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Review of the Construction Industry

Private Members’ Business – in the Northern Ireland Assembly on 25th February 2008.

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Photo of William Hay William Hay Speaker

The Business Committee has agreed to allow up to one hour and 30 minutes for the debate. The proposer of the motion will have 10 minutes to propose and 10 minutes to make a winding-up speech. All other Members who are called to speak will have five minutes.

Photo of Francie Brolly Francie Brolly Sinn Féin

I beg to move

That this Assembly notes the downturn in the construction industry, and the concerns raised by contractors about the powers and responsibilities of the Construction Industry Training Board (CITB); and calls on the Minister for Employment and Learning to conduct a wide-ranging review of the remit of the CITB, to include the issues of levies, apprenticeships and the disbursement of grants.

Go raibh maith agat, a Cheann Comhairle. The Construction Industry Training Board (CITB) was established under The Industrial Training (Construction Board) Order 1964.

Since its inception, there has been growing discontent about its remit and its operation, the main reason being fundamental: the construction industry is the only industry that is expected to pay a levy on its annual wage bill.

The stated purpose of the Construction Industry Training Board is to encourage contractors to provide training to those people employed, or intending to be employed, in the industry. Contractors consider that to be unnecessary since the Construction (Design and Management) Regulations 1994 ensure that contractors provide the best training for their employees. Further­more, the Buildsafe initiative demands a competent and well-trained workforce, and the possibility of Government funding. Stringent health-and-safety regulations, which are monitored regularly, are also in place; insurance premiums are high; and employers are increasingly concerned about the dangers that their workforces face, which can lead to possible injury or death. The avowed role of CITB is the monitoring of those training standards, which are paid for by the construction industry. That is hardly necessary, because no building contractor will pay for substandard training; a contractor will pay only for training that meets the required standards of health, safety and efficiency.

Until 1989, there were nine training boards. Only the construction industry was kept apart —maintaining its own training board and the statutory right to charge a levy to employers in the industry — and the other eight training boards were incorporated into the Training and Employment Agency (TEA). For example, the engineering industry’s training board became the Engineering Training Council (ETC). That organisation does not collect a levy; it sells its training to the industry and is successful in doing so. The situation is similar in the catering industry. Electrical contractors paid a levy until the mid-1990s, but the Training and Employment Agency allowed them to withdraw from CITB. They set up what is now known as the Electrical Training Trust (ETT); it does not collect a levy and is surviving well, with no complaints.

In the construction industry, the amount of levy collected from individual companies is based on their annual wage bill. In England, Scotland and Wales, that levy is obtained only from those companies that have a wage bill of more than £76,000, and they are charged at a rate of 0·2%. Incredibly, here, CITB collects a levy from any construction company with an annual wage bill of £15,000. That sum barely constitutes a decent single wage; it would not even be enough for an MLA to rent a constituency office. CITB across the water has been renamed and rebranded, but half of its 1,500-strong workforce performs the same function as CITB does here — and it still has the power to lift a levy at a rate of 0·2%. Our levy is lifted at a rate of 0·65% — over three times the rate imposed in England, Scotland and Wales. It was clearly intended that that revenue would be used to provide training to the industry. In England, Scotland and Wales, the payout for training is 80% of the levy collected; here, it is approximately 50%.

Photo of Tom Elliott Tom Elliott UUP

I am pleased that the Member refers to the approach in England, Scotland and Wales — rather than in another part of these islands — as the guide that we should follow on this matter.

Photo of Francie Brolly Francie Brolly Sinn Féin

Thank you, Tom. CITB here has a staff of 52; in England, Scotland and Wales, of an overall staff of 1,500, over 700 are employed specifically in the management of apprenticeships — something that our CITB simply does not do.

Therefore, people who work for CITB here number 800. The generally accepted ratio of our population to that of England, Scotland and Wales is 1:40. As a result, CITB employees here should be one fortieth of 800, which comes to 20. CITB here is amazingly overstaffed.

The chairman of the board, who lives in Switzerland, is paid £18,000 a year to attend six meetings a year. Almost half of CITB staff here drive company cars. CITB used to provide considerable direct training. However, it has established a network of accredited trainers for that purpose, and they charge very high prices. Contractors must pay the commercial trainers and then apply to CITB for a grant towards the cost of that training. More than half of CITB’s employers do not apply for a grant, because the process is too complicated and the forms are complex. One office manager told me that the amount of time that his staff would have to spend applying for the grant would possibly end up costing his office more than the amount that they would receive in return.

For example, between 2006 and 2007, a substantial company where I come from paid CITB a levy of £17,500. It paid commercial trainers £49,000 for training. Having paid that sum, it applied for a grant from CITB and received £5,000. Therefore, that company paid almost £70,000, including a levy of £17,500, for £5,000 in return. Commercial training does not offer the construction industry good value for money.

Building contractors are particularly angry at the seemingly unlimited access that CITB officers have to their personal records and files. A CITB officer will come into an office to ask questions. He will record on his laptop the answers that he receives, and he will take that information back to CITB headquarters. That that is done causes contractors great resentment, not to mention the questions about data protection that arise.

