Orders of the Day — Construction Industry (Unemployment)

– in the House of Commons at 12:00 am on 17th March 1972.

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4.2 p.m.

Photo of Mr Peter Trew Mr Peter Trew , Dartford

I welcome this opportunity of raising on the Adjournment the question of unemployment in the construction industry. I must begin by declaring an interest in construction.

The situation in the industry presents a strange contradiction. On the one hand, a very large number of construction workers are registered as unemployed; on the other hand, builders all over the country are experiencing acute shortages of skilled craftsmen. The number of men aged 18 and over registered as wholly unemployed on 14th February was just under 155,000. That is a very large number by any standards. It represents about 13 per cent. of the total work force of the industry, and one-sixth of all the unemployed. Clearly it is unacceptable that so large a number of men should be out of work. But, although I do not want in any way to minimise the seriousness of those figures, I believe that they are misleading.

A large proportion of those registered as unemployed are unskilled men. The breakdown of occupations in the February figures shows that those identified as having a specific skill account for only 42,000 out of the total of 155,000, and allowing for some men with miscellaneous skills in the remaining 113,000, it is fair to say that about two-thirds of those registered as unemployed in the construction industry are unskilled. In the key skilled trades of carpenter, bricklayer and plasterer, the numbers unemployed are small. For carpenters, the number is just under 6,000, for bricklayers it is just over 3,000 and for plasterers it is only 1,200. The only skilled trades in which there are significant numbers of unemployed are painting, decorating and sign-writing, where the total is just under 11,000, about a quarter of those having specific skills.

Much of the unskilled work in the industry is basic labouring and is the sort of work to which employment exchanges tend to direct men regardless of their previous experience because, subject to good health, it is something that can be done by most people. Thus at any time in the industry there is a large number of transient workers in the unskilled category. If they are unfortunate enough to lose their jobs, they are registered as unskilled construction workers because that happens to be the last industry in which they were employed. They are not construction workers in the normal sense of the word, because they do not habitually work in the industry and their inclusion in the unemployment figures gives a misleading impression of what is happening in the industry.

Another factor could be distorting the figures. Because the work is physically demanding quite a large number of men leave the industry each year before they reach retiring age, in order to seek more congenial work in other industries. My research suggests that between 20,000 and 30,000 men leave the industry in this way each year. Normally when the economy is buoyant they are quickly reabsorbed into other industries but at present they are likely to remain unemployed, and their numbers swell the unemployment figures.

Another factor bears on the reliability of the unemployment figures. It is possible that some men who are registered as unemployed are working and fraudulently claiming unemployment benefit. The recent inquiry at Southend revealed 70 cases where there was evidence of fraud in claiming and drawing unemployment benefit, and it is estimated that as a result of these revelations the employment exchange there is now saving £84,000 a year. If we assume that the prevalence of such malpractices is proportional to the number of unemployed throughout the country, the total losses nationally could be in the region of many millions of pounds a year.

The Daily Telegraph of 11th February, commenting on the Southend inquiry, reported a spokesman of the Department of Employment as estimating the total annual losses at only £250,000 a year—three times the losses incurred at Southend before the inquiry.

Surely that must be a ludicrously inadequate estimate? Allowing that there might have been special factors at South-end it is beyond belief that one area could have accounted for one-third of all the malpractices in the country. The true figure must be very much higher and certainly high enough to justify employing more than the 30 inspectors at present engaged in detecting these frauds.

I have suggested three reasons why the unemployment figures in the industry are misleading—first, because they include many men who are not construction workers in the normal sense; secondly, because they include men who have retired early from the industry and have no intention of returning to it; and, thirdly, because they include some men who are working and fraudulently claiming benefit. It is important to get the figures right, because the present very high figures are distracting attention from another equally serious manpower problem in the industry—the acute shortage of skilled labour. This shortage is widespread throughout the country, and I will cite two examples. I have taken these from development areas in order to counter any belief that these shortages are confined to the more prosperous parts of Britain.

Teesside Borough Council has a workload on its present housing programme which would justify the employment of 1,250 men of all trades. At present it can employ only 980, because of the shortage of skilled craftsmen. There is a particular shortage of plasterers, and recently three plasterers were finishing off 380 homes. The result is that the Council's contracts are behind programme, and it has had to grant extensions to its contractors. There is no shortage of unskilled men in the area, but unskilled men cannot be taken on unless the skilled men are there to support them.

