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Chamber and committees

Economy, Energy and Fair Work Committee

Meeting date: Tuesday, February 26, 2019

Agenda: Decision on Taking Business in Private, Subordinate Legislation, Construction and Scotland’s Economy, Subordinate Legislation, Construction and Scotland’s Economy, European Union (Withdrawal) Act 2018


Contents


Construction and Scotland’s Economy

The Convener

For item 7, we return to our inquiry into construction and Scotland’s economy. Our panel of witnesses is Fiona Harper, director of BSE Skills Ltd; Ian Hughes, partnerships director of the Construction Industry Training Board Scotland; Fiona Stewart, head of national training programmes for Skills Development Scotland; Professor Sean Smith, director of sustainable construction at Napier University; and Maureen Douglas, human resources director for the Forster Group. I thank all five of you for coming in this morning.

I have a question about the comment from the Institution of Civil Engineers that the construction sector in Scotland suffers from

“fragmented and unsustainable supply chain relationships”

and that there is a problem with

“limited investment in skills”.

Do the witnesses want to comment on whether that is correct? Do not feel that you have to answer every question; we will move the discussion along as people come in and out.

Ian Hughes (Construction Industry Training Board)

The latter part of the comment, about limited investment in skills, is interesting.

The organisations that invest in construction are, primarily, CITB and Skills Development Scotland, along with our colleagues from Government. We invest roughly 10 per cent of our £350 million budget in Scotland in skills, and we are the largest modern apprenticeship training investor, alongside the Scottish Government.

The lack of investment in skills leads to a further question: has that created a skills gap or has it created an underqualified and unskilled workforce? Scotland has by far the largest unqualified workforce, among older workers in particular, in Great Britain. Future priority areas that we would like to have a closer look at include investment in the older workforce.

With regard to the supply chain, members have probably heard numerous stories about procurement and the relationship between tier 1s, 2s, 3s and 4s. On the question whether the chain is fragmented or broken, I will defer to my colleague from the construction sector, who has more first-hand experience of what that means on the ground.

Customers from the SME and micro sectors often tell us that they are continually squeezed with regard to the time taken for them to be paid, the amount that they are paid or issues of retention—I will not go over those issues because they were probably dealt with this morning, but they need closer scrutiny.

The Convener

Before we come to Maureen Douglas, do you think that enough is being done to address the number of construction workers who will retire in Scotland over the next decade, which is estimated to be 30,000? The other issue is that the economy comes and goes, including for the construction sector; can something be done to feather out training during periods of downturn so that we have the skilled construction workers who will be needed when there is an upturn?

Ian Hughes

The retirement of 30,000 skilled workers is part of the picture of the churn of new entrants coming to the industry and people retiring. However, our research over this year and last—the first that has been carried out across Scotland’s regions—shows that certain occupations and geographies will suffer more than others over the next three, four or five years, which I can talk about further during this evidence session.

Bringing new entrants into construction is a key priority. People talk about skills gaps being created, which is a glass-half-empty phrase; our research shows that 6,000 job opportunities will need filling in Scotland over the coming years across various occupations and geographies. Part of our job as a training body is to make sure that the pipeline of talent that is coming through, particularly but not exclusively from schools, is right to fill those job opportunities.

Maureen Douglas (Forster Group)

There are a lot of points to make, and I hope that I will cover them all. For context, I point out that I am from an SME that covers Scotland and directly employs 150 people. We have created a skills academy and apprenticeship framework.

I turn to the convener’s original question about the sector’s investment in skills. What was said about investment in skills is not our experience, but I recognise the comment. With regard to the question about the supply chain, I do not think that the industry is fragmented, but we have different problems to which we cannot find a solution collectively. Tier 1 contractors have a very different skills challenge from the one faced by SMEs. On who services our sector, SMEs are 98 per cent of the construction industry, of which 91 per cent are microbusinesses.

It is important to understand that when we are talking about how to address the skills challenges.

11:30  

I think that the perception that we do not train comes from the frustration that we do not have the skills at the time when we need them. I think that construction is the most popular framework for apprenticeships. We are really good at apprenticeships. I spend a lot of time in other areas across the UK, and everybody looks at the Scottish model in respect of the construction industry and the apprenticeship framework. The model is phenomenal; it is envied by others. However, it is only one solution. As a nation, we have an opportunity to build on the good work that we do on the craft apprenticeships and to extend beyond those to other forms of apprenticeships, such as the foundation apprenticeships and the graduate apprenticeships that are coming through now.

As Ian Hughes said, we need to create pathways that enable us to take a trade or professional in one sector and allow them to transition across to another. We can then deal with the peaks and troughs of the construction industry. I work mainly in housebuilding. The industry is either building a lot of houses or, if recession comes, not building any—in which case, where do those people go? That is where the opportunities lie.

As an industry, we train, but we are frustrated that we perhaps do not have the skills; that is where we should focus our attention.

Before I bring in Andy Wightman, I say to our panellists that, when they want to come in, they should indicate that by raising their hand and I will try to bring them in as appropriate.

Andy Wightman

Ian Hughes talked about 6,000 job vacancies. We have figures that suggest that 35 per cent of vacancies in the construction industry are hard to fill due to a lack of available skills. Why is that? Has the position changed over the past 10 to 15 years?

Ian Hughes

We are hearing from employers, who are our customer base, that the quality of applicants—not the volumetrics, because we still have substantial numbers of applicants for apprenticeship vacancies, for example—is not as strong as it was in the past. There is no doubt that the numbers are down in some areas, particularly the Highlands and Islands, but a roofing apprenticeship that is advertised in the central belt will result in 200 or 300 applications.

We need to have a close look at the sift of the talent that is coming through the education system and at the career strategies to address some of the issues. The issue of employers struggling to get the right quality of applicants needs to be addressed in our education and further education systems. In many cases, the evidence that we are getting is that the volumetrics are still there. I am sure that Maureen Douglas would agree that a construction apprenticeship is still seen as a cherry, particularly for a young person, but in many occupations we are just not seeing the quality of applicants coming through, and that creates the percentage gap that Andy Wightman mentioned.

I know that one or two others want to come in, but I want to pursue that issue with you. You said that, in the central belt, there will be 200 to 300 applications for one apprenticeship opportunity.

