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Meeting housing demand Contents

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Chapter 7: Skills shortages

183.Skills shortages affect a range of sectors relating to the delivery of new homes, including construction, design, planning and green skills. While there are wider structural issues with the labour market, shortages in housebuilding sectors are particularly severe. This chapter discusses where skills shortages are most acute; the effectiveness of various government initiatives to meet skills gaps; future demand for skills; and how to incentivise more young people to join the workforce and retain existing members of the workforce through career development and lifelong learning.

Construction

184.The construction sector employs over 10% of the country’s workforce.273 In 2019, the sector contributed £117 billion to the UK economy, representing 6% of the UK’s total economic output, and accounted for 300,000 businesses, which was 13% of the UK’s total.274 The Government’s Employer Skills Survey in 2019 found that skills shortages accounted for 36% of all construction vacancies and 48% of all manufacturing and skilled trades vacancies.275 An ageing workforce contributes to this: 35% of the workforce are over 50. Only 20% of workers are aged below 30, a 2.5% reduction from five years ago.276 This will require the sector to recruit an additional 217,000 workers, or more than 43,000 per year.277 The types of jobs needed span a range of manual trades, as well as including emerging jobs in digital and manufacturing. In 2019, Build UK identified the roles with the most severe shortages as: construction and building trades supervisors; general labourers; quantity surveyors; construction project managers; bricklayers; civil engineers; and carpenters and joiners.278 The figures of those working in the construction industry do not include those employed in factories.279

185.The 2016 Farmer review, Modernise or Die, examined labour force and skills issues in the construction sector.280 It identified major structural problems including manpower shortage, the cyclical nature of the industry, a widening skills gap, a poor reputation, inadequate training and a lack of policy and industry oversight. The review’s findings informed the 2018 Construction Sector Deal, part of the Government’s Industrial Strategy. This sought to improve the productivity of construction through measures including investing in modern methods of housebuilding, increasing the number of apprenticeships and creating a National Retraining Scheme for the workforce to reskill.

186.Official figures for the construction industry should include those employed in factories related to construction. This would more accurately reflect productivity levels in the industry, particularly as the sector moves towards modern methods of construction.

Perceptions

187.We heard about the need for the sector to promote the advantages of a career in construction. Mark Enzer, Head of the National Twin Programme at the Centre for a Digital Built Britain, and Chief Technical Officer at Mott MacDonald, thought that the industry needs to harness a new narrative: “to show how every job that is contributing to the built environment is contributing to better outcomes for people, society and nature. It is something that is worth being part of.”281

188.Greater awareness of the financial rewards of a career in a trade might help with recruitment. The Centre for Vocational Education Research found in 2020 that men with a higher technical (level 4) qualification earn on average £5,100 more at age 30 (£37,000) than those with a degree (level 6), at £31,900.282 Surveys of those in the industry suggest that 65% of respondents said that good pay was an appealing aspect of working in construction and 74% were attracted by the physical, outdoor nature of the work and the fact that it is not office-based.283

189.We heard of innovative digital projects designed to attract young people into construction. The Chartered Institute of Building devised ‘Craft your future’, a construction game for 12- to 14-year-olds, which takes place in Minecraft and presents users with a variety of construction problems.284 Emphasising that construction is a sector that will rely on advanced digital skills in the future may help to attract children with an interest in computer science and other technical subjects, who may not previously have considered construction.

Construction Industry Training Board

190.The Construction Sector Deal committed to reforming the Construction Industry Training Board (CITB) so that it is “more strategic and focussed on future skills needs”. The CITB is funded by a levy paid by all construction employers, which is intended to support training, develop qualifications, offer apprenticeships and promote the industry as a career. Consultation on Levy Proposals for 2022–25 for registered employers took place in Spring 2021, a year later than planned due to the pandemic. Only 0.4% of employers registered with CITB responded to the proposals.285

191.Following a Government review in 2017, the CITB no longer provides training directly.286 Its current responsibilities include providing grants for apprenticeships; hosting the industry’s career portal, ‘Go Construct’; hosting Onsite Experience Hubs, which prepare new entrants from different professional backgrounds to work in construction; and developing Occupational Traineeships with Further Education Colleges to prepare participants for work and apprenticeships.

