Apprenticeships

4. The recession has led to lower workloads for construction firms, resulting in fewer employment and apprenticeship opportunities. While apprenticeship starts increased by 58% across the economy as a whole in 2010/11, starts in construction have lagged behind. However despite difficult circumstances there was a small upturn of 6% last year.

5. The most effective way to stimulate apprenticeship growth within the sector is to provide certainty on future projects. The government’s announcement of increased investment in infrastructure in the autumn statement was therefore welcome. The national infrastructure plan has identified a pipeline of 500 projects worth a total of £250 billion, with Ministers are looking to the construction sector to deliver these projects over the next decade. The Olympic Park - delivered ahead of time and to budget – showcased the best of what major contractors can achieve. But if the sector is to deliver high-profile projects in the years ahead - including Crossrail, Thames Tideway, and the HS2 high speed rail link – it must further develop its’ skills base.

6. There is a pressing need to tackle the barriers the construction sector faces in providing additional apprenticeship opportunities and developing a new generation of skilled staff. In particular, reduced funding rates for apprentices aged over 19 limits the ability of firms to progress staff to the Level 3 apprenticeship programmes required in many parts of the industry. Construction courses are comparatively expensive to deliver; while health and safety requirements mean construction apprentices tends to be older and therefore less likely to start a Level 3 programme before their 19th birthday. To address these and other barriers, our submission recommends:

· A flexible delivery contract covering full funding for Level 2 and Level 3 construction apprenticeships

· A better assessment of the impact the introduction of Functional Skills will have on apprentice completion rates in the construction industry

· Better awareness of funding available to support collaborative training models.

7. In addition, another route for driving apprenticeships is through local authority procurement. However some local authorities have unrealistic expectations about how best to achieve this. Many look for opportunities solely for applicants living with their own postcode boundaries to the exclusion of all others.  This means that contractors may not be able to provide sustainable apprenticeship placements if they move into another area where similar postcode restrictions apply.  At worst that might mean laying off apprentices taken on earlier to satisfy the current requirement. Some more business grounded guidance to local authorities on how to deliver sustainable opportunities is needed.    

The government’s priority must be to drive quality not quantity within apprenticeships

8. With youth unemployment rising to over a million, it is right and proper that government is looking to provide additional work and training opportunities for young people. However this should not be at the expense of diluting the apprenticeship brand which must remain as a ‘gold standard’ for vocational training.

9. Short training courses that do not properly ready a candidate for a career in his or her chosen profession should not be treated in the same way as – for example - a demanding four year Level 3 craft apprenticeship. In traditional craft industries where apprenticeships have their roots, it is assumed that an apprentice will, on completion, be able to work effectively and unsupervised in his or her chosen occupation. High quality craft apprenticeships therefore provide the longevity of employment opportunities that apprenticeships should provide. The benefits of shorter courses will be more transient.

10. For example, construction firm Seddon’s is taking on 75 new entrant trainees (40 of which are apprentices) this year to celebrate their 75th anniversary of offering apprenticeships. To meet the employment needs of the industry and the move towards more multi-skilling, Seddon's is broadening the training it provides (e.g. NVQs in maintenance) to give individuals more flexible skills sets. To support apprentices to build a long term career in the industry, in their final year apprentices receive careers advice on their future choices.

11. UKCG members welcome the government’s proposed review of apprenticeship quality, and the assertion by Skills Minister John Hayes that all new apprenticeships must take place over a minimum of 12 months. Funding and recognition should only be available for apprenticeships that prepare an individual for a career in a chosen profession or trade. It should not be made available where firms and training providers have labelled basic training programmes as apprenticeships in order to attract public funding. A rigorous Level 3 apprenticeship is not comparable with a twelve week training course that, in the ordinary course of events, would be funded wholly by the employer as a basic training and staff induction activity.

12. The apprenticeship brand should be focused on programmes that add value to individuals, industry and UK plc in the longer term. There is value in shorter training programmes in sectors such as retail or hospitality in providing the immediate skills required to carry out worthwhile jobs. But this should not be conflated with the apprenticeship brand.

Construction currently faces challenging business circumstances which are affecting training and recruitment levels

13. The construction sector stands ready to play a positive role in supporting government in its twin aims of generating economic growth and renewing the national infrastructure. By delivering new housing, economic, and social infrastructure the construction industry will play a vital role. However the economic downturn has created a number of challenges on skills which the sector urgently needs to address. In particular there is a need to increase the flow of young people into the industry and grow high quality apprenticeship opportunities.

Construction saw falling levels of recruitment during the recession

14. The sharp decline in private sector construction activity during the downturn led to a heavy recession in construction – with output falling by 2.8% in 2008 and 13.3% in 2009. Significantly the sector had the second highest redundancy rate in the UK during the downturn (peaking at c.32 per 1,000 employees in Qu1 2009), with a redundancy rate which was 47% higher than that experienced in manufacturing.

