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SPEECH BY SIR MICHAEL LATHAM DL,
CHAIRMAN, CITB-CONSTRUCTIONSKILLS
MAJOR SPENDS PROJECTS IN THE NORTH WEST: THE CONSTRUCTIONSKILLS OFFER,
HALLIWELL JONES STADIUM, WARRINGTON

29 NOVEMBER 2005

It is a great pleasure to be with you here today. Construction in the North West is expanding. It is one of the region's largest industries and fundamental to all other economic activity. The public order book has been strong. We’ve seen big rises in private housing, and industrial and commercial sectors. And that’s not even beginning to factor in national developments such as the Olympics, or Terminal 5, which have much wider national effects on skill requirements and labour supply.

Current major construction projects here in the North West include the Spinningfields 35-story tower and retail space; a massive £400m urban regeneration programme building 75,000 homes and schools in Liverpool; plus £600m in the next three years in East Lancashire. £250m for an Aquatic Research Centre in Liverpool; Paradise Street development in Liverpool £750m; Manchester gas pipeline renewal £280m; Manchester Hospital PFI £300m, and loads more!

Transport infrastructure, new housing developments, retail and leisure complexes, hospitals and schools, all represent a great opportunity to build and rebuild communities. It’s great business for us in construction, and good for the wider economy.

However, as we all know future demand isn’t just about delivering even more construction. Clients now want projects that offer best value - higher standards of work, better contractor relationships and a greater commitment to training local people. This demand for improved and sustainable performance is having a big impact on skills needs. It will mean better integration and management of the supply chain, and harnessing new technologies and processes.

There is a clear need for co-operation all the way through from the client along the whole supply chain. At a time when businesses need to be totally focused on skills and productivity, in order to compete, it is more than ever necessary, to invest in training. ConstructionSkills exists to help firms do just that.

The basic theme that permeated the whole Egan Review process, and Constructing the Team in 1994, was that the client should be at the core of the construction process. When I first recommended that over ten years ago, I was surprised to find that it was controversial. One distinguished consulting engineer even said to me that clients were “a nuisance”. Their role was to cut the first piece of grass, two years later cut the opening ribbon, not to appear in between, but just to pay. But we’ve moved on, with Constructing the Team, Rethinking Construction in 1998, and in 2002 Constructing Excellence. Our industry is now in better shape than ever to deal with the rapid growth we face.

Clients now have the right to expect:

  • A clear, direct and single channel of responsibility throughout the progress of the work
  • A supply side team which has no grey areas of liability, which is closely integrated, and with the same goals of client focused delivery
  • Design flair and cost consciousness, jointly achieved by the team, and which accommodates best practice buildability
  • A proper and early involvement of specialist work by the sub-contractors who will actually deliver it on site.

The construction industry is highly fragmented and the construction process is complex – from design and planning through to maintenance and refurbishment. Most of our work is done on a project basis. We work with people intensely for short periods. But this process is changing significantly. The transfer of activity off-site and the move towards pre-fabrication are spreading widely. There has been a real development of supply chain management, quality assurance and partnering with clients. Partnering is a seamless line involving the client and the whole of the supply side team. Best Practice demands a supply side brought together on a best value basis, with a team working in an integrated fashion –and with the skills which are essential to the project.

These modern procurement and integration approaches will foster a climate of innovation, increase productivity and enable the industry to compete internationally. But they also need us to develop higher-level assembly skills on site. Business management will also become more critical for company success – driven in part by ICT developments. The move by major contractors and home builders towards a fully qualified workforce, backed by demands for quality assurance, will represent a significant training requirement for the industry.

The Sector Skills Council ConstructionSkills is the latest important landmark in responding to the skills challenge. Since our inception two years ago we have made progress in securing sufficient recruits of the right calibre, in helping our existing workforce to be trained to the necessary standard, and in assisting the industry to improve its performance and productivity. By hammering away at these challenges we will ensure that we achieve our ultimate goal – a world class construction industry.

We are now beginning to make significant progress in positioning the construction industry as a career of choice for young people – especially at craft level. We’ve generated widespread public interest, and we are attracting really high quality people. We want to recruit the brightest and best young people into this industry – from craft to graduate. By raising the bar we are making construction both a more attractive and a more demanding industry to join and we are focusing on increasing the pool for quality recruits. Yesterday I was at an awards ceremony for apprentices at Bolton, and also saw progress on the Construction MBA at Manchester Business School. I saw for myself the high calibre of people we are now drawing in.

But attracting good quality new recruits is only half the battle. The challenge also involves finding enough work-based placements for these new entrants – at craft level, technicians, and graduate level. That’s not easy in an industry dominated by small businesses and self-employment. There is also the task of bringing around a ¼ of a million employees already in the workforce up to NVQ level 2 by 2010. It’s a huge responsibility.

What has ConstructionSkills achieved in its first two years of operation? The development of the Sector Skills Agreement has been important in drawing our line in the sand. The Agreement has given us a real opportunity to draw together employers, educators and government agencies to deliver collaborative action plans which will provide workable solutions to the challenges we face. The Sector Skills Agreement is a manifesto for change. It gives us a strong voice over how £300million of government funding for training is deployed in the industry.

Now I want to map out our challenges, and look at the progress we have made in the North West towards addressing them.

The first key challenge area is improving business performance. There’s a lot to do to close the productivity gap. Construction needs to improve its performance significantly in areas such as health and safety, quality and cost over-runs if it is going to provide real best practice.