Ian Hughes

Yes. That is not unusual.

However, from those 200 to 300 applications, you struggle to find a quality applicant.

Ian Hughes

A sift takes place. Any employer in any sector wants to employ the best individuals for their business. Employers have been telling us that, over the past 10 years, they have seen a downturn in the quality of the applicants for apprenticeships.

If we have 100 applicants for a roofing apprenticeship and only one can get the job, the challenge for us as a training body is what to do to keep the other 99 interested and active in moving into construction. Those people have shown an interest in getting into the sector; they have just not crossed the line as part of the competitive route into it. Do they fall off a cliff edge at that point or can we do something to spend more time with them, work more closely with them and get them over the line with another company, or the same company? That is the challenge that we face given the large number of learners in the system.

We must bear it in mind that 20,000 learners at further education colleges alone study construction in any year—2,000 are modern apprentices and 18,000 are other learners. We need to look closely at moving that cohort—that talent pipeline—into the construction industry to fill the gaps that were talked about earlier.

Are those learners not going into construction now?

Ian Hughes

The Government is looking at research to identify the directions that those learners go in. We carried out such research in England last year, but data for Scotland and Wales was not available. We hope to see destination points this year for construction learners. We hear from SMEs in the construction sector that those learners are not moving into the space, so where are they going? If they are not moving into construction or are not employable in the sector, part of our role is to ask why they are not and what we need to do to address the issues.

Maureen Douglas

There is absolutely no challenge on the volume of entrants into the construction sector. As Ian Hughes said, 20,000 people who are in full-time education want to get into the sector. Their transition rates are unknown, but work is under way to find out why people do not go into the sector.

As an employer, I go back to the filtering and channelling of our young people that starts in secondary school. We have a traditional vocational and academic approach, which means that a narrow funnel of talent ends up going down this channel. That is one reason why we have little diversity in our workforce, but it presents us with one of the greatest opportunities.

If we can change people’s experience at secondary school of a sector—whether that is construction and the built environment or another sector—through an alternative form of learning, we will have young people who are work ready and have the skills and capabilities that employers are looking for. The young people will then be able to adapt to the skills that are required in the industry.

Now, we train people to do a narrow job—to be a joiner or surveyor and to work in the public or private sector. If we can change our approach to education and to reskilling and retraining people once they are in employment, we can do wonderful things in the construction industry. We must look at that differently.

I ask Fiona Stewart from Skills Development Scotland to respond—

Fiona Harper also wants to come in, after Fiona Stewart.

Skills Development Scotland is the Government body with responsibility for skills. Why is there such a shortage of skilled workers?

Fiona Stewart (Skills Development Scotland)

Every year, we train 6,000 apprentices; last year, 6,104 people entered the industry as apprentices. Not all those individuals are new entrants, as many are employed and are upskilling. They might have come from other industries to retrain, or they are being trained at a higher level in leadership and management—that applies to many in the older cohort—which improves the industry.

For young people, Skills Development Scotland has developed foundation apprenticeships, which are a fairly new product that has been going for a few years. They are beginning to address diversity issues in the construction industry. For example, 13.1 per cent of those on foundation apprenticeships in construction are female. That is a big rise from modern apprenticeships, where only 1 per cent of those who choose that route are female.

That is vocational education, but many females enter the construction industry in higher-level jobs after further or higher education. The university participation rate for females is something like 39 per cent so, the higher the qualification level, the more attractive it is to female participants.

The modern apprenticeship programme is open to people of all backgrounds, genders and ethnicities, but one difficulty is that the industry involves mobile labour. Female participants do not necessarily want to travel from Glasgow to Dundee every day for work, so the terms and conditions do not lend themselves particularly well to female participation, especially for older female workers.

On entrants into the industry, we are looking at creating new pathways in schools at lower levels—at Scottish credit and qualifications framework levels 4 and 5—for young people who would perhaps not come into the industry through the traditional routes. We are trying to offer different vocational pathways for those young people to make a start in the industry and then to progress on to foundation apprenticeships, the main modern apprenticeships or graduate apprenticeships.

Some young people do not relate well to the types of learning you get in school—they do not do well with chalk and talk—but vocational learning enthuses them and makes them light up. It means that they can be successful in a career that they may never have thought of otherwise. We hope that those pathways will help with that.

The Government is making big inroads into attracting talent into the industry. It is looking at particular learning styles and offering different pathways. As a Government agency, SDS is looking to use innovative ways of attracting labour.

Most importantly, we cannot do any of this without engaging with employers. As Maureen Douglas pointed out, the industry is made up of SMEs, and most of our apprentices are employed in SMEs. It is important to attract and enthuse employers so that they aspire to create their own talent pipelines and invest in young people.

Our sector is the only one in Scotland with huge levels of both private and public investment, and 22 per cent of apprenticeships in Scotland are in construction. Private employers and the public sector take great account of the industry and they are investing in its future.

Fiona Harper (BSE Skills Ltd)

BSE Skills Ltd is a new organisation. We are part of the building services engineering sector, which covers plumbers, electricians, heating and ventilation, refrigeration and trades.

We had a sector skills council that came to a sticky end. The three trade associations in Scotland, which are Scotland’s Electrical Trade Association, the Scottish and Northern Ireland Plumbing Employers Federation and the Building Engineering Services Association—SELECT, SNIPEF and BESA—had already collaborated, and we decided to continue to collaborate. We wanted to participate in a detailed, in-depth look at what our industry offers in terms of skills and training. That is not to say that the approach is new; we have always done that through working alongside other organisations—for example, with SDS on the SummitSkills frameworks, and with the SQA.

The new company is quite unique in that it is run by the three trade associations. It has three directors and one consultant, and that is it. Our remit is simply to look at qualifications, national occupational standards and modern apprenticeship frameworks. Underneath all that, however, are three trade associations that are passionate about their industry and the people who work in it, be they employers or employees.

My side of the business is about looking at skills and training. The question was about where the industry gets people from. In the electrotechnical sector, our training provider would argue that it is inundated with applications, but it would also say that the quality of the applications has fallen and that it is harder to do the sift that Ian Hughes mentioned. The quality is not as good as it was. That is not based on empirical evidence but is the opinion that is expressed.