In South Wales the building firm, Modern Building (Wales) Ltd. has a contract for 315 houses for Bridgend Urban District Council. The programme requires 36 bricklayers, but the company is able to find only one-third of that number, and the local branch of the National Federation of Building Trades Employers tells me that few building firms in South Wales, if any, can fill their full complement of craftsmen. Similar stories could be told from all over the country. The fact that the official figures of unfilled vacancies are comparatively low is meaningless, because it is common knowledge that many builders do not bother to notify the employment exchange of vacancies.

There are two possible reasons for this shortage of skilled craftsmen. First, there has been a considerable upturn in two classes of construction work which make heavy demands on skilled labour—private house building and improvement grant work. Private house building is more labour-intensive than local authority building because the houses are built more quickly—in an average of 12–13 months compared with 16 months for council houses. Improvement grant work, particularly with the considerable increase in discretionary grants, needs craftsmen with all-round skills, who are in particularly short supply.

Second, there has been a serious falling off in the recruitment of young men into the industry. Figures from the Youth Employment Service indicate that the number of young recruits to the industry fell from 44,000 in 1964 to 28,000 in 1970, and in those figures the number of apprentices has fallen from 29,500 to 19,500. Admittedly, during those years the total number of operatives in the industry also fell, from 1,092,000 to 882,000, a reduction of 19 per cent., but the fall in the intake of young recruits was 36 per cent., nearly twice the fall in the total number of operatives. That is a serious reduction in the number of young recruits.

It is not as if the industry faces a static work load. It has been depressed for the past eight years, but now there are indications of a healthy upturn in construction activity. The industry could well face a situation in which its supply of skilled craftsmen was wholly inadequate to meet its needs.

I referred briefly to the increase in improvement grant work, which I welcome. There is a vast amount of work to be done in upgrading the conditions of the nation's housing. Improvement is cheaper than rebuilding, and it maintains existing communities intact. So I am very much in favour of it. But I have heard Government spokesmen refer to it as a cure for unemployment, particularly in the development areas. In the general Keynesian sense, of course, it could well make some contribution towards reducing unemployment, because it injects purchasing power into the economy. But as a cure for unemployment in the construction industry it is of little value. It is craft-intensive. It provides little opportunity for employing unskilled men, who form the bulk of the unemployed in the industry, and it can further aggravate the shortage of skilled craftsmen, which in many parts of the country is already making it difficult to get builders to quote for this class of work.

The most helpful development for the industry is the Government's recent announcement of a massive increase in training facilities. The situation in the industry is tailor-made for a policy of retraining. It obviously makes sense to equip some of the large body of unskilled workers with the necessary skills to fill some of the shortages of craftsmen, and I look forward to hearing the Government's plans for retraining as they affect the construction industry.

In conclusion, I should like to suggest other positive lines of action by the Government. The first requirement is to make the unemployment figures more meaningful. I should like there to be a survey to establish the number of unemployed who are genuinely construction workers and who could usefully be re-employed in the industry, and also the number who could be retrained to higher skills. At the same time, I should like to see a sample survey among building firms to try to ascertain the exact extent of the craft shortages. These would be very much higher than the official figures of unfilled vacancies suggest.

Second, there must be an all-out attack on abuses of the unemployment benefit system, or "dole-diddling", as it is picturesquely called. The present total of 30 inspectors for the whole country must be inadequate in the light of the Southend revelations, and the penalties do not seem anything like severe enough.

Thirdly, the Government should, in consultation with the leaders of the construction industry and the trade unions, evolve a manpower policy for the industry with special reference to stepping up the recruitment of apprentices and the rate of retraining.

Lastly, the Government, in their capacity as sponsors for a large volume of construction work, should give increasing attention to designing projects in ways which minimise the dependence on skilled site labour. Industrialised building got off to a false start eight years ago and had a further setback with the Ronan Point disaster, but given an increasing work load, the industry might well be facing a critical shortage of skilled craftsmen, and the time has come to take another look at construction techniques which minimise dependence on skilled site labour.

I am glad to have had the opportunity of airing the manpower problems of this key industry, and look forward to my hon. Friend's reply.

4.16 p.m.

Photo of Mr Dudley Smith Mr Dudley Smith , Warwick and Leamington

My hon. Friend the Member for Dartford (Mr. Trew) has revealed his expertise and understanding of the construction industry in his agreeable speech. I am sure that the House will be grateful to him for drawing attention to the manpower situation in the construction industry and to the extent to which the available statistics are a true indication of it.