192.The CITB has attracted criticism for failing to meet skills shortages. In October 2021, the National Federation of Builders published a paper calling for a fundamental restructuring of the body, including stripping CITB of its levy-raising powers.287 The paper found that industry confidence in the CITB as “credible and reputable, adding value to the industry” in 2020 was 26%, down from 35% in 2019. It concluded that the CITB’s responsibilities should be redeployed to existing and new organisations, and the existing company put to competitive tender to ensure a focus on accountability and value for money. The National Federation of Builders proposed setting up a new national construction careers body that would be sponsored by the Department for Education.288

193.The Construction Industry Training Board has not addressed construction skills shortages in an effective manner over many years. Reform is needed to address this issue. The Government should consider how the Construction Industry Training Board can upgrade its training offer for construction professionals. Failure to recruit and train the skills required to build new homes should cause the Government to consider potential alternative models for a national construction careers body.

Trade skills shortages

194.Firms are struggling to recruit electricians, roofers, bricklayers, plasterers, carpenters, plumbers and safety inspectors. According to the ONS, there were 48,000 UK construction vacancies between April and October 2021—the most vacancies in 20 years. This contrasts with the pre-pandemic level of 27,000 between December 2019 and February 2020.289 In the second quarter of 2021, 76% of roofing contractors reported experiencing difficulties with recruitment.290

195.SMEs are particularly affected by trades shortages; the Federation of Master Builders’ quarterly State of Trade Survey identified the following gaps during the second quarter of 2021:

• 53% of SME builders were struggling to hire carpenters/joiners
• 47% were struggling to hire bricklayers
• 36% were struggling to hire general labourers
• 31% were struggling to hire plasterers.291

Career progression and employment models

196. A lack of career progression in construction was raised as a major barrier to staff retention in the workforce. Table 5 shows how earnings tend to plateau for skilled construction and trades roles after 20 years in the industry.

Table 5: Hourly salary rates for skilled construction and building trades

Age range	Median hourly rate* (£)
18–21	8.20
22–29	11.73
30–39	13.41
40–49	13.32
50–59	13.59
60+	13.64

*The median hourly rate is likely to vary around the country. This table illustrates the tendency for earnings to plateau.
Source: Written evidence from Construction Industry Training Board (UKH0103)

197.The construction sector is dominated by self-employed contractors. Self-employed workers comprise nearly 40% of the construction workforce, as opposed to under 15% across all industries.292 Women are more likely than men to work as employees and less likely to be self-employed: in 2021, 88% of women in the construction sector were employees, compared with 80% of men.293 The Construction Leadership Council’s Industry Skills Plan recommends increasing the rate of direct employment in the construction sector to modernise and improve skills, concluding that it is “an enabler of apprenticeships, digital upskilling and competence”.294 On the other hand, this can be difficult for SMEs who may need to draw on a more flexible set of skills throughout a project. Off-payroll working rules, known as IR-35, determine the tax contributions for self-employed workers.295 These rules were altered in April 2021 and may also have an impact on the ability to hire skilled resources on building sites.296

198.We heard that most developers tend to bring in trade-specific subcontractors on a project-by-project basis, creating a cycle of high levels of turnover, with ‘layoffs’ taking place between projects. There is little incentive for companies to invest in and train their workforce under this model. LDS confirmed to us: “the business model for most SMEs is to acquire staff or sub-contractors on a site-by-site basis”.297 Shelter told us that: “Insolvencies and drops in available work mean many … workers lose employment and/or leave the sector to train in another industry.”298 While some smaller housebuilders take on their own staff, as we learned at our site visit to St Modwen Properties, this remains a rarity.

199.Several witnesses called for appropriate mandatory continued professional development to enhance the skills of those already in the workforce.299 This ‘lifelong learning’ will be necessary to keep the workforce up to date with the skills it needs. We heard that this would raise standards and improve the safety-critical aspects of construction. Some larger housebuilders provide continued development and training. Persimmon’s training includes accreditation programmes for site managers and contracts managers; full IT training for employees who regularly use IT applications; regular sales and customer service training for relevant staff; and course/exam fees, study leave and day release for recognised professional qualifications.300

Diversity

200.The construction industry is male dominated: only around 4% of trades roles are held by women.301 Only 8% of all construction apprenticeship starts are undertaken by women.302 Representation of people from a Black, Asian and minority ethnic background (BAME) is also poor: only around 5% of the construction workforce in the UK identify as BAME; this drops to 1% among senior industry roles.303 It will be necessary to attract people from a wider, more diverse talent pool to address skills shortages in the construction industry.

201.We heard that one barrier to attracting a more diverse workforce is the informality of the recruitment process. Firms tend to recruit people they know with few visible opportunities or role models. Brian Berry advocated online training courses as one way of encouraging more diverse routes into the profession.304 The precarious nature of a career in construction, which usually involves self-employment, long hours and working in a wide variety of locations, may also deter potential applicants.

