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Speech by Peter Lobban to the FEdS Conference

“Delivering the 2012 Olympics: What skills are required?”

Thursday 15 June 2006

<<TITLE SLIDE>>

Good afternoon ladies and gentlemen. On behalf of ConstructionSkills, the Sector Skills Council and training body for the Construction Industry, I would like to welcome you and reiterate how pleased I am to be with you today.

The main purpose of today’s event is to bring together many of the parties, in both public and private sectors who are involved in developing ideas and plans aimed at enhancing our national skills requirements, both for the Olympics themselves and on a longer term basis for the United Kingdom. We see today as an important step in addressing the major challenge that lies before all of us and committing to taking positive action.

<<OLYMPIC STADIA SLIDE>>

In 2012, the twenty nine days of sporting activity will be intense and come under global scrutiny but, in the longer term the Olympics will be judged on more enduring criteria.

The Olympics can act as a catalyst for a step change in skills and learning delivery. There will be a huge range of skills required for the Olympic events – the planning, the building and the running of the event itself – but the legacy could and should be a far wider understanding of the skills needs of the UK.

Although most of the events will take place in London, the impact of the Games will be felt nationwide, with sailing taking place off the Dorset coast, rowing in Windsor, football at stadia throughout the UK, and local communities hosting the national teams competing.

<<BEYOND THE OLYMPICS SLIDE>>

We have just six years to develop this competence and the requisite facilities. The majority of people who will contribute to the development of the Olympics are already in employment – in fact 80% of the workforce for 2020 is now in employment; others are now in secondary schools, further education and higher education. Indeed those that started secondary school this academic year will be employed at the time of the Olympics, if they enter the workforce directly after completing their studies.

The Olympics offers a significant opportunity for the business community and the public education services to work together for the long term benefit and improvement of the national skills base. The added impetus of the global spotlight concentrated on the UK will provide the driver for the level of excellence required for national skills and learning.

It is also very high profile in construction terms and to that end the question that I would pose is: Is it a construction problem or a construction solution?

<<CONSTRUCTION SKILLS NETWORK SLIDE>>

It is against this background that I am proud to be able to talk to you about the Construction Skills Network. The Construction Skills Network is the most comprehensive data analysis and consultation ever produced by the construction industry. It represents a radical change in the way research, data and information on the future employment, skills and training needs of the construction industry is collected and produced drawing on the knowledge and experience of Government, Sector Skills Councils, construction companies, education and training providers, regional agencies and customers across the UK.

This unique collaboration means the Construction Skills Network provides as near as possible, a consensus view of the current and future skills and training needs in the industry and enables us to share information and best practice with organisations beyond our immediate industry footprint – whether that be our partner Sector Skills Councils or Government departments and provide them with authoritative data to incorporate into their own capacity and productivity planning. Put in the context of today’s event it will help the industry plan so it can deliver the Olympics on time and on budget.

It is with the aid of the Construction Skills Network that we have been able to place in perspective the impact that the Olympic programme will have on the successful completion of regional construction projects.

<<WHERE ARE THE MAJOR PROJECTS? SLIDE>>

Following the immediate euphoria of winning the 2012 Olympics, concerns have started to be expressed as to whether there will be the skills available to build the Olympic facilities. At one level that concern is somewhat misconceived.

The Olympic facilities themselves will undoubtedly be iconic structures but in employment terms they will be quite small beer, as shown by outputs from our Construction Skills Network. The Olympics will have a value of around £2.5 billion over the next seven years and will require an average workforce of 5,000 each year, peaking at 9,300 in 2010. However, it is not enough on its own to significantly boost output and is less than a quarter of a percent of the total UK construction workforce.

<<ANNUAL AVERAGE INDUSTRY GROWTH SLIDE>>

However the Olympic build comes on top of a huge programme of projects scheduled for construction in the East, South East and Greater London areas. Infact infrastructure is forecast to be the strongest sub-sector in Greater London between now and 2010. From 2007, double-digit growth is expected as work begins on a number of sizeable road and rail schemes and an additional boost from work directly attributable to the Olympics is expected beyond 2008. There are £34 billion worth of new projects, of over £100 million each, in the pipeline to add to the normal underlying construction and maintenance activity. For example, the industry will require an average annual requirement of 880 bricklayers & building envelope specialists, 670 electricians, 490 plumbers and 460 construction managers between 2007 and 2011. This volume of demand will attract a mobile workforce from the whole of the UK, and beyond.

