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Speeches and presentations

Building for London

SLIDE 1 - Skills - Challenge or Opportunity?

Good afternoon, ladies and gentlemen. On behalf of ConstructionSkills, the Sector Skills Council for the Construction Industry, I was very pleased to accept Emma's invitation to consider the Skills Challenge of Building for London. In particular I hope to enlist your support in delivering a successful 2012 Olympics - not just meeting the challenge but grasping the opportunity.

SLIDE 2 - A Successful 2012?

What do we mean by a successful 2012 Olympics?

There seem to be at least 3 distinct but related phases. The first and most immediate is the construction phase - that is the responsibility of the ODA. The second is staging the event itself, including the travel, tourism, hotels, broadcasting, catering and all the other services for the competitors and spectators - that is the responsibility of LOCOG. The third phase is to do with the legacy of the Games, both the infrastructure - facilities and potential development areas - that will be left behind for use, or not, by the local community, and the people legacy in terms of sustainable communities. That last is the focus of the London 2012 Employment and Skills Taskforce LEST. I am a member of LEST as Chair of the cluster of Sector Skills Councils involved in the construction phase including SummitSkills, AssetSkills, Energy and Utility Skills, Skills for Logistics and even Lantra for all the green spaces. In this presentation I shall be concentrating on the construction phase and its potential legacy.

SLIDE 3 - Olympic stadia …

It was great celebrating the news that London had been awarded the 2012 Olympic Games last July. But after the euphoria, the question of whether there would be the skills available to build the Olympics facilities was one of the first to arise. At one level, that concern is somewhat misconceived.

The Olympic facilities themselves will undoubtedly be iconic structures but, in construction employment terms, they will be quite small beer. In the peak year of construction, the number of construction workers needed at all levels, from contracts managers to craftspeople, will be around 7,000. The average number of workers in each of the six years to 2012 will be under 5,000. Substantial as that may seem, it is in fact less than a quarter of a percent of the UK construction workforce.

SLIDE 4 - … beyond the Olympics

However, the size of the challenge is much greater. The Olympics comes on top of a huge programme of projects scheduled for construction in the South East and Greater London area. There are £34billion worth of new projects of over £100 million each in the pipeline to add to the normal underlying construction and maintenance activity. By 2016, London’s population is expected to grow by the equivalent of six cities the size of Cambridge. This will require new homes, new jobs and new infrastructure - running from Tower Bridge right through to the Thames estuary.

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 - from the local area, from the rest of the UK or from abroad.

SLIDE 5/6/7 - Construction Skills Network

ConstructionSkills has just established a new network to revolutionise the planning of construction recruitment and training. The Network has skills observatories in every region and country in the UK. Industry experts in each of these observatories impart their specific knowledge about planned construction programmes. This information is then combined in a UK-wide computer-based forecasting model and reviewed by a panel of UK industry experts.

SLIDE 8 - Average annual industry growth

The network has just produced its first forecast. It shows continued solid demand for construction with the strongest areas of growth moving from Wales, Yorkshire and the North, which were the hottest in the last 5 years, to Greater London, the South East and East of England in the next 5 years. This demand will suck in labour from other regions and could threaten their developments such as Liverpool European City of Culture in 2008.

SLIDE 9 - Labour requirements by occupation

The total UK demand translates into an average annual requirement for 10.5 thousand managers and supervisors, 21 thousand main trades and in total 87 thousand new recruits every year. This is a considerable requirement but it is actually less than the numbers recruited into the industry in each of the last 5 years.

SLIDE 10 - Construction Sector Skills Agreement

ConstructionSkills has plans not only to ensure that this requirement is met by well-trained recruits but also to upgrade the quality of the whole construction workforce. We were pleased to have been chosen to develop a Pathfinder Sector Skills Agreement. This is a deal in which the Government has said that if we can demonstrate significantly increased commitment by our industry to invest in skills they will ensure that the necessary Government training support will be provided. We have agreements in place to recruit ½ million new recruits, upskill ¼ million existing workers and treble investment in skills by subcontractors. We are making good progress with these plans.

