Are apprenticeship targets damaging the sector?

Apprentice requirements imposed on contractors by local authorities are backfiring – leaving some apprentices out of work and companies out of money

Amid the cacophony of political activity ahead of last month’s local elections, you may have heard candidates promising to create “local jobs for local people.” Politicians are well aware of the benefits of job creation – they love nothing more than touting the number of jobs provided to their people. However, one method of increasing these numbers is under increased scrutiny from the construction industry.

Over the past two decades, local governments have begun to impose stringent requirements, forcing contractors to provide apprenticeships as a condition for a client to obtain a building permit. Faced with an acute skills crisis, the industry is keen to offer such opportunities. However, a growing number of complaints from companies expose a system that may be counterproductive.

“Some local authorities have a really unrealistic set of expectations because they often don’t understand how construction packages work and have no knowledge of the industry,” says Lucille Watkins-Brazier, director of social impact at Lendlease. Local politicians are accused of creating a system that produces a cohort of disillusioned apprentices abandoning construction in favor of other sectors, whether out of ignorance or cynical selfishness.

“Local authorities are putting a really unrealistic set of expectations on us.”

Lucille Watkins-Brazier, Lendlease

Most councils set out the principles for creating apprenticeships as part of their strategic planning policy. These typically include an overall rate for all but the smallest changes. They present a formula for the number of apprenticeships depending on the value of the program, area or land area. For example, Lambeth Council’s policy requires contractors to provide one new apprenticeship position per 1,000 square meters of development or for every 10 residential units delivered.

To win the job on the project, companies must demonstrate how they will achieve the goal using a skills strategy, which is formally included in Section 106 of the conditions attached to the building permit. In most cases, the objectives are partially achieved through subcontractors, who must include the proposals in their tenders before they are written into the final contract.

Failure to meet targets leads to an automatic fine from the local authority, which is levied on the main contractor or passed down the supply chain. In the case of the largest projects, the financial risk can be dizzying. One company said Construction news is working on a multi-stage project in central London where failure to fill one vacancy would mean a payment of £25,000. The company is meeting its targets, but due to the size of the site, the theoretical risk is around £2.5 million.

Geographic restrictions

The task of meeting quotas is made more difficult by geographical restrictions imposed by local authorities. Outside London, experts say these areas are often widespread. However, London boroughs almost exclusively require that apprentices come from the borough where the program is based.

“Most municipalities have moved away from (the best ventures). So now it’s basically: “You’re over the limit or we’ll give you a penalty.”

Sue Hardy, Mace

This means that, for example, a contractor working on a large project on the outskirts of Westminster will not be able to take on apprentices from any of the six surrounding boroughs. This limitation causes a major headache, Watkins-Brazier says. “We have had examples where a prospective student lived at one end of the road and another at the other end. They both shopped at the same place, supporting the local economy in exactly the same way. But we couldn’t take one of them just because the municipal line dropped halfway.”

The problem is exacerbated by the discrepancy between the duration of apprenticeships – typically three years – and the much shorter duration of construction contracts and subcontracting packages within these apprenticeships. Once work is completed, contractors face the prospect of finding another project to transfer the intern to.

Geographic restrictions imposed by local authorities make this even more difficult. “If a contractor has a job in, say, Camden with four apprentices, then when they get the job in Hackney they will have to take on a further four local apprentices under a new section 106 contract,” says Sue Hardy, community and skills team leader at Mace. – What will happen to those they have already dealt with in Camden?

“We are considering the possibility of creating clusters – creating groups of central municipalities that could cooperate”

Keith Bottomley, City of London Corporation

The clear answer seems to be that the first batch of trainees often get laid off. “We have limited options, so this may inevitably mean giving up your original apprenticeship to take up a new job,” says Janette Welton-Pai, group funding and learning manager at Willmott Dixon.

“I could have 10 apprentices in Newham,” says James York, regional director of Morgan Sindall Construction in the Thames Valley. “If I got another job, I’d have to find another three, so I’d have to get rid of three from the first location.”

According to Welton-Pai, this is a situation with which the industry is deeply uncomfortable. “(Laid off apprentices) end up thinking the industry has failed them,” he says. Keith Bottomley, deputy chairman of policy at the City of London Corporation, agrees: “Many apprentices don’t complete their apprenticeships because of the rules in contract 106. Or they look at it (the situation) and don’t go into the construction industry at all. They say it won’t meet their needs. They don’t know how long they will practice.”

