Examination of Witnesses (Questions 126
- 139)
TUESDAY 23 OCTOBER 2007
Mr Peter Kendall, Mr Richard George, Mr Tom Hadley
and Mr Stephen Ratcliffe
Q126 Chairman:
Good afternoon, there are at least some familiar faces I see;
you are all welcome. As you know, we are conducting an inquiry
into the economic impact of immigration and you have very kindly
come along to help us. Some of the questions that we are going
to put will be more directed to one group of you than the other,
but if somebody feels they want to say anything particularly,
please feel free to say so. Is there anything you want to say
at the beginning in the way of an introductory statement or are
you happy to go straight on with the questions?
Mr Ratcliffe: I am happy to go straight into
the questions.
Q127 Chairman:
If I may start with quite a general question, how do you assess
the future demand for skilled and low-skilled labour in your respective
sectors and what do you expect to be the role of migrants in meeting
this demand?
Mr Ratcliffe: Shall I start? I am Stephen Ratcliffe,
chief executive of the Construction Confederation. Probably the
first thing to say is that construction as an industry has grown
quite significantly in the past decade. We have seen output increase
in real terms by about 30%, so the industry has seen a huge increase,
particularly in public sector investment in new schools, hospitals
and the like, and we see that rate of increase going on forward
into the next three to five years at least. In terms of how that
impacts on the labour force, we reckon from economic surveys that
we have done that we probably need about 87,000 new recruits a
year merely to stand still and fulfil the commitments that we
have got. Quite a lot of that is coming from indigenous workers,
from apprenticeships, from bringing older people into the industry,
but certainly we have increasingly depended on migrant labour.
There is probably nothing very unique or new about that: in the
Sixties and Seventies we drew on Irish workers and we also saw
our own people going across to Germany—you will remember
the TV series Auf Wiedersehen Pet, so as an industry we
have always had a very mobile workforce. In our current economic
trends survey we have seen that there are still quite significant
shortages in skilled trades—plasterers, bricklayers, plumbers
and the like—and although there are no absolute figures
we reckon that probably about 6% of the workforce at the moment
is coming mainly from Eastern Europe, probably much higher in
London and the South-East than elsewhere in the country. Certainly,
anecdotal evidence is that on some London sites you can have up
to about 30% of workers coming from mainly Poland, Hungary, Czechoslovakia.
Q128 Chairman:
87,000 you mentioned as the sort of increase each year and you
say 6% of the workforce; how much of the 87,000 would you expect
to come from overseas?
Mr Ratcliffe: At the moment in terms of new
apprenticeships we are probably training about 20,000 new apprenticeships
a year although I think that figure is going to increase quite
dramatically next year. We are also getting a lot of people coming
in as adults, but I still think that probably 10% of that figure
per year is coming in from overseas.
Q129 Chairman:
10% from overseas, about 8,000 a year.
Mr Ratcliffe: Yes, but it is quite difficult
to get a handle on the figures, not least because some are coming
in not in direct employment but coming in as self-employed. There
is a very high level of self-employment in construction; it is
probably one of the highest industries for self-employment, probably
about 40% of the workforce is self-employed.
Mr Hadley: Tom Hadley from the Recruitment and
Employment Confederation. We represent recruitment agencies across
all sectors in the UK; that includes temporary work agencies as
well as permanent recruitment. We do a monthly report on jobs
which we are happy to share on a regular basis in conjunction
with KPMG, which tracks demand from employers in all different
sectors. What we are finding now and we envisage in the future
is that there are sectors where there are on-going skills needs,
which corroborates the information we have just heard, and in
particular construction and engineering are two sectors where
there are needs and we expect them to continue. But it is not
just your higher skilled areas, and some of the areas where we
envisage a need to continue are areas like social care, catering;
drivers, for example, are an area where we see a big demand. There
will be a role for migrant workers to help fill those gaps. We
recognise there is a responsibility on employer groups like ourselves
to promote careers in these sectors where we are not having enough
people to fill the gaps and that has to happen in parallel. One
of our concluding remarks when we talk about migrant workers is
that we are always very keen to really define what we mean and
for us migrant workers includes EU nationals coming over as well
as those that come from outside the EU. But we do have some concerns
because the presumption seems to be that within an enlarged EU
there is going to be less need over the next few years for it
coming from outside the EU to come in, and that is perhaps something
that our members are concerned about; we are not quite sure that
that will be the case. I think there will be an on-going need
for it coming from outside the EU coming into the UK as well as
increasing recruitment of EU nationals.
Q130 Chairman:
Have you got a handle as to how many jobs you would like to be
filled from outside the United Kingdom?
Mr Hadley: It is not a question of like. Recruitment
professionals would like to find any sort of candidates they can
to fill which is why, ideally if you can recruit on your own doorstep,
that is better if it is candidates with a full skills set. We
do not play a numbers game, we do track the demand from employers.
