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Mind the Construction Skills Gap

There is no hope of a house-building renaissance without first addressing the systemic construction skills gap. But what can we do?

This fetishisation of the academic – at the expense of the vocational – is undermining our ability to build homes. When I was the vice-Chair of a Board of Governors at an all-through school in 2016, Nicky Morgan – then Education Secretary – introduced Progress 8. The basic tenet of Progress 8 is that schools are encouraged to take the most academic subjects. There are too many hairdressers, as the Local Government Association once said.

Instead, Morgan wanted more young people to study English, mathematics, the sciences, geography, history and the languages. Given the measures are included in school performance tables, schools are incentivised to take them – whether they’re the right choices for young people or not.

But what about bricklayers, carpenters, roofers, scaffolders, electricians, painters and decorators? What about the legion of young students – particularly working-class boys in deprived schools like the one I oversaw, who come from chaotic households, detest books, but are good with their hands?

With a vocational college less than a mile from the school I was based in, at the time it was hard to see why we shouldn’t encourage vocational courses. But the system is designed as such you ignore Progress 8 at your peril. A better attainment record – on paper – might encourage prospective parents and pupils to come to the conclusion that our school was the place for them and that has serious funding implications.

In hindsight, perverse incentives like these have, I suspect, wider consequences. Exacerbating skills gaps across our vocations – construction in particular – is a serious barrier a housebuilding renaissance. This is a self-inflicted crisis.  On top of our indifference to the vocational, the centralised skills system, cuts to the Adult Education Budget, and the closure of adult education centres have all meant that the UK plc is increasingly unable to respond to the needs of employers.

In 2018, 44% of small-to-medium housebuilders dubbed the construction skills shortage a major barrier to building more homes – climbing from 27% in 2015 – according to a Federation of Master Builders (FMB) House Builders’ survey. Though concerns over skills shortages fell dramatically the year after for the first time in five years to 26%, the skills gap remained the third greatest barrier to housebuilding, and housebuilders were clear that they expected the issue to get worse before it gets better. Employers were also critical of the work-readiness of our young people. Research by the Construction Industry Training Board (CITB) in 2018 found that over half (51%) of employers felt that school leavers weren’t prepared for the world of work. Business leaders across the industry have long felt the education system is decoupled from the needs of their businesses.

Without labouring the point, there is also greater uncertainty about the existing supply of construction workers. The non-UK workforce accounts for 14% of the construction industry – and over half (54%) in London – according to CITB. The scale of the exodus of Romanians and Bulgarians – more than half of them leaving the construction industry between 2015 and 2017 – should concern anyone who wants to see more homes built, not less.

The speed needed to tackle the skills shortage is all the greater, given the scale of the industry’s ageing workforce. According to the Royal Institute of Chartered Surveyors, 45% of the workforce are over 50, meaning that employers will need a steady stream of employees: 400,000 each year, equivalent to one recruit every 77 seconds.

Clearly the picture is complex and the challenges manifold. While the skills shortages that have receded are likely to be temporary, there is greater uncertainty on the horizon. This is compounded by the general incompetence of a government which has been wholly unable to fix the growing mismatch between the construction industry’s skills demands and a falling number of people gaining construction qualifications.

The introduction of construction T Levels in September 2021 is probably a good start, but the Government has wasted too much time already. The Government allocated £64 million to tackle skills shortages in the digital and construction industries as part of the National Retraining Scheme in 2017. Fast forward to 2020 and the National Retraining Scheme has been incorporated into the £2.5 billion National Skills Fund, yet the talk of construction has been quietly dropped.

The Government long abandoned its promise, as part of its 2015 Conservative Manifesto – and again in 2017 – to deliver 3 million apprenticeships by 2020. In 2018/19 there were 23,000 apprenticeship starts across Construction, Planning and the Built Environment – just 1,000 more than in 2010. A generous reading may make the case that since 2011/12 it has consistently crept up from 14,000 starts, but that would be clutching at straws since it plummeted by 8,000 the year before.

As a result of reform to the apprenticeship system, there has been a sharp increase in the number of providers but it has made little dent in the number of apprenticeship starts. There are several conclusions – and solutions – we can tentatively draw from these facts. The overriding reading of the evidence is that the UK doesn’t have the skills to build its way out of the housing crisis. How do you scale up housebuilding if you don’t have the workforce available to do the work?

The challenge requires a cross-departmental approach on issues ranging from immigration, skills and apprenticeships, the curriculum, and the role of business and further and higher education. I suspect neither the Department for Education (DfE) nor the Ministry for Housing, Communities and Local Government has paid due attention to the chronic skills shortages in construction – partly because the DfE has designed in vocational snobbery.

That the Government done away with the Skills Minister in June 2019 and a replacement was only found in February 2020 does nothing to dispel the accusation. As we look ahead to the national recovery, the Government has a real opportunity to transform how we design and deliver skills training. Those decisions mustn’t be made in the corridors of Whitehall – they must be made collaboratively, with employers, councils, education providers, and they must be aligned with local economic strategies.

There must be a greater focus on attracting talent at home too. Without attracting new entrants to the sector and upskilling the existing workforce, the Government’s target of building 300,000 homes each year by the mid-2020s will remain out of reach.

The Government must also get more construction apprenticeships on board – and quickly. It must forge a narrative which doesn’t fetishise the academic over the vocational, and in doing so must encourage women and ethnic minorities to shatter the glass ceilings that exist in an otherwise male, principally white, industry. The failure to address construction skills gaps now will see the new homes, schools and hospitals needed for future generations unbuilt.