I have no wish to be known as the Michael Fish of the construction industry, but for me the real question is not whether there will be enough skills to build the Olympic facilities, but where these skills will come from – London & the South East, from the rest of the UK or from abroad. And I don’t see that as a matter of construction skills research. I see it as straight political choice.

In terms of the UK construction industry we forecast that almost 348,000 workers will have to join the industry by 2010 – an average of 87,000 new recruits per year.

We cannot rely solely on migrant labour to fill these vacancies. The UK has benefited greatly from an influx of skilled labour from Eastern Europe in the last five years. Whilst migrant labour can help to reduce demand on a temporary basis, it would seem imprudent to rely on it as a long term solution. Eastern European workers will no doubt tend to return home when their economies pick up in the coming years, just as we have seen Irish workers return to Ireland as we see major generation projects starting. We must all accept we have a national skills shortage and what we require is a national skills solution.

Following lots of careers work and promotional campaigns there is evidence that there is an increasing interest in joining the industry. More work is in hand to ensure adequate entry at professional levels but the great news is that there is no shortage of applicants at craft level. The bad news is that there are insufficient jobs for them to start.

This paradox is down to the structure of the construction industry. Short term contracts and self employment give great flexibility to deliver construction projects, but they give a poor business case for investment in skills.

In London and the South of England self employment accounts for 70% - 80% and in Scotland and the North of England self employment accounts for some 30% of the workforce. In Scotland and the North we can place 6-7 apprentices per 100 workers; in London we are lucky if we can place 1 per 100. With a few notable exceptions London is currently a desert for craft apprenticeships.

<<REGIONAL LABOUR REQUIREMENTS SLIDE>>

This high level of short term contracts combined with the concern that the annual average intake required in the construction trades is not matched by the trained output, underlines the vital role that apprenticeships perform as the bedrock of our national skills base.

<<WORKERS FOR GL, EAST & SOUTH EAST SLIDE>>

For example: in London, the South East and the East of England the average annual requirement from now until 2010 for bricklayers is 1,690 per annum compared to the last recorded output from colleges in 2005 of 746, for roofers 850 each year are required, yet only 228 qualified and for the largest category-need wood trades, 3,800 are needed every year to fulfill placements on projects, yet less than half that number - 1,259 - are actually qualifying.

If we assume that modern methods of construction significantly increase productivity, in Greater London alone, this produces only a 14% reduction in the average number of new entrants required.

The Greater London construction industry is forecast to grow 11% compared to the East of England where we anticipate over 18% growth running up to 2010. Despite the Olympics being a major undertaking the mobility of the workforce in the construction sector will ensure that if we equip our workers appropriately, they will be positioned to meet these challenges.

Lack of opportunities to practice on site is the catch-22 that scuppers many well intentioned training initiatives. You can teach knowledge, but as Tiger Woods shows it takes lots of practice to attain a skill. There are many thousands of young people studying full-time at FE Colleges who cannot find an employer so they can practice and without that they will never become qualified. And this is a particular problem for young women and people from visible ethnic minorities, who represent less than 1% and 3% respectively of the construction craft workforce.

<<ETHNICITY IN THE THAMES GATEWAY SLIDE (MAP)>>

ConstructionSkills is working with industry and Government to ensure that we have a more diverse workforce that can really reflect the social and ethnic fabric of our nation. The construction industry, like all industries must embrace change and progress if it is to continue to grow and flourish. It is absolutely essential that we recruit more women and ethnic minorities if we are to achieve our goal of creating a skilled, dependable and balanced workforce to address the challenges of construction in the future.

If is for exactly for these reasons that we take so seriously our partnerships with related bodies like our fellow Sector Skills Councils, the Learning Skills Council, Centres of Vocational Excellence and FE colleges to name a few, so we can all collectively encourage new recruits to join the construction sector.

<<GRADUATE/ATYPICAL RECRUITMENT SLIDE>>

At ConstructionSkills, we have sought to tackle issues head on. In 2005 we launched the Inspire Scholarship scheme. It provides students with the opportunity to secure funding of up to £9,000 per year and support them through their studies on a three year course, as well as a 10-week summer work placement with a leading construction employer and the chance of a job on graduation. It is backed by over 150 employers from all areas of the construction and built environmental industry, reaching from architecture practices, engineering and surveying firms to management consultancies and contractors.