15. Forecasts predict a bumpy road ahead. The latest market forecasts produced by CITB- Construction Skills predict a fall in construction output of 3% during 2012, with a further 45,000 jobs being lost. While growth is expected to return thereafter, the CITB- Construction Skills projections anticipate that by 2016, output and employment will still be 5% below their respective 2007/8 peaks.

16. The decline in new employment opportunities has led to an increasingly ageing workforce within the sector. The number of 16-19 year olds in the industry has fallen by 52% (to 56,781) since 2008, with 16-24 year olds now accounting for just over one in ten (12%) of the construction workforce. In contrast 17% of construction workers are now aged 55 and over.

17. There is now a serious risk that the ageing workforce, coupled with a failure to attract and train sufficient numbers of young people, will result in a skills vacuum and manpower shortage that hampers growth within the industry.

18. A clear example is provided by the Electrical Contractors Association. The average age of a qualified electrician (NVQ Level 3) in the commercial and industrial part of the industry is 45-50 years old. As a safety critical sector it is vital that that new people are recruited and trained to appropriate standards.

And the downturn impacted on numbers of apprenticeships within the industry

19. Lower levels of recruitment within the industry has inevitably led to a fall in the numbers of apprentices being taken on by construction firms. While apprenticeships starts across the economy have continued on a positive trend in recent years – even during the recession – the construction industry has lagged behind. There were 14,940 starts in construction this year, and while this represents a small annual increase, the number of starts remain 27% lower than in 2007/8 prior to the recession (See Exhibit 1).

Exhibit 1

20. Level 2 and Level 3 qualifications will meet the bulk of the industry’s skills needs for the foreseeable future – with 78% of construction apprenticeship starts at Level 2 in 2009/10 (See Exhibit 2). The sector has a strong record in providing opportunities to those with low skills – although 70% of apprentices enter the industry with GCSE results D-E, the vast majority go on to achieve their first Level 2 qualification.

21. Construction firms are working hard to provide new and innovative construction opportunities. Kier are developing a construction team leader apprenticeship aimed at developing supervisors and managers. The company aims to recruit 100 people this year onto the initial pilots and provide Level 2 training. The aim is to provide a ladder up to Level 3 and foundation degree over the coming years.

Exhibit 2

22. The CITB-Construction Skills Managing Agency has been able to achieve recruitment rates above the national average due to a close learner/employer engagement strategy. While leaner starts in construction at Level 2 decreased by 13% in 2010 compared with the year before, CITB’s own Managing Agency saw a 28% increase. CITB have also seen positive returns on progressing apprentices from Level 2 to Level 3 – but like the industry as a whole – reducing funding for those aged 19+ presents a significant barrier to further progress.

Current age dependent funding rules limit apprentice progression within the industry

23. Obstacles that prevent the construction industry taking on and training new apprentices must be tackled. The current age dependent funding rules for apprenticeships – with 100% funding available for 16-18 year olds, but only up to 50% available for those aged 19+ - is an obstacle to progression from Level 2 to Level 3 qualifications within the industry. Level 3 qualifications will be required for a number of on-site roles, while employers recognise their responsibility to provide a ladder of progression opportunities to staff to aid their personal development. In addition, the government’s skills strategy has made clear that Level 3 should be the benchmark to which all apprentices ‘aspire’.

24. The conversion rate for Level 2 construction apprentices successfully moving on to Level 3 programmes is currently around 25%. However there is a need to increase this conversion rate to provide the flow of Level 3 skills the industry needs. The number of Level 3 apprenticeship starts in construction has declined in recent years – falling by 26% between 2007/8 and 2009/10.

25. The nature of the construction industry means that the reduction in apprentice funding post-19 has a particularly strong impact on the numbers starting Level 3 apprenticeships compared to other industries:

· Construction apprenticeships are comparatively expensive to deliver. Research by the Warwick Institute for Employment research found the average net cost to a construction employer of a three year apprenticeship to be £22,000 – this compares to an average cost of an apprenticeship of £4,200 in hospitality and £2,300 in retail [3] . Costs to colleges and training provider of providing construction training are equally high due to costs associated with materials and the large square footage required. Many providers will limit provision by trade and refuse to contemplate certain activities at Level 3 due to the significant reduction in funding.

· Health and safety requirements within the industry due to the need to use certain types of specialist equipment, mean many apprentices can not start their training until they are slightly older (mainly when they can drive). As a result it is unlikely that successful apprentices will be able to start a Level 3 programme before the age of 19 and be eligible for full funding.

· The qualifications profile of many entrants to construction – with 70% of apprentices entering the industry with GCSE results D-E – is incompatible with putting an entrant onto a Level 3 programmes immediately.