<strong><span class="has-inline-color has-accent-color">Jack Shaw</span></strong>
Jack Shaw

Jack is a Senior Policy Researcher for a Labour MP, has previously worked for the Local Government Association, and is a member of the London Labour Housing Group Executive Committee.

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Beyond Short-Termism: How to Fix the Covid-19 Renters Crisis

Resolution Foundation report demonstrates the inadequacy of the Government’s response to the renters crisis – it must go beyond its own short-termism, writes Jack Shaw.

In March the Government said that this pandemic was an opportunity to end rough sleeping for good. New research by the Resolution Foundation has made it clear that that won’t be the case unless the Government is willing to put protecting renters and tackling homelessness at the top of its domestic agenda – and it can only do so by legislating. 

At the end of October the Resolution Foundation published its report Coping with Housing Costs, Six Months On, based on a survey in September of 6,000 working-age adults across the country. This follows the same survey carried out in May, and provides a unique opportunity to view the pandemic through the lens of housing.  The findings are stark, if not all too familiar.

The basic tenet is that the safety net put in place at the beginning of the pandemic for private and social renters, as well as homeowners with mortgages, falls short of the support required to keep people from losing their homes. 

Comparisons between tenures show that, across multiple indices, renters are hit harder. Compared to homeowners with mortgages, renters – social and private – are more likely to have lost their job or been furloughed; be in arrears; cut back on other items, dip into savings or borrow to cover housing costs; be in receipt of Housing Benefit and Universal Credit; and be less certain about where they’re going to live in 12 months’ time.

Over time the need for homeowners with mortgages to draw on mortgage holidays has fallen, while their job certainty appears to have increased – only three per cent of people with mortgages reported job losses, compared with eight per cent in the private rented sector and seven per cent in the social rented sector respectively. 

It does not appear that the need for housing support for renters has receded as much as we had hoped over the same period. Fewer renters reported being on furlough in September compared to May – perhaps because some have returned to work – but more reported losing their job.

Likewise, the number of renters seeking – and being refused – rent reductions has remained relatively stable at around one in 20. The picture is nuanced, but there are several conclusions that can be drawn.  

First, the blow to households with mortgages has been softer during this pandemic. Second, not only have renters been hit harder, but they have also recovered more slowly. Third, the interventions put in place by the Government aren’t sufficient. At best, they delay homelessness, not prevent it. True, renters have benefitted from a ban on evictions, and an uplift in Local Housing Allowance (LHA) rates and Universal Credit (UC), but none of these are long-lasting.

The LHA rate rise itself follows a capricious rate freeze by the Government in 2016, which decoupled it from inflation. What that means is as inflation rises, LHA rates do not rise with it. This gives renters access to fewer and fewer properties, which has undoubtedly undermined the resilience of private renters who benefit from LHA during this pandemic. 

The uplift essentially returns LHA rates to pre-2016 levels, although in another blow the Spending Review has since revealed that LHA rates will be frozen in cash terms from next year – so rates will once again fall back below 30th percentile over time, pushing renters back to square one just as they’re running out of cash. The ban on evictions has already ended, and the UC uplift is due to end in April.

As the Government battles on every front – COVID, saving the economy, protecting public health, Brexit, a credible Opposition – I suspect the Secretary of State for Work and Pensions’ latest words in Parliament are more than a Freudian slip: they were by design.

On 30 November, when asked whether she would make the Universal Credit uplift permanent, Dr Thérèse Coffey pointed out to Parliament that “we can also make the effort to encourage people to go for vacancies.” With the number of vacancies down 35% this time last year notwithstanding, such nonsense in the face of evidence-based interventions that will support renters to hold onto their tenancy is the epitome of absurdity.

But do not take my word for it. Modelling by the Joseph Rowntree highlighted that up to 16 million people across several million households are at risk of losing the equivalent to £1,040 overnight if the UC uplift ends in April, a kick in the teeth for the lowest income families just as they’re recovering from the pandemic. Research from Shelter earlier this year also revealed that 322,000 renters were in arrears despite keeping up with their rent before the pandemic began. With landlords handing out notices of repossession, we are only months away from understanding the full impact inadequate support has had on renters.

So, where does that leave us? Above all, it leaves us angry – or at least it should do. As to where it leads us: to the Government’s front door. The safety net is holding – just – in the face of the pandemic. While it cannot be the solution for renters forever, for now it’s making a global pandemic more bearable.

Though the Government cannot even get short-termism right, it already needs to look long-term too, and that starts with taking control over the domestic agenda and legislating as it has promised. Ministers need to get on with the job and abolish Section 21 of the 1988 Housing Act – so called ‘no fault’ evictions which allow landlords to evict tenants without good reason – over 18 months since the promise was made.

The Government also needs to bring forward the Renters Reform Bill, which no doubt should have precedence over some of the smaller items on the legislative agenda, such as the licensing of jet skis last month. If, as the Bill says, its aim is to improve the “security for tenants in the rental sector, delivering greater protection for tenants and empowering them to hold their landlord to account”, then surely the best time is now, before that security all but evaporates?

The cost of renting has long outstripped people’s ability to pay rent. The Government should strengthen and lengthen interventions to support those most in need, but it should also abandon its short-termism and support existing interventions with legislation that looks toward the long-term. A failure to do so will force more renters out of secure, permanent accommodation, and into temporary bed and breakfasts.

<strong><span class="has-inline-color has-accent-color">Jack Shaw</span></strong>
Jack Shaw

Jack is a Senior Policy Researcher for a Labour MP, has previously worked for the Local Government Association, and is a member of the London Labour Housing Group Executive Committee.