In January 2006, the Department for Employment and Learning (DEL), under the review of public administration (RPA), decided to wind up CITB. However, lobbying by CITB resulted in the non-implementation of that decision. Again under RPA, and before the restoration of devolution, Peter Hain announced that he would amalgamate CITB and the Sector Skills Council (SSC) for Construction, but that did not happen. For a long time, the Construction Employers’ Federation (CEF)was a great supporter of CITB — they were almost in the same bed — but it has recently forwarded a document to CITB that asks for a complete review of its operation and the manner in which it conducts its business. It has also asked CITB for a considerable reduction in the amount of levy that is exacted. The motion is fundamentally in tune with that recommendation.

Photo of Jimmy Spratt Jimmy Spratt DUP 12:15 pm, 25th February 2008

I support the motion, and I declare an interest. My son owns a small construction company, so I have been given an invaluable insight into the current climate and the challenges that are faced by the construction industry. As we all know, the construction industry is a vital component of our economy, so we must aid it however we can. The industry is largely made up of small firms with an annual turnover of less than £250,000 a year. The industry comprises 11% of the Northern Ireland workforce and provides a livelihood to many people in Northern Ireland.

Only last week, a construction worker spoke on Radio Ulster’s ‘Evening Extra’ programme, and I listened intently to his comments with a view to today’s debate. I was struck by the gentleman’s desire to remain in the industry, even at this difficult time. However, he made it clear that if work were not available in Northern Ireland, he would have to consider seriously the prospect of moving to Scotland, or perhaps the Isle of Man, to gain employment and earn a living. This young man should not have to leave Northern Ireland in such circumstances. This is his home; yet he faces the real prospect, as some of his colleagues have also faced, of being forced to leave Northern Ireland to find work elsewhere.

There is much talk about the brain drain — do we now have a skills drain? It is individuals such as that gentleman; bricklayers; plumbers; joiners and electricians, who need the support of the structures and mechanisms that are in place in their industry to help them to get through this tough period

Photo of Iris Robinson Iris Robinson DUP

Does the Member agree that instances of paramilitary activity, whereby paramilitaries demand protection money from construction firms, comprise an additional drain on the construction industry? If such money is not paid, vehicles and other paraphernalia belonging to the firms are destroyed by those same people.

Photo of Jimmy Spratt Jimmy Spratt DUP

I agree fully with the honourable Member, and we have seen many examples in the not too distant past of very expensive equipment being burnt, so that is also a problem in the industry. The mechanism is in place to help the construction industry to tough it out.

Training is an important aspect of CITB’s function; however, over the past few years, it appears that some people in the industry have become unclear about the organisation’s training and development role. Indeed, the clouding over of CITB’s role has been the knock on effect of a decrease in direct training. CITB appears to play a key role in identifying skills required, and one could argue that a more strategic role has developed for the board. We must assess whether the change in direction is positive, or negative, and whether both roles can be fulfilled adequately. We should note that CITB is a statutory body with the appropriate — and I emphasise appropriate — statutory powers to collect a levy and develop training criteria, and it is legally accountable. We should keep that in mind during our deliberations today.

It is vital that the board, as the representative body, is seen to represent the construction industry as a whole. That is particularly the case in the construction industry, where the vast majority of firms are small. We must ensure that the board is genuinely representative. Currently, CITB membership comprises employers, who take a lead role, academics, and trade unions. It is right that employers take a leading role on the board.

We must aid our industry in any way that we can at this time, as must those support groups that are already in place. We must always be mindful of the small construction firms that constitute probably the vast majority of employers in the construction industry; those small firms must not be left out. I support the motion.

Photo of David McClarty David McClarty UUP

I thank the Members for securing this very important debate. I, along with others, recognise that the construction industry is going through a difficult period, and it is likely to do so for the next couple of years. However, it should also be noted that the industry has recently undergone a period of record growth, although, unfortunately, it seems that this has, somewhat inevitably, ended.

The sub-prime mortgage scandal, the credit squeeze, and, perhaps, some overly exuberant speculative development have taken their toll on Northern Ireland’s housing market. We need a period of stocktaking in which we can support first-time buyers back into the market and ensure the construction industry’s long-term sustainability and growth.

Those larger issues are reflected in our falling house prices and reduced activity in the construction sector. Indeed, the Ulster Bank’s December 2007 construction purchasing managers’ index (PMI) figure is the lowest since records began in 2000. In Northern Ireland, annual planning applications have dropped by 10,000 since 2004-05. Many problems can be put down to events and economics only. However, in this time of difficulty in the industry, it is right that we should examine the workings of the Construction Industry Training Board. The levy employed CITB is unique among similar industries and the question of value for money is very valid. The levy often hits small construction companies harder, and they can often not get the same use from the services and facilities provided by CITB.

I also draw attention to the limits on payroll costs in Northern Ireland, which are very low in comparison with those in the rest of the United Kingdom. That means that employers who can least afford to pay the levy are in the same position as very large companies.

Although CITB may have been fit for purpose in past decades, there is a case for a more dynamic approach to training and apprenticeships that better suits the needs of the industry in an increasingly difficult marketplace. I support the motion and any subsequent review.

