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Peter Lobban speech for ConstructionSkills at the

“Closing the Skills Gap” seminar with the Fabian Society,

Lord Mayor’s Parlour, Manchester City Hall – 27 September 2006

I am very pleased to be with you here today, representing ConstructionSkills. In particular, I’m delighted that our Skills Minister Phil Hope is taking part in this debate and that Economic Secretary Ed Balls is taking the chair – I very much believe that skills and economic development go absolutely together.

As we have heard in the Conference, “Closing the Skills Gap” represents one of the most significant challenges facing the UK in the next decade, particularly if we are to compete with the emerging markets in India, China and Latin America. As Ed Balls’ boss said on Monday, and I quote: “You cannot buy from elsewhere what in the global economy you need most: the skills and creativity of all our people.”

So what is the current state of play in construction industry in the UK?

I’m pleased to say that demand for construction is expected to remain strong. In June this year ConstructionSkills launched the Construction Skills Network. The Network is the most comprehensive data analysis and consultation ever produced by the construction industry. It draws on the knowledge and experience of construction companies, Government, regional agencies Sector Skills Councils, education and training providers, and customers across the UK.

This unique collaboration means the Construction Skills Network provides a consensus view of the future skills and training needs in the industry. Overall, UK construction output growth is forecast to average 3% every year between now and 2010. This will require around 350,000 new construction workers nation-wide. As a country we need many large infrastructure projects. Among them, the Thames Gateway, King’s Cross & Victoria station redevelopment, large port projects at Shellhaven, Felixstowe and Harwich, the £1billion regeneration of the BP refinery in Neath and of course the projects related to the 2012 Olympics. The whole country is relying on the construction sector to make these projects work, together with substantial programmes for schools, hospitals and housing.

Is this a challenge or an opportunity? Actually, I think it is fundamentally a policy choice.

Via our path-finding Sector Skills Agreement, ConstructionSkills sees this as an opportunity. Working with our partners in Government and the private and public sectors, including the Learning Skills Council, Centres for Vocational Excellence and FE colleges, we are committed to providing a highly skilled workforce for the UK construction industry.

In this morning’s session we have been asked to consider how policy makers, working in partnership with other stakeholders, can best deal with the skills gap. In my short introductory presentation, I should like to highlight three issues that I believe policy makers should remember: two recommendations for the Comprehensive Spending Review and one request for Government as a construction client.

I remember my three issues for policy makers as: Tiger Woods, Gordon Ramsay and Paul Getty.

Why Tiger Woods? Because he shows us that whilst you can be taught knowledge, you have to practice to acquire a skill. That’s very difficult in the South of England, where 70% of the craft workforce is self-employed. There are very few employers to take an apprentice and there are thousands of young people studying construction crafts at college full-time with no opportunity for on-site practice and no chance of becoming properly qualified and joining the industry.

As a Sector Skills Council through our Sector Skills Agreement, we have obtained commitment from major contractors to open up their sites to these young people so they can be placed with sub-contractors and can get the necessary work experience and become qualified. This innovative Programme Led Apprenticeship route is now being rolled-out by the Learning and Skills Council across other sectors.

And why Gordon Ramsay? Because he so colourfully demonstrates that you need to have all your ingredients to succeed in the kitchen. Our work in managing these atypical recruits clearly shows that there are many elements required to support them through training into work: positive image campaigns, outreach to local communities, providing taster courses, arranging concurrent budgetary support, facilitating work placements, ongoing mentoring support during work practice, finding sufficient funding for adult training, and the list goes on depending on individual circumstances.

We are committed, through our Sector Skills Agreement, to addressing the shortage of women and visible ethnic minorities in the craft workforce, currently standing at 1% and 3% respectively.

Our experience shows that you really do need all of the ingredients or you will fail to get people qualified and into work. Unfortunately starting with the best of intentions, huge amounts of public funding have been wasted by only providing individual ingredients.

And my final issue, why Paul Getty? Because he demonstrated the need to invest your funds and not just give away money to have a sustainable impact. We have been working with Registered Social Landlords, using the work to refurbish homes through the Decent Homes Programme to skill-up people from the local communities. The recent report on the first seventeen demonstration projects in this Sustainable Training for Sustainable Communities project, has demonstrated how successful this approach can be.

Following on from Tiger Woods, Gordon Ramsay and Paul Getty, here are my two recommendations for the Comprehensive Spending Review – though I hope and expect they will feature in the Leitch Report.

Number one, is don’t spend money on training; invest it in skills. Training has to get people into work or upgrade the skills of the existing workforce. One critical success factor for meeting the skills challenges is delivering training in the right format, in the right place and at the right time, for both the employer and the learner. Later this year ConstructionSkills will start to deploy the National Construction Skills Academy, in the form of on-site training units. This will enable training and assessment to be delivered on site, where the work is happening and the majority of workers are situated. We are also finalising bilateral agreements with UCATT and the T&G to ensure that we work together with Union Learning Reps.

A network of Regional hubs, made up of clients, contractors, developers, key learning and funding providers will be formed to manage the Academy sites. ConstructionSkills will work with these hubs to plan, establish and support work-based training centres at all the significant construction projects in each region.

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

And I’m pleased to say that we have colleagues here today who are involved in developing the most advanced Skills Academy projects, so hopefully we’ll hear from them in our discussion later for a firsthand account of how this approach is going to make a difference.

My second recommendation, is don’t provide sheep-dip: one size doesn’t fit all. Allow training provision to be tailored to the sector and position Sector Skills Councils so they have the appropriate influence. Sector Skills Councils are ideally placed to be the broker between employer demands and training provision. However, Government funding mechanisms need to be amended if SSCs are to drive change and shift the balance to allow the sector-based approach to succeed. SSCs should be involved in ensuring that funding for useless training – such as short courses that do not lead on to at least NVQ Level 2 – is stopped and the resources redirected to valuable programmes such as PLPs and NSA projects.

Finally, my one request for Government as a client. The Government is not only by far the biggest construction client, it is and always will be a repeat client. As such, Government departments 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. This best value approach should also take account of quality and as such, should require as a minimum CSCS carded workforces on all Government contracts. I would also further suggest that they bring project training plans encompassing the full supply chain into the evaluation of tenders.

At ConstructionSkills we believe that through co-operation with all parties present here today we can effectively “Close the Skills Gap”.
At ConstructionSkills we have many examples of how we have brought together and harnessed employer demand for sills – the drive for CSCS cards, programme led apprenticeships, training groups for SMEs in all regions. And even at graduate level, the INSPIRE scholarship match funded programme which brought 100 companies together and has led to hundreds of applications to do construction related degree courses.

The signs are encouraging. We are making progress and we hope that the Leitch Report will help to move the whole agenda forward.

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