Recently, with our English colleagues, we conducted labour market intelligence research on the electrotechnical sector for the first time in our industry, and what came back was that young people are now looking for different things. They do not particularly like the idea of travelling—other panellists have mentioned that. We probably need to have another look at how people are employed in the industry and what we expect from them.

On training, what came through from the labour market intelligence was that employment in the electrotechnical sector is sustainable. People come in, they stay and they progress through the industry. They come in as apprentices, stay on, go into management and, often, become company owners.

11:45  

We know that we are doing well, but whether the skills gap is being filled is a difficult question to answer. All our apprentices are employed on direct hire and the companies have to maintain that employment throughout the four-year apprenticeship. Employers want to do that in order to sustain the industry, and that is where we focus our attention.

Foundation apprenticeships are difficult for us in the context of health and safety, but we run our own pre-apprenticeship programmes. We have a national progression award that covers all three sectors, but it is not funded, so it is difficult to encourage young people and their families—or employers, for that matter—to become involved.

We have limited time, so could committee members ask short questions, and could panel members focus on the key points and give brief answers when responding?

John Mason

I will build on some of the questions that Andy Wightman asked, especially around diversity. I take the point that Fiona Stewart made that more women are coming into the industry at the higher and further education levels, but it is disappointing to read that only 1 per cent of entrants to modern apprenticeships are women. That figure comes across as pretty grim. We see other sectors that were predominantly male, such as the police, making quite big steps forward in bringing in more women. Is there really nothing more that we can do to increase the figure from 1 per cent?

Maureen Douglas

It is an absolute tragedy. I work in the sector and I am appalled, but the industry itself has created and sustained the situation. Unlike other sectors, we have not made the shift to change. I will give a bit of a history lesson: we will not go back to the 18th century, when apprenticeships were run by parishes. Prior to the world wars, it was very common to see women as bricklayers, carpenters and craftswomen, particularly in rural areas. The wars came, and we all know what happened when the men came back from the wars. In particular, the role of women changed. From that grew organisations and institutions and, as an industry, we became very narrow.

The joiners, plumbers, electricians, architects and other professionals all have their own organisational bodies and develop their own qualifications. In recruitment, we all know that people will typically employ the person who looks like and represents them. Sorry if this is slightly contentious, but we ended up with a predominantly white male industry that did not have much desire to fundamentally shift and change the situation. How do we address that?

When you say a lack of desire, is that on the part of small employers, for example?

Maureen Douglas

I think that it is a blend. Employers absolutely have a responsibility, because they take on employees, but people know what they know and, with our industry being as small as it is, it is very difficult to change such behaviours without changing something else first. Sorry, I was asked for a short answer, so I will get to the point. For me, it is about the talent pipeline. I think that the foundation apprenticeships are phenomenal and really exciting, but if we can have a more diverse range of talent coming into the sector, through a variety of pathways—and, of course, it is not just about women—the people who come through will reflect the communities in which we work, and employers will gain the confidence to take on those people and then make the shift.

John Mason

I will move on. Although I have mentioned women, I am interested in the fact that black and minority ethnic people are also underrepresented. Who can change that? Is it schools, families, peers, or is it everybody?

Fiona Harper

It is everybody. We firmly believe that schools and careers advisers can help. We run a skills competition in Edinburgh and the Lothians that combines work by training providers, universities and colleges. The competition involves fun tasks that use electrotechnical skills and concern heating and ventilating. The competitors have to make water go through a pipe, make a light turn on and build a roof—all sorts of things. That is great fun. The competition is aimed at secondary 4 pupils; it involves a number of girls, who work with boys as teams—the teams are not girls against boys. The pupils enjoy that competition. If, with the help of schools, careers advisers and SDS, we could roll that out to other parts of the country, that would influence how young people approach the industry and what it offers.

John Mason

In a previous evidence session, we heard that some colleges teach girls separately from boys—at least in first year—because they feel that that is advantageous. Is that worth while? Ms Douglas is shaking her head.

Fiona Harper

Sadly, Maureen Douglas will not be happy with me for saying that, with SDS, we are encouraging West College Scotland to see whether having an all-girl class would help. I make it clear to all members that there are no barriers in our industry if a girl applies; the problem is getting girls and people from different ethnic groups to apply.

John Mason

Is the term “construction” an issue? I am not a fan of changing the name of something just to create a different image—my colleague Angela Constance will talk more about image later—but would using another name make a difference?

Professor Sean Smith (Napier University)

We need to learn from why the workforce at higher levels, which comes through universities and colleges, is becoming more diverse. There are key role models in the sector—we see women who have gone into particular positions in the sector in the press and on television, which all helps. We do not see that in the trades.

In a 2016 survey, Keepmoat asked young women how they saw the construction sector and whether they would work in it. About 29 per cent of young women said that they thought that construction was only on site. To go back to terminology, when there are so many clean tech roles in engineering and other areas, the construction sector needs to widen the reach of its messages.

If there were more off-site roles, would that draw in a wider variety of people?

Professor Smith

Many regard being off site as an opportunity, particularly because it offers flexibility around work and shift patterns for people who have families and other commitments. However, that is not a panacea. The car industry in America shifted significantly towards having more female workers, but it then shifted back. I do not have the answer as to why female participation reduced again in America; the level increased but fell back.

Ian Hughes

I agree with colleagues about the talent pipeline. It would be shocking in any sector for 50 per cent of the potential talent pipeline not to be recruited into the sector. That is a huge waste and a missed opportunity.

We plan to put together a substantial careers strategy through working with colleagues in Skills Development Scotland. Such a strategy must be for four, five or six years—it is not a quick fix.

There are four strands to any careers strategy that intends to attract and diversify a workforce. The strands are using digital and social media; giving young people hands-on work experience; using ambassadors and role models, which has been touched on; and using marketing campaigns to take a hearts-and-minds approach.

If the blend is right, if the impact on increasing the number of people from the population cohorts that are not getting involved in construction is measured over a sustained period and if that works properly, we will have a success. We are not achieving that at present.

It is interesting that, in the school environment, every sector—from further and higher education to industry—is after a piece of the third-year or fourth-year student. Getting a part of Jimmy or Mary Smith is so competitive that it is unsustainable.

