Construction Industry
The final item of business is a members' business debate on motion S1M-2622, in the name of Marilyn Livingstone, on cross-party support for a review of the construction industry in Scotland. The debate will be concluded without any question being put. I invite members who wish to speak in the debate to press their request-to-speak buttons. I invite members who are leaving the chamber to do so as quickly as possible. I call Marilyn Livingstone to open the debate.
Motion debated,
That the Parliament recognises the importance of the construction industry to the Scottish economy and the contribution it makes to supporting employment and vocational education and training; notes that nine out of every 10 construction firms employ less than eight people; acknowledges that the reputation of the whole industry is damaged by the actions of rogue traders, particularly within the residential sector, and that small businesses contend that their profitability and competitiveness is adversely affected by the system of cash retentions, and believes that the Scottish Executive should initiate a strategic review of construction in Scotland in order to (a) identify how best to combat the "cowboy" element, (b) support the education and training infrastructure so that it is able to meet the skill requirements of the industry, (c) examine the possibility of developing an inspection and assessment regime to evaluate the competence of construction companies, (d) address the system of cash retentions and (e) ensure that the provisions within the existing construction contracts legislation deliver a process that is fair, effective and easy to understand.
It gives me great pleasure to open this evening's debate by introducing the main issues that are raised in the motion, and setting out some of the elements that I would like to underpin a review of the construction industry in Scotland.
The construction industry is an essential element of the Scottish economy. It accounts for roughly 10 per cent of Scottish gross domestic product and employs many thousands of staff. The industry is unique in composition. Nine out of 10 construction firms employ fewer than eight people and many firms are local businesses that have been passed from generation to generation. A thriving construction industry has a fundamental role to play in developing the physical environment and infrastructure that is necessary for a smart, successful Scotland. Given our booming local economies—for example, here in the capital—it is vital that Scotland possess a construction industry that is equally vibrant, confident and highly skilled and that can react and respond to the dynamic demands that are placed on it by local and regional economies.
The construction industry conjures up many popular images and stereotypes among the public. The industry continues to be severely damaged by a very small element of unscrupulous operators and rogue traders. Stories about poor or shoddy workmanship, a leaking conservatory roof, unsafe power connections or deadlines reneged on are not hard to come by.
Other MSPs and I have had contact with a range of stakeholders, some of whom I welcome to the gallery today. We found widespread consensus for change in the industry, which is welcome. The industry agrees that a small minority has tainted the majority. The industry is fully supportive of proactive measures to regulate the industry further by building on the internal regulatory schemes that have been put in place by industry associations. I believe that a review that is centred on addressing regulation, assessment and standards in the industry is essential if we are to develop an efficient and responsive sector that puts customers first and ensures customer confidence—an important point—throughout the country.
A review of the industry, which is proposed in the motion, should cover the creation of industry-wide standards. Those should include the development of uniform, sustainable and improved inspection and assessment regimes, reform of cash retention schemes, in which clients retain a percentage of the payment that is due in case defects arise, in order to speed up payments and secure cash streams, and the development of a coherent training and lifelong learning framework.
In the next few minutes, I will focus on the training and lifelong learning agenda for the industry, which is important. An acute skills shortage is one of the major challenges that the industry faces. The overall participation rate in apprenticeship training in Scotland has reduced over the years, which has damaged the industry's competitiveness. We must consider ways of attracting women back into the construction industry. Statistics in the industry's survey "Children's Attitudes towards the Construction Industry" show that 12 per cent of boys, in comparison with only 4 per cent of girls, thought that a job in construction would be worth while. There is work to be done on getting the gender balance on track.
The lack of a pool of skilled workers has resulted in many small employers' economic viability being compromised as recruitment becomes a greater problem. Much work has been done to establish a more flexible framework, based on equality of access for all ages, and to foster a culture of training and skills development in the sector. If we are to widen training opportunities, we must break down the traditional barriers. Many members in the chamber are members of the Enterprise and Lifelong Learning Committee, which is considering how to break down those barriers.