Sometimes that means having to go and recruit overseas although
I would say the vast majority of placements of migrant workers
are people who are already in this country. It is still relatively
rare, although it does happen, for our members to go and do a
proactive recruitment campaign overseas because that is very time-consuming.
So mostly it is people who are already in the UK who are placed
by our agencies.
Mr Kendall: Peter Kendall, president of the
National Farmers Union, and Richard George, one of our economists
at the NFU. I would like to make a reference to short-term low-skilled
workers. The Seasonal Agricultural Workers Scheme, which has been
a phenomenally important part of the horticulture and vegetable
sector, soft fruit and top fruit parts of the industry—we
believe that the winding-down and the removal of the SAW Scheme
will have an enormous impact. Although there are a lot of pictures
of rotting fruit that has been picked and harvested and gone to
waste there are strong examples from our members where we have
had problems gathering fruit this year as we have seen the numbers
of SAWS students being limited. We think there is a big need to
have a continuation of the scheme allowing us to pull in low-skilled
workers on a short term basis from outside the enlarged EU and
we believe that we can do that without having similar sorts of
problems that wider spread immigration has because these people
come on a short term contract, they are very carefully monitored.
Already there have been 15,000 SAW Scheme students, temporary
low-skilled workers, coming into do the harvest of the different
types of agricultural production and we would be very nervous
if that was unwound. It is not a plea for extension of immigration
for high-skilled workers; this is very much wanting some support
for the Seasonal Agricultural Workers Scheme, which we think has
a very different role to wider immigration.
Q131 Lord Sheldon:
This is a question to the National Farmers Union. You say that
immigration and skills shortages should be looked at separately
from areas like agriculture and horticulture with seasonal labour.
Why should these matters be considered separately?
Mr Kendall: Although agriculture has seen a
massive downturn in the number of people working within it, we
are finding that people who are coming to work in agriculture
in the skilled part of it quite refreshing—there is an upturn
of optimism about agriculture. But the temporary short term employment
of gathering fruit and vegetables, as I touched on, is a very
different issue for us. There is almost a disincentive through
some of the welfare schemes, so that people coming and working
temporarily on farms then lose benefits and this causes a real
disincentive for people to come and do that sort of work. Also,
it is quite arduous. I used to work as a Brussels sprout harvester
on our farm in Bedfordshire. It is back-breaking work and we find
it is very difficult to draw people from students in the UK to
do that work and we are finding success both before the enlargement
of the EU from those countries looking to learn and experience
the English way of life but also good workers that help us gather
in the harvest. We think there is a big distinction between that
short-term temporary work and long-term skilled migration where
we do not see the same challenges.
Q132 Lord Sheldon:
In agriculture and horticulture there is still the need for skilled
people presumably.
Mr Kendall: Absolutely but my point, I would
say, is that I am seeing a revival of interest in agriculture
in the wider skilled sector. I need people who are almost computer
specialists to operate the machinery we operate now—we operate
machines that are very, very technically advanced—and I
want skilled operators. But my concern is that the wider immigration
issue is impinging on the SAW Scheme that has provided the absolutely
critical short-term, temporary, low-skilled workforce for agriculture.
Q133 Lord Layard:
Going on about that, I can see that maybe it is difficult to get
British workers, but why is it so difficult to get workers from
the new accession countries to come and do this sort of work,
however back-breaking it is. Another question, going back to what
you said about the scheme, what do you know about whether everybody
goes home and what the checks are that everybody goes home of
the non-EU migrants?
Mr Kendall: I would like if I could to submit
exact figures on that but certainly all the evidence we have had
is that it is a very successful scheme that has incredibly high
percentage rates of returning students, who have participated
in SAWS. The SAWS return rate is 98.8% of students returning correctly.
Q134 Chairman:
That was a figure worth quoting.
Mr Kendall: On the back of that, the slippage
occurs because some people are coming from the EU 27 and therefore
they do not have to return, but even on the back of the 98.8%t
I think that is a staggeringly strong record for the SAW Scheme.
Why we do not find there is sufficient access already from the
enlarged EU for our low-skilled workers is, I think, we know already
that some countries are actually trying to entice workers back.
We are already hearing of schemes in Poland where people are being
encouraged to go back and seek employment in those countries,
but also the longer these countries have been involved in the
EU the more they look for higher value work, and we are struggling
at the moment to pull all the students we require from the accession
countries. But the proposals currently are that we will have to
have all our students next year from just Bulgaria and Romania
and that is too tight a restriction to get the requirement we
need.
Q135 Chairman:
I wonder if you can help me a little bit. Why once you have got
them is it difficult to retain them on farms?
Mr Kendall: It is actually for a short period
of time. Are you talking about the existing EU members' students?
Q136 Chairman:
Yes.
