Apprentice requirements imposed by local authorities on contractors are backfiring – leaving some trainees out of work and firms out of pocket
Amid the cacophony of politicking before last month’s local elections, you may have heard candidates promising to create “local jobs for local people”. Politicians are acutely aware of the benefits of creating employment – they love nothing more than touting the number of jobs delivered to their residents. But one method of boosting the figures is coming under increased scrutiny from the construction industry.
Over the past two decades, councils have started to impose tough requirements forcing contractors to provide apprenticeships as a condition of the client gaining planning permission. Amid its acute skills crisis, the industry is keen to offer such opportunities. But a crescendo of complaints from firms reveals a system that could be having the opposite effect to the one intended.
“There is a really unrealistic set of expectations levied upon us by some local authorities, because they often lack an understanding of how construction packages work, and they don’t have an understanding of the industry,” says Lucille Watkins-Brazier, head of social impact at Lendlease. Whether through ignorance or cynical self-interest, local politicians stand accused of creating a system that is producing a cohort of disillusioned apprentices abandoning construction for other sectors.
“There is a really unrealistic set of expectations levied upon us by local authorities”
Lucille Watkins-Brazier, Lendlease
Most councils outline their rules on the creation of apprenticeships within their strategic planning policies. These typically include a blanket ratio on all but the smallest developments. They outline a formula for numbers of apprenticeships related to the scheme’s value, floorspace or land area. For example, Lambeth Council’s policy requires contractors to provide one new apprenticeship role per 1,000 square metres of development or every 10 residential units provided.
To win work on a project, firms must show how they will meet the target via a skills strategy that is formally included in the section 106 conditions attached to the planning permission. In most cases, the targets are partially delivered through subcontractors who must include proposals in their tender bids before they are enshrined in the final contract.
Missing the targets leads to an automatic fine from the local authority, which lands on the main contractor, or is passed down the supply chain. On the largest projects, the financial risk can be eye-watering. One firm told Construction News it is working on a multi-phase scheme in central London where failing to fill one vacancy would mean the firm paying £25,000. The firm is meeting the targets but, because of the size of the job, the theoretical risk is around £2.5m.
Geographical restrictions
The job of meeting the quotas is made more difficult by geographical restrictions imposed by local authorities. Outside London, these catchment areas are often widely drawn, experts say. London boroughs, however, almost exclusively require that apprentices are drawn from the borough in which the scheme sits.
“Most of the boroughs have moved away from [best endeavours]. So now it’s generally, ‘You hit the quota or we will fine you’”
Sue Hardy, Mace
This means that a contractor working on a large scheme on the edge of Westminster, for example, would not be able to take on apprentices from any of the six surrounding boroughs. This restriction is a major headache, says Watkins-Brazier. “We’ve had examples of having a potential apprentice living one end of a road and another living at the other end. They were both shopping in the same place, supporting the local economy in exactly the same way. But we couldn’t claim one of them just because the borough line fell halfway along the road.”
The issue is exacerbated by a mismatch between the length of time apprenticeships take – typically three years – and the much shorter duration of construction jobs and subcontractor packages within them. When a job finishes, contractors face the prospect of finding another project to move the trainee to.
The geographical restrictions imposed by local authorities make this even more challenging. “If a contractor has a job in, say, Camden with four apprentices, when they win a job in Hackney, they have to take on another four local apprentices through that new section 106 agreement,” says Sue Hardy, community and skills team leader at Mace. “So what happens to the ones they’ve already taken on in Camden?”
“We are looking at clustering – creating groups of central boroughs that might be able to collaborate”
Keith Bottomley, City of London Corporation
The stark answer appears to be that the first set of apprentices are often made redundant. “We only have so much capacity, so inevitably it can mean letting go of the original apprenticeships to take on the new job,” says Janette Welton-Pai, group funding and learning manager at Willmott Dixon.
“I could have 10 apprentices in Newham,” says James York, Morgan Sindall Construction’s area director for Thames Valley. “If I got another job, I would have to find another three, so I would have to get rid of three from the first site.”
This is a situation that the industry is deeply uncomfortable with, according to Welton-Pai. “[The apprentices who are let go] end up thinking the industry has let them down,” she says. Keith Bottomley, deputy policy chairman at City of London Corporation, agrees: “Many apprentices are not completing their apprenticeships because of the rules in the 106 agreement. Or they look at this [situation] and don’t come into the construction industry in the first place. They say it isn’t going to meet their needs. They don’t know how long they’re going to get as an apprentice.”