<<POSITIVE IMAGE SLIDE>>

In the first quarter of 2006 we undertook research among 2,400 11 to 18 year old girls which found that 43% of young women felt their career options were limited because of their gender. Over 70% felt there was a gender bias against girls in the careers advice they were given, despite the girls themselves being keen to break gender stereotypes and more than a third of those questioned said they would be happy to “prove themselves against men”. As a result ConstructionSkills’ annual Positive Image campaign seeks to change this. The 2006 campaign, which launched in April led on a television advertising campaign designed to appeal to young women directly and encourage them to “make their mark” by joining the industry.

We can not underestimate the need for joined up policy and thinking when seeking to enhance our national skilled workforce. We warmly welcomed Chancellor Gordon Brown’s latest budget when he announced proposals to encourage more women to enter industry, where he emphasized they must have greater representation across all sectors.

Not withstanding the importance attached to the 2012 Olympic Games, which does present an opportunity to recruit on a large scale in the South East and a massive opportunity to train the regional workforce, it is a high profile example of the broader challenges which face the construction industry between now and 2012.

<<STFSC SLIDE>>

We are only too aware of the importance of drawing upon the resources of local communities and the need to improve skills on a micro level as well as on regional and national levels. The strategy that we are adopting in our Construction Sector Skills Agreement is to focus on major construction projects. To build agreements with the supply chains involved, placing ideally local based apprentices with subcontractors so that they can get the work experience to practice what they have been taught and become competent and qualified on the job.

We are piloting a new programme-led apprenticeship, whereby successful first year full-time students can be given a second year on major construction sites to get the on-site practical experience to become qualified. We have developed a STEP programme whereby we pay employers to give local people a work trial period so they can demonstrate their worth. And we are looking to expand on our successful Sustainable Training for Sustainable Construction joint initiative with the Housing Forum which trains and qualifies local people on local housing refurbishment projects. We are also working with the Princes Trust on a Construction Team initiative which motivates economically inactive young people to get qualified in construction trades.

The Thames Gateway regneration provides a clear example of the unique opportunity facing the construction industry. With at least a fifteen year build and redevelopment timescale, it is a long-term programme of projects offering the time to give work experience to many apprentices. It is based in an area with high visible ethnic minority representation offering the chance to significantly change the face of the construction industry. It gives us the opportunity to put the building blocks in place to create sustainable communities, to strive for social inclusion and long term community growth. Not just in building the facilities but in maintaining them thereafter.

These are objectives that many policy influencers are spelling out loud and clear as being key priorities for the development. The Institute for Public Policy Research Commission on Sustainability in the South East has called for an “approach to growth, driven by quality of life priorities, that seeks to promote resource efficiency, reduce disparities within the region and support government efforts to address inter-regional disparities in economic performance”.

From that stand point the projects like the Thames Gateway, the Lewisham & Croydon regeneration projects and the King’s Cross and Battersea Powerstation mixed business/residential initiatives are undeniably solutions and not problems. These projects can create long-lasting benefits for the local communities. If we get it right we can be a beacon of good practice and sustainable development.

So what needs to be done? We need to create a framework which supports the development of a diverse economy within these geographical areas, which supports existing employment and secures new opportunities for local people.

<<WORKING TOGETHER SLIDE>>

In building this framework we need and want to work together with Registered Social Landlords and Housing Associations, local authorities, major contractors, sub-contractors and other partners in these regenerative schemes. We need repeat construction clients to recognise that it is in their own economic interest not to go for cheapest short term price but to value investment in the local skills base that they will need in the longer term. We need Government skills funders to recognise the effectiveness of supporting local work experience, particularly for adults.

We need local support organisations to come together with trainers and employers to put together the total package that is required to support atypical industry recruits. A total package because training into employment is like a cake: you need all the ingredients, or it flops. Most importantly, we need to pull together now. There is a danger that well intentioned but ultimately unfocussed and opportunistic training initiatives springing up in the Thames Gateway train people only to a basic level that may not lead to a job.

Our engagement with key partners at the right time in the development is crucial. For example we will need to engage early on delivery of the transport infrastructure for the Olympics and pick up with key employment and skills bodies.