The Executive has taken many steps. There has been massive investment in funding in the further education sector, and we are now looking to develop the Scottish credit and qualifications framework, which will ensure transferability of qualifications and will entrench parity of esteem between academic and vocational qualifications. I want also to mention the trade unions' development and implementation of the successful return to learn projects and the expansion of the modern apprenticeship programme. The committee is also examining the simplification of funding streams, qualifications, pathways and quality and accreditation mechanisms. Careers Scotland and Future Skills Scotland will provide top-quality information and all-age guidance, which will help actively to address the skills gap.
The committee believes that there is a significant need to increase the number of businesses—particularly small and medium-sized enterprises—that are engaged in workplace training and development. The construction industry is extremely eager to work with us and all other major stakeholders on increasing the number of people who are qualified apprentices or technicians—that is where the gaps exist. The industry would benefit from a coherent public works programme, so that it can operate efficiently, offer security of employment and invest in the right training and plant machinery. As an example of good practice, "rethinking construction" centres have been launched in Northern Ireland and Wales, at which people can propose new ideas and talk about best practice. Perhaps the Executive could consider following that example.
I call upon the Scottish Executive to acknowledge the important contribution that the construction industry makes to the Scottish economy. I ask the Executive to reflect on the significance of the industry and to investigate avenues for developing and promoting a modern construction industry by conducting a strategic root-and-branch review of the industry.
Please can we have speeches of four or five minutes.
I thank Marilyn Livingstone for securing a members' business debate on the construction industry. Her final statement was right—a root-and-branch review of the construction industry in Scotland is needed.
In July 1998, before the establishment of the Parliament, the Egan report was published. That report, which was commissioned by the Department of the Environment, Transport and the Regions, was entitled "Rethinking Construction". It contained many good ideas and recommended some positive ways forward for the industry. It also considered radical ways of thinking, some of which merited further discussion.
The Egan report identified five key drivers of change to set the agenda for the construction industry at large: committed leadership; a focus on the customer; integrated processes and teams; a quality-driven agenda; and a commitment to people. Those drivers reflect everything that Marilyn Livingstone noted in her motion and spoke about.
In the report's summary, its authors emphasised:
"we are not inviting UK construction to look at what it does already and do it better: we are asking the industry and Government to join with major clients to do it entirely differently."
They proposed
"a radical change in the way we build"
in this country and they wanted progress to be made on their aims within five years. It is almost five years since the report was published and there does not appear to have been any change at all.
A further consultation paper has been produced by a committee that is chaired by Sir John Egan—the strategic forum for construction. That paper builds on "Rethinking Construction" and looks at how change can be accelerated. I was pleased to see that the consultation paper noted another report—the Laing report—which I am sure is close to Robin Harper's heart, as it deals with sustainable construction. The Laing report emphasises
"the importance of whole life performance in securing enduring value through productivity in use."
The consultation, which is due to be completed by 31 May, has taken that on board.
I have a general interest in construction, and in November last year I asked the Scottish Parliament information centre to find out how the Scottish Executive was developing its thinking in relation to the recommendations that the Egan report made. I was happy to learn that the Executive was considering the Egan report and the promotion of the Egan agenda within Scotland. The Executive approved funding to cover the salary and secondment costs for a co-ordinator for the pulling together in Scotland campaign. The Royal Institute of Chartered Surveyors in Scotland was pleased to publish details of the campaign as a way forward for construction in Scotland.
Marilyn Livingstone mentioned the "rethinking construction" centres that have been opened in Northern Ireland and Wales. I did a massive search for similar initiatives in Scotland. I even asked SPICe to find out what was happening in that regard. We could not find anything. Has the co-ordinator been appointed? What is happening about the pulling together in Scotland campaign? What is happening in relation to "Rethinking Construction"? Even a website would enable ideas to be pooled and the issue to be progressed.
I ask the minister to let us know whether the Executive intends to embrace any of the Egan principles and to tell us what is happening about the project into which the Executive put money six months ago. We have heard nothing more about it.
Marilyn Livingstone has developed an important motion, to which I am pleased to give my support. I also support her comments and those of Linda Fabiani.