Photo of Alex Attwood Alex Attwood Social Democratic and Labour Party

I, too, welcome the debate, not least because it brings to the Chamber issues around training and apprenticeships in the North. Before dealing with some of the issues raised in Mr Brolly’s motion, it is important to say that the House again expresses general concern about the current situation regarding the training of apprentices. The Minister will be replying later in the debate; however, on 11 February 2008, he confirmed on the Floor of the House that his Department is conducting a review of the Training for Success programme. That review is not only timely, it may well be urgent.

Preliminary figures given to the Committee for Employment and Learning a month ago showed that the number of people undertaking apprenticeships was down by approximately 2,000, year on year — from 7,500 to 5,000; there seemed to be some acute problems with the number of people entering apprenticeships at level 3; evidence given to the Committee, which the Chairperson can confirm, suggested that there are issues arising because part-time employees are not within the range of Training for Success contracts; and there are issues concerning people in the retail industry who may require training given that that industry is the single largest private-sector employer in the North. For all those reasons, the Minister should come to the House and state the nature of the Department’s review, its time frame and its overall purpose.

I would like to think that the Minister and the Depart­ment will address, through the review, the particular issues regarding the construction industry that have been highlighted to the Committee. I will highlight three or four of those today.

First, there is the payment to apprentices — the Department has not laid down how much they should be earning and, as a consequence, some employers in the North are paying the minimum amount of £40 per week to those in training.

Secondly, there is inconsistency in training under the Training for Success programme. Some trainees may be in training for two days and on site for three; others may be in training for three days and on site for two; and some may be in training for three days only. That is not the way to develop a cohesive group of trainers in the North to serve the needs of construction industry trainees.

Thirdly, the fundamental issue, given that the Training for Success programme was meant to offer employment from day one, I have evidence that indicates that only 40% of those who go into training are in employment from day one. I trust that these broader issues about the construction industry will be addressed by the Department and by the Minister in his review.

Finally, I want to turn to the other substance of the motion, namely the work of the Construction Industry Training Board. As Mr Brolly and other Members have said, I agree that it is time to conduct a review of the Construction Industry Training Board. If the Minister accepts the motion and a review is undertaken, I would urge him to consider four issues.

The first is the strategic planning role of CITB, whereby three members of staff and consultants are paid more than £300,000 per year. Is that value for money and is CITB providing the strategic planning requirements that the industry seeks? Secondly, why is CITB involved in careers promotion, because although it may or may not be doing that job well, is there not a family of careers advisers in the Department for Employment and Learning and the broader structures in the North who are providing that service? Furthermore, does £156,000 per year need to be spent on staff and other costs for that function?

Thirdly, will the Minister, through the review, examine regional advisory services — in which staffing and other costs amount to £500,000 per year — and determine whether that work is being done in a targeted way? Finally, will the Minister look at administration and the payment of grants — whereby six staff are being paid, with associated costs, £188,000 per year — and decide whether that is the right way for the payment of grants and the needs of the industry to be met satisfactorily?

Photo of Naomi Long Naomi Long Alliance 12:30 pm, 25th February 2008

I do not think that I need to declare an interest in this issue because I am no longer a practising civil engineer. However, from my time as a civil engineer, I have experience of CITB, through being trained by the organisation and working with other members of staff who were also trained by it.

Although I do not have any particular problem with the wording of the motion, I am slightly disappointed at the jaded view that people have taken of the organisation in the debate so far. No organisation is perfect and all of us would admit that there are areas that could be changed and improved. However, some of the things that CITB do are important and should not always be placed in a negative context.

One of the biggest gaps in the construction industry is being able to have training and skills provided, especially in an industry largely based on the self-employed or very small firms of contractors. Such firms, especially in periods of financial difficulty, can find it very hard to afford to invest in their staff. It can also be difficult for them to see the benefit of such investment when staff might be very mobile. They could be investing large sums to train staff who, in six months’ time, could be working for a different company, which would be reaping the benefits. Therefore, it can be a difficult industry in which to embed training.

The idea behind the levy was that companies that had more money would pay more through a levy and that that would then be redistributed in more affordable training for those in smaller companies. Whether the levy balance is working well is an issue that needs to be considered. However, the notion that the construction industry as a whole should pay for the training of those employed in the construction industry is an entirely sensible and appropriate principle because, under current laws, many of the small, single-person or two-person firms in the construc­tion sector could not afford to meet the requirements necessary to function in the industry.

There are other aspects of CITB that have to be considered. The organisation has its grant for training and achievement, providing training advice and research from its own facility. It also has a role in careers promotion and monitoring trading standards. Other Members have suggested that that may not be necessary and that people will pay only for good-quality training. However, the standard of training is crucial.

Historically, the construction industry has one of the highest fatality rates of any industry. That rate has come down significantly because of good quality health-and-safety training, good practice and good monitoring. Unfortunately, experience shows that we cannot simply rely on people in the industry to self-regulate the quality of that training or trainees’ performance on health-and-safety issues; it requires independent assessors. For those reasons, it is important that everyone has access to good quality training.

CITB has been reviewed several times, most recently in 2005, and the board is considering restructuring and reorganising. The Department for Employment and Learning is due to re-evaluate the board in 2010, so a review in 2008 would neither be value for money nor productive.

