directly benefit

from developments in their area. It is led by local planning authorities, working in partnership with local training providers. As such, it offers a method to put localism into practice and provides a local solution to a national issue.

· Enhance public procurement – as well as securing apprenticeships through the planning process, any public sector organisation procuring capital works has the opportunity to embed construction apprenticeship requirements into their contracts. These apprenticeships can be delivered in partnership with contractors and local colleges, as per the Construction Futures model.

· Take an innovative approach - there are innovative ways the Construction Futures model can be deployed. For instance, in Northamptonshire, links are being established with a wide range of agencies, including the probation service, to help elements of society that have particular difficulties accessing apprenticeships and training opportunities.

2. INTRODUCTION

2.1 This written evidence is based upon the experience and industry knowledge of the Construction Futures team. It will therefore focus upon the provision and delivery of apprenticeships in the construction sector.

2.2 Construction Futures was established by the West Northamptonshire Development Corporation and is part-funded by the European Regional Development Fund. It has created a ground-breaking way to deliver construction training and apprenticeships through the planning and procurement system at nil cost to the Exchequer. Launched in 2009 by the Communities Minister Iain Wright, it is the first scheme of its kind in the UK.

2.3 WNDC is one of three Urban Development Corporations in the UK, and the only one outside London. WNDC was set up in 2004 to facilitate growth and regeneration within West Northamptonshire. In order to harness the employment and training opportunities inherent in its delivery programme, Construction Futures was established.

2.4 The national potential of the Construction Futures approach has been recognised, and the scheme is being promoted across the East Midlands to other local planning authorities, as well as private sector developers.

3. EVIDENCE

3.1 Is the extra funding promised by the Coalition Government necessary for apprenticeships? How can this funding best be spent?

3.2 Although the additional funding announced by the coalition government is most welcome, its impact has varied from sector to sector. For instance, the construction industry has particular circumstances, which funding alone cannot address.

The Problem

3.3 Despite the significant rise in public funding, the number of construction related apprenticeships in 2010/11 only rose by 5% compared with 2009/10. This is markedly lower than the rise of over 50% across all sectors as a whole during the same period.

3.4 The lack of apprenticeships in the construction industry is a long standing problem, which has resulted in sector skills shortages and a heavy reliance on imported labour. There are several root causes of this situation:

3.5 Industry Structure: the construction industry is highly segmented, with particularly high levels of subcontracting. Large-scale apprenticeship programmes and initiatives are traditionally very difficult to implement in this fractured environment. Additionally, the transient nature of sub-contracted work for most SMEs in the sector means that long-term investment in skills, training and apprenticeships remains unattractive, despite public subsidies.

3.6 Economic Cycles: the construction industry is usually the first to be affected by economic downturns, as commercial developments and public works are stalled or cancelled. For similar reasons, it is typically the last sector to leave recession. Naturally, when the industry goes into decline, skills leave and enter other sectors. As a result, when the industry begins to recover and grow, there is a structural skills shortage. Given the time it takes to attract and train new people, these shortages remain, restricting growth, until the next recession when the cycle starts again.

3.7 Academia and industry dislocation - there is a dislocation between the provision of construction training and industry demand. Not only is this due to the cyclical issues associated with economic downturns, but also the curriculum being pursued by most training providers. Construction is changing, as along with the traditional trades, new skills are increasingly required, particularly those related to low carbon construction techniques. However, without a direct link to industry, it is challenging for training providers to ensure supply meets demand.

3.8 The experience of the Construction Futures team has also revealed a dislocation between the targets of training providers, such as colleges, and the apprenticeships agenda. At an operational level, heads of departments and tutors are performance managed according to the grades that their students achieve rather than student conversion rates into employment. There is therefore little incentive for them to proactively promote and facilitate apprenticeship programmes.

Solution One – Harness the planning system

3.9 There is a solution to these sector specific problems, which can be implemented at a local level, by planning authorities. It lies in making construction apprenticeships a contractual and legal requirement for developers when planning applications are determined. Links can then be established between contractors and local training providers, such as colleges, to ensure trainees can be supplied when developments start on-site.