On the point about the sectors needing the correct skills and having in place the right people to drive forward the economy, it is important that we—the Government and the training body—address that collectively, to make sure that we can tackle the issue head on.

Thank you very much. We had better leave that one; we need to move on.

Angela Constance (Almond Valley) (SNP)

The evidence thus far implies that the construction industry has an image problem; indeed, the CITB has published research to that effect. If the witnesses accept that the industry has such a problem, what can the industry do about that? Perhaps you could reference the pay gap and the industry’s reputation for adversarial relationships and unconscious bias. We will come on to the Government agencies later, but I want to know what the industry will do to improve its image.

Maureen Douglas

I disagree in part. I believe that the image problem starts at school. If we take woodwork as an example, many pupils’ first experience of a construction qualification is when they are given a task to measure and cut a piece of wood then chuck it in a bin. That does not give them construction experience or help them to understand the broad range of careers, as is the case when people take on a project.

I want to know what industry will do to improve its image. I will come on to Government agencies and public services in a minute.

Maureen Douglas

I did not mean to be rude. Construction experience provides the foundation that industry has to build on. Therefore, we are already getting a preconditioned, narrow group of people into the industry, and it is up to us—we are mostly small and microbusinesses—to do what we can in that environment to create something that provides for all. When you are typically employing only a particular cohort, it is very difficult to do anything thereafter.

Industry—

So what are you proposing to do?

Maureen Douglas

I am trying to say that small and micro-organisations will find it very difficult to do any one thing themselves—whether it is education or something else—that will tackle the issue institutionally, across all the different sectors, to make a difference. The solution has to come at a much higher level, whether that is through campaigns run by the industry training boards or by working with major contractors that have the resources to allow the open-door programmes, for example.

You are asking me what industry can do. Given that 98 per cent of the industry comprises microbusinesses, that is a huge challenge and responsibility. I think that the responsibility lies elsewhere—it is for the policymakers, the funders, the influencers and the educators to create a more diverse pipeline of talent for the industry. That in itself will culturally help businesses to grow.

I am not disputing the responsibility at an institutional level, but I am keen to hear examples. Perhaps Ian Hughes can suggest what industry could do to take a lead.

Ian Hughes

Industry has to lead, with the support of organisations such as the CITB, which has leverage and investment capabilities. The sector’s image is poor across the board. In order to rebalance it, we need to move the industry into a space in which the pathways to opportunity are picked up. Those opportunities exist. We create and offer tens of thousands of jobs every year. We are not making that up, and nor is it anecdotal.

Many young people and, more important, their parents, have an image of what the construction industry is like. Recent research shows that 75 per cent of parents said yes to an apprenticeship but only 25 per cent said that they want that for their child.

What does image refer to? Is it the building site image? Is it the image of guys covered in mud walking down the road after work? Is it the image that the pay and career opportunities are not very good? Those images need to be rebalanced and redressed. We cannot sugarcoat the fact that building sites are dirty, hard places to work in, and why should we? However, many of the 270,000 jobs in construction are outwith building sites, and the issue is how to get that fact across. That is about image, basically. It goes back to the pathway of a huge amount of job and career opportunities, which are not necessarily with tools on building sites. As was mentioned earlier, we know that we need to rebalance that image.

My 18-year-old daughter went through the careers conversations recently. She was given brochures for construction and the built environment. The construction brochure went over the shoulder, but she thought that the built environment looked interesting. That was because the image and opportunities were pitched in a different way.

12:00  

So what are you doing about that, as an industry skills person?

Ian Hughes

That question goes back to our plan, which we will announce in a matter of weeks, to invest considerable additional money in Scotland to address image and opportunity through careers campaigns and direct funding interventions in the school environment. We will not do that in isolation but with colleagues in Government and, more important, with employers, who will be able to step in and get the message across, both as ambassadors giving a story and with job opportunities. Over the next three to four years, we will be investing heavily with additional money to try to address that specific area.

Angela Constance

We look forward to hearing more about that.

We have heard about negative images and problems of perception among teachers, parents, careers advisers and young people. I ask Fiona Stewart to outline what the careers information, advice and guidance service is doing to overcome negative perceptions throughout every stage of our education system, starting early.

Fiona Stewart

We have our digital platform My World of Work, we have marketplace, and we have information for young people at primary school and right through secondary school that is pertinent to their particular stages and the decisions that they are making. My World of Work has a comprehensive construction offering. Construction, with 22 per cent of modern apprenticeships, is our most popular apprenticeship. If perceptions were negative, those people would not be coming for those places. Demand is greater than supply; for every job, there are at least six applicants. As Ian Hughes pointed out, some areas have a couple of hundred applicants for each place.

Careers advisers work directly with young people through all stages of their school career.

When does that start?

Fiona Stewart

It starts in primary school. We are encouraging primary school teachers and pupils to use our digital platform so that children make choices from an informed position. It means that, on the transition from primary to secondary school, young people have an idea of what a career is, can work out their strengths and can build on that as they go through secondary school.

At apprenticeships.scot, we have a vacancy portal so that young people can look at what jobs are available in sectors, including blue chip companies and all sorts of organisations. CITB works with us and is progressing more jobs on to the vacancy portal so that young people can see that the jobs are not just for a brickie or carpenter; there are jobs for building standards, clerks of works, civil engineering and a whole gamut of occupations. Young people can plan their careers accordingly.

A lot of young people want to do vocational jobs, which involve making things or contributing to making things. Other people want to design things or outline plans for things that someone else will do. My World of Work allows young people to gather information and demonstrate it to their parents, because, as Ian Hughes said, sometimes it is difficult for a young person to persuade a parent of the validity of the apprenticeship that they want to do.

The qualifications that they will gain through an apprenticeship have an equivalence with further and higher education. Young people can go through an apprenticeship programme from foundation to graduate and come out with the equivalent of a masters degree. That is a very powerful message, but we have a huge hill to climb to change hearts and minds about vocational education and achieve parity of esteem. Our digital offering will help with that, but we need to get messages out and we need to get the industry to back this.

We have case studies about diverse individuals who work in the industry; we are trying to promote them as ambassadors so that young people aspire to be the same as them and realise that construction is not a closed occupation to people who are female, have a disability or come from an ethnic minority background.