The problem of rogue traders would be helped by a more level playing field and a reduction in VAT on house repair work, which is desirable in itself.
I want to concentrate on skills and training, which is a narrow aspect of the subject of the debate. There is a worrying mismatch between the skills that society needs and the skills that our young people are acquiring. That is clearly visible, in a slightly different area, with regard to gas fitters to carry out the central heating programme, which is such a flagship policy for the Executive. It is also visible with regard to the building tradesmen who are required to do the work that is necessary to bring houses, schools and hospitals up to standard under, for example, Glasgow's housing stock transfer and the other public sector capital renovation schemes that we are going ahead with in Glasgow and other places.
Gas fitters tend to be in their 50s and are likely to retire soon. A huge skills gap is opening up as the supply of skilled labour falls while the requirement for it increases as the central heating programme goes ahead. Despite raising the issue with ministers in the context of housing stock transfer and the central heating programme, I have grave doubts that the extent of the problem is fully recognised by ministers, their advisers and the various organisations with which they interrelate.
Jobs in the building industry have traditionally been viewed as dangerous, requiring people to be outdoors in all sorts of weather, subject to sudden redundancy, seasonally insecure and insecure in the longer term. Increasingly, the reality is that the industry should provide secure work for 15 years or more and a worthwhile career for people. I am not sure that the issues are being examined with sufficient urgency.
Marilyn Livingstone mentioned the expansion of support for further education colleges. That is perfectly correct, but FE colleges still have major funding issues. I have suspicions about whether the way in which FE colleges are funded reflects adequately, and acts as a driver for, what we want to happen. In other words, we should ensure that the drivers are about the state of the industry rather than financial. We have to provide training of the kind that the industry needs. Part of the problem is that young people are not keen to go into the industry and, if they are, they are often not job-ready.
I draw the minister's attention to the success of the Youth Build project, which I came across -recently, and which has developed under the umbrella of Paisley Partnership. Youth Build recruits youngsters aged between 18 and 24 who are eligible for the new deal and who are resident in social inclusion partnership areas. For six months, they get new deal rates of pay of £42 plus £15 and thereafter they are guaranteed the industry rate. They are placed with firms that are doing housing association maintenance work, which would otherwise have difficulty in supporting quality training. They are supported by a training manager and a support worker. Among other things, that provides male role models. I acknowledge what Marilyn Livingstone said about gender balance, but in this respect male role models are not unimportant. They also have an informal mentoring role. The training is devised around the work that is available and leads on, where appropriate, to apprenticeship opportunities. In one or two instances, the scheme has provided a motivating incentive for young men coming out of prison.
Youth Build has completed one successful project with nine young people. It is now on its second. I am aware that the numbers are small, but I am told that it is the first project of its kind in Scotland. The Executive could help by encouraging similar projects and by getting Communities Scotland to allow housing association maintenance contracts to be let for longer than a year at a time, to provide some stability. One of the problems that has developed over the years is the withdrawal of the private sector relief from training projects. We have to make it easier for people with expertise to get back into the field, support them when they do so and provide the job opportunities that are so necessary.
The motion is important. As always, it is disappointing during members' business to see the press gallery empty, because a lot will come out of the debate that it is worth while to report more widely than usually happens with these debates. I support the motion.
I congratulate Marilyn Livingstone on the motion, and I apologise on behalf of my colleague Annabel Goldie, the deputy convener of the Enterprise and Lifelong Learning Committee, who I know would have liked to participate in the debate. Unfortunately she has a painful foot injury, which does not allow her to attend and which will force her to miss the greater pleasure of attending the Conservative party conference over the weekend. A number of other colleagues have had to leave early to attend the conference, to avoid the traffic chaos that will no doubt be caused by the large number of attendees tomorrow.
The debate is welcome, because too often in Scotland in recent times we have centred our attentions on the so-called sexy or sunrise industries, which people perceive as having enormous importance, and have forgotten a number of other important industries that bring important employment and economic benefit to our country.