When people working in the industry were surveyed, more than half of them felt that health-and-safety concerns would be less of a priority if CITB were disbanded. Almost half of those surveyed thought that the quality and quantity of training would be reduced. If people are working in a dangerous and difficult environment in which investment in training, and the emphasis on health and safety, is reduced, that should concern the Assembly.

Photo of Naomi Long Naomi Long Alliance

I cannot give way; I am very short of time.

The promotion of careers in the construction industry is also an issue. The industry is diverse, and it is difficult for people to get hands-on work experience, because of site conditions and health-and-safety requirements, in order to decide which area of the industry appeals to them. CITB has brought people onto controlled sites so that they can get valuable hands-on experience. I would not completely dismiss CITB’s role in such activities, but whether it should be the lead partner is another question. However, it is important to allow school-age students onto construction sites so that they can get a flavour of the opportunities that are available.

Photo of William Hay William Hay Speaker

The Member’s time is up.

Photo of Naomi Long Naomi Long Alliance

The Alliance Party has no problem with the motion, but I am slightly concerned about the tone of the debate.

Photo of Adrian McQuillan Adrian McQuillan DUP

All Members acknowledge the fact that there has been a downward trend in the construction industry over recent months. How do we address that downturn, and how do we invest in training our work­force for the future?

The Programme for Government and the Budget have made it clear that the present situation of Northern Ireland’s being heavily dependent on the public sector is not sustainable. We must examine every area of business life in Northern Ireland in order to address that issue. Last week, we debated our tourism industry, which can be developed by private investment. In the course of that development, the construction industry would undoubtedly benefit by way of newbuild projects.

We must also examine the development of Northern Ireland’s infrastructure needs to ensure that private-sector investors view Northern Ireland as being the right place in which to invest. The upgrade of the water and sewerage systems is under way, and the building of hotels and the upgrading of our road and rail networks are linked to the future economic well-being of our construction industry.

In order to achieve the technical or managerial skills and the professionalism required to ensure the delivery of those standards, we must have the best system in place, for Northern Ireland and beyond, to develop those skills and professionalism. A root-and-branch review of the Construction Industry Training Board will help to identify those areas where improvements can, or should, be made and modernised. That should also ensure that CITB is a proactive body that can identify the need for new skills early on — for example, in energy-efficient home construction — and put in place the training programmes that are needed to ensure that the industry can not only keep up to date, but be ahead of its rivals in the UK and, indeed, worldwide.

I am not saying that the existing CITB structure cannot deliver on those issues, and I do not want anyone who is involved with the board to think that I am criticising the current structures. However, there are always good reasons for taking a long, hard look at the structures and seeing ways in which they can be improved so that any skills deficit is reduced and a skills base is available in Northern Ireland when it is required. I fully recognise CITB’s good training work in several areas — health and safety, apprenticeships and scaffold operator training. My suggestion would ensure the best possible system for Northern Ireland.

I ask the Minister for Employment and Learning to conduct a review, with the aim of providing the world-class skills that are required to ensure that Northern Ireland can build its future in-house from a highly skilled workforce that has been trained by local firms. In that way, the economic benefits of regeneration and development can remain part of Northern Ireland’s economy. That will benefit not only construction firms, but the people whom they employ. Our economy can, and will, be expanded; however, any skills deficit will put us at a disadvantage competitively, result in a further downturn in the construction industry and result in fewer people being employed in the industry.

Let us take this opportunity to ensure that a vital component of our economic development is ready for the challenges that lie ahead.

Photo of Sue Ramsey Sue Ramsey Sinn Féin

Go raibh maith agat, a Cheann Comhairle. Like other Members, I welcome the motion. I welcome the Minister for Employment and Learning and commend the other parties for not tabling amend­ments, because the motion covers the issues that Members have highlighted. Judging by Members’ contributions, I think that the motion will receive the unanimous support of the House.

Although I take on board Naomi Long’s point about positive results emanating from the training board, I want to make it clear that Sinn Féin has not called for the disbandment of CITB, but a fundamental review.

I agree wholeheartedly, with David McClarty’s view that the construction industry has grown over the past few years. The investment strategy states that public investment could total £14·3 billion over the next 10 years, with nearly £4 billion already confirmed for 2006-08. Therefore, we must ensure that the correct amount of money goes to the construction industry.

The purpose of the motion is to raise genuine concerns that the construction industry has highlighted to Sinn Féin about CITB; I am sure that the board has done the same to other parties and individuals. In February 2005, Deloitte MCS submitted a final report to the Department for Employment and Learning on its review of CITB. The board was last reviewed in 1998. During the 2005 review, there were substantial terms of reference, but they did not include some issues of major concern to the construction industry. The purpose of Sinn Féin’s motion is to address those issues and for the review to start off on the right footing.

The purpose of CITB is to encourage the adequate training of those employed, or intending to be employed, in the construction industry. Francie Brolly and other Members highlighted the fact that no statutory levy is imposed on any other industry. Therefore, why impose a levy on one group and not on another? I accept that CITB uses the moneys to help the industry with training costs. However, companies complain that it is too difficult to claim grants under the current system. Some companies do not even try to claim, because the complicated application form changes from year to year.

