Written evidence submitted by the CITB (ITS0001)
The Construction Industry Training Board (CITB) is the employer-led and funded skills and standards body for the construction industry in Great Britain. A statutory corporation, charity, and non-departmental public body, sponsored by the Department for Education, our work supports industry to attract, develop and retain the construction workforce. We maintain construction training standards and keep Britain building safely. Our purpose is to support the construction industry to have a skilled, competent, and inclusive workforce, now and in the future.
CITB welcomes the opportunity to respond to the Scottish Affairs Committee’s inquiry on industrial transition in Scotland, specifically in relation to the construction sector.
3. To what extent is the UK Government’s forthcoming industrial strategy, Invest 2035, geared towards the challenges and opportunities facing Scotland today?
The construction industry provides the critical infrastructure, housing, repairs and maintenance required to support Scotland's economy and communities. The construction industry contributes 6% to GDP, with 21,000 micro, small and medium-sized enterprises (SMEs) generating growth in communities across Scotland. Employing over 231,000 people, it has a significant impact on the wider economy in Scotland.
As such, the sector will be a vital enabler of the growth required to meet the vision of a modern Industrial Strategy. In the vernacular of the Industrial Strategy, Construction would be considered a “Foundational” sector, as it will be required to provide critical inputs and infrastructure to the growth-driving sectors.
The construction sector must be a key sub-sector in the final Industrial Strategy. It is key to the Government's plans to deliver the certainty and stability businesses need to invest in the high growth sectors that will drive their growth mission, as it builds more homes, transitions the economy to net zero, and delivers large infrastructure projects.
What are the barriers to and enablers of industrial growth in Scotland, both now and in the future?
The construction industry needs an ongoing supply of skills to meet the breadth and depth of what needs to be delivered through the Industrial Strategy, in addition to the requirements of major infrastructure projects, an ambitious homebuilding plan, and the demands around net zero, including new build and retrofit.
However, the construction industry faces a range of labour market challenges which act as a key barrier to its ability to ensure it has a skilled workforce to underpin delivery of the Industrial Strategy. Many of these challenges are common to other sectors of the economy, however, the structure and make-up of the construction industry often exacerbates these impacts. Construction has an ageing workforce; a high labour but low productivity business model; and a history of boom and bust within the industry. Industry’s very high proportion of SMEs and self-employed; mobile workforce; and its difficulty in planning over the long-term for fluctuating workloads also hampers both recruitment and upskilling. The labour market challenges have been seriously exacerbated by the COVID-19 pandemic and the end of EU Freedom of Movement.
The construction industry will need to recruit 26,100 more workers in Scotland to 2028 to address these impacts and meet output demand at a time when the labour market is historically tight
(Construction Skills Network: Focusing on the skills construction needs: 2024-2028, CITB, 2024). This figure changes annually based on a range of economic and business factors and includes all known future construction activity relating to the move to net zero. The industry’s current annual recruitment requirement of 5,220 workers a year was an increase on the 3,910 in the 2023-2027 Outlook (Construction Skills Network: The skills construction needs: 2023-2027, CITB, 2023).
Developing a skilled workforce and a marketplace that allows the construction industry to support the delivery of the Industrial Strategy requires active planning and direction, supported by the UK Government. Employer recruitment and demand for training tends to be driven by regulation, legislation, and business growth opportunities. Where market demand has not been stimulated, employers will not undertake training elements that do not meet business requirements. A key enabler of industrial growth would therefore be a long-term pipeline of work to ensure that employers view the delivery of the Industrial Strategy as a growth opportunity.
For example, the need to improve the energy efficiency of 27 million homes across the UK presents the biggest opportunity for construction employers this century, and industry must be supported to respond to both economic opportunity and growing customer demand. Analysis of TrustMark data found that businesses involved in retrofitting homes are experiencing huge demand for their services, with three out of four looking to increase their workload (Improving the energy efficiency of Britain’s homes: the opportunity, CITB, 2024). However, as with the wider construction sector, the vast majority of businesses involved in energy efficiency work are small or micro in size. Nine out of 10 (92%) firms have fewer than 50 employees, with two out of three (65%) having fewer than 10. As such, small and micro businesses, who are already busy, require certainty provided by long-term funding and policies to encourage upskilling of their workforce to capitalise on the opportunity of retrofitting the UK’s homes.