The construction industry is one of those industries. The retail sector in Scotland also comes to mind—that sector is an enormously important employer and is important to our economy, but is often overlooked. A debate on the construction industry is welcome.
The industry raised many important issues in the Enterprise and Lifelong Learning Committee's lifelong learning inquiry, not least the issues that Robert Brown touched on in respect of the skills gap. One of the inquiry's most important outcomes is that we can now move forward and say that there are specific skills that we need people to have in industries such as the construction industry and we want to move away from simply putting people into boxes in further education. However, that will not happen unless we sell jobs and work in the construction industry more positively.
Surveys show that our and young people's perceptions of the industry are often far wide of the mark. Most work in the construction industry is highly skilled. People do not just turn up with a hammer, as in "Auf Wiedersehen, Pet", which has been revived by the BBC—it is not like that. The work is valuable, skilled and vital to our country. It is incumbent on all of us to sell that message, rather than simply say to young people that they should go into the so-called new industries.
Construction has many aspects that are part of new industry and we should do much more to ensure that its success continues, particularly because the construction industry is and needs to be in every community. Local businesses and small local traders have a direct effect on their communities. They tend to procure and employ within their communities and we should give more support to such businesses. The minister will have heard the criticism of Scottish Enterprise that is often vented, that a lot of help is given to large businesses but there is not enough help for local businesses. Local construction firms certainly deserve support.
I am not the expert on the construction industry that Linda Fabiani has become over the past two or three years—she hid that under her bushel—but I certainly welcome the debate.
I congratulate Marilyn Livingstone on securing the debate. It is clear that there is all-party support for a fundamental review of the building industry.
I emphasise what Marilyn Livingstone and David Mundell said about the importance of the construction industry. It is important not just because of its sheer size; it has knock-on benefits for Scotland's indigenous economy. If the construction industry is expanded, many sectors of the economy will also be expanded. We are often talking about indigenous business, indigenous jobs and indigenous projects that are of maximum benefit to the Scottish economy—that is not the case in respect of some inward investment projects.
Over the next few years, the construction industry faces enormous challenges. It is estimated that about 27,500 people will have to be recruited in the industry over the next four or five years, 13,000 of whom will replace those who have retired from the industry and 14,500 to fulfil the investment ambitions of the private and public sectors. Those 27,500 recruits represent a massive opportunity, not just for the industry but for the Scottish economy. I hope that the minister will refer to that in his closing remarks.
Some of Robert Brown's points about problems with training are particularly important in relation to the college sector, where the economic viability of courses is often called into question and there is not the throughput required to make the courses viable or to achieve the target of 27,500 recruits.
Another important issue for the construction industry is quality. Members have referred to the problem with cowboys. There is only one long-term way to solve that problem—to raise quality standards in the industry. I would like the minister to comment on what is happening down south in relation to the quality mark scheme and what he intends to do about a Scottish equivalent. The Department of Trade and Industry is providing £600 to applicants who register in the quality mark scheme through the construction licensing executive scheme. No such assistance is currently available to the industry in Scotland. That means that building companies in Scotland are at a disadvantage and we must rectify that.
The other area that needs to be reviewed is the cash retention system within the industry. Something like 95 per cent of all the companies involved in the building sector employ fewer than eight people. However, as much as 20 per cent of those companies' total turnover is tied up in cash retentions. That has a serious knock-on effect for cash flow and profit and loss in the industry.
I hope that the minister will address cash retentions and the need for registration. We are always hearing businesses say, rightly, that there is too much regulation but, in a sense, the construction sector is an industry that needs slightly more regulation if we are to tackle problems such as registrations, quality control and the imposition of a quality mark scheme. All those issues are urgent and all of them are a key part of ensuring that the building trade can make a full contribution and realise its full potential for the Scottish economy.
For far too long, politicians have ignored the building trade. It is high time that the Parliament and the minister, as the key person in the Executive, put construction right to the top of the agenda.
At one stage, I thought that Alex Neil was going to break his wish for consensus. I hope that he was not suggesting that I would be anything other than a participant in the new politics.
