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Industry must act on skills challenge

  • The UK needs to expand its capacity to train and retrain workers as part of delivering the skills required for the shift to green energy and sustainability
  • Over the long-term, there needs to be a greater focus on vocational and technical education. But as at least 80% of the 2030 workforce is already in the labour market, re-training and upskilling are the priorities
  • Industry is best placed to identify what skills are needed and how they should be taught. But UK firms lag behind on workplace training and there is too little co-ordination at a sectoral level
  • Co-operation is going to be crucial. Across industries, regions and decarbonising clusters there has to be a far more collaborative approach on how to source, train and deploy workers

The UK’s energy transition has a skills shortage. Decarbonising major sectors like power, transportation and heating will create hundreds of thousands of new jobs. Some will be high-skilled, others low-skilled. 

Some will be a straightforward fit for existing workers, while others will require much more intensive instruction. Consulting firm Bain estimates that in total, 4 million UK workers – one in every eight – will need retraining. 

“The UK’s training ecosystem is not designed for this once in a generation level of reskilling,” warned the Bain report. “It will require a partnership between the government and businesses to train the skilled ‘green’ workers needed to deliver net zero.”

Falling short

The truth is that when it comes to vocational and technical skills, the UK’s training ecosystem is not well-designed at all. This is no secret. Experts have warned for years that the UK is producing nowhere near enough higher technician level qualifications and spending too little on post-secondary and workplace training.

Ewart Keep, who holds the chair in Education, Training and Skills at Oxford University’s Department of Education, said UK employers spending on training per head is just half the EU average. In 2019, almost one-third of employers provided no training to any of their workers. “That’s how dire it is,” he said.  

Companies love a successful apprenticeship story – and rightly so. Stuart Crooks, managing director of Hinkley Point C, started out as an electrical apprentice four decades ago and has spoken passionately about the opportunity he was given. 

But apprenticeships these days are much rarer. Paul Johnson, head of the IFS, has estimated that in 2020 more 18 year olds won places at Oxbridge than embarked on a higher level apprenticeship. 

The UK is heading into a once in a generation skills challenge with some serious structural and capacity problems. But there are solutions. 

Speed and scale

The training challenge has several key features. The first is the speed and scale of the problem. Bain’s report estimates that between 2023 and 2030 the UK will lose around 240,000 jobs – half of which are in ICE vehicle manufacturing, trade and repair. 

Another 60,000 losses will come from the manufacture and installation of gas boilers. Over the same period, around 1 million new jobs will be created, spread across a diffuse range of sectors.

But simply comparing the number of jobs created with those lost “radically understates” the speed of the transition and the amount of turbulence it will cause, said Julian Critchlow, an advisory partner at Bain. 

For the people in industries undergoing a decline, there is likely to be a stark choice between retraining or unemployment. 

Critchlow pointed out that not only will some 4 million workers require training, the bulk of this training will have to happen over a 10-year period. At the height of the transition, as many as 800,000 workers could require some form of training in a single year. “It’s a quantum level of change relative to business as usual,” he said.

Time to move

In addition to the speed and scale, there is a geographic mismatch between where potential workers live and where jobs will be created – or lost. 

The West Midlands and Scotland will experience far more labour upheaval than the South West for instance. Despite the UK’s significant lack of geographic mobility, people are going to have to move. 

Bain’s report suggested incentives to relocate training capacity to areas with large numbers of vulnerable legacy roles. It pointed to the offshore transition skills hub being created in Aberdeen.

Another mismatch is between the skills and qualifications that workers have now, and those they will need for the new roles. Bain estimates only about one third of legacy roles will have a clear replacement in the net-zero transition. 

The firm estimates that tens of thousands of gas boiler installation jobs will be lost. But retraining an installer to work on heat pumps instead takes just a few days. In sectors like construction and manufacturing, however, the training or retraining is likely to be more intensive, time consuming and costly. 

In short, the training ecosystem needs more funding, more workers, more courses, more instructors and appropriate qualifications. 

