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Only leadership can win the battle for skills backing

An early question for the incoming government this month will be whether there should continue to be industry training boards funded by a levy collected under statutory powers.

My instinctive answer to that is a qualified yes. It makes sense to have a cross-industry training body that can employ the specialist experience and skills that very few employers can afford on their own; that can direct and verify the content and quality of courses; and that can aggregate demand in a way that training can be delivered economically.

In short, I think there is a market failure born of an operating model in which no one owns the whole process, responding to demand that is volatile and unpredictable, so no single company has the incentive to invest in an uncertain future. Without training boards funded by levy, therefore, I am pretty convinced there would be even less training.

The qualification is that I don’t think anybody (including the training boards) believes they have got everything right, and significant reform must be part of any future plans in order to address market failure and demonstrate to levy-payers that the service delivers value.

Lack of trust

As for the levy, the blunt truth is that it probably has to be statutory if only because companies in the sector don’t trust each other. They believe that if they produce a skilled workforce, their competitors will regard that as a quarry from which their own workforce can be mined.

Nor, if there were a voluntary levy, would they trust each other to pay it – and probably with good cause. The film industry has a voluntary levy, but suffers about a 30 per cent default rate, so without statutory backing, therefore, the construction training boards would spend their lives chasing dues.

“To say that ‘we can only afford one levy’ or that profit margins are too narrow to justify an investment in training is simply nuts”

Of course, a minister may fairly ask why an industry made up of people who don’t trust each other should be a concern for government. Just one answer to that is just how important the industry is. It is major employer and creates the places where we live and work. And of course, the government is the industry’s largest customer. It therefore has a vested interest in an industry that functions effectively.

However, it is hard to push the need for a central training body and a statutory levy with ministers if the industry has no clear plans as to how the levy can be used to address market failure; to match the pipeline of skills to the pipeline of work; and to drive up productivity.

Time to stand up

This is about leadership. Whatever the strengths and weaknesses of the training boards, the industry has had every opportunity to steer them. To turn around now and hold them responsible for an entirely predictable skills crisis is failing to grasp the nettle.

Similarly, to say that ‘we can only afford one levy’ or that profit margins are too narrow to justify an investment in training is simply nuts. We wouldn’t say that we can’t buy bricks because margins are so narrow, so this is saying that training is a discretionary purchase or a waste of money – but we’d be perfectly happy to waste a bit more if we could just have a better profit margin.

Instead, leadership needs to step up and take ownership of a strategy for a skills and training programme that is fit for purpose. Without that, it is at least presumptuous to assume that ministers will decide to support maintaining a statutory levy. With it, it will be easier to advise them to do so.

Paul Morrell is a former government chief construction adviser and is advising the government steering group currently reviewing the CITB. The opinions expressed here are his own.

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