I am delighted to welcome all members' contributions to this evening's debate. I particularly congratulate my colleague and comrade Marilyn Livingstone on securing the debate—I have to do that because she is the lead Labour MSP on the Enterprise and Lifelong Learning Committee. As I mentioned earlier today, it is particularly apposite that she should have secured the debate on the day that we hear that the House of Lords has unanimously upheld the plaintiffs' appeals in the Fairchild case. Today is a day of historic triumph for the trade union movement against some very dark forces indeed. The judgment means justice for many workers, their families and the trade union movement, particularly those unions in the construction industry. I pay tribute to the role of the Union of Construction, Allied Trades and Technicians, the GMB and my union, Amicus—commonly known as the Amalgamated Engineering and Electrical Union—in securing that historic victory.
Training and safety are the keys to success for the various construction industries. Alex Neil touched on a pertinent point. Sometimes we rightly beat ourselves about the head over the effects of regulation and the regulatory burden on industry. However, we must acknowledge the many ways in which people interact with industry. Perhaps we need stress-sensitive regulation. We could look for the areas in which regulation is needed to boost public confidence and increase public safety without putting onerous and undue burdens on those whom we wish to help and encourage. Better regulation might be needed to deal with the particular challenges of rogue traders in the construction industry.
We must also consider consumers in a wider sense—private individuals, the private sector and public bodies. The victims of rogue traders are those who abide by the rules. Across the policy spectrum—but in construction more than in other areas—companies that abide by the rules and by health and safety norms pay the price for those who do the job on the cheap, take the profit and move on. It was too much a feature of my experience as an advocate to hunt the cowboy, usually against some legal time bar, when workers and other companies had been put at great risk and in danger.
Marilyn Livingstone mentioned the boom here in Edinburgh. We should also mention the great investment that will get under way in my home city of Glasgow as we start to transform its social housing. I look forward to the investments that will be made in my constituency in the Hillhead initiative on housing and in the revival and redevelopment of Kirkintilloch and Lennoxtown. Those projects will bring career and job opportunities. I hope that the contracts that we write for local people bring many such opportunities.
Marilyn Livingstone's motion refers to the importance of upskilling the work force and building on Labour's success—working with our Liberal colleagues—in delivering early on our commitment to modern apprenticeships. The Enterprise and Lifelong Learning Committee continues to work on upskilling and I commend its interim report on lifelong learning to other members for their comments, given that we have had comments from virtually everyone else. Marilyn Livingstone mentioned the key role for employers and trade unions in the return to learn scheme. We must consider how we incentivise support for return to learn broadly throughout the country and in tandem with social partners.
It is obvious that Robert Brown has not heard of Rosie the riveter. He mentioned the need for male role models. It is important that we take up some of the issues with finding career and vocational opportunities for younger men and—dare one say it—younger women.
I share some of David Mundell's sentiments, but I disagree on one issue. Construction is a sunrise industry and it is difficult to think of another industry that is more at the forefront of the information technology revolution. I am thankful that we have moved on from "Boys from the Blackstuff" and those who brought about the social and economic circumstances that underlay its scripts.
I close by talking about the final part of Marilyn Livingstone's motion. We must carefully consider having a review of arbitration. We cannot allow the complexities and procedures of arbitration to be used in an economically oppressive way. That is often done—particularly in relation to cash retention—and remains a problem for smaller companies especially. I hope that the minister will consider that.
I observe that Lewis Macdonald is the perfect minister to wind up the debate, given his previous responsibility as convener of the Holyrood progress group. For David Mundell's benefit, I make it clear that neither Lewis Macdonald nor I had the bravery to say "Auf Wiedersehen, Pet" to Linda Fabiani as we left that group. It is nice to see her and Alex Neil sitting on the same side of the chamber, because they did not do so during the brief question-and-answer session last night on a somewhat important building project—at least to us—that is taking place at the other end of the road outside the door.
