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Clients should reward contractors that directly employ, says Laing O’Rourke

Contractors that directly employ more workers should be rewarded by clients with extra work, Laing O’Rourke’s director of human capital has said.

John O’Connor told Construction News tier one firms needed to shift towards directly employing more staff and that this change should be driven by clients and legislation.

Mr O’Connor said if clients opted to use local suppliers and contractors that employed directly, the sector would be “forced and dragged” into a scenario where the direct employment model was more widely adopted.

He said the current situation of firms largely using non-direct labour was not sustainable and a change was needed to benefit the long-term future of the sector.

He was speaking as Laing O’Rourke published a 10-point plan to close the skills gap in a new report, Engineering the Future.

Among its recommendations was greater direct employment (see box).

Laing O’Rourke is currently the UK’s largest direct employer of construction workers, directly employing 12,000 people across its Europe business, with 63 per cent of those being site-based workers.

Mr O’Connor said this level of direct employment resulted in a more engaged workforce, greater retention of staff and created a more attractive industry for those looking to get into construction.

He added that the case for directly employing staff was even stronger after the referendum vote, with uncertainty over freedom of movement.

“The direct delivery model puts us in a far more secure position [post-Brexit] because we are in control of a vertically integrated supply chain [and] we are in control of our destiny,” Mr O’Connor said.

He said this meant firms would not be subject to the whims of trades and subcontractors.

Other recommendations in the report included the creation of a design, construction and engineering GCSE and A-level to be rolled out across UK schools.

Mr O’Connor said the new qualification at GCSE level would increase the appeal of the sector at a younger age and develop a more diverse skills base.

The report also called on the government to: lead an initiative that would map projects and skills pipelines for specific regions across the UK; increase the number of Russell Group universities offering part-time degree apprenticeships; and give the Construction Leadership Council a bigger voice in government.

Laing O’Rourke has also urged the government to merge the CITB with the Engineering Construction Training Board to create one single training body.

This echoes calls from Mark Farmer in his report Modernise or Die published last month to completely overhaul the CITB, including the levy and the mandate under which it operates.

Mr O’Connor said: “We want something that sits under common leadership to support everyone’s efforts in setting and assuring standards, rather than having a dual-headed approach.”

He added that the current system, which will see contractors pay the government’s apprenticeship levy and CITB levy from April, was not sustainable.

“We are a low-margin sector that cannot afford to pay two levies, so reform will be required around that,” he said.

“That will be the drumbeat from any tier ones you talk to: ‘We can’t pay two levies’.”

Report recommendations

  • Flex the government’s planned apprenticeship levy and reduce delays to approval of ‘Trailblazer Apprenticeship’ standards.
  • Create regionally focused skills pipelines.
  • Increase availability of Russell Group university standard part-time degree apprenticeships.
  • Review options for career transitioning apprenticeships.
  • Introduce GCSEs and A-levels in design, engineer and construct disciplines.
  • Foster collaboration between industry and government to deliver a broader range of improved careers advice for construction and engineering.
  • Commit the industry to measurable improvements in diversity.
  • Seize the opportunity of the new Department for Business, Energy and Industrial Strategy.
  • Support the creation of a single construction and infrastructure skills body.
  • Facilitate the ongoing professional development of a directly employed workforce.

Readers' comments (2)

  • As a subcontractor in the industry I applaud what has just been said, I feel though it will be a very long time before any change is seen.
    There should be more recognition from main contractors and clients for firms who employ apprentices and have a robust training plan.
    25% of our workforce of over 100 are apprentices and the remainder have some training going on at any one time.
    The industry has been ruined by subcontractors and main contractors looking for short term gain and not considering where the next generation of skilled workers is coming from.

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  • There is a lot of good ideas in this report, it seems to me to be more practical than the Farmer report.

    Clients face a lot of pressure from Local Authorities to encourage apprenticeships (quite rightly) so there is already some degree of incentive to use direct labour, but this is a welcome addition to the debate.

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