Previous UK Government initiatives such as the Green Deal and Green Homes Grant have led to peaks and troughs in demand, variable quality of delivery, and resulted in job losses, leading to a lack of confidence to invest among small businesses. While recent policy and funding announcements as part of the Warm Homes Plan, such as the 300,000 households which will benefit from home upgrades in 2025/26 are welcome, longer-term planning and longer-term supporting policies and funding will enable local authorities to procure for long-term funded projects, thereby providing clear demand and greater certainty for local supply chains.
To what extent does the Industrial Strategy Advisory Council reflect the make-up and priorities of Scottish industries? How can the Council ensure the needs and interests of Scottish industries are represented within the UK Government’s policy-making processes?
Small and medium-sized enterprises (SMEs) make up 99.3% of all private sector businesses in Scotland (as of March 2023). In the construction industry the percentage is even higher, with small businesses of 1-49 employees equating to 99% of the sector. However, SMEs largely do not have the capacity to directly engage with government-led consortia, and despite their importance, an organisation representing the views of SMEs does not feature in the membership of the Industrial Strategy Advisory Council. As such, the needs of Scottish SMEs should be reflected by an organisation such as CITB, which has 8,000 registered employers in Scotland, and can engage with them through established networks and relay their needs, on their behalf.
How can the UK Government achieve its objective of an industrial strategy with a ‘place-based approach’? What should such an approach look like, and how could it deliver for Scottish industries?
The Scottish Government has adopted the internationally recognised Community Wealth Building (CWB) approach to economic development as a key practical means by which it can deliver the wellbeing economy objectives outlined in the National Strategy for Economic Transformation (NSET).
CWB is designed to harness the economic leverage of local ‘anchor’ organisations, such as local councils, health, universities, colleges, housing associations, or large local private sector employers, to tackle long standing systematic challenges and structural inequalities within communities. It seeks to transform local and regional economic systems to enable more local communities and people to own, have a stake in, access, and benefit from, the wealth the economy generates. CWB can deliver more and better jobs, business growth, community-owned assets, and shorter supply chains - creating greater resilience and supporting net zero ambitions. The CWB approach offers a space for strategic and place-focused brokerage and a conversation focused on economic development and fair and responsible growth. Primary legislation on CWB will be introduced during this Parliamentary year.
CWB acts as a framework for activity across five interlinked pillars:
To deliver a place-based approach to the Industrial Strategy in Scotland, the UK Government should engage with the Scottish Government and its CWB approach. To ensure that there are sufficient skills in the construction sector to deliver the Industrial Strategy in Scotland, the UK Government should engage with existing data and insights on the workforce at a regional level. Where skills and workforce gaps exist, such as in the South East; Aberdeen City and Aberdeenshire; and Glasgow and the West (Local Skills – Scotland 2023 update, CITB, 2023), the UK Government should work with the Scottish Government on its commitment to regional skills planning in the reform of the post-school education and skills landscape currently underway.
How will the UK Government’s approach cohere with the Scottish Government’s economic plans, including its Green Industrial Strategy and National Strategy for Economic Transformation?
The Scottish Government’s National Strategy for Economic Transformation (NSET) aims to deliver a Scottish economy which is more prosperous, more productive, and more internationally competitive. As NSET is in the second year of its ten-year timeframe, the UK Government should engage with the NSET Delivery Board on learning to date of the Skilled Workforce programme of action and areas of coordination, such as targeting more skills investment and support to working aged people in poverty and systemically addressing labour market inactivity challenges. The Industrial Strategy should also seek to align with the Scottish Government’s Green Industrial Strategy, as a key component of the NSET, on areas of commonality such as clean energy industries. The alignment strategy underpinning coordination with the Scottish Government should also be responsive to the evolving policy environment, such as the series of forthcoming Just Transitions Plans.
February 2025