SLIDE 11 - Positive Image 2005

Last year alone, our Positive Image publicity campaign generated 90,000 visitors to our construction careers website, and helped us towards receiving 20,000 online apprenticeship applications. 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 Scotland and the North of England, self employment accounts for some 30% of the craft workforce; in the South of England and London self employment accounts for 70%-80%. 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. Indeed, with a few notable exceptions London is currently a desert for craft apprenticeships.

SLIDE 12 - Apprenticeships - engaging self-employed and supply chains

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.

The strategy that we are adopting in our Sector Skills Agreement is to focus on major construction projects. We have been working to build agreements with their supply chains, placing 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. This has lead to the piloting of a new programme-led approach whereby successful first year full-time College students can be given a second year on major construction sites to get the practice to become qualified. We want to extend this approach to London building projects.

SLIDE 13 - Graduate and Atypical recruitment

Even at the professional levels, the story is getting better - last year, hundreds of young people applied for our new Inspire Scholarships, a partnership programme with key employers which sponsors undergraduates embarking on construction-related degree courses. Figures out last month from UCAS show that applications to building-related degree courses were up by almost 20%. We want to increase the number of scholarships for Londoners.

More work is in hand to inspire even more diverse young people such females and visible ethnic minorities about the benefits of construction as a career. We promote in ways and places that reach them. Unless you are in the habit of going into ladies changing rooms you may have missed seeing many of our adverts!

SLIDE 14 - Sustainable Training for Sustainable Communities

Finding starter jobs 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.

Our Sustainable Training for Sustainable Communities initiative, run in partnership with the Housing Forum, has proved to be an excellent way forward particularly with slightly older recruits. The 17 current demonstration projects focused on long term housing refurbishment programmes have produced many starter jobs giving opportunities for work practice for local people to become qualified. Located in deprived areas, such as inner cities, these projects are supporting much higher than normal percentages of female and black ethnic minority trainees. We want to extend this initiative to London and double the number of Sustainable Training for Sustainable Communities projects.

SLIDE 15 - Qualifying the workforce

We are also working in partnership with the major contractors and their supply chains to qualify their existing workforce. We have a fleet of testing vehicles that take our computerized health and safety tests to their work sites. Demand has built up really quickly and last year alone we delivered some 330 thousand tests with over 300 thousand passes. As part of our On Site Assessment and Training initiative we have also developed one-day tests to assess occupational competence on site. This is being tied into a one-stop-shop Skills Direct service to speed up delivery of CSCS cards. With the new relationship we have just agreed with CSCS, and in partnership with the major contractors and major home builders, we shall be supporting a swift move to full “zero tolerance” - no card, no work - on all their sites. We want to do this on London building projects.

SLIDE 16 - Improving business performance

Working with supply chains on major construction projects also provides an excellent business case for investment in skills. It is the weakest link in any chain that lets you down. But the links also have to be integrated.

As the Egan Report “Rethinking Construction” pointed out the full supply chain should be involved as early as possible to allow real value engineering in project design. “Buildability” is a concept that should apply to all construction projects, not just to the Olympic swimming pool.

But we also need the management and leadership skills for integration. Our research shows that UK construction managers tend to have good technical and legal skills, but many are weaker in the softer skills, including communication and team working, needed for successful partnering.

In order to help managers develop these skills we have set up a fund of £2million per year to provide tailored training. We also have successful experience of forming subcontractors in supply chains into training groups helping them to develop Company Training Plans and achieve Investors in People. We want to do this on Building London projects.

SLIDE 17 - 2012 - Challenge or Opportunity?

In the context of these exciting developments with our Sector Skills Agreement we see Building London not as a challenge but as a unique opportunity to develop a sustainable UK construction industry, particularly in the London area. We have successfully done all these things on Terminal 5, training thousands of local people in partnership with BAA and contractors Laing O’Rourke and AMEC and their supply chains. And we have been involved in several other good examples such as Paddington Basin regeneration, Kings Cross and the St Pancras Channel Tunnel Rail Link. We plan to use this experience in launching our first Construction National Skills Academy site on one of the major Gateway area projects later this year

SLIDE 18 - Where are the major projects?