Francie Brolly and Alex Attwood referred to the fact that CITB in England pays out over 80% of its levy in incoming grant aid, but here it is just over 43%. How do we account for the other 57%? It has been indicated that training accounts for that 57%, but we need to see that information so that people are made accountable for the money that they receive. CITB has an annual income of £42 million and a staff of 52; almost half the levies collected in 2002-03 were spent on salaries, travel and company cars. Is that value for money? We need to ask those questions and get answers.

The 2005 review accepted that the need for training in the construction industry is not matched by the uptake of training by contractors.

The perceived value for money provided by CITB is a concern for many in the industry. Those issues were highlighted during the Department’s own review. Members should bear in mind that, in the motion, Sinn Féin calls for the proposed review to include:

“the issues of levies, apprenticeships and the disbursement of grants.”

Naomi Long said also that there seems to be a jaded view of CITB and that no organisation is perfect. That may be her point of view, but the Assembly should strive for perfection and must move in that direction.

I agree with Jimmy Spratt that CITB, as the representative body, should be seen to represent the industry as a whole. That comment was spot on.

I had intended to make some other points, but I am conscious that my time is up. I support the motion and commend it to the other parties. Go raibh maith agat.

Photo of Jim Shannon Jim Shannon DUP 12:45 pm, 25th February 2008

I support the motion. Indeed, it was not too long ago that the House debated the subject of apprenticeships in Northern Ireland, and it is important to discuss it again in relation to the construction industry.

There is work, and we have the employers. There is a need for the Department to exercise its rights and to put in place the regulations required to meet the projected need in the Province.

Ther er scaurs that tha industree canny keap gawn oan tha wae it shud be acaus o’ tha nummer o’ plannin eplikatshuns gaun thru’. But mi lukin wud be that whun we hae tha labur nummers whau hae tha knac, we wull be abel tae pit fort oorsels on tha mainland en fardar afiel, whuch meens ther wull aye be woark fer theim whau that er abel tae dae it.

There are fears that the industry cannot continue in the way that it is due to the number of planning applications going through. However, my view is that when we have the skilled labour numbers, we will be able to promote ourselves on the mainland and further afield. That means that there will always be work for those who are able to do it.

Northern Ireland’s growth rate is significantly higher than the rest of the United Kingdom’s as regards the construction industry. It has been estimated that both construction output and full-time employment are expected to rise by an annual average of 4·4% and 3·9% respectively, leading up to 2010. That prospective work will, of course, require an increase in skilled workers. DEL, therefore, must step into its role and work with CITB to make provision for that. The point is that we want partnership, not abolition, and for that partnership to be — excuse the pun — more constructive.

It is not simply the projected growth in Northern Ireland that demands attention. Our young men, and to a lesser extent, our young women are being poached to work on the mainland, as a consequence of the superior training that is inherent in Northern Ireland. I know a 22-year-old man who, having finished his apprenticeship as a foreman, did some work experience on the mainland. The English firm offered him a starting wage of £32,000 plus bonuses, as well as free flights home every other weekend. It was difficult for that young man to stay at home, especially as he was considering buying his own apartment in Ards, which is the property hot spot of the UK. He did, however, choose to work at home for a lesser wage. I cannot pretend that that will always be the case. We train young men to higher standards than on the mainland only to have them poached by firms there. That is unacceptable.

At present, the construction industry in Northern Ireland employs over 78,000 people, and that number is expected to increase by 10,000 in the next two years. At this point, I want to make a plea for Strangford. In that area, there are many people, young and old — especially the young ones coming through — looking for jobs, and the construction industry is a very important part of the employment structure. It is clear that there must be a considered and co-ordinated effort not only to supply the numbers needed to get the work done in the Province, but to enable more Northern Ireland firms to tender on the mainland, while displaying their superior skills.

A Saintfield firm called Dawson Wam (GB) Ltd, which is based in my constituency, is working on a signature project in Canary Wharf in London and on some motorway projects, using its teams from the Province and doing an exemplary job. It is its vision, and that of many other firms in Northern Ireland, to be able to expand on the mainland.

There are opportunities that far exceed the work to be done in the Province, and now is the time to put in place the structures that are needed to facilitate that growth, both in Northern Ireland and further afield. It is also clear that that must be done in partnership with CITB and that it is no longer enough for CITB and the Department to be exclusive from each other in the way that they work.

CITB is known for its ability to liaise well with small firms, and we must ensure that it liaises with bigger businesses, too. The Department for Employment and Learning’s role is to promote, as well as to encourage and support, the smaller things.

It is clear that, at some stage, there has been a breakdown in communication, and that a greater vision must be recognised and pursued. DEL must liaise with the Department for Social Development (DSD), and all other Departments, to ensure that the work that is scheduled is done by home-grown teams rather than by teams from the Republic and elsewhere, which has been the case in some hospital projects of which I am aware.

If we build up our own industry, train the men and women, and let them work, in the long run, we will see more Northern Ireland firms being big hitters on the mainland, and further boosting our reputation and economy. We must address the issues, put in the groundwork and the good foundations, and the superior skills that our construction industry displays will ensure that we get the recognition and the jobs that we very much deserve.