202.Diversity remains a major issue in construction trades, with only 4% of trades roles held by women. It will be essential to draw on a wider talent base to meet the demand for skills.

Planning and design skills

203.There are also challenges in recruiting to professional roles in built environment sectors, leading to delays in the planning process. The National Audit Office reported a 13% reduction in planning inspectors between 2010 and 2018.305 The Home Builders Federation told us: “Chronic under-resourcing and under-staffing in local planning authorities is leading to discrepancies, administrative errors and additional delays for developers”.306

204.The traditional route to become a professional planner is to pursue a university degree accredited by the Royal Town and Planning Institute, with a master’s required for those whose first degree is in an unrelated subject. In 2019, the Royal Town and Planning Institute introduced the
Chartered Town Planner apprenticeship scheme, which is available at 10 universities.307 It offers two entry points: one for current undergraduates, who complete a two-year apprenticeship programme, and a five-year programme for those without an undergraduate degree. There are approximately 300 apprentices currently enrolled on the programme.

205.Jonathan Manns was optimistic about attracting prospective young planners:

“You are involved in shaping a community that will have a lasting legacy and a direct impact on people’s lives. Without being trite, we talk about units or homes, but these are the places where people fall in love, raise families, and have memories. The public sector has a real opportunity to attract and retain people if we start focusing on those benefits.”308

206.Having the appropriate planning resource in the right places is part of the problem. While some local authorities may have the right number of staff for day-to-day requirements, they may not have the resources required for larger sites. Pooja Agrawal argued in favour of having a more flexible resource that brings in planners from the private sector, trainees on placements or professionals from other areas, such as ecology, to contribute to larger projects.309 She told us that Public Practice carries out similar work by placing mid-career built environment practitioners into public sector organisations.310

207.The Royal Institute of British Architects referred to a “concerning lack of specialist design expertise within local government”.311 These experts might be qualified architects, or technical design specialists with an urban design training, who can advise on the close-up attributes of a building, such as complexity, materials and texture, as well as those viewed from a distance, such as symmetry, balance and human scale. Design specialists would also advise on broader placemaking in a new development. The Royal Institute of British Architects suggested that there is a “reliance in local authorities on using professionals without a design background to provide design related advice, such as planners and conservation officers” and thought that employing trained architects will be key to achieving positive design outcomes.312 The Place Alliance found that in 2021 three quarters of local planning authorities had no access to architectural advice.313

208.The Urban Design Group has suggested that a ratio of design specialist staff to other professional planning staff of 1:10 is a reasonable aspiration.314 At the current rate of recruitment, it will take until 2077 to have at least one urban design officer in every local planning authority in England.315

209.The Government should enable local planning departments to have access to flexible resources, where skills from the private sector and other specialist areas are brought on for specific large sites.

Digital skills

210.We heard that the housebuilding sector has not been quick to adapt to digital ways of working. The Construction Industry Council told us that digital training programmes for construction are lacking, with education failing to reflect the industry’s technological developments.316 Mark Enzer advised: “As we anticipate the transformation of the industry, we can anticipate the transformation of the workforce.”317 Rather than relying on highly skilled digital graduates, however, Mark Enzer suggested that jobs at all levels will involve digital elements. He stressed that this will make processes easier and help to make the industry more attractive and diverse.

211.Connected Places Catapult highlighted that local planning authorities need to be supported by digital leadership programmes, in order to upskill the digital and data literacy of the workforce. The Construction Industry Council also want to see more digital training programmes in construction. It said:

“some of the larger building contractors are using technology in a fully integrated way to streamline processes and drive up quality, with projects designed and ‘built’ digitally before starting on site. They are arming their site-based project managers with tablets and apps to check projects are being built as designed”.318

212.The digitalisation of processes is rarer in smaller firms, but the Construction Industry Council is confident that greater remote working has “led to the wider adoption of digital technologies across the sector” and recommend that Government, local authorities and housing associations reward companies that invest in training their staff.

213.Specialist skills will also be needed to retrofit the existing housing stock with green technologies. The UK has a particularly challenging housing stock to retrofit, because it has some of the oldest and least energy efficient homes.319 The New Economics Foundation predicts that the UK will need 36,000 trained retrofit specialists to meet demand, yet at present there are only 2% of that number.320 The Commons Environmental Audit Committee recently published a report, Green Jobs, on these issues.321

Apprenticeship Levy

214.The Apprenticeship Levy was introduced in April 2017 and is a form of taxation designed to fund the Government’s apprenticeship programme for large and small employers. The levy applies to businesses with a pay bill over £3 million at a rate of 0.5%. Businesses with an income of less than £3 million can use levy funds if they agree to contribute 5% of the apprenticeship’s training costs, with the Government contributing the rest.