The construction industry is one of the largest industries in this country, employing something like 1¼ million workers, of whom the vast majority are men. Recently, it has been faced not only with a considerable upsurge in private house construction but also with an increase in house improvement work in the assisted areas which has been encouraged by the Government's decision to increase house improvement grants from 50 per cent, to 75 per cent. In the future, there is likely to be a further call on the construction industry as a consequence of the Government's decision to spend over £160 million in improving the environmental and social services infrastructure in the assisted areas.

It is against this background that we see the importance of ensuring that the manpower supply in the industry is adequate for the tasks which it has to meet, and I agree with my hon. Friend on that point. The February unemployed figures showed that there were 163,212 males unemployed whose last job had been in the construction industry; this represented over 12 per cent. of the estimated total number of employees in the industry.

At the same time, however, there were nearly 11,000 unfilled vacancies for construction workers held at employment exchanges. These figures, however, do not purport to measure the total unsatisfied demand. For a variety of reasons, not all employers notify their demands to employment exchanges, so that the unsatisfied demand for construction workers is undoubtedly much greater than these figures indicate. We thus have a seemingly paradoxical situation in which there is an unacceptably high level of unemployment in the industry together with acute labour shortages.

As my hon. Friend points out, this is in part due to regional and local area imbalances between supply and demand. More importantly, the co-existence of a large number of vacancies and high unemployment, as my hon. Friend has stressed, is largely explained in terms of the fact that, whereas a high proportion of those registered as unemployed are unskilled, the bulk of vacancies are for skilled workers.

Of the 155,000 wholly unemployed men whose last job was in the construction industry, only 35 per cent. were registered as skilled, whereas of the 11,000 vacancies held by my Department, 8,000, or over 70 per cent., were for skilled workers. Of these 8,000 unfilled vacancies for skilled workers, about 2,000 were for carpenters and joiners and 2,000 for bricklayers.

In attempting to get an indication of the pressure of demand it is common practice to work out ratios of notified vacancies to registered wholly unemployed workers. While these ratios do not give a precise indication of demand at any one time or at any one place they can be used to give some idea of changes in pressures at different times or of differences in the manpower situation in different areas.

On this basis it is clear that the main shortages are of bricklayers, joiners, and to some extent, plasterers and that they are mainly in the Southern parts of the country. National and regional figures, however, iron out local variations and I agree with my hon. Friend that there is evidence of difficulties of labour supply, not only in the southern areas, where they are most acute, but in other parts of the country.

Before I go on to outline what the Government is doing to remedy this situation, I should like to turn to some of the specific criticisms my hon. Friend has made of the unemployment and vacancy statistics. Firstly, as he points out, the term "construction industry" as used in the present industrial classification system includes not only the building industry but also the civil engineering and electrical wiring installation industries as well, and even open-cast coal mining—though there are only about 5,000 people engaged in that. Various sectors have become increasingly interrelated over the years and their separation was becoming more and more artificial.

It is also true that unemployed men are classified to the construction industry because their last job was in that industry, and not because they are permanently attached to it. In collecting statistics it is easier to recognise a man's last job than the industry to which he is permanently attached—if indeed any man agrees that he is ever permanently attached to any industry.

As the Phelps Brown Report recognised, there is a good deal of mobility between the construction industry and other industries and it would be a formidable task to say of many workers which is their industry of permanent attachment.

My hon. Friend also suggested that the unemployment figures for the industry were artificially inflated by those people who are working and at the same time fraudently claiming benefit—something which worries many people and is of considerable importance. It is impossible to estimate the precise extent of undiscovered fraud or its bearing on the published figures of the numbers of persons unemployed. Unfortunately, there is and always has been a certain amount of abuse. But we need to see it in perspective. The following figures may help: in 1971, out of just over 3½ million claims to unemployment benefit, there were 12½ thousand cases of suspected fraud. This is well under half of 1 per cent. Even allowing that some fraud may go undetected, there is certainly no evidence that fraud is perpetrated on a widespread scale. Any scheme of cash benefits inevitably attracts a small minority of people who try to abuse it and it is difficult to deter them altogether without penalising many genuine claimants. The steps we take to prevent and detect fraud and abuse of the unemployment rules are, we believe, a reasonable balance between the need to scrutinise claims closely and the need to avoid treating every claimant as a potential scrounger.

However we are certainly not complacent about this matter and we vigorously pursue cases of suspected fraud, as we are doing in Southend at the moment. The whole question will be kept under review by my Department. I should like to take the opportunity to appeal for more co-operation from the public and from employers, particularly employers in the building industry. Our anti-fraud measures will obviously be more effective if the public are more ready to give information to our local offices which will help to prevent and uncover the misuse of public funds. I only wish more people would send us examples so that we could go into the question with greater thoroughness. Only today I had some information from an hon. Member which will be pursued vigorously by my Department.