Photo of Declan O'Loan Declan O'Loan Social Democratic and Labour Party

I want to focus primarily on the phrase in the motion that refers to:

“the downturn in the construction industry”.

Although I am content with the latter part of the proposal, I have some concerns about that phrase, because it is neither accurate nor helpful. I say that in the context of the upcoming investment conference, which is a major opportunity for us. It puts huge demands on all sectors to deliver, and it is important that we send out the right message. I am not sure that the wording used does that.

We have a construction industry that can compete in international markets, even though I cite only two examples — Mivan and the Patton Group, which I heard being referred to recently as having done a multimillion-pound shop-fit for Selfridges in London. We have an industry that can compete on the international stage.

Today, I, and other members of my party, met the Construction Employers Federation. I want to make some broad comments about the industry as a whole, and I hope that I do justice to the remarks that were made to us. The mood of CEF is quite buoyant. I will make some specific points on housing, but we should not forget that construction is not just about housing — there are other sectors of the industry, such as retail and office building. There is also a much wider civil engineering sector.

There is no doubt that there is a decline in house starts, following a welcome drop in house prices. Nonetheless, the omens for the future are strong. Housing growth indicators describe a housing need, showing requirements for a large growth in the housing stock — I believe as many as 200,000 houses over a forecast period, which is something in the order of 15 years. We know about the determined plans of the Executive to build 10,000 social houses within five years.

We have an investment strategy, with plans for an overall investment of £18 billion by 2018, and much of that money will go into the construction industry. An important issue is the capacity of the sector to deliver, and the message that I heard today is that the sector is confident that it can deliver. A major concern of the sector is the reality of the public expenditure plans, both in the short term and the medium term. The Assembly and Executive are putting a great deal of faith in asset sales. The uncertainties in relation to that strategy need to be recognised. There is also a considerable lack of detail about the role of PPPs in the delivery of the investment strategy.

Before industry will invest, it needs to have confidence in that level of public investment. We want to put as much certainty as we can into the system — although there can never be total certainly, as the strength of a private enterprise system is that it is not certain. There is a link to the employment and training issue in the area of confidence and certainty. Before the industry will commit to expanding its workforce and investing in training, it needs to have confidence that it is going to get its money back on its investment.

Although I support the proposal concerning CITB, I am critical of a significant amount of what I heard from the proposer of the motion, and in one later speech.

Photo of Francie Brolly Francie Brolly Sinn Féin

Surely the Member understands that he is talking about firms such as the Patton Group and Mivan, which would be able to absorb a few years of weak turnover. Jimmy Spratt and I are talking about the people from our communities, such as the small contractors, who together employ a huge number of people. However, I know of construction workers from my home community who are walking the streets today.

Photo of Declan O'Loan Declan O'Loan Social Democratic and Labour Party

I am aware of the issues with which small employers have to deal, and I know that they are an important part of the construction industry. In fact, when I was talking to the representatives of CEF this morning, we discussed small firms. Therefore, I am not blind to those realities; I am merely attempting to give an overview of where the sector is going and of the part that the Assembly and the Executive play in it.

As I have said, I am critical of a great deal that I have heard Members say today. I feel that they have dealt unnecessarily with issues that, in the context of the overall strategy, are relatively petty. We have a bigger job to do; the Executive and Assembly need to rise to the occasion and contribute to major strategic decision-making.

Photo of Reg Empey Reg Empey UUP

I am indebted to the Members who tabled the motion. There is a range of issues to be dealt with, and I will attempt to do that as I proceed. However, to give Members some context, the previous review of CITB commenced in 2004, and since then, progress has been made on its recommendations. The review, the report of which is available publicly on the Department’s website, concluded that CITB be retained and that a statutory levy is necessary for the sector. Construction industry employers indicated in that review that the functions of CITB and its continued existence were considered necessary in order to encourage training.

The skills context in which CITB operates is changing rapidly and is very broad. It may be helpful if I outline briefly the current skills position, including the policy debate on collective measures, which is topical across the UK. Over the past decade, our economy has experienced steady growth. Our labour supply continues to increase due to high levels of inward migration and to the stream of well-educated young people who are entering the workforce. Those developments, coupled with high labour demand, have seen employment rise strongly and our productivity increase. However, in Northern Ireland, we have the highest number of employed and the lowest number of unemployed people that we have ever had.

In the recent Programme for Government, the Executive identified the economy as a primary focus. They also identified skills as one of the six pillars that were specified in the investment strategy. Our vision for a successful future economy has been characterised by high productivity, a highly skilled and flexible workforce, and economic growth. However, this year, we will review our skills strategy to take account of the changing situation that has been described. That review will take account of the all-island and cross-UK context, and all that will be put in the context of Europe and of the global challenges that face us.

Total employment in the construction sector in Northern Ireland is expected to rise from approximately 84,000 to 95,000 between 2008 and 2012. To meet that demand, almost 3,000 new workers will be required to join the industry each year. One of the factors boosting demand will be the investment strategy for Northern Ireland 2008-18, through which over £18 billion of new infrastructure will be delivered during those 10 years.

