Written submission from the Engineering Construction Industry Training Board (IND0084)

House of Commons, Business and Trade Committee
Call for Evidence: Inquiry on the Industrial Strategy

Engineering Construction Industry Training Board (ECITB)
EVIDENCE SUBMISSION



21 February 2024

INTRODUCTION

The Engineering Construction Industry Training Board (ECITB), a statutory skills body and non-departmental public body sponsored by the Department for Education, is tasked with developing workforce capabilities across the engineering construction sector. This industry is vital to the UK's critical infrastructure, delivering engineering design, project management, construction, maintenance, and decommissioning services throughout the energy and process sectors. While the scale of the Net Zero skills challenge is unprecedented, the ECITB is actively collaborating with employers, training providers, and government partners to build pathways toward meeting these ambitious workforce development goals. The organisation recognises that transforming our energy infrastructure will require significant expansion of the skilled workforce and is working to accelerate training initiatives to support this transition.
 

The ECITB is responsible for raising and deploying a statutory training levy from its in-scope employers and providing leadership and oversight in the development and delivery of apprenticeships, vocational training, and upskilling programmes. Through our extensive network of approved training providers and close collaboration with industry stakeholders, we strive to maintain high standards of training quality and align skills development initiatives with the evolving requirements of employers.
 

The ECITB welcomes the opportunity to submit evidence to this consultation on the Industrial Strategy. The role of the skills system and public bodies like ECITB will be vital to delivering effective industrial strategy and can support both economic prosperity and social mobility.

ECITB RESPONSE

Question 3: What Industrial Strategy is required to deliver the Government’s carbon reduction targets set out at COP29, de-risk the economy from geo-political threats and close regional gaps in growth?

A well-designed industrial strategy should be structured in a way that supports the UK’s Net Zero commitments, economic resilience, and regional development. To help achieve these objectives, the strategy could focus on three key areas:

1. Investing in Strategic Clean Energy Sectors
2. Strengthening Regional Industrial Clusters and Workforce Development
3. Enhancing Infrastructure and Innovation to Support Economic Security

1. Investing in Strategic Clean Energy Sectors

To help meet carbon reduction targets while supporting long-term industrial growth, the government may wish to explore additional ways to encourage investment in nuclear, hydrogen, carbon capture and storage (CCS), and renewables. These sectors could provide opportunities for high-value jobs, innovation, regional growth and reduced reliance on fossil fuel imports.

• Nuclear Power as a Stable Pillar for Decarbonisation:
• The nuclear industry now accounts for 39.2% of the Engineering Construction Industry (ECI) workforce in-scope to the ECITB, reflecting the increasingly important labour requirement of nuclear new build and decommissioning.
• As a relatively stable sector, nuclear energy may offer long-term workforce and investment certainty. However, past policy uncertainty and infrastructure delivery challenges have presented challenges for workforce planning. The transition to the RAB funding model, with government assuming a share of the construction risk, is expected to de-risk projects for investors and developers. This, in turn, should enable more effective workforce planning.
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• Hydrogen and CCS for Industrial Decarbonisation:
• Hydrogen and CCS are increasingly recognised as key to decarbonising heavy industry and transport.
• CCUS projects like Acorn (Peterhead) and Viking (Theddlethorpe) illustrate how regional initiatives could contribute to Net Zero ambitions while attracting investment.
• Given that the economic viability of CCS remains a challenge, the government may wish to consider how a clearer investment framework could provide greater certainty for private sector involvement.
• Scaling Up Renewables to Support Net Zero:
• The renewables sector has experienced workforce growth over the past decade
• Offshore wind, in particular, has the potential to support nearly 97,500 jobs by 2030, though this will depend on the extent to which components and services are sourced from within the UK rather than imported.
• Since 59% of offshore wind jobs are in manufacturing and procurement, the government may wish to explore opportunities to enhance domestic supply chain resilience and reduce reliance on imported components.

