Speech by Sir Michael Latham at the Launch of Scottish Construction Skills Survey

Glasgow 27 May 2004

Before I begin my remarks today, may I first of all extend my deep sympathy to all those caught up in the terrible accident in the city two weeks ago? In an industry such as ours, our hearts go out to colleagues in another sector who have suffered the terrible consequences of a major incident. The courage of those involved, whether the victims themselves or those in the rescue services or in the local community, certainly made a profound impression on all of us who watched the tragic events from afar. Our thoughts are with you at this painful time.

It is a great pleasure to be back in Scotland, relatively soon after the formal launch of ConstructionSkills here. One of the themes of my remarks on that occasion was the need to work in partnership if we are to overcome the challenges facing our industry. So it is particularly appropriate that we are launching today the results of research carried out collaboratively by Futureskills Scotland and CITB-ConstructionSkills. And once again, I am delighted to see many of our partners in so many aspects of our work represented here today: from the Scottish Executive and Parliament, from Scottish Enterprise and from Historic Scotland, from the Scottish Construction Industry Group and the new Scottish Construction Innovation and Excellence Forum.

Minister, we are also very pleased that you are able to join us again. The very real support that you and your Ministerial colleagues give to ConstructionSkills and to the construction industry in Scotland generally is much appreciated. Ours is a vital industry, and we greatly value our strong links with the elected representatives of the Scottish people and their advisers, in Government, Parliament and local government.

I don’t intend to repeat what Graeme has said, so I won’t go into the details of the Survey. But I would like to pick out one or two statistics which the research has thrown up and then reflect on their wider significance. If we are to get things right on the ground, we have to make sure that the overarching structures are sound. Inevitably there is more than one stakeholder with an entirely legitimate interest in getting this right. So we have to make sure that we are all working together towards the same objectives. We don’t want overlap, but equally we don’t want important matters to fall between two stools. And if we are to ensure that activities are successfully co-ordinated, someone has to take the lead – and in this field, I believe, that has to be ConstructionSkills. The buck stops with us – well, ultimately with me, until April 2007, unless Ministers or the industry want to get shot of me before then! So I’m determined that by working together in partnership we will achieve our objectives much better than if we worked apart.

If I had to pick out the most pertinent facts in the survey, I think they would be these:

• 17% of employers had a vacancy. 13% had a hard to fill vacancy. 7% had a skills shortage vacancy;
• Two-thirds of employers who reported skills gaps (as opposed to shortages) referred to impacts from these gaps which included higher operating costs, problems meeting customers’ expectations, difficulties meeting required quality standards and challenges arising from the introduction of new working practices or technology;
• Almost 9 out of 10 construction employers are neither IIP-accredited nor working towards it;
• Just over half of employers had funded or arranged training for their staff. That means about half had not done so.

You might wonder why I chose such gloomy figures or why I have chosen to focus on the more challenging outcomes of the survey, rather than celebrating the good practice that undoubtedly does go on. It’s also important to note – as I did when I spoke at the launch of ConstructionSkills in January – that in Scotland you have somewhat less severe skills shortages than is the case in some other parts of the UK. That is due, to a considerable extent, to the strong ethos of training and education in Scotland and continuing employer commitment, which I greatly welcome.

Nevertheless, my point in highlighting these particular figures is threefold:

• To underline the scale of the challenge to recruit high calibre people to our industry and then to train and retrain them throughout their careers;
• To reflect on the vital importance of all the key stakeholders in the industry working together to meet these challenges; and
• To look beyond the industry to the impact that these skills shortages and gaps on have the wider Scottish (and indeed UK) economy.

After a brief look at each of these points, I’d like to share with you a personal vision of the future of our industry as I know it can be and which it is the responsibility of all of us in this room to work to achieve.

On the scale of the recruitment challenge, the figures speak for themselves. As activity in the sector continues to grow and order books look strong, the target for recruitment to the industry increases. We currently estimate something in excess of 400,000 new entrants are needed across the UK over the next five years. Again, Scotland may be proportionately somewhat better placed, but there is work to be done in recruiting non-traditional applicants. You may have seen that the Equal Opportunities Commission recently published a report on gender imbalance in various sectors, of which construction was one.

We are doing a great deal to try to make the industry more appealing to women and girls still at school. I believe we are starting to have some success. But the numbers of women employed on site in craft occupations in particular remains minute – around 1 in 100. We have to do better than that.

As a Sector Skills Council, it is our remit to find out and then deliver employers’ training requirements. This survey helps to quantify them. But we must also work with the educational institutions, both at school and post-compulsory school attendance levels, to ensure that the right courses are being offered in the right places at the right time. This is why it is so important for us to work closely with the Scottish Executive.