26. A solution proposed by the construction industry, would be a flexible delivery contract for those starting a construction apprenticeship at age 16-18 which would provide full funding for Level 2 and Level 3 apprentice training regardless of age upon converting to Level 3. Under this contract learners who have the potential can continue to Level 3 within the same contract therefore maintaining levels of funding; those who are deemed to have achieved their current full potential at Level 2 and do not wish to proceed to the next level can leave the programme with no detrimental impact upon provider performance stats – they will be classed as a Level 2 success not an ‘early leaver’. It is estimated that introducing flexible delivery contracts or equalising 19+ funding to current 16-18 rates would cost a maximum of £14m per annum in construction trades.

The introduction of Functional Skills could negatively impact on apprenticeship achievement rates

27. The construction industry recognises the importance of all apprentices achieving a strong baseline in literacy and numeracy in order to support their future progress in work and life. However there are concerns that the recent Ministerial announcement that all apprentices will have to achieve a minimum of Level 2 in English and maths, alongside the introduction of Functional Skills into apprenticeship frameworks from September 2012, will make it more difficult for many construction apprentices to complete their frameworks. In particular the standards within functional skills programmes at all levels are generally considered to be more difficult than the current key skills framework which they will replace.

28. At present a large proportion of learners recruited into construction craft apprenticeships, and ultimately developed into highly skilled craftspeople, come with GCSE grades ranging from D-E rather than A-C. The risks associated with the introduction of Functional Skills and the new literacy and numeracy requirements are:

· If the current recruitment pool and percentage breakdown of GCSE results remains the same there could be a significant drop in achievement rates due to an inability to achieve Functional Skills whilst the learner is more than capable of achieving all the other elements of the framework. Not only will this have a negative impact on the futures of a large number of learners it will also significantly reduce the value for money element associated with the funding received.

· There is also a risk that employers, aware of the higher level requirements, may raise the bar for applicant requirements in terms of current educational standards achieved at time of application.

· Colleges generate income for on-programme learners and, as with employers, if they believe applicants with lower level grades may not be able to complete a full programme and the achieve framework they may insist upon higher GCSE grades for all applicants.

· Both of the points above create the risk of excluding a large cohort of capable candidates due to their perceived inability to achieve the requirements of Functional Skills, despite the fact that experience demonstrates they are more than capable of developing into skilled craftspeople in their chosen trades. Functional Skills could lead to the creation of another band of school leavers excluded from the opportunity of an apprenticeship, and rather than raising standards could leave large numbers without a skilled career option and with no level of additional support in literacy and numeracy.

29. The government must work more closely with Construction Skills and the construction industry to assess the impact the introduction of Functional Skills, and the new literacy and numeracy requirements, will have on the completion of apprenticeships within the industry. There is a clear need to balance quality and accessibility within apprenticeship frameworks, and mitigate against measures that pose unnecessary obstacles to a young person’s ability to complete their apprenticeship and get a foothold within the industry. We are aware that other sectors have raised similar concerns about the difficulty of functional skills for some apprentices, and the more classroom based methods of assessment which can be a ‘turn-off’ for some young people, particularly those who performed less well at school. The government must provide re-assurance on these issues before Functional Skills are introduced in September 2012.

SMEs remain an untapped market for apprenticeships – greater collaboration would boost provision

30. The construction industry is characterised by a number of large contractors, who operate sub-contracting relationships with SMEs. The construction industry value chain consists of 300,000 firms, including many small and medium sized family and local businesses.

31. There remains significant untapped potential to increase apprentice provision in the industry, particularly amongst SMEs. Construction is therefore a prime sector for the extension of collaborative apprenticeship models - either through large firms supporting SMEs in their supply chain by training more apprentices than they need; or SMEs accessing training through Apprenticeship Training Agencies or Group Training Associations.

32. There is good practice on which to build – for example Carillion recruits and trains around 1,000 apprentices every year, a large number of whom are placed within the supply chain. However the additional costs taken-on by larger firms needs to be recognised, and they need to be able to access further support.

33. UKCG members support the work of CITB-ConstructionSkills who currently operate three Shared Apprenticeship Schemes, with plans to expand to the programme to include potentially ten more. The scheme operates broadly along the lines of an Apprenticeship Training Agency and are led by local bodies – such as local authorities or housing associations – who can influence regional work flows. Apprentices are employed by the shared apprentice holding company with placements provided within different construction firms.

34. The sector welcomes initiatives such as the Growth and Innovation Fund, and the £250m fund announced by the Prime Minister on employer ownership of skills. These programmes will allow employer or employer bodies to bid for matched contributions aimed at supporting greater collaboration on skills and developing employer centred solutions.

35. While this additional funding to support collaborative models on skills is welcome, many construction employers will be unaware of the money which is available and how to access it. The National Apprenticeship Service and sector skills councils must ensure firms are aware of the existence of the funds; and provide guidance on the procedures for bidding and putting proposals together.

3 February 2012