I, too, congratulate Marilyn Livingstone on initiating the debate. As Alex Neil and others have reflected, it is important to recognise the role of the construction industry in a modern Scottish economy, not only as an employer and a generator of wealth, but as the sector that builds the infrastructure that is so important for our future. I endorse the motion, which calls for a strategic review of the industry. I hope that the minister will respond positively to the suggestions that Marilyn Livingstone and others have made on addressing skills shortages and other issues.
The construction industry needs to offer people attractive careers. The current skills shortage in the industry suggests that the careers that it offers are not attractive enough. In my constituency, there are shortages in certain key areas, not least of which are those of skilled heating and ventilation engineers and electricians. I share the concerns of other members who reflected on the need to address those shortages. Brian Fitzpatrick mentioned the fact that the Enterprise and Lifelong Learning Committee is examining that issue and the way in which we balance the competing needs of our economy with those of our further and higher education sectors. Robert Brown and other members commented on the interim report that the committee has produced on the issue.
There are a number of reasons for the skills shortages that manifest themselves across the industry. One is the British sickness—the belief that it is more respectable to wear a suit in the office than to get one's boots dirty on a building site. To some extent, that sentiment is reflected in the rewards that the construction industry can bring. I was interested to learn—indeed, I was horrified to learn—that it is possible to earn a higher hourly rate if one works in public affairs in Edinburgh than if one works as a chartered architect or engineer in a constituency such as Shetland. I know who provides the best service to the country and it is probably not the lobbyist.
Another reason for the skills shortage is the lack of training opportunities and access to funding. In that respect, the Parliament needs to ensure better co-ordination between the industry and government and to give greater encouragement to firms to offer apprenticeships. In my generation—if that is not an odd phrase—many businesses, from Dounreay onwards, were encouraged to offer craft apprenticeships to people as they left high school. Although the modern apprenticeship scheme has been an undoubted and welcome success, more can and should be done to enlarge that area of training.
The motion refers to the cowboy element of the industry, which undercuts reputable operators and provides clients with a poor service. An equally important point is that that element does not provide the quality of training that the industry requires.
The industry is often too confrontational. That is the result of clients' addiction to competitive tendering without thought for quality. A low fee for the designer at the design stage can lead to an inefficient design that costs more to build and does not serve its purpose. Keen tenders for the construction stage can be double-edged swords. It is in no one's interest for a contractor to start on site knowing that he has to seek causes for claims or cut corners if he is to avoid making a loss on the job. From the start, there is conflict between the architect and the contractor and the contractor and the subcontractor. Time that should be spent on delivering a quality, value-for-money project can often be wasted arguing over clauses in conditions of contracts. However, there are signs that that is changing and that contractual problems can be addressed.
In the longer term, we need to concentrate on higher standards and lower costs. Linda Fabiani mentioned the Egan report. One of its important recommendations was that the industry should seek to
"replace competitive tendering with long term relationships based on clear measurement of performance and sustained improvements in quality and efficiency."
Some large companies, such as the British Airports Authority, have followed that approach for some time using partnering to build teamwork among client, designer and contractors. That approach works. The strategic review that the motion calls for would give us an opportunity to examine that approach, to see the benefits of partnering and to consider how it could be extended across the board. On that basis, the motion's suggestions are well worth pursuing.
I understand that a number of lobbyists will be waiting at the exit for Mr Scott at the end of the debate.
I thank Marilyn Livingstone for securing the debate. I will restrict myself to making three main points.
When David Mundell mentioned boxes, I thought that he was going to talk about houses. In Europe, such things as triple glazing, high-quality insulation, heat recovery, photovoltaics, solar energy capture, combined heat and power systems and built-in child-friendly and disabled-friendly strategies are commonly locked into the philosophy behind the building of any large housing estate. Do we find that here? No, we do not. We find dreary repetition of one-class designs of medium-quality buildings, often without subsequent application to architects to improve on the designs. My first plea is for the Executive to find some way of ensuring that architects are consulted and used more in our housing industry.
The second thing that comes to mind is the huge ecological footprint that our construction industry generally leaves on the country. It was recently drawn to my attention that, because of the way in which our tax and economic regime works, it is relatively economically advantageous not to build buildings—particularly office blocks and temporary factories—with design lives of more than 15 to 25 years. I believe that that is extremely economically wasteful. Perhaps the Executive could consider ways of ensuring that the construction industry takes hold of the philosophy of long life and loose fit in its construction strategies.
