Skills shortage in the UK construction industry
The construction sector is in the grips of a skills shortage which is limiting construction activity and increasing labour costs at the same time. The shortage has recently hit its worst recorded level and it is expected to worsen over the coming years and decades, with the recruitment of new talent failing to keep up with the rate of retirement.
The Chartered Institute of Building (CIOB) has reported that the industry will need to find 157,000 new recruits by 2021 in order to keep up with demand. One of the key ways in which the industry and the UK government are attempting to tackle this is through the recruitment of apprentices.
Apprenticeship levy – background
The government has committed to an additional 3,000,000 apprenticeship starts across all industries in England by 2020. From 6 April 2017, changes in apprenticeship funding were introduced and implemented meaning that funding of new apprenticeships will now come from an apprenticeship levy rather than taxpayers. The government's objectives when implementing the levy were to boost productivity by investing in human capital, develop vocational skills and increase the quantity and quality of apprenticeships.
The levy is set at a rate of 0.5% of an employer's wage bill and is collected monthly via the Pay as You Earn (PAYE) mechanism. The levy applies to companies of all sizes with an annual payroll bill of £3,000,000 of more – less than 2% of UK employers. All levy contributions are paid into an employer's online digital apprenticeship service account and the government also contributes to the levy with a 10% top up meaning that for every £1 that enters an employer's digital account it gets an additional 10 pence. Employers in England (Scotland, Wales are Northern Ireland are currently excluded) can reclaim their apprenticeship levy contributions as digital vouchers to pay for training apprentices.
Smaller employers who do not pay the levy are also able to access the digital apprenticeship service and by 2020, all employers will be able to use service to pay for the training an assessment for apprenticeships.
Is the apprenticeship levy working?
The initial figures haven't been too promising – between August and October 2017 there were 114,400 apprenticeship starts, comprising of 21,400 starts in August, 28,600 in September and 34,300 in October. These figures are significantly less than those reported at the same time in 2016, when there were 36,500, 74,400 and 44,800 starts respectively. This sharp decrease in apprenticeship starts highlights the need to reform the apprenticeship levy system, according to the Federation of Master Builders (FMB).
According to Brian Berry, Chief Executive of the FMB:
"The lack of flexibility in the value of vouchers which large employers are able to pass down the supply chain to smaller subcontractors who work for them is a key issue. At present, only 10% of vouchers are able to be passed down, however larger construction firms do not tend to directly employ large numbers of on-site tradespeople. This means that there is a real danger that these vouchers are not being spent on training the key skills that the industry so desperately needs."
How will the apprenticeship levy work alongside the Construction Industry Training Board levy?
Around 1% of employers registered with the Construction Industry Training Board (CITB) (a non-departmental public body that reports to the Department for Business, Innovations and Skills) will need to pay the apprenticeship levy. The CITB already collects a levy from construction employers with a wage bill of £80,000 or more and the funds collected are invested back into the construction industry through training. Therefore, for the 2017/2018 financial year, employers with a payroll over £3m who are within the scope of the CITB levy will have to pay both levies. Given the overlap between schemes, the CITB has commented that it is for the construction industry to decide what type of support they want for skills and training in the future. The CITB has set up a new employer-led "Levy Working Party" to consider the options for how the CITB levy can work alongside the apprenticeship levy with the possible implementation of a new CITB Levy Order for 2018.
A new forecast from the CITB has revealed that over 150,000 construction jobs are set to be created over the next five years, with 15,350 carpenters and 9,350 labourers needed. There will also be a significant growth in a range of professional and managerial roles. Whilst it is imperative that the apparent issues with the apprenticeship levy and the uncertainty around how the system is going to coincide with the CITB levy are addressed and resolved, more needs to be done so that the UK construction industry can continue to grow in the future.
So what can you do?
There are a number of reasons why young people are not drawn to a career in construction. It is often seen as an uncertain sector - the demise of Carillion has reinforced this perception as well as public concerns over the impact of Brexit. In addition, school pupils are generally not aware of the variety of jobs available in the sector.
A key way to address these perceptions and to encourage more new talent into the construction sector is for people and businesses within the industry to engage with schools and colleges. More needs to be done to educate pupils – and their parents and teachers – about what options are available and what a career in construction looks like. This will allow students to adapt to shortages in a particular skill set. It is also important to promote the industry to girls and students from STEM subjects, who would not typically consider a career in construction.
There are many organisations who are linking businesses with schools and colleges, such as the CIOB and the CITB. This is a national crisis which is impeding the growth of our sector. But this is also an opportunity for you to shape the future of the construction sector and the next generation of talent.
Kara Price and Sarah Wales, Womble Bond Dickinson
Robotics startup Canvas secures $24 million funding
The financing included strategic investment by Suffolk Construction with participation from Alumni Ventures Group and existing investors Innovation Endeavors, Brick & Mortar Ventures, Obvious Ventures, and Grit Labs.
Canvas plans to use the funds to accelerate its ability to transform construction work by bringing robotics into the built environment, starting with drywall finishing.
Advancements in robotics technology have been stymied in construction due to the complexity of the ever-changing job site environment - but Canvas claims technology it has invented now makes it possible to bring it to the industry.
By enabling skilled trade workers with a new class of tool, Canvas helps customers deliver control over schedules and safer working conditions.
"Since our launch last fall, we've seen incredible demand for the Canvas system and our unique ability to set the bar on quality, safety, and predictability," said Kevin Albert, CEO and Co-founder of Canvas.
Canvas has started by focusing on drywall finishing, one of the most labor-intensive, unpredictable, and congested parts of the construction process. The company's approach combines the skills and expertise of trained union workers with robotics technology.
"At Suffolk, we pride ourselves on redefining what is possible by innovating, investing, and building – we therefore share an aligned worldview with Canvas," said Jit Kee Chin, Chief Data and Innovation Officer and Executive Vice President at Suffolk.
Wan Li Zhu, Managing Director of Suffolk Technologies, said: "We are excited to partner with Canvas in creating a safer and more productive construction process where people and machines work together seamlessly and collaboratively to deliver at the highest quality levels."