3.10 Using the above approach, Construction Futures has secured apprenticeships, as well as short-term training placements, in 37 legal agreements to date in West Northamptonshire. This has secured in excess of 2,000 training weeks, with many more in the pipeline.

3.11 When a planning application is made, Construction Futures uses industry led-software to accurately forecast the number and nature of apprenticeships and training placements that could be created by a proposed development. These requirements are agreed with developers and embedded in the legal agreements tied to an eventual planning permission. The apprenticeship obligations can then be passed down to a contractor through the developer’s procurement process.

3.12 The above approach has been considered by local planning authorities in the past and has started to be promoted by Construction Skills. Indeed, some authorities have written the requirement for construction apprenticeships into their planning policy frameworks. However, authorities have struggled to turn the policy into action. The solution lies in providing implementation support, with a specialist team establishing links with local training providers to source trainees, monitoring the contractors and enforcing their obligations.

Solution Two – Enhance Public Procurement

3.13 Working in partnership with the construction industry, Construction Futures has established the legal framework to embed training requirements in development contracts. Once the development is on-site, Construction Futures then works with local training providers to supply suitably skilled, site-ready trainees. This approach relies on a unique set of tools and systems:

3.14 Legal Tools: All of the necessary procedures and documentation relating to the procurement and planning process have been tested and implemented successfully in West Northamptonshire.

3.15 Skills Forecasting: A bespoke forecasting model is used to identify the training and employment opportunities on a new construction site, depending on its size and value. It specifies the exact range of trades that can be covered, consistent with industry standard labour modelling. It has been developed in partnership with Davis Langdon and takes an ‘industry-led approach’ resulting in realistic and deliverable obligations rather than aspirational targets, which are unlikely to be achieved.

3.16 Skills Tracking Database: Construction Futures has helped to develop a powerful database which matches candidates to training and employment opportunities. It manages the range and phasing of placements on a site and handles all monitoring and reporting functions.

Funding

3.17 The construction Futures approach itself, as outlined above, does not incur any public sector expenditure. It is funded by developer contributions through the section106 process. The coordinating and delivery team is supported by a levy of £97 per dwelling or £1 per sq m for commercial development. The contractor then uses the government subsidies available to help fund and deliver the contractually committed apprenticeships.

4. RECOMMENDATIONS FOR ACTION

4.1 Harness the planning system – local planning authorities can embed the requirement for construction apprenticeships on new developments into their local planning policy frameworks, including the community infrastructure levy.

4.2 Set realistic targets in partnership – using industry led software, local planning authorities can accurately and realistically forecast apprenticeship opportunities on proposed developments and agree the opportunities in partnership with developers.

4.3 Make obligations contractual – once planning permission is provided the apprenticeship opportunities can be made contractual and embedded in legal agreements.

4.4 Delivery support – it is crucial to provide delivery support to all parties. Local coordination teams can help to ensure that potential apprentices are sourced from local training providers and other agencies, placed on a skills database and selected in partnership with contractors.

4.5 Monitoring – the contractor’s obligations should be enforced and monitored by the coordination team.

4.6 Local delivery – the Construction Futures model helps local people directly benefit from developments in their area. It is led by local planning authorities, working in partnership with local training providers. As such, it offers a method to put localism into practice and provides a local solution to a national issue.

4.7 Enhance public procurement – as well as securing apprenticeships through the planning process, any public sector organisation procuring capital works has the opportunity to embed construction apprenticeship requirements into their contracts. These apprenticeships can be delivered in partnership with contractors and local colleges, as per the Construction Futures model.

4.8 Take an innovative approach - there are innovative ways the Construction Futures model can be deployed. For instance, in Northamptonshire, links are being established with a wide range of agencies, including the probation service, to help elements of society that have particular difficulties accessing apprenticeships and training opportunities.

2 February 2012