Industry gets involved 

The first and best thing UK companies can do to help meet the challenge is to embrace collaboration. Here the engineering and construction industries offer an example of how acute skills shortages can emerge and how to go about tackling them.

An asset owner knows it will take thousands of electricians, platers, pipefitters and welders to complete a project. But construction is farmed out to contractors and subcontractors. They are the ones to hire skilled workers, but only when they have won a contract. 

Once they do, it is no use hiring apprentices to go through a four-year course – they need trained workers immediately. Left to their own devices, none of the industry stakeholders have sufficient incentive to fund training. 

The Engineering Construction Industry Training Board (ECITB) was created in part to solve this market failure. Until very recently, asset owners thought of the workforce as a problem for contractors. But Andy Brown, the group’s COO, has said the ECITB is starting to work on a regional level with asset owners to develop skills pipelines and build training provider capacity. 

The next step, said Brown, is to bring in the contractors. The ECITB has already collaborated with major UK contractors to develop a standardised industry skill-set called Connected Competence. The idea is that contractors will accept that if they want to win work from major regional asset owners, they will have to hire labour from an agreed skills provider network that trains workers using an agreed competence assurance programme.

Use them or lose them

“It’s a much more collaborative approach that’s needed,” said Brown. “Regional funders, regional providers, regional asset owners, and then the contractors are the last piece of the jigsaw.”

In Humberside, the ECITB is working with leading stakeholders like Phillips 66 and Harbour Energy on a skills plan. 

“It’s not just about building capacity in the local training provider, it’s about engagement, training provision, employability, it’s about co-ordinating where these learners will go,” said Brown. “If one project slips behind, we need to deploy workers elsewhere or we lose them.”

He sees the ECITB’s role as supporting training in key regions like Humberside, Teesside, Scotland, and the nuclear plants at Hinkley and Sizewell, but doing so against national standards in order to build national – not just regional –  capacity. This is easier said than done.

Asset owners in a specific area like Humberside see the benefits of working collaboratively. But in East Anglia where Sizewell will be built, it is proving harder to bring together owners of nuclear, wind and gas infrastructure assets to agree on skills. 

Collective action 

Oxford’s Keep thinks the reason the ECITB is the UK’s most serious and successful model of intra-industry collaboration is because the projects are so time-sensitive. 

“In a sense, it’s forced them to be more collective, because the consequences of things going wrong are just so expensive,” he said.

This does not mean that other sectors cannot follow the same example. The Institute of Environmental Management and Assessment (IEMA) has developed a green careers hub to try to provide a central and comprehensive source of information for potential employees. 

IEMA has also collaborated with Solar Energy UK and the Solar Taskforce, which is preparing its report on what is needed for the UK to meet its 70 GW of solar by 2035 target.

Different skills are needed for domestic rooftop solar and large commercial solar installations. Maintenance of a 70 GW solar fleet will be another key consideration. 

“We need to start thinking about what are the roles that we need, where are the potential shortages and what’s the routes to fix those shortages,” said Martin Baxter, deputy CEO at IEMA. “We have to be able to work in collaboration and partnership.”

Skill divide

Collective action would go some way to addressing several of the barriers to expanding the skills ecosystem. There is, for example, a tension between the idea of a three or four year apprenticeship as the primary pathway to a fulfilling career, and the immediate need for skills that would take far less time to train. 

“What we need in Hinkley Point right now is people who can tack weld and screw brackets five days a week for the next few months,” said ECITB’s Brown. “We don’t need four years’ worth of training for that.” 

There could and should be more apprenticeships for young people going into vocational and technical careers. But Keep points out that 80% of the UK’s 2030 workforce have already entered the labour market. “They’re not young trainees,” he says. “Retraining is absolutely critical.” 

Academics and industry figures approve of the thinking behind the government’s skills bootcamps, which provide courses up to 16 weeks in length across a range of areas including construction and EV maintenance. But these are not for people already in work. 

