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.