The potential benefits will be maximised if we can build skill levels in the local construction workforce to strengthen the economy. CITB, as a partner in construction skills, will have to address the skills issues for the sector.

The motion noted the recent downturn in the construction sector. It is true that construction in Northern Ireland has enjoyed strong growth in recent years, and we know that that downturn has tended to be concentrated in the housing market. However, the investment strategy has resulted in the infrastructure side of the sector still enjoying significant buoyancy.

Turning to Members’ points, Jimmy Spratt asked who takes the lead role in CITB. Certainly, the employers have the lead role in making the decision on the levy, but the board’s entire membership deals collectively with other matters.

Mr McClarty discussed whether small firms get value for money. As I understand it, approximately 64% of the CITB levy comes from those firms, which receive approximately 68% of the grants that the board issues.

When proposing the motion, Mr Brolly referred to the RPA proposal to amalgamate CITB and Construction­Skills. Both organisations exist here and in Great Britain, and the Department for Employment and Learning has encouraged their alignment here. As Members are aware, CITB has statutory levy-raising powers, which are preserved under the new arrangements. I warmly welcome the fact that ConstructionSkills is establishing itself in Northern Ireland in order to undertake its sector skills role.

Alex Attwood raised several issues, including careers and the review of Training for Success. Work on Training for Success has already commenced, and we envisage that we will be in a position to consult with the Committee for Employment and Learning in March or April, with a view to having any revisions in place for the next academic year, which commences in September. Although we have looked closely at several of the issues at an earlier stage than was anticipated, we believe that the necessary flexibility must exist. I hope to be able to talk shortly to Mr Attwood and other members of the Committee about that matter.

Mr Attwood also mentioned wages, and it is ironic that apprentices are exempt from the national minimum wage regulations. That point is perhaps not understood fully outside the House. The Department’s guidelines basically state that people should be paid the going rate for the job. We know that that does not happen in all cases, but to put it into context, the national minimum wage regulations do not actually deal with that.

Turning to the sector skills —

Photo of Alex Attwood Alex Attwood Social Democratic and Labour Party 1:00 am, 25th February 2008

I thank the Minister for giving way. I have listened very carefully to what he has said, but I have not picked up whether he is minded to conduct a review on the workings of CITB.

Photo of Reg Empey Reg Empey UUP

Perhaps if the Member would let me finish, he would get a flavour of that later in the debate.

Photo of Alex Attwood Alex Attwood Social Democratic and Labour Party

I thank the Minister.

My second point is that construction employers do not like the fact that people are getting paid £40 a week. They are telling their members and the industry that they should pay on an appropriate scale. The construction employers are saying that whatever the Department’s advice may be, it is so vague as to allow employers to pay their workers £40 a week. Is there not a need for less ambiguity and for more definition about what apprentices should, and must, be paid?

Photo of Reg Empey Reg Empey UUP

The Member will realise that the national minimum wage regulations are not a devolved matter, and that, therefore, creates a particular difficulty for us. An additional issue is the question of what employers pay and whether they provide apprent­iceships. I have made it clear to the House previously that I believe that employers have a responsibility — and indeed a much greater role to play — to provide apprenticeships. Many do not do so, which is a weakness in our system.

Many employers have been able to hide behind the inward migration of substantial numbers of workers, who are effectively covering up for the skills gaps that clearly exist. If those workers decide to move elsewhere, we would have a significant problem ahead of us.

As far as the more substantial issues are concerned, I have dealt with Training for Success, and, as I said, I hope that my Department will shortly be in a position to ask Members to give the matter further consideration in a future debate.

Among the Members who highlighted other issues, Naomi Long talked about problems with the atmosphere and that a jaded approach was being taken. It is inevitable that any tax on employers will create difficulties, and that is the case with the one that CITB, in effect, imposes. However, I want to set that issue in the context of the Leitch Review that was published at the end of 2006. Over the past few months I have been under pressure from Whitehall Ministers who have been considering whether more bodies in GB should levy employers, which is what happened here several years ago. CITB is the only remaining training board in Northern Ireland to levy employers, but there used to be others.

The Leitch Review recommended voluntary arrang­ments with employers for training. However, it did not anticipate the necessity to proceed with the imposition of bureaucracy. It is inevitable and unavoidable that when that happens, administration accounts for a significant percentage of the levy. However, some Members seem to be confused about that issue: approximately 80% of the levied amount is returned to employers in the form of grants and soft assistance, such as advice, and so forth. Therefore, contrary to what has been implied, the entire levy is not taken up by administration. Simply to calculate the amount of money that remains after grants are paid would indicate that larger amounts are being spent on administration than is the case.

I have been resisting the suggestion that my Depart­ment creates a series of bodies that could levy employers to provide training. Not only have employers enough to contend with, but they must be convinced of the merit of training. One wonders at the long-term viability of employers who do not recognise that having well-trained staff is in the interest of their long-term bottom line.

Photo of Naomi Long Naomi Long Alliance

Does the Minister accept that workforce mobility and the difficulty in making employers aware of the benefit to their businesses of investing large sums of money in training an individual who may quickly move on from the company, make the construction industry unique?