Just 25% of construction is involved in training. Attracting the other 75%, who are often self-employed and working on short-term contracts, will require new methods of funding and provision that are more in tune with an industry that is increasingly project-based and supply chain driven. ConstructionSkills is using a range of initiatives to help more of the industry plan for and invest in training. In the North West, construction firms are being encouraged to adopt a structured approach to training through the Investors in People programme and the development of annual training plans. In 2004, 153 local construction companies committed to Investors in People. We have created agreements with Investors in People UK and the Small Business Service to improve and simplify the offer of advice to construction employers. Our sights are now trained on doing similar things with Constructing Excellence and the Federation of Small Businesses.

Next, developing management and leadership skills. Many managers have good legal, technical or practical skills, but lack the soft skills needed for successful partnering. Partnering throughout the supply chain is the key to improving client satisfaction, and increasing productivity and safety. We established a fund of £2m per year to provide relevant management and supervisory training, supported by federations such as the National Federation of Builders.

Now Lifelong learning. We know that continual on-the-job training is key to raising the performance of companies. However, Continuous Professional Development (CPD) and graduate training is patchy, particularly in small companies. We are looking to expand the Approved Training Schemes that have been piloted with civil engineering surveyors. Through an agreement between an employer and the relevant professional institute, the schemes aim to give new graduates appropriate training, development and experience when they first start work.

The next challenge is capacity planning for the future. Construction is a labour-intensive industry. We rely on the skills of our workforce to adapt to different projects, teams and site conditions. While highly experienced, the majority of workers lack formal qualifications. Future demand is for greater productivity, and the ability to master new building methods and materials. Capacity planning is hampered by the lack of comprehensive evidence from which to develop national and regional skills strategies. In establishing a Construction Productivity, Capacity and Skills Observatory to bring together existing intelligence we will be able to develop a first rate forecasting ability and provide really effective and up to date statistical data.

Increasing pressure from clients and from within the industry has led to the drive for a fully qualified workforce that can prove it is competent to work on site. On-Site Assessment and Training (OSAT) is the key to helping workers gain an NVQ without needing to leave site and getting them carded. This industry-led scheme is playing a leading role in delivering a fully qualified workforce, and increasing numbers of clients and contractors now require the CSCS card as a ’licence to operate on site’.

By the end of 2004, 13,549 construction workers in the North West had registered with OSAT, of whom 5,141 had successfully gained an NVQ. The North West is also piloting an assessed NVQ which aims to provide a ''fast track'' option to experienced workers who can demonstrate they meet the scope of the NVQ at initial assessment stage. It complements the OSAT, giving employers the choice to suit their workforce.

Next, recruiting qualified new entrants. Based on forecasts for output growth and an annual productivity increase of 1%, the North West needs to recruit and train 52,400 new workers between 2004 and 2008. The lack of trained people is already affecting business, with 63% of local construction companies reporting difficulties in recruiting skilled labour.

ConstructionSkills is spending a lot of effort on promoting career opportunities in construction. The national series of Positive Image campaigns have helped transform young people's view of the industry, and new entrant and graduate applications have soared. ConstructionSkills North West is continuing to promote career opportunities in schools and with Jobcentre Plus Advisers.

We also need to increase the level of quality applications for construction-related degrees. In the professional services sector, 65% of firms report problems in finding enough graduates with the right skills. ConstructionSkills is working with higher education to develop foundation degrees which meet industry needs. University applications have increased in many disciplines, and we have set up a £1m fund through the ‘Inspire Scholarships’ scheme to sponsor undergraduates who choose a construction-related degree. This year’s pilot has been most encouraging.

We need to increase apprentice completions. Having inspired more young people to enter construction, we must tackle the low retention and framework achievement rates for apprentices. Some 63% of local construction employers consider that newly trained recruits lack the variety of skills they need. A key factor in increasing the number of apprenticeship completions will be providing enough work placements. This can only be done by involving small firms throughout the supply chain. We’re working with FE colleges and training providers to ensure that the NVQ assessment requirements are clearly understood, best practice is shared in completing work-based evidence portfolios, and arrangements for key skills are improved. The goal nationally is for apprentice framework completions to increase from 3,000 to 13,000 per year by 2010.

Adult apprentices face a lack of suitable work placements and lower funding than young new entrants. Demographic trends show that construction cannot rely on young people alone, especially its traditional pool of male school leavers, to reduce skill shortages. To help overcome these barriers, ConstructionSkills is supporting the ''STEP into Construction'' initiative, which in 2004 helped 32 women and 13 people from visible ethnic minorities in the North West to find training, work experience or employment. We have also published a handbook for employers on diversity issues. But there is still much more to be done to ensure that our industry looks like the Britain it serves. And modern Britain is not all male and white.

This is just some of what ConstructionSkills is doing. It is a solid programme, shaped by employers. We all know that well managed and well trained firms are more likely to be successful, profitable, safe and attractive companies to work for. It is vital to spread good management practice throughout the whole sector. ConstructionSkills is working to deliver the step change in training which the construction industry needs to achieve in order to remain competitive and to fully grasp the opportunities ahead. We are a booming industry with an exciting future to look forward to. We are a historic industry, with great buildings many centuries old, here in the North West and throughout our country. But we are also a modern and progressive industry, designing and building now for the next 100 years. We can be proud of our achievements, confident of the future and safe in the knowledge that we have, quite literally, built Britain.

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