Can devolution help bridge the skills gap?
The construction and engineering industries need more workers
This article was produced in association with Laing O'Rourke
“We don’t believe the government will be able to deliver its industrial strategy without a clear focus on skills,” said John O’Connor, group director for human capital at construction, engineering and manufacturing firm Laing O’Rourke. “If left unaddressed, the skills shortage will stifle productivity and competitiveness and perhaps hamper those aspirations that the new government has to replace some of our very aged infrastructure.”
O’Connor was opening a Prospect roundtable discussion supported by Laing O’Rourke called, “Making devolution work: how can an industrial strategy address the UK’s skills and employability gap?” Supporting his argument, he quoted figures from Infrastructure UK which suggest that by 2020 an additional 400,000 jobs will be required in the construction sector. “That’s based on known demand today,” O’Connor noted. “That demand may increase given the aspiration of our new government.”
If gaps in skills and employability represents the challenge to a fully functioning industrial strategy perhaps devolution, at least in part, is the solution. That was the thrust of the conversation that followed.
But first, a challenge of a different sort. It came from David Willetts, executive chair of the Resolution Foundation and former Minister of State for Universities and Science. Willetts questioned the extent and nature of the skills shortage facing the construction industry.
Price signals and flexibility in the labour market
“The free market economist in me is always surprised that there isn’t a clearer price signal through wages,” Willetts noted. “You’d expect a surge in pay both as a signal of a shortage and as an incentive to encourage plugging the gap.” Those signals, he said, were not conspicuous in STEM (science, technology, engineering and mathematics) careers. And when it came to “hard-edged conversations” with the Treasury, officials would be certain to point to this apparent anomaly.
His other challenge? That the UK has a “flexible and effective” labour market when compared to most other western European countries. “We seem pretty good at matching skills to jobs,” he said. “The language of shortage and pressure points is quite difficult to reconcile with the way our labour market works.”
The problem with early specialisation
Those objections aside, Willetts said he did understand why there is some concern about the supply of people in construction, engineering and manufacturing industries. He offered two potential reasons for the shortage.
The first is early specialisation, meaning that students are selecting subjects—and therefore narrowing their opportunities—at the age of 15 or 16. And given that university engineering departments will almost always want to take students with A-level physics and maths, that severely limits the number of people to choose from: just 7 per cent of students have both. “In most other countries 100 per cent of young people are potentially recruitable but in our model it’s 7 per cent,” he said. “Whether or not you’re going to be an engineer shouldn’t be a decision you take at 15.”
Paul Jackson, chief executive of EngineeringUK echoed the need for structural change in education. He said that by the time they reach the age of 18 or 19 male and female students have “quite a positive view” of engineering. “But by that stage all routes have been shut off,” he said. By way of exception, he pointed to University College London which dropped its requirement for physics and maths A-level among its engineering degree intake.
The gender divide
If educational attainment and early specialisation is reducing the potential pool of future engineers, so too is a lack of gender diversity. Just 9 per cent of UK engineering graduates are female, the lowest proportion in Europe. And once that small percentage enter the workforce, many of them experience discrimination. A study by the Institution of Mechanical Engineering (IMechE) found that 63 per cent of women in engineering had experienced some form of sexism, compared to 25 per cent in medicine and 19 per cent in finance. “Even though a lot of companies are doing a really good job, there’s still a culture which has not been addressed,” said Peter Finegold, head of education and skills at IMechE.
Sue Percy, chief executive of the Chartered Institution of Highways and Transportation, said it was for this reason that simply setting a higher target of female graduate intake would not work. “Numbers are not enough,” she said. “We can’t say we’ll increase it from nine to 25 per cent because you might recruit them but we won’t retain them.”
Andrew Crudgington, director of external affairs and strategy at the Institution of Civil Engineers, identified working culture as an inhibitor, too. “We do need to get over that,” he said. Meanwhile, James Kenny, Head of Global Affairs, Arup said his firm hires an equal number of male and female employees but added: “By three or four years in you already see the gap opening up. We spend a lot of time and effort on retention.”
Engineering suffers from a lack of age and ethnic diversity, too. “We’re here to build and engineer for society and we’re not representative of society,” said Sue Percy.