Agency pros and cons
One way around the rules is to employ apprentices through an apprentice training agency (ATA). “Smaller contractors tend to use skills and training agencies, who then become the employer. Often they have the capacity to move them around,” says Watkins-Brazier. “Quite often you’ll get quite chaotic emails from an ATA, saying, ‘I’ve got a really great candidate. He’s done 90 per cent of his training. He just needs to complete for the next six months. Will you take him?’”
But this route can be stressful and erratic, she says. “Sometimes the ATA is lucky and they’re able to make the puzzle piece fit. But often what happens is those apprentices are left out in the cold and they haven’t got the certification that they need to be able to move forward. So the apprentice is left playing a waiting game, hoping that over time somebody else will be willing to take them on so that they can complete their course, which is really not good practice at all.”
In addition, some contractors have a policy of not using agency labour due to concerns about staff welfare and modern slavery. “We try to avoid using labour agencies and we ask our supply chain not to use them unless absolutely necessary,” says Watkins-Brazier. “That makes the problem even greater, really, because if you’re not using a labour agency, you don’t then have as much capacity to move people around.”
Sadly, the issues with section 106 agreements are nothing new. In 2017, the London mayor’s Homes for Londoners Board presented a solution. Board papers from the time outlined a new approach. The London Local Labour Initiative would “move away from a focus on new apprenticeship and employment starts as well as allowing apprentices, trainees and workers to move between sites across local authority boundaries to enable them to complete their training”.
However, the initiative failed to get off the ground. Welton-Pai worked for the Construction Industry Training Board and was seconded to the Greater London Authority at the time.
“When we got into it, it probably got put in the too difficult box,” she says. “It came up against a lot of blocks. It was a political thing – [councils] wanted the figures in terms of getting people into the industry.”
Since then, problems with the system have only got worse. Originally, local authority policies included wording requiring contractors to make “best endeavours” to meet the defined apprenticeship quotas. That was generally understood to allow contractors to meet a minimum of 50 per cent of the targets, according to Hardy. However, the capital’s boroughs have adopted a harder line. “Most of the boroughs have moved away from [best endeavours] now, because they didn’t like that definition. So now it’s generally, ‘You hit the quota or we will fine you’.”
Some believe this is down to increasing financial pressures on local authorities. One contractor claimed that they work with a London borough that works on the basis that contractors will fail to meet their targets. “They factor it in at the beginning, and budget where they are going to spend the money before you start the projects,” the source says.
In addition, the increasing use of modern methods of construction (MMC) means section 106 quotas are becoming dangerously unfit for purpose on some projects. Using offsite materials reduces the number of workers needed on site. However, the quotas – generally based on floorspace or project values – have remained unchanged for years.
“The targets haven’t moved with the times,” says Hardy. “Due to MMC, the workforce can reduce by a third. So they’re then asking for you to have say, 10 per cent of the people on site now, which is just not safe. When I’ve spoken to health and safety in the past, they have said actually 5 per cent trainees is kind of the limit of what you should have for safe on a site.”
CN made its own best endeavours to talk to representatives of local authorities about the chorus of complaints from contractors – without success. Despite the issue being non-political, some used the excuse of election purdah – rules that prevent any communications designed to affect public support for a political party in the run-up to local elections. Other calls went unreturned.
A welcome solution
However, there could be some light at the end of the tunnel. The Skills for a Sustainable Skyline Taskforce – a group chaired by Bottomley aimed at promoting sustainable development in central London – last year recommended reform to the section 106 apprenticeship system to introduce a more “collaborative relationship between local authorities”.
Bottomley says that his body is currently overseeing discussions with 12 local authorities in central London about potential solutions. “We have defined this area as a critical top three output for the taskforce,” he tells CN. “We are looking at clustering – creating groups of central boroughs that might be able to collaborate so that apprentices could complete their training across multiple boroughs and developments.”
The industry would welcome such a move, saying it could lead to an overall increase in the number of apprentices being taken on. “We do an awful lot of work to get that pipeline of candidates,” Hardy says. “If this system wasn’t siloed and was done across the whole of London, there’d be a massive pipeline of candidates. So actually there’ll be people that are ready, with a CSCS card and the relevant health and safety training.”
While the taskforce’s initiative is confined to less than half of London’s boroughs, it could provide a potential template for similar collaboration in the rest of the capital and further afield. Persuading local politicians to take a more enlightened attitude will not be easy. For the sake of the young people they claim to want to help, and the health of local economies, it is vital they do so.