SDS is spending a lot of time and effort on populating our digital platforms with relevant information for individuals, parents, teachers and employers. Employers are important because those are some of the hearts and minds that we have to change. As Maureen Douglas said, people tend to recruit others in their likeness until they are shown something different. The case studies and examples we have—talking heads, video clips and so on—demonstrate that.

Professor Smith

I chair the Scottish Government’s short-life working group on new housing construction skills. A lot of people have been involved in that and my thanks go to SDS, the SMEs, CITB, the Federation of Master Builders, the Scottish Building Federation and Homes for Scotland.

The working group’s report will come out in the next two or three weeks and I will make sure that the committee has sight of it. We have broken it down into nine thematic areas and we cover the short, medium and longer-term skills needs of the sector.

One area is outreach to schools and, linked to that, we are involved with the Edinburgh and south-east Scotland city region deal, in particular the inclusive growth aspect. There will be a 40 per cent uplift in the number of new homes being built over the next 20 years. That is a staggering amount of activity and work and therefore we need to get more people to come into the sector in south-east Scotland. That cannot be done through the normal routes, because it is the fastest-growing region in Scotland and the fifth fastest-growing region in the UK. We have worked with SDS and others to look systematically at themes for south-east Scotland and that work has fed in to the short-life working group.

There will be a specific focus on early years. Although the project has not started, as part of that early outreach we have been in to speak to the headteachers of all the primary and secondary schools in Edinburgh. We are telling them that we need to get in front of the teachers and the careers advisers—

Presumably you will be doing that work outwith Edinburgh as well, if it covers the south-east region.

Professor Smith

Yes—it covers the six local authorities for south-east Scotland. It will also involve working with the local operational staff of the developing the young workforce programme. One key feature is to build on something that industry has been doing in the past few years, which is the design engineer construct programme that is run by Class of Your Own. It is about going into primary and secondary schools to raise the profile of the job opportunities in the sector. Teachers in the schools that have been involved with the programme say that it is going extremely well and are very positive about it.

Primary headteachers have asked us why we are talking about skills career pathways when that is so many years down the line from primary school. It is because when we ask the students who arrive at Napier where they first heard about sustainability, low-carbon technologies and renewable energy, they all say that it was at primary school.

Primary teachers have an incredibly influential role—they can plant a seed. We would like to build on that work across south-east Scotland. The short-life working group will be making that recommendation too. You cannot just turn on a tap; it is about planting a seed.

Jamie Halcro Johnston

Witnesses have said that the quality of the applicants coming through has fallen. Is there a particular reason for that? Is there a particular year that it happened or has it been happening over the past five or 10 years?

Maureen Douglas

That question is perhaps for me, as an employer. The issue is about the lack of variety in the applications rather than their quality. When we launch our apprenticeship opportunities, I receive more than 1,000 applications from throughout Scotland. The volume is there, but the skills—or lack of them—and competences from applicants are much the same.

The challenge for the sector is that we are not getting the broad vocational and academic talent pipeline, which is where the opportunity lies. Broadening that pipeline would help businesses to grow.

Is that a change from the past? Did you previously get people with such a vocational and academic background?

Maureen Douglas

No—it is a fundamental problem in the sector that people come in through a narrow channel of skill level. People have typically taken a vocational and non-academic route; they might have dropped out of education and gone on to full-time NPAs.

Ian Hughes referred to quality. Did you mean that too narrow a group of people is coming through?

Ian Hughes

Maureen Douglas is absolutely correct. I can speak only on the basis of what employers—our customers—say. A painter and decorator offered two apprenticeships and received 70 applications. He said that, once he had sifted the applications, he had a shortlist of only four. After those four had gone through his internal recruitment processes, no one was recruited.

The employer told me that the skills that applicants brought to the table were not as strong as those that would have been offered 10, 15 or 20 years ago. I do not know whether that has a direct correlation with what happened in schools then, but that employer definitely talked about the quality of the young people’s experience. That could mean that the population of young people are doing other things; they might be less interested in becoming a painter and decorator and more interested in moving into college or university, food and drink or manufacturing.

We have talked about image, recruitment issues and the talent pipeline from the school cohort diminishing. That is probably because construction has not kept up with its competitors on its offer. The offer from construction is extremely strong—there are huge opportunities and great career opportunities—but it has not kept up with the offer from some other sectors that are in schools and which also want a piece of the pupil. With our public sector partners, the construction sector needs to address that, because that boils down to the big economic impact that construction has on the country. It would be remiss of us not to address the opportunity and the weak talent pipeline.

Jamie Halcro Johnston

Instead of encouraging people to go down the apprenticeship route or to college, are a lot of schools encouraging their students to aim towards university? Do apprenticeships have parity of esteem with university? Do we as a society need to value apprenticeships more?

Fiona Harper

Anecdotally, we receive quantitative and qualitative information that the trend is to direct better students towards university. Another piece of information that comes to us, for which I have no evidence apart from what people see, feel and perceive, is that young apprentices do not have skills in talking to people or dealing with customers and that they have different attitudes to work. The anecdotal information is that the young people who come forward from schools have changed.

Fiona Stewart

The hope is that foundation apprenticeships will start to turn the tide, because they involve young people making positive choices about careers and moving into particular industries. In the senior phase of school, those young people get academic underpinning knowledge and—most important—vocational opportunities through working with employers.

The hope is that, when those young people move from school and from foundation apprenticeships, they will be much more attractive employees for employers to take on. The aim is for young people to make a smooth transition from school and a foundation apprenticeship into a modern apprenticeship because they will have the skills and will be equipped with an understanding of the industry that they are moving into, so they will not make wrong choices.

12:15  

Colin Beattie

Some positive comments have been made about foundation and graduate apprenticeships, but there is clearly an issue about the quality of the applications, which has been explored to some extent. Do we have more work to do specifically in relation to construction apprenticeships? Should we redesign them so that they are better shaped for the future?

Professor Smith

That has been discussed at the short-life working group, given the shortage of bricklayers, for example, and workers in other trades in the sector. We should not take anything away from the electrical side of things, because there are also shortages in that sector.