<<NATIONAL SKILLS ACADEMY SLIDE>>

This autumn we will start to deploy the National Construction Skills Academy, in the form of project-based training. Rather than being ‘bricks and mortar’, the National Skills Academy for Construction will centre on a network of work-based training centres, operating on all significant construction projects around the country. The network will deliver training on a project-by-project basis, responding to the specific skills needs of each.

The approach is designed to overcome the challenges of training a mobile workforce in a sector made up of large numbers of very small firms and sole traders, unable to commit, on an individual basis, to the costs of training, but who come together to form different parts of the supply chain on major projects.

The initial aim is to establish work-based training centres on a range of construction projects as part of the developmental phase to commence in September 2006. This will be followed by the development of a network of centres over the next three to five years across a range of construction projects such as major regeneration and development projects, refurbishment and maintenance projects, civil engineering and housing construction. This will be a marked change from the current structure with apprentices attending FE programmes off-site.

The dynamic opportunity that the Skills Academies can provide for a refocus of training in the construction industry cannot be underestimated and with universal support from industry stakeholders, it will help to lay the foundation of enhancing the national skills base and enable the construction workforce to realize its potential.

<<MONEY FOLLOWS THE APPRENTICE SLIDE>>

This revitalised approach where money follows the trainee and not the classroom has already been tried and tested in major developments such as Paddington Basin regeneration, Heathrow Terminal 5 and the St Pancras Channel Tunnel Rail Link.

The current FE funding structure encourages money to stay in the classroom. This must change if we are to successfully rise to the skills challenge.

In many cases workers may already have skills; it could be a case of sitting a Health and Safety Test and being able to prove their competence. In other cases, additional training can be delivered, through our On Site Assessment and Training scheme. Construction is not taking place on one fixed site, so training must be mobile and deliverable on-the-job.

<<SUSTAINABLE TRAINING ROUTE SLIDE 1>>

One of the key success factors will be to deliver a sustainable skills route. The regeneration is taking place in areas of high deprivation and the question is how can we offer people a long term training and employment route? We have decades of continuous work ahead of us – so let’s get people started on the training ladder now. For example by becoming trained and qualified on local housing refurbishment, local people can move onto working on existing construction and infrastructure projects before being involved in fitting out the Olympic facilities.

<<SUSTAINABLE TRAINING ROUTE SLIDE 2>>

By meshing with the different construction phases for each project and providing a long pathway of skills development, we can provide real sustainable opportunities for the local communities.

There are already many organisations and projects in the South East area and beyond, that are working hard to engage local people and communities in local construction projects. ConstructionSkills, as the Sector Skills Council for Construction, is committed to playing its role. I am a member of the London 2012 Employment and Skills Taskforce – chairing the cluster of Sector Skills Councils involved in the construction phase. We are also a key player on the Strategic Forum Olympic Task Force.

We want to work with partners to support and co-ordinate the skills agenda required to build the Olympic facilities, pulling together initiatives and ideas, to ensure that local enthusiasm and resources are harnessed to deliver a legacy of skilled and committed people who will help the communities thrive for decades to come.

We want to expand upon our existing network of partners, and encourage more individuals and organizations with expertise to join us in meeting the Olympic challenge.

Today, I’m pleased that we are making a start in coming together as politicians and representatives of planning, skills and the construction sectors, but we must reach out and continue to work with wider stakeholders such as the London Boroughs and major contractors and residential developers involved in social housing, as well as some of the schools and colleges operating in the London and the South East.

<<LASTING LEGACY>>

The 2012 Olympic Games provides a genuine opportunity for a lasting legacy. We can provide world class facilities for the games and the local communities afterwards. We possess the foresight to tackle these challenges and we are putting in place the necessary mechanisms to train our construction workforce. We can deliver the skilled workforce required and eagerly look forward to this opportunity.

However we cannot perform this task alone. Our partnerships and alliances with each and every stakeholder are essential. As I outlined earlier, this is an opportunity, in fact a golden opportunity for us all. If we grasp the nettle we can get this right, and we can be a showcase for the world in terms of large scale construction, good practice and sustainable development. We will be able to demonstrate that British ingenuity and dynamism has never been stronger. I look forward to hearing your thoughts and views throughout the afternoon.

Thank you.

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