With a six year plus build timescale the Olympics and other major Gateway developments constitute a long-term programme of projects with time to give work experience to many apprentices and graduates.

SLIDE 19

Part of the attraction of the East End of London to the IOC was the diversity of the local population: this diversity also offers us the chance to significantly change the face of the UK construction industry. There is a great opportunity to reach out to local Ethnic community groupings and work with them to create and promote inspirational role models.

SLIDE 20

More generally there is a need for many stakeholders to come together and deliver real results on the ground. Training people so they get into work is like baking a cake. It involves many ingredients and if any one element is missing the cake is a flop. There are a lot of organisations, including funding agencies, local government, training providers that need to play key roles from now until long after the Olympics are over. For our part we have already set up a dedicated ConstructionSkills London 2012 team to coordinate action on the ground for the construction phase.

The Olympic development, especially when seen as part of the Thames Gateway regeneration, could create fantastic long-lasting benefits for the local communities. If we get it right we could be a beacon of good practice and sustainable development. But we will need strong leadership between now and 2012.

Strong leadership will be vital to ensure that investments in legacy will not be priced out by lowest cost procurement. Repeat construction clients need 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.

The UK has benefited greatly from an influx of skilled labour from Eastern Europe in the last five years. To a large extent these immigrants have replaced Irish labour which has returned to Ireland as its construction industry has boomed. Whilst immigrant labour can help to peak shave demand on a temporary basis, it would seem imprudent to rely on it as a long term solution. Eastern European workers will no doubt also tend to return home when their economies pick up in the coming years.

With Government as by far and away the biggest of all repeat construction clients, the Treasury needs to take the lead in recognising the longer term business case for investment in local skills and make sure that departmental and agencies’ procurement practices do not myopically adopt a short term lowest cost approach.

SLIDE 21- Arrow diagram with sustainable route.

The programme and timetable of construction work required is still evolving. The construction programme around the Olympics does not just involve the stadiums and Olympic Village, there are also huge utilities and transport investments, major commercial and retail developments, tens of thousands of private houses and massive social housing refurbishment schemes not to mention schools and hospitals.

The industry’s Sector Skills Councils must also show leadership in ensuring we know exactly what skills we need where, and when, and making sure that Government funding agencies recognise what will help us deliver - from supporting local work experience, to adult re-skilling. We have commissioned ongoing research and will ensure that we keep at the forefront of understanding the skills requirements as the plans continue to evolve.

There are many years of work ahead, but it comes in different types and phases and we need to time our skills development inputs well or we will miss the bus and unchangeable deadlines will squeeze out our opportunities. We have an urgent need to agree plans to get some people started on the training ladder right now. For example by becoming trained and qualified on the current major work programme in regeneration of local housing, local people could move onto working on Thames Gateway projects before being involved in fitting out the Olympic facilities. 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.

SLIDE 22

We intend to work with the London 2012 Employment and Training Taskforce to build an Olympics Legacy Club for companies who wish to join together and commit to skilling local people for the construction workforce. We do not see this as an exclusive club only for those companies with Olympics contracts but rather an inclusive club including all those who share our commitment to create a sustainable legacy for the future. We are currently negotiating commitments with various sectors of the industry - major contractors, housebuilders and registered social landlords - and in the near future we hope to make public some exciting partnership commitments. Commitments that will achieve real results for local residents - work placements for FE students, jobs on Sustainable Training projects, sponsorships for local undergraduates - literally thousands of opportunities to change the face of construction.

SLIDE 23 - We would very much like all of you here today to join with us in that club. It really is a once in a lifetime opportunity to transform London from the current construction training desert in to a real showcase of sustainability. It will need a lot of leadership and commitment but for us at ConstructionSkills that legacy would the best Olympic Gold medal of all.

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