A coordinated approach across these energy sectors, alongside targeted incentives and initiatives for R&D, domestic manufacturing, and workforce training, will help the UK remain competitive while advancing Net Zero goals.

2. Strengthening Regional Industrial Clusters and Workforce Development

An effective industrial strategy would benefit from aligning national priorities with local strengths. Several approaches could help enhance regional economic growth:

• Enhancing Workforce Development Through Regional Skills Hubs:
• The ECITB’s Regional Skills Hub Funding is designed to boost training provider capacity and grow new entrant numbers in industrial cluster hot spots and other major engineering construction centres of activity to help address skills shortages in the industry.
• Regional Skills Hubs funding grants of between £50,000 and £500,000 are available to ECI projects that meet set criteria.
• The model helps deliver targeted upskilling, apprenticeships, and retraining programmes, ensuring a skilled workforce for sectors like renewables, nuclear, and hydrogen. The Regional Skills Hub Model has shown success in aligning training with local industry needs. Expanding this or a similar approach in key industrial clusters may help ensure the workforce is equipped for emerging sectors.
• Increasing access to apprenticeships and Higher Technical Qualifications (HTQs) in fields such as hydrogen, CCS, and nuclear could help address future skills shortages.
• The government may also wish to consider how multi-disciplinary skills training could help increase workforce flexibility across growth sectors.

Ensuring that skills development keeps pace with infrastructure investment will be key to supporting industrial transformation while providing high-quality employment opportunities across the UK.

3. Enhancing Infrastructure and Innovation to Support Economic Security

The development of the Industrial strategy is an opportunity to consider how best to secure resilient supply chains, enhance infrastructure, and support innovation in high-growth sectors, particularly in light of geopolitical uncertainties.

• Strategic Investment in Infrastructure:
• As part of wider industrial decarbonisation efforts, investments in low-carbon infrastructure (e.g., green hydrogen production and CCS hubs) may help bolster the UK’s competitive advantage in emerging clean energy technologies.
• Building Innovation Ecosystems in Regional Clusters:
• The government may wish to consider how further investment in R&D centres—particularly those focused on hydrogen, CCS, and advanced nuclear—could stimulate innovation and attract private sector involvement; with skills planning being a part of this - bringing together FE and HE as per ECITB’s Regional Skills Hub Model.
• Collaboration between complementary regions, such as Humber and Teesside for low-carbon supply chains, could also help accelerate industrial transformation.
• Ensuring Industrial Strategy is Responsive to Regional Needs:
• As regional economies evolve, regular assessment of regional skills needs, employment patterns, and industry developments could help inform policy adjustments. Particularly, the importance of regional and granular level industry specific labour market intelligence is paramount.
• From a macro perspective, workforce transition from fossil fuels to renewables is not just a skills issue but a cultural, economic, and personal challenge for workers and communities. Past industrial shifts highlight the need for long-term planning, worker engagement, and support for industrial heritage. Regions like Germany’s Ruhr Valley show that successful transitions require structured workforce development, leveraging existing skills while addressing key concerns—such as lower pay in renewables compared to oil and gas.
  
  
  
   

Question 4: Whether the Government should prioritise economic sectors or ‘grand challenges’? If sectors are the right focus, has the government prioritised the right growth-driving sectors of the economy? What is the best design of industrial strategy for these sectors? How should Government identify and invest in the sectors of the future?

There are benefits to considering a sector-focused approach to industrial strategy, as this can provide clearer investment priorities, enabling targeted workforce development and growth opportunities. While addressing grand challenges (such as Net Zero or technological innovation) is important, focusing on high-growth, strategically vital sectors may offer a more practical and measurable way to achieve economic transformation.

The Right Growth Sectors

Within the infrastructure and ECI, sectors like the UK’s nuclear, hydrogen, carbon capture and storage (CCS), and renewables represent potential growth areas that align with the country’s Net Zero commitments, energy security needs, and regional development objectives.