Finally, I would like to mention ISO 14001. If the Executive is to adopt a sustainability indicator to add to the very few that we have already, I suggest that at the top of the list of sustainability measures should be the number of construction industry firms signing up to ISO 14001. That brings me to part (c) of Marilyn Livingstone's motion, which calls for a review to
"examine the possibility of developing an inspection and assessment regime to evaluate the competence of construction companies".
If the Executive went down that road, the regime could also be used to encourage firms by saying to them, "Not only are we going to assess your competence, but here is the book on ISO 14001. See what you can do to change the things that you're doing." That would revolutionise the ecological footprint of the construction industry on Scotland. If we have greener buildings, we will have higher profits, more employment, better buildings and healthier, wealthier and happier people as a result.
I thank all members for their contributions this evening. In particular, I thank Marilyn Livingstone for a motion that recognises the importance of the construction industry to Scotland. Tavish Scott mentioned the fact that he, I and Linda Fabiani were the founding members of the Holyrood progress group and were responsible for developing that building project some two years ago. Clearly, that gave the three of us a specific client view of the construction industry.
However, as Robin Harper has more than hinted, we are all clients of the construction industry, directly or indirectly, and many people also obtain their livelihood from the industry. Therefore, it is of considerable importance to us all and makes a major direct contribution to the Scottish economy as a whole, accounting for around 5.6 per cent of gross domestic product and around 5.5 per cent of the Scottish work force. As members have said, the industry has expanded significantly over the past year or two—by more than 2 per cent on average—and forecasts suggest that the sector will continue to grow at a steady rate this year.
I start with the obvious but important point that the issues covered in the debate touch on both devolved and reserved areas, and that the key to delivering some of the changes that have been identified as being important to achieving the kind of construction industry that we want in the future is effective partnership between the Scottish Executive and our colleagues in the Department of Trade and Industry and others in the UK Government.
That applies to the first of the specific issues to which I will respond—rogue traders or cowboy operators within the industry. We are all familiar with that issue and it is a problem that needs to be tackled. As a consumer protection matter, it is principally a reserved matter. Alex Neil mentioned the quality mark scheme. It is important to say that that scheme, which is the creation of the DTI and was launched earlier this year, is in an initial roll-out phase in England and Wales. Through that scheme, homeowners will be able to find an independent assessment of quality work and of tradespeople who are qualified to provide such work.
I will come back to the DTI position in a moment. In Scotland, the building trades associations have got together to develop a self-regulation scheme through the Scottish Construction Licensing Executive, which includes independent members from bodies such as Citizens Advice Scotland and the Scottish Consumer Council. Its Scottish construction licensing scheme, which is already under way in the plumbing industry, is aimed at combating rogue traders.
We and the DTI welcome that self-regulation initiative. It fits well with our proposals for a modernised building standards system. However, we need to ensure that what the DTI brings forward is compatible with what the Scottish industry is doing. The DTI retains the option to introduce the quality mark scheme in Scotland should the Scottish scheme not work. We will certainly continue to talk to our colleagues in the UK Government about the possibility of a joint approach, based on a recognition that different schemes may deliver the same outcomes in different parts of the UK.
A distinguishing feature of the DTI scheme is the £600 incentive. Will the Scottish Executive, working with the industry, provide a similar incentive for companies in Scotland?
There is a difficulty with how we might approach that, given that we are dealing with a reserved matter. We will work with the industry and the DTI to identify ways in which we can achieve the outcomes that we desire in Scotland, which are very much the same outcomes as those to which the DTI is working towards south of the border.
A number of members mentioned developing the training infrastructure to meet skills requirements. That is crucial. In December 2000, Wendy Alexander commissioned research into the skills needs and perceptions of the industry, to establish employment opportunities and to maximise the potential benefits of the increasing buoyancy in the construction industry. That research was led by the University of Glasgow and built on earlier work by Glasgow City Council, Scottish Enterprise and Communities Scotland. The research confirms the need to make the industry more attractive to young people, women and people from ethnic minorities, who are significantly under-represented in the work force, and for the industry to engage extensively with national training programmes such as the new deal, which is also a programme that works across the UK.