We also need to accept that distinctions which may make sense within the industry may not appear quite so obvious outside it. So the fact that we can work closely with our colleagues in SummitSkills is important if we are to ensure that every piece of the jigsaw fits in to place. I greatly welcome our very close links with Summit Skills. Indeed I personally hold three Chairmanships in the M & E sector, two of which also involve Scotland, and the third involves close links with the Scottish JIB. The co-operation so far between ConstructionSkills and Summit Skills has been very close and that will continue.

As for the impact on the economy as a whole, this report makes my point for me. If skills gaps are creating difficulties in meeting required quality or customer service objectives, there are clients who are not yet getting what they want at the right time and to the desired standard. If they are commercial clients, there is a direct knock-on effect in terms of the performance of the economy. Factories, shops or offices not completed on time slow down economic development. If it’s a housing development or refurbishment which is behind schedule, there may be implications for labour mobility, quite apart from the social consequences. And delays or poor performance in school, hospital or other social building, are very unwelcome as well.

There are almost ten thousand construction employers in Scotland and more than one hundred thousand employees so we have to deliver Best Practice for our clients, for the end users and for the people of Scotland as a whole. I know that Graeme looks forward to working closely with Scottish Enterprise to do just that.

In many cases the client will be the public sector itself. There is tremendous investment at the moment in the fabric of our communities – schools and hospitals, roads and rail. This is a great opportunity for the construction industry to showcase what it is able to do for society at large. That way leads a virtuous circle in which young people see the merits of the industry and are attracted to a career within it. We have a great opportunity at the moment and we must seize it.

And we must always keep our sights on the wider scene. I’d like to share with you a vision of what our industry will increasingly look like, as we move through this first decade of the 21^st century. Then I’d like to say a few words about how we can turn this vision into reality.

It will be an industry with an increasingly well-qualified, and diverse, workforce. And one which can prove its competence. By the end of the decade, it will be a fully-qualified workforce. You’ll need a CSCS, SCORE or equivalent affiliated card to be allowed to work on site, certainly for any project of any size.

It will be an industry which responds quickly and flexibly to changes in regulation and working practices. The regulatory environment is always likely to grow tougher. We need to anticipate that and respond intelligently. We will all need to embrace new technology rapidly. There will be an even sharper focus on the customer. And there will be improved and better-focused management, building businesses for the longer-term.

It must also be an industry in which many more firms are Investors in People.

Now we all know the myths about IiP. “It’s for big companies, not for SMEs like me.” “It’s a load of box-ticking and form-filling.” “I’ll end up sending staff on an irrelevant course – it’ll waste their time and my money.”

I’ve heard all of these reactions – and more – many times. So have we all. They’re all misguided.

One reason why CITB has set itself a target of having one thousand CITB-registered companies IiP-accredited within three years is that IiP works. It is well-suited to our industry. There are too few companies in the sector, in comparison with other sectors, which have followed the IiP path. More than 30,000 companies in the UK are accredited. More than 10,000 of them have fewer than 50 employees. They include some of the most successful companies in the UK. They didn’t embrace IiP – to quote another favourite response – “just to get a plaque on the wall”. Research has shown that 80% of accredited companies have increased levels of customer satisfaction and 70% have improved productivity. Those who say “It doesn’t get any more work” are missing the point. No logo gets work on its own. What counts is that IiP improves a firm’s efficiency and performance at project level. And that is what gets more work.

The better the performance of individual firms within it, the better the overall reputation of the industry will be. It will be easier to recruit high-calibre people into the industry; quality standards will increase still further; clients will pay for better quality; and we will be in a virtuous circle of improvement.

That’s my vision of the industry over the next few years. I am greatly encouraged by the progress we’ve already made.

And let’s not spend too much time worrying about our image. Of course it can be improved. Bodgers and cowboys do harm us, as they are in contact with domestic houseowners or tenants and let them down or rip them off. But every week hundreds of excellent projects, both large and small, are completed to the satisfaction of clients. The growth of partnering and best practice is continually re-enforcing this. We must trumpet our own successes, and also draw encouragement from the very strong demand from young people to join our industry. We need to respond to that demand by taking on more apprentices or trainees of any age, because they want to join, we need them and the whole country looks to them to be the constructors of the future.

By working together, we can build a truly competitive, world-class construction industry both here in Scotland and throughout the UK. And that is a prize worth striving for, together. Ours is a great industry. Lets be proud of it. It is vital for Scotland. And it has achieved much in the past. And it will be with us still in generations yet unborn.