Martin Baxter, deputy CEO at the IEMA, points to the personal learning accounts available in Wales. That allows firms to send their employees on short courses – including IEMA courses – and upskill their workforce. 

Future proofed

Unions are understandably concerned about a short-term expansion in cheap, low-skilled labour. They would much prefer to see apprenticeships that lay the foundation for a long-term career. 

In 2021, Hinkley Point C electrical contractors Balfour Beatty Kilpatrick and NG Bailey proposed a new “electrical support operative” role. ECITB was to create a training standard for the position. This was dropped in the face of union concerns around deskilling. 

Both sides have a point. There will be roles created that are very important but not necessarily fully skilled. Many of these will only require a few months of training and could provide the platform for a future career. But they could also be a dead-end. 

The classic example is smart meter fitting, which requires a Level 2 qualification that trains people to fit the meters and nothing else. “When the smart meter campaign finally finishes, those people will be out of a job,” said Keep.

Collaboration

The solution will have to be collaborative and industry-led. Countries like France, Norway, Canada and New Zealand have sectoral bodies that help corral and co-ordinate employers. The UK lacks that kind of infrastructure, but industry co-operation can still go a long way to achieving better outcomes. 

A more collaborative approach could also help with increasing funding for training. This cannot be solved by simply going cap in hand to the government. 

The ECITB’s levy and grant system, for example, provides it with perhaps £30 million per year. The industry requires ten times that figure to meet the coming challenge in construction and engineering skills. 

ECITB Wind Turbine scholars, currently studying at Nes Col, got a flavour of life working offshore at the Operations and Maintenance base at Montrose Port which services the Seagreen offshore wind farm, currently under construction.
ECITB Wind Turbine scholars, currently studying at Nes Col, got a flavour of life working offshore at the Operations and Maintenance base at Montrose Port which services the Seagreen offshore wind farm, currently under construction. Source: ECITB May 2023

More money for training is needed and it is going to have to come from somewhere.

Brown suggested that in construction and engineering the more asset owners engage with skills capacity, the more it could help reduce project risk. This in turn could help lower the cost of capital. On a co-ordinated, regional level this could amount to significant savings for project costs, which could be reinvested in skills. This kind of collaboration could also provide a platform to request additional help from government and regional authorities. 

Training the trainers

There are, of course, things the government could do to help. There is an urgent need for new training facilities and for qualified trainers to staff them. 

Keep noted that the government used to have a scheme for the training of trainers. He has spent the last 30 years suggesting the scheme be revisited. After all, the government already pays the Education and Training Foundation to train further education lecturers and private training providers. 

“Why don’t we have a scheme for trainers in companies,” he said. “If you want on-the-job training to be of any decent quality, not least apprenticeship, then you need someone in the organisation or perhaps shared amongst a group of small employers who is a qualified trainer.” 

In many European countries, companies cannot hire apprentices unless they have a qualified trainer on their books. In the UK, meanwhile, companies can use the funding made available through an apprenticeship level to put senior staff through an external MBA programme. 

There will also have to be discussion with the government on how best to dramatically expand training capacity given that it will only need to be expanded for a finite period of time – perhaps a decade. 

Critchlow suggested that key players could flex their own training programmes. Other countries are looking at whether large companies could be incentivised to act as champions in training up particular sectors. 

Then there is the argument that the government could do more to stimulate the demand side. A major bottleneck on demand for green skills is that retrofitting has not taken off. 

Urgency required

Keep’s work on the UK’s progress to its 2028 targets showed that in 2021 the country was installing only 6% of the necessary volume of heat pumps. Furthermore, it is meeting only 9% of its cavity wall insulation and 2% of solid wall insulation requirements. 

In order to beef up training, there needs to be sufficient demand for a given course.

The future looks daunting from a skills perspective. But industry has a huge opportunity to help set the agenda and determine the right solutions. 

But there should be a real sense of urgency. “The first thing is for boards is to grasp the nature of the scale of this transition,” said Critchlow. “It may feel like it’s in the early years, but it will accelerate very, very fast.” 

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