A number of house builders that in the past have not wanted to take on or have not invested in apprentices, because they used their sub-contractors, now want to take on apprentices, but those house builders are finding it difficult to take on young people who want to do a four-year modern apprenticeship in bricklaying. Some of them have said that they do not want the apprentices to work on curved walls and arches, but that they want the apprentices to start with bricklaying and work on houses. The house builders have asked for there to be a qualification for bricklaying for house building, so that they can get the apprentices excited and salaried. Then, they want the apprentices to be stepped up to that full MA, which will lead the apprentices to a future.

Parts of the sector are requesting that approach. It would not be about watering down or providing MAs by the back door. The sector is listening to young people who are saying that they want to be at work slightly quicker and are interested in doing various things. There is a need and a demand, so employers are asking whether some of the apprenticeships could be adapted.

It is credibly exciting for the sector to think about the skills and technologies to come. Not just in Scotland but globally, there will be a transformation in the next 10 to 20 years, given the amount of new technologies that there will be in relation to clean tech and other infrastructure that will be required, in addition to all the retrofit and traditional craft skills.

In our discussions, some organisations have asked, “What about if you introduced a qualification in that area?” There is a general feeling that that might take a bit longer than the organisations think, because there would be a lot of paperwork and hurdles. The industry has requested that we adapt our approach to the qualifications that are provided by the Scottish Qualifications Authority so that it is more amenable and adaptable to the sector’s current and future needs.

How are the industry training organisations responding to that?

Ian Hughes

We respond to employer demand. With partners in the public sector, we assist in the design of qualifications when there is a proven demand from employers for them. There is no point in spending time, effort and money in designing something that would not be picked up by employers who want to retain individuals in their business. If there is a demand from employers, we react to that by bringing our standards and qualifications colleagues round with table with employers to design a qualification. The employers will then pick up people with that qualification through the employment route. We are not prescriptive. We strongly support the existing four-year craft apprenticeships in Scotland, for example. If there is a demand for other qualifications in the sector, we will respond to that positively across the board.

Maureen Douglas

I have a practical example. As I said, our four-year craft apprenticeship is regarded and envied by many. However—this is similar to what Jeanette MacIntyre said earlier—it did not produce the desired outcome for our organisation after the four years, because the apprentices learned things that they did not need to do and they did not learn things that they needed to do.

We now have a specialist apprenticeship programme that is specific to house building. However, it is not about having one or the other; there needs to be a spectrum of qualifications that create pathways that we do not have at the moment. People should be able to do a craft apprenticeship and work in repair and maintenance, before moving into house building, doing their transitionary training and then becoming a specialist in price work, for example. We do not have those pathways.

We should protect what is great and good, but we should also develop other sector-specific qualifications and shared apprenticeship models, perhaps in rural areas, such as the Highlands and Islands. That is where the opportunities to generate greater capacity in the sector lie. We have the tools at our disposal, but we are very narrow and rigid in what we offer.

Fiona Harper

The BSE sector takes a holistic view of training. We train people to be able to work in the commercial, domestic and industrial sectors. We see that as being the right way to go about things, because when people move from job to job and from one employer to another they can then adapt to suit the new employer’s business. We also encourage, and provide, continuing professional development in the new renewable technologies—such as installation of electric vehicle chargers—and building standards. We see craftsmen as being the core, with top-up training in the specialisms.

I did not have a chance to say so earlier, but we seek professionalism in our trades. In the electrotechnical sector, in particular, we seek protection of title so that we can get professionalism into the industry. A person will take pride in being, for example, an electrician—not just because they are properly trained but because that is their job. That is where we are.

I will continue with that theme. Some of the submissions that we have received have expressed concerns about apprenticeships being dumbed down or diluted in some way. What are the panel’s views on that?

Maureen Douglas

The comment about dumbing down was made about our apprenticeship programme. As I said earlier, the outcomes on learner skills were not what we needed for delivery of a zero-defect roof, for example. We worked hard with institutions such as the qualifications bodies to change the content, but we were not able to do so. The qualification is a generic one that, quite rightly, has to cover all elements, because very few companies will do a particular thing in volume. It is therefore an unusual situation.

In four years, I have put 50 apprentices through the scheme, half of whom are now qualified and out in industry. Of that half, half again are working for other contractors, but that is okay, because they will come back. The other half are in either their first or second year of training.

The training is done in a residential programme, in which we seek not just to develop the individual but to contextualise the learning to industry standards. It is the quality control element—the fabric of what we do in volume—that we cannot replicate through other training providers. We are contractors, but we did not step into training; we fell into it because we could not get the skilled workers whom we were looking for. I would argue that we are not an example of dilution, but I understand the fear about that.

If we look at what has happened in England, we see a plethora of confusing information and different training providers. We are not like that in Scotland. We have a main qualifications body, a funding council and Skills Development Scotland, and we do not have the massive population that there is down south. Therefore, we can figure this out if we are creative. A lot of what people might hear is about closed minds and protectionism, because that is the way that things are. To go back to the original question, if we intend to change what our industry looks like and who is in it, we may have to challenge how we do things, which we can do through skills and training.

We also need to modernise our MA programme, but that is perhaps a matter for a different discussion.

We will have to move on.

Jackie Baillie

Much of what I had intended to ask questions about has been covered, but let me ask Professor Smith about the CITB. Earlier, you talked about digital transformation, but the CITB has expressed concern that the industry has yet to undergo the digital transformation that it needs. Why do you think that is and what do we need to do to make it happen?

Professor Smith

I had thought that that question would go to the CITB.

I am asking you first, Professor Smith—I will come back to the CITB. [Laughter.]

Professor Smith

Digital transformation is happening through a variety of measures. If I may, I will use the example of south-east Scotland again. The two principal skills gateways that are planned for south-east Scotland in the Edinburgh and south-east Scotland city region deal are data-driven innovation and housing construction infrastructure, because those are the two largest growth sectors in the region’s economy.

The integration of what is happening digitally or with data, and of where future infrastructure is going, is still a bit of a learning journey. For example, it was great that the Governments south and north of the border wanted to encourage BIM—or building information modelling—but one of the requests that will come from the short-life working group is for a skills impact analysis perhaps to be carried out with any major change relating to skills or to building regulations or other policies. No one asked the colleges and universities or the companies, “Do you have enough people who are BIM trained?”, “What investment do you require for software?” or “How many licences do you need?” Sadly, that resulted in short-termism, and there was no initial investment. People in the sector were recovering from the recession and, as a result, we had a huge churn of people who were BIM qualified jumping companies to get increased salaries, because there was just not the supply.