Mr Kendall: There is an issue about them not
wanting to come any more actually because the restrictions for
the new SAW Scheme from next year are that 100% of our students
will have to be from Bulgaria and Romania. That is very restrictive
and we are finding a real challenge in sourcing the number of
temporary, low-skilled, harvesting labour from those countries,
so we need to have access to countries outside the EU.
Q137 Lord Paul:
My question is really one for Mr Ratcliffe, but if any of you
want to join in, please do so. UCATT, the construction union,
has argued in written evidence to us that more apprenticeship
places must be offered to young people in the construction industry.
How does immigration affect employers' incentives to provide apprenticeship
places to young British workers?
Mr Ratcliffe: The straightforward answer is
that it does not. There is a whole host of issues around apprenticeships
and I think the first issue I would raise is that the industry
has a rather poor public image. Its health and safety record has
not been brilliant with 77 deaths this year. It is probably one
of the last of the dirty trades, if you like, or at least that
is the perception of construction. It is also one of the few industries
that has its own statutory training board, CITB Construction Skills,
so one of the things we have been doing over the past three to
five years is mounting a positive image campaign about all the
myriad of opportunities available to people in construction. That
has paid off rather better than we had hoped and I think the other
factor in all of this is that we have had very stable economic
conditions over the last decade. We are also seeing companies
entering into framework contracts with clients so they have a
long stream of work, perhaps lasting four to five years, so that
they can plan apprenticeships in a much better way. We have therefore
actually seen over the past few years more and more youngsters
actually applying for apprenticeship posts in construction. We
have seen a bit of a mismatch because the numbers have been a
bit low in previous years of contractors being able to offer work
placements for these people, and that is something which we are
working on at the moment, just to give you one example. In relation
to the Olympics, 14 major contractors have pooled resources together
and amongst their supply chain are offering 1000 apprenticeship
placements and 1000 adult training opportunities over the lifetime
of the Olympics. That is not just confined to the stadium, the
swimming pool et cetera; it applies to projects in the whole of
the London area.
Mr Hadley: If I could perhaps corroborate that
from the feedback of recruitment agencies specialised in the construction
sector. We are seeing both things happen in parallel; there is
often an urgent need for workers which does necessitate some recruitment
overseas or certainly opening the door for nationals from beyond
the EU sometimes, but we are also seeing a genuine desire to upskill
in the UK and almost to sell careers. To give you one practical
example, there are agencies on our books who are working with
South Bank University, who have a scheme in construction, giving
them that first assignment which gives you the practical experience
and then you can develop a career within that sector; and certainly
our members are very aware of their responsibilities and the long-term
benefits of playing an active role. So we are seeing both the
migrant workers and trying to train up people within the UK as
things that can work in parallel.
Q138 Chairman:
When somebody says to me "I have a plumbing business, why
do I have to bother to train a plumber if I can get a fully qualified
plumber from Poland," you are indicating that that is not
a common situation. But are you able to give us any figures—not
necessarily today—to demonstrate the rate at which you are
training construction workers over the years?
Mr Ratcliffe: We can certainly give you some
figures. In terms of craft apprenticeship placements we are talking
about 7000 or so per year. I could probably give you some more
detailed information because CITB Construction Skills do publish
it. The reason why the plumbers here would want to train up local
people is that the construction economies in Europe, particularly
in Germany and in Poland, have been in the doldrums and it would
be very easy if those economies were suddenly to take off to see
quite a lot of these people going back, so there is a sustainability
issue here which we are very mindful of.
Q139 Lord Vallance of Tummel:
Staying with the construction sector for a moment, what is the
proportion of self-employed persons in the total workforce and
how does that compare with the migrant workforce. What is your
assessment of the proportion of bogus self-employed persons and
how do the earnings and employment conditions of self-employed
persons compare with those of employees?
Mr Ratcliffe: First of all, the proportion of
construction workers in self-employment is about 40%, who are
legally self-employed rather than bogus self-employed—there
is obviously a definite picture in that. We simply do not know
what proportion of migrant labour is self-employed, although I
think people coming in from Romania and Bulgaria probably would
be working under self-employed status as opposed to under PAYE.
Bogus self-employment certainly is a problem in the industry and
has been a problem in the industry for a number of years. But
there is a new construction industry tax scheme which came into
play in April of this year which means that rather than people
passing loads of paper vouchers around is all computerised and
so companies are having to put in monthly returns of their workers,
classifying people as to whether they are employed or self-employed,
so I think over the course of this year we will see some better
information coming up. There are also pretty huge penalties for
people who misrepresent those returns, so I would see the new
CIS regulations as being a means of tackling bogus self-employed.
The other point I would just make is there is a grey economy in
construction. There is the so-called cowboy builder and people
knock and ring doorbells and are saying to people they will do
the job for cash only. It is almost a part of the industry. It
is not our part of the industry—I represent major and bona
fide contractors—but it is a problem, it is an issue and
it is an issue that we have talked to the Government about for
at least the last 30 years as to how one can eradicate it. No
one has yet come up with a magic wand to work it all out.
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