Autumn Statement

Lord Jones of Cheltenham Excerpts

Thursday 4th December 2014 Lords Chamber

[Lord Jones of Cheltenham (LD)]

My Lords, I congratulate the noble Viscount, Lord Younger, on securing this very important debate and the noble Lord, Lord Rose, on his excellent maiden speech.

I want to concentrate on the UK’s chronic skills shortage, particularly in construction, which is hampering productivity and holding back the economic recovery, according to business leaders. The situation is best summed up by Richard Steer, chairman of Gleeds Worldwide, the leading construction management company, responsible for a wide range of projects, from nuclear power stations to luxury apartments. His view on the Autumn Statement is that,

“the pre-announced news on infrastructure and housing spending is good, as is spreading investment nationwide rather than just focusing on London and Southeast. The headline grabber is the major revision in stamp duty. It will hopefully re-stimulate the housing market which appears to have frozen. This combined with the recent announcement of direct government intervention in house building … shows a commitment to trying to meet the growing national housing shortfall. But the shortage of skilled labour in our sector is still a major challenge for us all and whilst we see some help in this area in this statement it is not enough in my view”.

Kevin Green, chief executive of the Recruitment and Employment Confederation, paints an alarming picture. He says:

“Last year we had nine areas of skills shortages, now we have 43 areas. Every single type of engineering is in short supply, from mechanical to software, civil to electrical. In IT, coders, programmers, developers are all in short supply; there’s a shortage of doctors and nurses in the National Health Service; and we need about 20,000 more teachers in the UK”.

He adds that,

“the situation’s been getting worse month-on-month”.

Rob Wall, the CBI’s head of employment and education, concurs, as does Alan Muse, global director of the built environment at the Royal Institution of Chartered Surveyors. According to one recent report by accountants KPMG and the London Chamber of Commerce and Industry, about 20% more construction managers, surveyors, electricians and other trades will be needed to meet demand over the next four years than were needed from 2010 to 2013. According to Richard Steer:

“About 400,000 people left the industry since 2008”.

He says that another 400,000 will retire over the next five years and that the industry is suffering from a severe shortage of almost all skilled people. He points out:

“Brickies are flocking to the South East leaving shortages in the regions … It takes about three or four years to become a good brickie”.

He adds that during the recession:

“Brick factories closed down so house builders have suffered a huge shortage of raw materials”.

Chris Bence of the leading building supply merchants in Gloucestershire put it starkly when he told me:

“You can set what target you like for building houses, but you can’t build them because there are not enough bricks”.

These shortfalls mean that the price of construction is going up at a time when we are trying to create more social and affordable housing.

The Government have certainly been investing in apprenticeships. Business is keen to expand the apprenticeships programme, as long as it is more involved in designing the schemes and courses. The Autumn Statement partly responds to this by abolishing national insurance contributions for employers of apprentices under 25 earning up to the higher tax level. But most organisations say that more could be done to remove the stigma attached to vocational subjects in schools, colleges and universities. Rob Wall of the CBI says:

“Vocational routes are seen as second class and that isn’t acceptable”.

Germany, South Korea and Switzerland have much more successful vocational routes to employment because they regard university degrees and apprenticeships as having equal value and worth.

Some noble Lords will have already heard my story of the young lady who told her parents and teachers that she was not going to university. They were horrified and tried bribery and blackmail to try to make her change her mind. But she was determined, because she wanted to become an electrician. She started an apprenticeship. Now, four years later, she is earning more than her elder brother, who did go to university. She has no student debt, no drink habit and can get up in the morning. Most importantly, she is happy and her parents are no longer horrified. The Construction Industry Training Board reckons that 180,000 more construction workers like that young lady will be needed over the next five years. Without those skilled people, the Government will not meet their ambitious targets for housing and infrastructure.