I cannot blame the CITB for that, because it was not responsible for that policy. However, when there is a policy change that is important and which helps the sector for the future, investment has to come with it. Things are now happening with BIM training—the Construction Scotland innovation centre and others are doing work on it—but it is an example of the cart coming before the horse. If we are to embrace digital correctly, we need to ensure that the training that we require for some of that digital content is ready to roll out.

Ian Hughes

In my opinion, the issue of digitalisation is part of the future skills requirements of industry and the staff in it. A partnership agreement that we recently signed with the Construction Scotland innovation centre has four key themes running through it, one of which is digital in its widest sense—it is not restricted to BIM.

In essence, our vision is to enable employers to access, with our financial support, the right training in future skills, so that they can move their workforce and businesses capability forward. Under the CITB’s model, we do not deliver future skills training directly; we have an innovation centre for Scotland that is tasked with doing that type of thing, and what we bring to that centre is, we hope, our employer network of interested parties and investment. It is an approach that we are keen on.

Next month, we will launch a major funding initiative on digitalisation. It will be a commissioned funding bidding process that will be open to the marketplace; however, it will be nation specific where required, which means that Scotland, England and Wales will be able to bid separately if they need to.

Good. I will leave it there, convener.

Gordon MacDonald

Before I move on to my questions, I want to ask about training levies. Construction companies pay two levies for training—the CITB levy and the UK Government apprenticeship levy. Do Scottish companies benefit from the UK Government apprenticeship levy, or is it seen as another form of taxation?

Ian Hughes

As an overview, I would say that approximately 70 companies in Scotland pay the joint apprenticeship levy—the CITB levy and the Westminster one. Those 70 companies are the ones with a payroll exceeding £3 million, and we worked with them on a one-to-one basis and offered them transitional financial assistance in the first year. We are working closely with Westminster to get across the message via employers and, for example, the Construction Leadership Council that, particularly with the tier 1 levy, having one sector administer two levies does not make much sense in terms of economies or efficiencies of scale.

Colleagues might want to comment on this, but the main difference between Scotland and England is that English companies or employers that pay the apprenticeship levy can then tap into a digital process to access limited funds for training in specific areas. That is very different from the CITB levy and the diversity that we bring through additional leverage and value. Work needs to be done on that to ensure that there is more of a level playing field. We are under pressure from our tier 1 customers asking us why they have to pay a construction levy managed by the CITB as well as the Westminster levy. Given that the money comes off their profit and loss, they have every right to ask that question, and there is work to be done particularly with the Westminster Government to try to rebalance the impact on the sector.

12:30  

Professor Smith

That subject has come up in discussions in the working group. There is a general feeling from the larger companies that there is more transparency in England in relation to how the apprenticeship levy is spent and what they see as a result, and the Scottish Government might have a role in creating greater transparency of how the levy is spent in Scotland by the sectors. For those who work in construction and pay into the apprenticeship levy, that might involve reflecting on the moneys that are coming back north and how much is coming back to the sector in various forms such as MAs, FAs, graduate apprenticeships and whatever else. Several voices have made the point that they would like greater transparency, given that, in England, they can see where the money is going and how it is being spent.

Maureen Douglas

The microbusinesses and SMEs that make up 98 per cent of the industry do not benefit. The CITB levy provides the sector with a different form of support that is invaluable to Scotland. Scotland receives back from the industry training board far more than it puts in, because the board trains people—and rightly so—and the challenge for the CITB is to communicate clearly the offering and added value that it brings back to the large, the medium and the micro. It has moved away from a grants-in, money-out model to a levy-in, skills-out one, and those are two very different things.

Gordon MacDonald

In 2017, the construction index website highlighted that 94 per cent of Scottish respondents were dissatisfied with aspects of the CITB. What needs to change to make the governance and operation of the CITB more accountable to Scottish CITB levy payers?

Ian Hughes

That is an interesting statistic. I will throw another one back at you: in the last census that we carried out over the whole of Scotland, more than 80 per cent of respondents said that they were happy with what the CITB was doing. The responses depend on whom you speak to and what statistics you use.

It is in the public domain that our governance model and our structure are changing and that we are downsizing our headcount, and that is a reaction to what employers, Governments and institutions have been telling us for several years now, which is that we have become too large, too complex and, one might say, bloated. We are reducing what we are doing in order to concentrate on our three key operational areas, which are training and development, careers, and standards and qualifications.

In our future operating model, everything else that we have been doing over the decades will be moved aside by being outsourced or sold off. Our timeline is to achieve that by 2020. That does not mean by any stretch of the imagination that we will be investing less in skills and training; indeed, we will be investing more in those things, particularly in Scotland, because of the research that was carried out last year. The fundamental changes will be made to the back wiring or back engine of the business. We are increasing our customer-facing units in Scotland, including apprenticeships and the company advisers on the ground.

There is also the change to the governance model. We now have a Scottish council that is 100 per cent employer led with a split of roughly 50 per cent tier 1 companies and 50 per cent SMEs and microbusinesses, and its role is to hold the main CITB board to account for what is happening in Scotland. That change was implemented over the final quarter of last year and quarter 1 of this year, and we will monitor that new governance model to ensure that it has impact and influence on what we do in Scotland, based on the CITB strategy coming out of headquarters.

Does Fiona Stewart want to comment?

Fiona Stewart

The CITB is very relevant in Scotland. We rely on it to shape standards and the frameworks within which qualifications are developed, and we rely on it to work with industry to identify areas where technology has changed and where qualifications and national occupational standards, which govern job descriptions and so on, need to be kept up to date. As with any organisation, there are challenges about doing more with less and being better, faster and more responsive, and the CITB is developing in that direction by looking at how it can do its core activities better.

We have talked about negative perceptions of the industry, and the CITB will be doing more on that. It already does a huge amount on diversity and works closely with SDS on our five-year equalities plan, as do our other partners, to try to change entrenched behaviours and patterns.

The CITB has a huge task, and it is exciting that it is rising to the challenge and trying to get into a shape for 2020 that should help us to make a difference in Scotland and make the sector much stronger.