Pros and cons of agencies

One way to get around these rules is to hire apprentices through an apprenticeship training agency (ATA). “Smaller contractors use skills and training agencies who then become the employer. They often have the ability to move them,” says Watkins-Brazier. “Quite often you get pretty disjointed emails from ATA saying, ‘I have a really great candidate. He completed 90 percent of his training. He just needs to complete his work for the next six months. Will you take him?

But this route can be stressful and inconsistent, he says. “Sometimes ATA gets lucky and manages to fit a piece of the puzzle. However, it often happens that trainees are left in the lurch and do not have the certificate needed for further development. So the apprentice is left in a waiting game, hoping that over time someone else will be willing to take him on so he can complete the course, which is actually not a good practice at all.”

Additionally, some contractors have a policy of not using agency work due to concerns about staff welfare and modern slavery. “We try to avoid using staffing agencies and ask our supply chain not to use them unless absolutely necessary,” says Watkins-Brazier. “It really makes the problem even bigger because if you don’t use an employment agency, you don’t have as much ability to move people around.”

Unfortunately, problems with Section 106 contracts are nothing new. In 2017, the Mayor of London’s Housing Board presented a solution. Board documents from that time presented a new approach. The London Local Work Initiative would “move away from the focus on starting new apprenticeships and employment, and enable apprentices, trainees and workers to move between locations outside local authority boundaries to enable them to complete their training”.

However, the initiative was not implemented. Welton-Pai worked for the Construction Industry Training Council and was on secondment to the Greater London Authority at the time.

“When we got into it, we probably fell into too hard a box,” he says. “We encountered many blocks. “It was a political issue – (the councils) cared about the numbers when it came to attracting people to the industry.”

Since then, the system’s problems have only gotten worse. Originally, local authority policy included language requiring contractors to “make every effort” to meet certain apprenticeship quotas. According to Hardy, it was widely understood that this would enable contractors to achieve at least 50 percent of their goals. However, the capital authorities adopted a tougher stance. “Most municipalities have now moved away from (best efforts) because they didn’t like that definition. So now it’s basically: “You’re over the limit or we’ll fine you.”

Some believe this is due to increasing financial pressure on local authorities. One contractor claimed to be working with a London borough that assumed the contractors would not achieve their targets. “They take this into account at the beginning and set a budget for where they are going to spend the money before they start projects,” the source said.

Additionally, the increasing use of modern methods of construction (MMC) means that Section 106 amounts are becoming dangerously unsuitable for some projects. Using external materials reduces the number of workers needed on site. However, the amounts – generally based on square footage or project value – have remained unchanged for years.

“The goals haven’t moved with the times,” says Hardy. “With MMC, the number of employees can be reduced by one third. They then ask you to tell 10 percent of the people currently on site that it is simply not safe. When I’ve talked to health and safety people in the past, they’ve said that in fact, 5 percent trainees is kind of the limit of what you need to have to be safe on a construction site.”

CN made every effort to speak to local authority representatives about the chorus of contractor complaints – to no avail. Even though the issue was not political in nature, some used the excuse of electoral purdah – rules that prevent communications intended to influence public support for a political party in the run-up to local elections. Other calls went unanswered.

A welcome solution

However, there may be light at the end of the tunnel. The Skills for Sustainability Task Force – a group chaired by Bottomley that aims to promote sustainability in central London – last year recommended reform of the Section 106 apprenticeship system to introduce more “collaborative relationships between local authorities” .

Bottomley says his body is currently overseeing discussions with 12 local authorities in central London about potential solutions. “We defined this area as the three most important deliverables for the task force,” he says CN. “We are considering clustering – creating groups of central municipalities that could work together so that trainees can complete their training in multiple municipalities and locations.”

The industry would welcome such a move, saying it could lead to an overall increase in apprentice intake. “We put a lot of work into recruiting this group of candidates,” Hardy says. “If this system had not been siled and rolled out across London, there would have been a huge pipeline of candidates. So there will actually be people ready, with a CSCS card and appropriate training in occupational health and safety.”

While the task force’s initiative is limited to less than half of London’s boroughs, it could provide a potential template for similar collaboration across the rest of the capital and beyond. Convincing local politicians to be more enlightened will not be easy. This is extremely important for the young people they claim to help and for the health of local economies.