In response to that research, our welfare to work advisory task force, chaired by John Milligan, has established a group to help people on the new deal to move into construction. The group works with the industry and focuses on disadvantaged groups and long-term unemployed people. It seeks to provide a package of training and work experience followed by a period of subsidised employment.
Does the minister agree that the higher the building standards, the greater the skills that are required, so that a more highly skilled work force will be needed to achieve those ends?
Absolutely. I emphasise that we see the move forward in quality, which has been identified, and the development of opportunities to learn skills and broaden the work force as things that go together.
We will work with Careers Scotland and the Construction Industry Training Board to promote awareness of opportunities in the construction industry, in line with the promotion of modern apprenticeships. Scotland has a good record on modern apprenticeships in construction, with just under 5,000 starts.
The Glasgow construction forum, which was launched earlier this month by Glasgow City Council, also arose from a recommendation in the research that was carried out in Glasgow. The forum brings together senior directors from a number of key companies that operate in that part of Scotland. They have agreed to work together to address some of the key issues.
Both Marilyn Livingstone and Brian Fitzpatrick mentioned the key role that trade unions play, on the learning side as well as in improving standards in the workplace. We recognise that role and will continue to work to support that and to find ways to enhance it.
The motion refers to the inspection and assessment of companies, and one or two members also raised that issue. Constructionline is a UK-wide Government-sponsored database of contractors and consultants that are approved as being financially sound and technically capable of undertaking various types and sizes of contract for the public sector. The Scottish Executive is one of the main users of that database in the UK and we actively encourage other public sector organisations in Scotland to use it when sourcing suppliers. Constructionline is a means of obtaining information and making the checks that clients must make before they place public sector contracts. We encourage all those with whom we work in the public sector to use the system. It provides security for the client and assures a level of quality in the product.
One or two members raised concerns about the system of cash retentions. The system goes back a long way in the construction industry and exists for a good reason. From the client's point of view—whether they are an individual householder or a public or private corporation—retentions provide an incentive for contractors and suppliers to comply fully with their obligations and to make good any defective workmanship before the retained sums are paid. The system reflects a culture in the industry in which financial penalties appeared to be the only way to ensure that work was done in full. The answer is to seek to address that culture and to create one that is based on long-term partnering in contracts and a more co-operative approach to works procurement among contractors, suppliers and clients. Better performance across the industry would diminish the need and the argument for cash retentions. We are well placed to act on that and we wish to do so to allow us to obtain value for money for the public from the contracts that we place.
What the minister says is fine and logical in relation to a major contractor that is dealing with a client for a major project or a one-to-one contractor that is dealing with one client. However, when big contractors use lots of sub-contractors, they can—as Brian Fitzpatrick said—use the retentions system as an ingenious way of avoiding paying for many years. The arbitration system can be spun out, which permits that to happen. We must find a way of protecting the small trader against the big boy in the trade.
I accept that point. The key to protecting those further down the line who are not responsible for defective workmanship or delays is a change in the culture in the industry.
I want to emphasise that we recognise the importance of the construction industry to the economy and we endorse the principles of the "rethinking construction" initiative as a means of delivering improvements in the industry. Scottish Enterprise will work with the industry in leading a Scottish "rethinking construction" initiative in partnership with Communities Scotland. There are good examples of projects based on the principles of "rethinking construction" that were used in Wales and Northern Ireland—the Asda store at Robroyston in Glasgow, for example. We are aware of the good work in those areas and of the need to produce projects to match that work. The short-term project, pulling together in Scotland, which we fund, is making significant progress and we will introduce further proposals soon.
The construction industry is a key driver in the Scottish economy. We recognise that there is a lot to be done, but the initiatives that are under way and the initiatives that we are considering demonstrate our commitment to it.
Meeting closed at 18:04.