Photo of Reg Empey Reg Empey UUP

I accept that the construction industry is unique because of the nature of the work and the fact that it is constantly changing: that is why CITB was not subsumed into a single training board with all the other bodies.

I welcome today’s debate. As Members said, CITB was reviewed in 2004-05 and, under the quinquennial arrangement, the next review is not due until 2009. The proposed review of CITB is at the core of the debate. As CITB is a non-departmental public body, it is fully accountable, through the Department for Employment and Learning, to the Assembly, and its performance is monitored closely. It is subject to regular formal reviews, the next of which is due to commence in 2009.

From Members’ comments today, the concerns that they raised, and the significant changes in construction skills, it is evident that it is now timely to pause and reflect on the operation and funding of CITB. Therefore, in view of the issues raised by Assembly colleagues in the debate, I am prepared to bring forward the planned review of CITB in 2009 to this year. Construction is an important sector in the local economy, and the review will clarify the appropriate future role of CITB.

I shall bring forward the review to the current calendar year. I will keep the Committee advised and apprised of the Department’s proposals. That is my response to the concerns that have been raised during the debate. I hope that I have taken into account the significant concerns that have been expressed. However, we must be fair to everyone, and the review will have no predetermined outcome. In view of what Members have said, it is timely to expedite the review.

Photo of Paul Maskey Paul Maskey Sinn Féin

Go raibh maith agat, a Cheann Comhairle. I thank the Minister for bringing forward the review. I hope — and I am sure that all Members agree — that the review takes place early this year because it is important that the industry moves in the right direction. Given that the Minister has said that he will bring the review forward, my speech will not last for 10 minutes.

When proposing the motion, Francie Brolly mentioned levies, which must be considered as part of the review. The Minister said that he is not sure how the review will look, or what outcomes it will produce. Along with the Minister, I attended an event organised by the Northern Ireland Assembly and Business Trust in this Building, which was attended by businesspeople from all over the North. One businessman that I spoke to said that he could employ an additional 200 people the following day if they had the necessary level of skills. That is a very important issue, as is the matter of levies.

One of the most important training initiatives in the construction industry is the apprenticeship system. CITB has no direct role in the delivery of that scheme or in the setting of standards, which are controlled by the natinal vocational qualifications system. CITB has a careers department, which duplicates the work of trained careers teachers in schools, recruitment officers for training organisations, colleges and universities, and staff in the local jobcentres. Government schemes such as Bridge to Employment have provided training for the construction industry, without a levy. The construction industry must invest in its workforce.

Francie Brolly also mentioned value for money, and used the example of a local firm that paid CITB a levy of £17,500, and £49,000 to commercial trainers for training, but received a grant of only £5,000. I am not sure whether such practice is sustainable in the construction industry.

The Member for South Belfast Jimmy Spratt mentioned the challenges that the construction industry faces, particularly small firms. He said that it is sometimes beneficial for small firms to move elsewhere, which some have done, and some might still do. We do not want that to happen because such firms are too important to the development and sustainability of the North. Mr Spratt went on to talk about skills training, which is something that Sinn Féin hopes is addressed by the review because the skills requirement is unclear.

David McClarty said that the record growth of recent times has ended, and he was later criticised by Declan O’Loan, who said that we must be careful about the terminology that we use. Mr McClarty then spoke of fit-for-purpose training and apprenticeships, which ties in with the issue of value for money.

Alex Attwood voiced his concern about training apprenticeships — a point that has been well made during the debate. The review should proceed as a matter of urgency.

Naomi Long mentioned her civil engineering background. She may not have a conflict of interests any more — it is up to her whether she goes back to that occupation.

Photo of Naomi Long Naomi Long Alliance

That depends on the electorate.

Photo of Paul Maskey Paul Maskey Sinn Féin

I was just about to say that politics is a strange game — some of us may not be here next year. It is always good to have an occupation to return to if needs be.

Naomi Long also talked about affordability for employers and staff, and she mentioned the review, which she said should create more understanding.

The motion is very clear in calling for the Minister:

“to conduct a wide-ranging review of the remit of the CITB”.

I hope that we have managed to address some of her concerns about the wording of the motion.

Adrian McQuillan said that the review will assist in creating better-quality training and safety for the workforce. We must strive for world-class skills for our workforce. Sue Ramsey commended other parties for not tabling amendments to the motion, and I echo her remarks. Members have shown leadership.

Jim Shannon talked about people in his constituency of Strangford, and he referred to an individual who could have secured employment in England with a salary of £32,000 but who chose to stay here. That person has shown leadership by staying, and I hope that he can be a future employer. I ask Mr Shannon to send him our regards.

Minister Empey referred to some of the issues that we want to see covered in the review. I thank him for coming to the Chamber and for saying that he will bring the review forward by a year. I hope that the review will occur as early as possible this year; it has been pointed out several times already today that we need it to happen as quickly as possible. Go raibh maith agat.

Question put and agreed to.


That this Assembly notes the downturn in the construction industry, and the concerns raised by contractors about the powers and responsibilities of the Construction Industry Training Board (CITB); and calls on the Minister for Employment and Learning to conduct a wide-ranging review of the remit of the CITB, to include the issues of levies, apprenticeships and the disbursement of grants.