215.The number of apprenticeship starts has fallen consistently since the levy’s introduction. Between the 2015/16 financial year and the first full year of the levy’s operation in 2017/18, the National Audit Office reported that the number of apprenticeship starts fell by 26%.322 The COVID-19 pandemic exacerbated problems with the scheme, with the Construction Industry Training Board informing us: “During the 2020/21 academic year there were 6,000 fewer construction apprenticeship starts, representing a reduction of 30% compared to the previous year.”323 The Federation of Master Builders suggested that the consistent decline in the number of apprenticeship starts, with 21,900 reported in 2019/20, “means that the Government has failed to meet its commitment to grow this to 25,000 by 2020, as set out in the Construction Sector Deal” of 2018.324

216.In July 2021, the Government introduced a £7 million fund to help employers set up ‘flexi-job’ construction apprenticeship schemes. These are due to begin in January 2022 and are intended to allow apprentices to work across a range of projects with multiple employers. This initiative could help apprenticeships to develop the varied set of skills needed to move between contracts and could also enable smaller employers to share apprenticeships.325

217.In recent years, a number of bodies have called for wholesale reform of the levy, including other Lords Committees.326 Make Modular pointed to limitations on what the levy funds can be spent and the cap on how much can be spent on each apprenticeship, which can lead to unspent funds.327 We heard that the £3,000 incentive for taking on an apprentice in an SME does not cover the bureaucracy involved.328 In 2019, the Confederation of British Industry concluded: “Without urgent action, the Apprenticeship Levy risks becoming a roadblock to the Government’s wider and welcome efforts to modernise the skills system.”329

218.Apprenticeships are vital to many built environment sectors and help develop talent for the future. The number of apprenticeships has fallen consistently since the Apprenticeship Levy’s introduction. We urge the Government to review the Apprenticeship Levy.

Education

219.There is limited engagement with skills related to housebuilding in school curricula; more can be done to promote careers in the built environment at an earlier age. The Royal Institution of Chartered Surveyors has called for construction and the built environment to be a focus of investment for future GCSE qualifications.330 Wales introduced a Built Environment GCSE in September 2021. In England a vocational Level 1/2 qualification, ‘Constructing the built environment’, is available for those seeking to pursue a practical course at age 14-16, but there is no academic equivalent.331

Box 7: Welsh Built Environment GCSE

Subject content Unit 1: The sector The built environment life cycle Types of building and structure Tools, technologies and materials Building structures and forms Sustainable construction methods Trades, employment and careers Health and safety Unit 2: Designing the built environment Constructing the built environment

Unit 3: Planning and design stages of buildings and structures Construction processes Wellbeing of communities Post-occupancy evaluations Building maintenance and repair Change of use Changing practices

Source: Welsh Joint Education Committee, GCSE specification template (2 October 2021): https://www.wjec.co.uk/media/cjlos3v5/wjec-gcse-built-environment-specification-e-20-10-2021.pdf [accessed 16 December 2021]

220.We heard of a disconnect between further education and the job market. Only 25% of further education students who study construction in a technical college go onto a job in construction and a further 15% move onto an apprenticeship, with 60% reaching the end of their studies at age 18 with no immediate secure work.332 Charlotte Bonner, National Head of Education for Sustainable Development at the Education and Training Foundation, advised us that whilst there are strong attractions and training routes into the construction industry, there is “a significant drop off in that translating into long-term employment.”333

T levels

221.Introduced in September 2020, T levels are two-year courses which are equivalent to three A levels.334 They provide students with a technical education and include a placement with an employer of approximately 45 days. As of September 2021, construction-specific T level courses are available in onsite construction; building services engineering for construction; and design, surveying and planning for construction. There are concerns that the cancellation of BTECs, which are applied general technical qualifications, will reduce student choice and accessibility.335 There has also been some discussion that, as a level 3 qualification, T levels are set too high for many young people who would make useful employees. The equivalence with three A levels makes these courses suited for students already doing well academically.

222.Introduction through technical qualifications at the age of 16 is too late to capture young peoples’ interest in the built environment. The Government should ensure wider and earlier engagement with built environment sectors across the curriculum, by introducing modules before and at GCSE level.

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