Gordon MacDonald

That is good to hear. The fact that new governance arrangements are coming in must mean that there were concerns among the membership that the CITB had to address. How much collaboration is there between the two bodies, given that you both have responsibilities for providing apprenticeships?

Fiona Stewart

There is great collaboration. As I have said, the CITB uses our digital platform, and as it digitises its activity, it gets into a better place to be much more responsive. Meanwhile, the CITB helps us get enough relevant, up-to-date information on to our platforms to allow young people to make informed choices about their future and to inform parents, teachers and so on. There is a huge amount of collaboration on, for example, regional plans. None of us can do this ourselves; we must all work together, and it is exciting to be moving into that future.

Gordon MacDonald

I asked the question, because of what was said in some of the written submissions that the committee received. Glasgow Caledonian University said:

“there seems to be little collaboration”

between the two bodies. GCU also said:

“CITB seems out of touch as far as Scotland is concerned”

when it comes to meeting the needs of the industry. You are telling us one thing, but a submission from another organisation suggests otherwise.

Fiona Stewart

There are two aspects to this. As the CITB is our biggest contractor for apprenticeships, it is, on the training and operational delivery side of things, a huge partner.

On the other side—in other words, the standards, frameworks and qualifications side—the CITB takes information from companies such as Maureen Douglas’s company and other small companies, as well as from tier 1 suppliers, and tries to shape a framework to enable individuals to be trained for the industry and not just for one job, so that if a downturn comes, those people will be mobile and able to go into other jobs that become available. Some of the work that we have done recently in the context of the downturn in oil and gas and the transition training fund has involved setting up a fabulous model of responsiveness to allow us to be fleet of foot in helping individuals change from one industry to another. Construction has been a huge supporter of that, because that sector has benefited from people moving into it from the oil and gas industry.

We also run an adopt-an-apprentice scheme with the CITB, again to try to tackle some of the perceptions that an apprentice can complete their apprenticeship only if they are in employment when they come to do their skills test. Through the CITB, we have challenged trade organisations to allow some skills tests for qualifications to be done six months before the end of the apprenticeship, because the person has the underpinning knowledge and the vocational capability and competence to do the test at that point. Some of the submissions perhaps do not understand the complexity and the depth of our partnership working. From SDS’s perspective, the collaboration with the CITB is very good.

Ian Hughes

I must re-emphasise that, as members well know, skills, training and education are devolved across the three nations, and we are moving our business model to reflect that. We align with public sector partners to deliver Government policy. We do not create the CITB policy in the three nations; instead, we align with what the Governments want us to do and their priorities, and we communicate that to our employer customer base to ensure that they know where their money is being invested. The aim of our alignment with organisations such as SDS—we have agreements with other public sector bodies and will put more in place shortly—is to deliver the policies that are set by Government. We do not work in a vacuum or a bubble, and we cannot do this in isolation.

I believe that the national construction college site at Inchinnan is being closed and that 29 training jobs are moving down to York. Can you give us some background to that?

Ian Hughes

Inchinnan is one of six sites in our college network where we are withdrawing from direct delivery. We are not withdrawing the provision of scaffolding training but, as part of our operating model moving forward, we will not deliver that training in Inchinnan; instead, we will find a new partner and enable it to deliver the training. We have said publicly that we will not withdraw from any specialist training in any nation until a better alternative can be found in the marketplace.

Over the decades, much of what we do has evolved because of market failure; we stepped in, invested and directly provided training such as the scaffolding training at Inchinnan. We believe that the market is now in a position to pick that up. We have a tremendous further education network in Scotland with infrastructure, assets and skills. I am not saying that it will pick up the training at Inchinnan, but we believe that there are organisations out there that can do that as well if not better than the CITB. Our overall model is to withdraw from that direct delivery, but we will not do that in a way that jeopardises the provision of the training. We cannot stop scaffolding training in this country, as that would be disastrous.

A number of other functions in Inchinnan are being outsourced to other organisations, and colleagues are having conversations with those organisations to decide where the functions might be located. I cannot comment on whether they will go to York, as that is part of the consultation—

The Convener

I am sorry to interrupt, but we are a bit pressed for time, so I will have to cut you off there.

Dean Lockhart wants to come in briefly, and I think that Andy Wightman has a question.

Dean Lockhart

I will keep it brief and go back to the observation made by a couple of panel members that Scotland does not do enough to train older people who are either in work or between jobs. We have heard about the role of apprenticeships in addressing that gap, but what about part-time college places? How important are they in retraining older workers in the sector? Are enough college places available? Perhaps Ian Hughes can answer that first, as he made the observation that we are not doing enough to train older people in the sector.

Ian Hughes

The issue of investment in that cohort is a matter of priorities. Fiona Stewart can comment on this better than I can, but as far as modern apprenticeships are concerned the priority for Government at present is 16 to 19-year-olds. Our employers say that they would be more than happy—many of them would be delighted—to work with older entrants in the workplace, but the present funding model makes that difficult. The reality is that it is not attractive for, say, a 25-year-old to enter construction on an apprenticeship wage rate, and we are keen to explore what more can be done to make that an attractive proposition for older individuals. Fiona Stewart can confirm this, but I think that, with modern apprenticeships, the Government’s current priority is the younger cohort, and that is where we concentrate our resources.

12:45  

Fiona Stewart

Yes, it is current Government policy to give young people the best possible start in their careers, but I point out that a third of those in the modern apprenticeship programme are 25 years and over. As I have mentioned, many of those individuals are involved in leadership and management; they are progressing their careers, and employers are using the apprenticeship for workforce development. For example, many of the people doing level 4 in construction site management have come from other industries and are taking the opportunity to retrain. It all comes down to the employers and the support that they provide through wage costs and so on, even though individuals might not be as productive at the start of their career as they will be when they move through their training. Currently, a third of apprenticeships in construction are 25 plus.

The Convener

I am afraid that we have other business to deal with before 1 o’clock and members have other matters to attend to in Parliament. If there is anything that you wish to add to your evidence, if there are any points that we have not had time to cover fully or if you want to comment on some of those latter questions, feel free to write to the committee, and we will treat that as part of your evidence. I apologise for having to cut things short, but I thank you very much for coming.

I suspend the meeting briefly to allow the witnesses to leave.

12:46 Meeting suspended.  

12:47 On resuming—