• Renewables and CCS for Industrial Decarbonisation:
• While hydrogen and CCS currently employ just 2.3% of the ECI workforce, these sectors are key to decarbonising heavy industry and transport.
• Investments in North Sea CCUS projects like Acorn (Peterhead) and Viking (Theddlethorpe) may help advance Net Zero goals while attracting private investment to key regions.
• The renewables workforce has nearly doubled over three years, yet still accounts for just 6.2% of the ECI workforce.

These sectoral investments could help position the UK as a leader in clean energy, supply chain resilience, and industrial decarbonisation while also supporting regional economic development. It is, however, important to note that oil and gas will continue to play a key role in the energy mix and that decommissioning activity will require skilled workforce for years to come.

Best Design of Industrial Strategy for Growth Sectors

A well-structured industrial strategy may benefit from:

1. Sector-Specific Investment Aligned with Regional Strengths
1. Local Growth Plans could be tailored to sectoral strengths in key industrial hubs (e.g., nuclear in the South West, CCS in Teesside, offshore wind in Scotland and Humber).
2. Strategic Workforce Development Initiatives
1. Proactive Skills Planning: Collaborate closely with asset owners, developers, contractors, and Further Education (FE) providers to identify skills needs ahead of project schedules.
2. Early Training Investment: Establish training infrastructure and programmes well in advance, ensuring a skilled workforce is available when projects commence.
3. Supporting Project Delivery: A well-prepared workforce reduces delays, improves efficiency, and enhances project success rates.
4. Career Progression Pathways: Design training pathways that align with different project phases, allowing workers to upskill and progress while remaining on the same project.
5. Retaining Talent Locally: Address workforce retention challenges, particularly in rural and industrial areas, by enabling workers to build long-term careers within the region.
6. Current Exploration: ECITB is exploring this approach in relation to Sizewell C (SZC) in collaboration with CITB, ensuring workforce sustainability for nuclear projects.
3. Encouraging Investment in Supply Chains and Innovation
1. Investment in UK-based manufacturing for offshore wind components could help secure long-term jobs and strengthen energy resilience.
4. Cross-Sector Skills Development
   a. Many core engineering and technical competencies are transferable across the energy and industrial sectors, from project controls to mechanical engineering.
   b. This transferability may help create a more adaptable workforce while providing workers with broader career opportunities across different sectors

Question 6: What is the right balance of investment in ‘horizontal’ policy, such as skills, infrastructure, clean energy, and transport, and sector-specific investment

A well-balanced industrial strategy will benefit from combining two complementary approaches. Horizontal investment in foundational areas like skills, infrastructure, and transport can create the essential building blocks that benefit all sectors simultaneously. Since the ECI workforce operates on a cross-sector basis, we believe this could be complemented by targeted sector-specific investment and targeted skills initiatives utilising existing policy and institutional levers like the ITBs, in key growth industries such as nuclear, renewables, hydrogen, and CCS to address their unique challenges and opportunities. E.g. while horizontal investment in port infrastructure benefits multiple sectors, specific investment in nuclear training facilities addresses sector-unique requirements. Given the interconnected challenges facing these sectors—including workforce shortages, supply chain constraints, and regulatory uncertainty—this dual investment approach may help unlock long-term economic growth.

The Role of Horizontal Investment

Investment in foundational areas such as skills, infrastructure, and regulatory certainty may provide cross-sectoral benefits, ensuring the UK remains competitive in emerging industries.

• With 38% of the ECI workforce over 50, workforce shortages pose a major risk. Yet, contractors hesitate to invest in training without project certainty, while investors delay funding due to workforce concerns. Early collaboration with asset owners, developers, and FE providers can identify skills needs and establish training infrastructure ahead of schedule to support project delivery.
• Developing domestic manufacturing capabilities for offshore wind components (e.g., turbine blades and nacelles) may help increase UK content from 48% to the government’s 60% target while reducing reliance on imports.
• Regulatory Certainty and Investment Confidence
• Policy consistency is vital to securing long-term investment in nuclear, renewables, and CCS.
• Prolonged planning approval processes for renewable, hydrogen, and CCS projects deter investors and create uncertainty around final investment decisions (FIDs).
• Providing greater clarity on local content requirements and tax incentives may encourage private investment.