To return to the main point. I accept my hon. Friend's general point about some of the limitations of the unemployment figures. However to render a complete analysis of the unemployed register at regular intervals would be extremely costly in staff time. It is doubtful whether it would yield results of any great value. The present statistics, if read with due care and with due regard to their limitations, give us a useful indicator of changing pressures of demand and supply.

In any case, we have other sources of information about the manpower situation in the construction industry. A National Consultative Council for the Building and Civil Engineering Industries meets twice a year—its last meeting was on Wednesday of this week—under the chairmanship of the Minister for Housing and Construction. Under it in each region there is a regional joint committee on which all sides of the industries are fully represented.

My Department is represented on them and presents regional and local figures as a basis for informed discussion on the regional and local manpower situations. In my opinion, the assessments which come from these regional bodies to the National Consultative Council give as good an appreciation of the general manpower situation in the industry as is likely to come from any other source.

These assessments, together with reports from our regional officers and elsewhere, have certainly brought to light the supply difficulties about which my hon. Friend has spoken. A study of them has indicated a need to consider not merely the abilities of the unemployed, but also the working of the construction labour market as a whole at the present time in relation to the present work load.

In fact, in another part of the House of Commons at this very moment my right hon. Friend the Minister for Housing and Construction and my hon. Friend the Minister of State in the Department of Employment are meeting representatives of the construction industries, employers and trade unionists, to discuss what needs to be done to make the labour market function effectively and to improve recruitment and training. So it is particularly apposite that my hon. Friend should have raised this subject this afternoon.

It is possible that in addition to discussions on a variety of subjects, including the notification of vacancies, apprenticeship, training, transfer assistance and the difficulties of labour supply generally, arrangements will be agreed for a survey into various aspects of the current labour market situation. This is one or the matters my hon. Friend called for. I hope that these discussions and the proposed survey will be accepted as an indication that the Government and the industry are alike determined to see that the right sort of action is taken to meet current problems.

I should now briefly like to turn to what is already being done to meet current labour shortages in the industry, particularly in increasing the intake of apprentices and the training of craftsmen and others. The figures collected by careers offices of new entrants to employment confirm that the level of recruitment of construction apprentices in the last three years has been relatively low in comparison with previous years. Last year, according to our figures, 20,000 boys entered construction apprenticeships, and the figures were broadly similar in 1969 and 1970. Between 1964 and 1968, recruitment ranged between 24,000 and 29,000 a year.

I believe—and I am sure my hon. Friend accepts this—that the main explanation of this reduction is the decline in the demand for construction work which has taken place and which I am sure will now be reversed by the massive economic measures undertaken by the Government in recent months.

I hope that construction employers will find it possible to increase their intake of apprentices this year. In weighing up their 1972 recruitment, they should have regard not only to the likely increasing demand on the industry, but also to the implications of the raising of the school leaving age in 1973. This will reduce by more than 250,000 the number of young people entering the labour market in 1973.

With regard to training apart from apprenticeships, the House will already know of the plans for the great expansion of training and reorganisation of training arrangements announced by my right hon. Friend. I need only mention a few figures to indicate what is being done for the construction industry. On 11th February there were 2,863 training places in construction trades in Government Training Centres, with a 95 per cent. occupancy rate. A total of 664 of these places were for bricklaying; 785 for carpentry and joinery. We shall be providing 150 additional bricklaying places in Government Training Centres as soon as possible—56 of them in April, and the remainder as soon as additional instructors can be recruited.

I should like to say a great deal more about training, but time is against me. All in all, we are planning to increase the number of training places in Government Training Centres or similar establishments from the present level of about 2,850 to about 3,750 as soon as possible. With a high rate of occupancy, these places should be capable of turning out about 6,750 trainees in a full year.

I hope that my necessarily brief review of the situation will satisfy my hon. Friend that the Government is already taking vigorous action, not only to make a correct assessment of the current manpower situation, but also to examine the steps which need to be taken to ensure that the construction labour force is adequate for the tasks before it.

My hon. Friend has done a valuable service in bringing this matter to the attention of the House and, as I have said, we are not complacent in any of the respects which he has mentioned. Indeed we are giving attention to this subject today and will continue to do so.

Question put and agreed to.

Adjourned accordingly at half-past Four o'clock.