Finally, on a different subject, with the increased investment in the NHS, I urge the Government to encourage Gloucestershire health chiefs to reverse their decision on accident and emergency services at Cheltenham General Hospital. It is frankly ridiculous that the service is being downgraded simply because of the failure to recruit enough emergency doctors and nurses. I have received excellent A&E treatment in Cheltenham on more occasions than I care to remember, and would not be here now without its early intervention. A town the size of Cheltenham needs and deserves a full A&E service.

Young People: Alternatives to University

Lord Jones of Cheltenham Excerpts

Thursday 23rd October 2014 Lords Chamber

[Lord Jones of Cheltenham (LD)]

My Lords, I, too, congratulate the noble Lord, Lord Monks—I was going to say my noble friend; he is a friend, really—on securing this debate. It dovetails nicely into the one that we had earlier.

I look forward to the day when a completed apprenticeship is regarded as being just as valuable as a completed degree course. The two need the same status so that individuals feel equally valued by society. I particularly want to talk about the opportunities for apprenticeships in construction available to those who decide not to attend university.

When having work done recently on my house, I wanted a properly trained architect, bricklayer, plasterer, carpenter and electrician to make sure that the job was done properly. These skills are becoming more difficult to find. The latest figures, which show rising employment and falling benefit claims in the UK, have shed light on a skills timebomb. Official data showed that the number of bricklayers claiming jobseeker’s allowance dropped to 1,775 in August from a peak of 15,425 in March 2009. It also showed construction wages up by an annual 4% in July. That makes construction at the artisan level one of the strongest performing sectors for pay growth, while in the wider economy wages are failing to match inflation.

The numbers reflect the rise in work for an industry that shed many skilled workers during the recession. When projects were cancelled and new work dried up, many either left or chose not to join the industry. The sector lost almost 400,000 people. Another 400,000 are due to retire over the next five years, according to the Construction Industry Training Board. Now, as builders take on new work, the shortage of skilled tradespeople has allowed bricklayers and other subcontractors to ramp up their hourly rates. We are returning to the age of the “Loadsamoney” plumbers, plasterers and painters that plagued the Thatcher era and are symptomatic of a cost-push inflationary spiral affecting housebuilding costs. A number of government-funded apprenticeship schemes are in place, but they need to attract many more young people to construction if we are to solve the appalling housing shortage.

Some time ago I tabled a Written Question about the shortage of skills in the construction industry. The noble Viscount, Lord Younger of Leckie, replied:

“There has been no specific assessment of the availability of skilled personnel for the home building sector.”

That was a surprise. He went on:

“The Construction Industry Training Board’s latest Construction Skills Network Report forecasts an annual recruitment requirement for the construction sector, including home building, of 36,400 a year for the 2013-2018 period.”

We are nowhere near that. He added:

“Under the auspices of the Construction Leadership Council, the house building industry is developing an action plan to address two immediate priorities: improving the image of house building and attracting back experienced workers who left during the recession, and other workers with relevant skills.”—[Official Report, 11/6/14; col. WA 253.]

To attract young people to construction, we need fewer screaming headlines in our media predicting a construction slump, which happened after the August figures for construction were released. We are now in late October, and the August figures are ancient history. Let us face it: there is no news value in the fact that construction can go up as well as down in its output, so it will be ignored by most people working at the sharp end. Construction has been on a meteoric trajectory over the past 18 months. With all parties now writing their manifestos for the next election, it is clear that building more homes will be a common theme. The view from the ground is that construction will be a good place to be for many years to come. If we want to attract young men and women into construction, they will not be assisted by foolish national headlines based on limited data that imply that construction is still a rollercoaster industry. I am not sure that we can do much about the reporting of the Office for National Statistics figures, but the Government have a role in ensuring that the construction sector has a stable future with a sufficient number of properly trained personnel to build our future.

I heard about a young woman who decided not to go to university. Her teachers and parents were horrified and tried to change her mind, but she wanted to be an electrician and was very determined. She took an apprenticeship and was successful. Now, four years later, she is earning more than her older brother who went to university. Unlike him, she has no student debt; nor does she have a drink habit. More importantly, she is happy, and her parents are not horrified any more.