Property sector welcomes Farmer’s construction skills review

Real estate professionals have lauded Mark Farmer’s review of how to upskill the construction sector to enable the government’s plan to deliver 1.5m homes. The 2023 Industry Training Board Review, entitled Transforming The Construction Workforce, has been led by Farmer, founder of consultancy Cast, and highlights the critical challenges facing the construction and engineering sectors. These include a declining workforce with growing skills gaps at a time when there is an urgent need to meet ambitious targets for homes, infrastructure, and the transition to clean energy. The review, commissioned by the Department for Education, concludes that a fundamental reset of the current ITB model is necessary to safeguard growth ambitions. Speaking on the challenges associated with the construction sector, Mark Allnutt, executive director Europe of Greystar, said: “Planning reform must be supported by measures to resolve the bottlenecks around construction, which are driving up costs and increasing uncertainty. “It can cost 30% more to develop a build-to-rent scheme in the UK versus the US, so we have to address outdated models and embrace innovation. Modular housing is one of a number of important delivery methods that present an opportunity to deliver high quality homes at speed while addressing the growing skills gap and the challenges posed by an ageing workforce. Bold steps must be taken to acknowledge and tackle the skills crisis and to drive innovation.” The challenges in the construction sector have had a severe impact on developers and investors. John Dunkerley, chief executive of Apache Capital Partners, said: “The recent market headwinds for the construction sector have been closely monitored by institutional investors and an important part of any investment case is building industry financial health and capability. “In line with Labour’s objectives and growing the volume of homes across the tenure spectrum, including BTR, that will require a fundamental expansion in workforce as well as a step change in productivity. It is also vital that the skills gap is addressed, including the appropriate focus on modern methods of construction, and investors are actively engaged in shaping these industry outcomes through demand-side levers.” David Thomas, Barratt Redrow Group chief executive, said: “The construction industry has had a long-standing challenge on skills, a challenge that we have to overcome if we are to build 1.5m high quality homes over the next five years. Construction offers varied and rewarding career options and we must think differently if we are to attract and grow the talent we need to be successful. “Therefore, we support Mark Farmer’s thoughtful review and the recommendations designed to enable CITB to fully focus on the training and upskilling required to drive industry-wide competency and increase productivity. “There is no quick fix, but alongside the HBF sector skills plan, the creation of Skills England and the new growth and skills levy, this is a positive step towards creating the skilled workforce required to build the homes the UK needs.” Rob Perrins, Berkeley Group chief executive, said that the industry and government need to work together to address the skills and workforce challenges that have hampered the sector’s productivity for far too long. Perrins said: “This review provides a valuable blueprint for future collaboration and a more joined-up and flexible skills system that supports many more people into truly rewarding and successful built environment careers.” Farmer’s report found that the current system is not addressing the sector’s needs, and a strategic, unified approach is needed to build a resilient, productive and skilled workforce. The review makes 63 recommendations to transform how the industry approaches workforce development. The DfE has accepted 34 recommendations without amendment and partially accepted or accepted in principle another 26 recommendations. The government has rejected three recommendations due to being outside of the review’s scope or challenging the statutory accountability of the ITBs. The recommendations include: The ITB model should be retained in terms of its basic statutory mandate but its strategic priorities, core capabilities and activity require wholesale transformation. This all needs to be ruthlessly focused on addressing the fundamental workforce resilience challenges facing the construction and engineering construction industries. The statutory levy-grant system should also be retained but modernised and refocused to ruthlessly drive measurable outcomes linked to the new priority industry challenges. SMART [specific, measurable, achievable, relevant, and time-bound] KPIs should be developed aimed at maximising outcomes from levy spend with more balanced accountability between industry and government. A fundamental reset is required across ITBs to change direction and effectiveness. There is a common fundamental challenge which both the construction and engineering industries face in terms of declining workforce resiliency resulting in workforce gaps and skills gaps and a more strategic and unified approach spanning both industry sectors should be adopted, including operational convergence/a merger after a suitable transition, minimising disruption to ongoing activities Three new core strategic objectives are established which guide all priorities and a reset strategic plan: improve industry’s workforce competency and the ongoing maintenance of its currency; improve industry’s project level productivity and quality assurance in conjunction with other parallel regulatory reforms; and improve industry’s strategic level workforce retention and utilisation. There is a need for more strategic demand planning and a linked work brokerage function which can enable skills and competency supply to be better matched to demand over time and geography, including potential for transferable skills within industries to be better identified and exploited and for employers to be able to make more informed decisions on investing in human capital. Industry leaders need to increasingly recognise the role their organisations can play in assisting with training alongside providers as part of their social impact and their own direct workforce development responsibilities. Existing best practice worker card systems need to be translated towards a single strategic platform capable of measuring and policing worker occupational competency, beyond basic health and safety matters. End client entities, not just employers from both engineering construction and construction, should also form a much stronger part of the leadership and governance of the new body. The DfE should carefully explore and consult with industry on a modified legislative scope order, aimed at resolving the most obvious anomalies. These appear to be in new and emerging sectors in engineering construction and potentially in areas related to integrated mass building retrofit. The ITBs and subsequently the new body should seek to meet a 5% efficiency saving target, and the post-review changes should yield savings of at least 5% from operational expenditure, in line with Cabinet Office guidelines. This should include a rigorous examination of the functional need for current staffing levels and propose ways to make significant savings. The ITBs and subsequently the new body should consider publishing clearer evidence of levy spend to show the split between funding spent directly on training and the costs of running the organisation. In support of the report, the National House Building Council will be investing £100m in a network of multi-skill training hubs. Steve Wood, NHBC chief executive, said: “NHBC recognises many of the challenges noted within and is committed to working with government and industry in closing the competency and productivity gaps. “It is vital that workforce expansion goes hand-in-hand with a relentless focus on quality. That is why the apprentices at our hubs will be intensively trained to NHBC’s standards in real-site conditions, fully preparing them for life on site. From government and industry to individual builders and developers, it is everyone’s responsibility to support the development of a skilled workforce fit to meet the country’s needs.”