The Need for Sector-Specific Investment

While horizontal investment provides a strong foundation, sector-specific support may be necessary to unlock growth in strategically important industries.

• Nuclear Energy: A Stable Sector Requiring Long-Term Support
• Nuclear is now the largest subsector in the ECI, accounting for 39.2% of the workforce in 2024, up from 34.6% in 2021.
• Investment in nuclear training facilities and specialist apprenticeships could help replace an ageing workforce while supporting future expansion, including Small Modular Reactors (SMRs).
• Hydrogen and CCS: Addressing Early-Stage Challenges
• These sectors employ only 2.3% of the in-scope ECI workforce, reflecting their early-stage development.
• The lack of standardised qualifications in hydrogen and CCS delays workforce scale-up and increases uncertainty for employers.
• The government may wish to consider incentives for training providers to develop industry-led qualifications in these sectors to support rapid deployment.
• Renewables: Expanding Domestic Manufacturing and Infrastructure
• The offshore wind sector is projected to grow from 31,000 jobs to nearly 97,500 by 2030, but achieving this will require investment in domestic supply chains and skills training.
• With 59% of offshore wind jobs in manufacturing and procurement, increasing UK-based production of key components may strengthen the sector’s long-term economic benefits.

Question 1: What Industrial Strategy will maximise economic growth, productivity and good, high-skilled jobs across the UK, how the Government’s plan measures up to this design - and how the Government should best measure progress?

A well-designed industrial strategy may focus on targeted investment in high-growth sectors, workforce development, and supply chain resilience to support economic growth, productivity, and high-skilled job creation across the UK. Additionally, it should also consider sectors that are key to industrial base - including many carbon-intensive industries whose workforce will be vital to the transition. The government’s Invest 2035 strategy presents an opportunity to align sectoral priorities with long-term skills planning and infrastructure investment to ensure global competitiveness and Net Zero delivery.

Key Principles for Maximising Economic Growth, Productivity, and High-Skilled Jobs

1. A Workforce Strategy That Tackles Skills Shortages and Supports High-Skilled Jobs
1. 38% of the ECI workforce is over 50, creating an urgent need for skills replacement and workforce planning.
2. Addressing the Catch-22 scenario—where investors hesitate due to concerns over workforce readiness while employers delay training without investment certainty—may help unlock job creation.
3. Expanding apprenticeships, Higher Technical Qualifications (HTQs), and employer-led training in nuclear, hydrogen, and CCS could help fill critical skills gaps and increase productivity.
4. ECITB’s Regional Skills Hub model could be scaled up to align training provision with sectoral needs across key industrial clusters.
2. Strengthening Domestic Supply Chains to Secure UK-Based Jobs
1. The government may wish to explore how domestic manufacturing capacity—particularly for turbine blades, nacelles, and nuclear plant components—could help retain more high-skilled jobs in the UK.
2. £48 billion in offshore wind infrastructure investment is needed by 2030 to improve port capacity and supply chain readiness.

The Engineering Construction Industry (ECI) plays a vital role in providing high-skilled jobs critical to delivering clean energy, infrastructure, and industrial growth.

• Nuclear accounts for 39.2% of the ECI workforce, offering high-value, long-term careers in reactor construction, maintenance, and decommissioning. Offshore wind is projected to grow from 31,000 to 97,500 jobs by 2030
• Expanding domestic supply chains could help secure more skilled jobs in the UK.
• Hydrogen and CCS, though emerging, require specialist training to scale up their workforce, currently only 2.3% of the ECI.

Towards this submission the ECITB has leveraged its internal base of evidence including but not limited to insights from: ECITB’s Labour Forecasting Tool, ECITB Census 2024, ECITB’s Regional Skills Hub Model etc. The ECITB is ready to share further information or granular level data if required.

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