Picking up Willetts’ earlier theme around price signals, Jack Carnell from Manchester Airports Group identified another financial inhibitor. Carnell, group public affairs and CSR manager, suggested that tuition fees for engineering degrees should be priced to incentivise 16 year olds to make the right choice. “You’re asking people to do a very difficult degree that takes up a lot of time while charging them a lot of money,” he said.
Laing O’Rourke’s John O’Connor offered another potential reason for a skills shortage—namely the image of the construction, infrastructure and engineering industry. He cited a YouGov poll that found that 67 per cent of those polled would never consider a career in construction, regarding it as dirty or over strenuous. “It’s pretty damning stuff and a sad indictment of what we are trying to achieve. But today’s reality is that we don’t require people with spades and buckets. We require digitally-enabled technicians who have a knowledge of building information modelling.”
O’Connor offered a series of recommendations designed to address the skills and employability gap. These included a conversion of level 2 and level 3 Design Engineering Construct! course, turning them into mainstream GCSE and A-level courses. These courses, he said, are delivered in only 42 out of 3,400 state funded schools in the UK.
O’Connor also called on Russell Group universities—24 of the UK’s top institutions—to offer part-time vocational courses in engineering. Today, 264 of these courses exist in UK universities but none are offered by the Russell Group. “We need smart, better, more capable people coming in at entry level,” he said.
David Willetts offered another potential solution—for universities to choose students with potential if not necessarily the best grades. He pointed to the example of King’s College London, which faced a similar issue, namely an oversupply of well-educated, middle-class students with four A-levels which meant that medicine was becoming one of the least socially represented degree courses. The solution? Recruit a second tier of students with lower grades and provide an extra year of education to bring them up to scratch.
Paul Jackson of EngineeringUK agreed. “We’ve got to stop insisting that someone who arrives at university can already do the finals without any further intervention,” he argued.
Devolution: the local solution
Devolution offers another route to plugging the employability and skills gap. Alexandra Jones, chief executive of Centre for Cities, said: “Place has a really important role to play… in identifying where the opportunities are.” She offered the example of Reading, the Berkshire town which has a high demand for HGV lorry drivers. Industry, schools and the local authority are working together to alert students of this potential opportunity and directing them to the relevant qualifications. “It’s about helping the kids go where there are vacancies,” said Jones.
Nigel Milton, head of external affairs for Heathrow offered another practical, local example. Waiting for the go-ahead to add a third runway to the airport, Heathrow’s management is “coming up with a plan of how we are going to build it from 2020,” explained Milton. That plan involves setting up a Heathrow Skills Taskforce to work with schools, colleges, universities and the local authorities around the airport to make sure it has the skills in place. “For companies like Heathrow that is now what we have to do,” said Milton. “It’s no good just thinking let’s just get through the political process and planning process and hope that the talent is there. We are going to have to fund the interventions to make sure when our project comes online we have British talent to build it.”
For Jon Lamonte, chief executive of Transport for Greater Manchester, devolution overcomes the inherent problems of dealing with Whitehall. “It is the only chance you get of merging the different pots of money from siloed government departments. What you need is industry to come in and play its part in the devolution mix and we haven’t cracked that yet.”
With the support of Laing O’Rourke, Prospect hosted a private roundtable discussion at the 2016 Conservative Party Conference on how an industrial strategy can help address the UK’s skills gap. The discussion was chaired by Jon Bernstein, Associate Editor for Prospect. Speakers included: John O’Connor, Group Director for Human Capital, Laing O’Rourke; Lord David Willetts, Executive Chair, Resolution Foundation; Paul Jackson, Chief Executive, Engineering UK; Dr Jon Lamonte, Chief Executive, Transport for Greater Manchester; Andrew Crudgington, Director of External Affairs & Strategy, Institution of Civil Engineers; Peter Finegold, Head of Education and Skills, IMeche; Alexandra Jones, Chief Executive, Centre for Cities; Sarah Whitney, Founding Director, Metro Dynamics; Nigel Milton, Director of External Affairs, Heathrow; Sue Percy, Chief Executive, Chartered Institute of Highways and Transportation; Andrew Mayer, Head of Public Affairs, BASF; and James Kenny, Head of Global Affairs, Arup.
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