Does the construction skills system need a rethink?
A new report into the housebuilding sector calls for an overhaul of the construction skills system amid a “hollowing-out” of its workforce. Jenny Messenger looks at the review’s key recommendations
The UK’s construction sector has faced numerous challenges in recent years, weathering high inflation and insolvencies as the need for new homes intensifies.
High up on the list of problems is a shrinking workforce and a growing skills gap. It is an issue Inside Housing has been campaigning on over the past year: our Housing Hires campaign pledged to share best practice and ideas about how best to recruit and retain staff in the sector. Now, according to a new report, Transforming the Construction Workforce, construction is at its lowest employment level since 1998. Figures from the Office for National Statistics show that the number of people employed in the construction industry fell by 17% between 2008 and 2023.
Authored by Mark Farmer, founder of Cast Consultancy, the new review questions whether the Construction Industry Training Board (CITB) and the Engineering Construction Industry Training Board (ECITB) – the two arm’s-length public bodies responsible for addressing skills and training concerns – are still fit for purpose.
Mr Farmer is best known for his 2016 review into the UK’s construction labour model, which called on the sector to “modernise or die”. His latest review is equally stringent, claiming that more regulation is needed to improve skills in the sector and “police” the workforce.
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It makes a total of 63 recommendations that aim to revamp the sector’s competency, productivity and workforce retention – spanning everything from the introduction of a system to monitor employees’ skills, to an overhaul of the way the ITBs work.
Central to the recommendations is a new approach to improving standards and compliance for the sector’s existing workforce. Immediate action “is crucial to offset the hollowing-out of the workforce which we see in every economic cycle”, Mr Farmer says.
According to Kelly Boorman, national head of construction at audit and tax advisory firm RSM UK, the sector currently faces a 250,000-person labour shortage and an ageing workforce, alongside the pressure of meeting the government’s 1.5 million homes target.
“We cannot just assume we are going to recruit our way out of this crisis by setting ever more unattainable new entrant targets”
“While there’s been £2.5bn allocated in additional funding for skills training over the next three years to address skills gaps in construction, there’s some concern this isn’t soon enough,” she says. The review suggests instead that “a more competent and quality assured workforce will be more productive and take some pressure off daunting new recruitment needs”.
“Importantly, we cannot just assume we are going to recruit our way out of this crisis by setting ever more unattainable new entrant targets,” Mr Farmer says.
“This review confirms that the industry has a basic attraction and absorption problem that needs to be urgently addressed, but in the meantime we need to be able to do more with the resources we already have.”
Recommendation 10, for example, calls for the sector’s existing best practice worker card systems to be transformed into a digital passport scheme that would go beyond basic health and safety, capable of “measuring and policing worker occupational competency”. This scheme would span the whole workforce, with the hope that a minimum level of competency would act as both a barrier to entry and a means of driving up quality and productivity. The Department for Education (DfE), which commissioned the review, says this is something the ECITB has already developed and can be scaled up.
The review also proposed that a skills passport system should have a counterpart on the demand side, so that the future workforce demand can be modelled and linked to the supply-side picture.
Jennie Daly, chief executive of house builder Taylor Wimpey, says the passport scheme “could have a transformative impact on our workforce planning capabilities and allow the sector to build resilience”.
David Thomas, chief executive of Barratt Redrow, another major house builder, says the firm supports “Mark Farmer’s thoughtful review and the recommendations”.
20%
Percentage by which construction employment has fallen since 2008
250k
Number of construction workers the sector is currently short of
Flexible career paths
Another key theme among the recommendations was the need for more flexible and faster career pathways. It called the current focus on apprenticeships “too limiting” and found a disparity between the number of people taking construction courses and those who can find long-term employment.
According to 2021-22 figures from the DfE, around 30% of those who study on the courses do not enter the industry on a sustained basis.
Steve Wood, chief executive of the National House Building Council, welcomed the report, drawing attention to its collaboration with the CITB to invest £140m in a network of multi-skill training hubs.
While the review has not called for the ITBs to be abolished, it has urged a “wholesale transformation” that would see the two ITBs merge into one entity.
The review also looked closely at how the ITBs – which collect a statutory levy that is partly used to fund training – spend their money. It recommended the new body should meet a 5% efficiency saving target, as well as consider publishing “clearer evidence of levy spend to show the split between funding spent directly on training and the costs of running the organisation”.
On the whole, the DfE seemed to share the review’s urgency, stating that “where activity can be delivered quickly, we will work with the ITBs to monitor delivery and evaluate impact”. It has accepted 34 recommendations without amendment, and partially accepted or accepted in principle 26 others, which it said may need sector consultation. The three it rejected were on how best to use public procurement and planning conditions to improve workforce retention, which the DfE said were either outside the review’s scope or challenged “the statutory accountability of the ITBs”.
While it did not confirm what shape the ITBs will take in future, it made clear that the levy-grant system will not change. Next, the government will “evaluate the progress towards wholesale transformation” and inform the industry in advance of any structural changes.
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