GRJ0054

Written Evidence submitted by ELECTRICITY NORTH WEST LIMITED

 

Introduction

 

  1. Electricity North West is the North West’s electricity distribution network operator, managing the network powering Greater Manchester, Lancashire and Cumbria. We are proud of our key workers who have continued operating the network to keep power flowing to our region throughout the pandemic, and we’re pleased to be able to respond to this call for evidence on Green Jobs.

 

  1. At Electricity North West we are currently consulting on our future business plans for 2023-2028 which will be submitted to Ofgem later this year and will determine how much we can charge as part of the electricity bill to help meet consumer priorities and accelerate net zero innovation across the North West. Our own work and investment in the network is still ongoing as we continue to keep power flowing in the North West. We have key depots in Workington and Carlisle in the north of our patch, Preston and Blackburn in Lancashire and a host of others across our region from Manchester to Birchwood in Warrington where our contact centre is based.

 

  1. We are a major North West employer driven by research, innovation and customer service. We take pride in all we do because it matters to people's lives. Our colleagues are at the heart of our business and their skills and expertise are helping to shape the future of the network. We are working to constantly develop a modern, diverse, high-quality, well-trained workforce fit for the future and recognise that our business plans should focus on:

 

 

Does the UK workforce have the skills and capacity needed to deliver the green jobs required to meet our net zero target and other environmental ambitions (including in the 25-year environment plan)?

 

  1. The scale of the challenge ahead to meet net zero is vast. Over the coming years, smart, strategic decisions will ensure our energy networks are ‘net zero ready’ to deliver the best value for current and future generations. This will require networks to ramp up reinforcement activity, as we need to be prepared in advance of the mass roll-out of Electric Vehicles and Heat Pumps (especially in off gas grid areas). Being too slow to take action and invest where needed will lead to energy networks acting as a barrier to meeting net zero – this includes increasing the number of skilled workers in our sector.

 

  1. ENWL’s full skills requirements for ED2 are currently being shaped by the overarching business plan process. Acceptability testing is due to complete in January and will present further clarity to shape future skills requirements. We are currently working with EU skills and our Trade Union Partners to help shape and broaden our thinking and planning.

 

  1. As we transition to Distribution System Operation, new skills will be required;

 

  1. We are currently exploring opportunities to broaden both our apprenticeship intake and potentially graduate intake in the Engineering and IT space to support these more specialised fields. We have also identified that training will be needed for colleagues who work with customers in vulnerable circumstances and are implementing a three-tier programme informed and shaped by key external stakeholders ie fuel poverty, domestic abuse, NSPCC, Mates in Mind.

 

  1. Our workforce is sized against the operational response capabilities required in storm conditions which are the most important factor for our business model.  We have found that the UK contractor market is flexible, competitive and highly skilled and is able to meet our needs in delivering a large proportion of our capital programme.

 

  1. Therefore, the number of apprentices recruited is determined initially by the attrition rate of the current workforce. In 2020 we recruited 19 new apprentices, up from 17 in 2019. The mix of skills needed varies by the forecasted investment program. Significant use is made for cross skilling to ensure smart technologies are incorporated into training. Increasingly new training courses will need to be identified and developed to ensure staff have the necessary skills sets required to install new and innovative equipment. We do plan to increase numbers as a part of this reinforcement work. 

 

  1. The training of staff will include existing craft and engineering skills and additional competencies that are required to accommodate the new equipment and systems that will be employed in the networks to 2025 and beyond.  The numbers and level of training will also be determined by the capacity of company training schools, which are used to train both direct employees and the contractor supply chain. From 2018 the apprentice intake per annum was set to a maximum of 20.  For RIIO ED2 (2023-2028) it could potentially increase to 26 per annum – 130 over ED2.

 

What needs to be done to ensure that these skills and capacity are developed in time to meet our environmental targets?

 

  1. It is clear that as we build back better to hit our net zero targets, there are investments that need to be made now to reduce both direct and indirect costs in future.

 

  1. Having a sufficiently large pool of workers with the right skills is crucial to the success of levelling‐up green infrastructure, and our research and evidence shows that there is a need to develop and expand the skills and resource pool to achieve net zero ambitions. This need is particularly acute in city‐regions that aim to reach net zero in an accelerated timeframe.

 

  1. In response to these challenges we are building upon our own successful apprentice training programme, having established one of the best equipped, specialist electricity network academies in the country in Blackburn. Our apprentice and re‐training programmes are specifically focussed on building a workforce capable of delivering the highly‐skilled and motivated craftspeople and engineers required for the green jobs we are creating.

 

  1. Creating this programme has not been a simple process and we have found that the current Government apprentice programme is complex and challenging, with numerous barriers through to completion. The development and approval of an apprenticeship standard can take a minimum of twelve months to implement. There are limited apprenticeship standards to support green jobs; a detailed review of green job requirements is clearly required and will help develop the pipeline of skilled workers that are required to achieve decarbonisation and net zero targets.

 

  1. This review should dovetail with any wider government plans for further education and skills devolution to local and regional government. Further devolution in this area has the potential to support localities in maximising and retaining the employment and growth benefits of levelling up green infrastructure in their local economies, as well as shaping a wider skills and jobs strategy that is tailored to a region’s needs and competitive strengths.

 

  1. We have given the best view of our plans at this point in time, but they are heavily dependent on financial, policy, regulatory and other considerations.

 

  1. Network companies require a sound investment climate and price control for RIIO2 to be set by Ofgem. We believe that a fair price control can be set by Ofgem that delivers for both investors and customers alike. This includes providing clarity on how uncertainty will be dealt with in RIIO2. We could do more depending on the wider economy, however further clarity from government on areas such as the future of heat will be required.

 

  1. We can also see market failures in moving towards net zero, particularly when it comes areas such as connection costs. Depending on how the charging boundary is set, we could deploy further reinforcement to help address the challenge of decarbonising transport and heat, e.g.: facilitating rapid charge points.

 

  1. We believe there is a need to have more regulatory clarity to allow investors to deploy more capital, allowing us to support more green jobs and invest in skills and talent.

 

What measures should the Government take to ensure that its proposals to meet environmental targets do not by default lead to jobs in affected industries being exported?

 

  1. The majority of the network companies’ labour and skills needs are met by UK employed staff; either direct employees or contractor staff.

 

  1. Only a small percentage of industry employees are recruited from oversees and this policy will vary between businesses. The continued used of overseas staff is dependent on continued approval via the Migration Advisory Committee, which reviews the current exemptions (including skilled engineering staff) every two years.

 

  1. The recruitment and employment of European staff from January 2021 will be dependent on UK Government policy arrangements post Brexit. 

 

  1. The future split of UK and overseas employed staff will also be influenced by the industry’s capacity to recruit the numbers of employees required to address current and future skills shortages. These have resulted from both high levels of forecast retirements and forecast shortfalls in skilled resources, both within networks and in the wider supply chain, and the challenges of transforming the networks to meet net zero.

 

  1. There will be no split between smart vs conventional reinforcement of the network, the current workforce will be trained and upskilled to accommodate the new systems and technologies, thus multiskilled for all types of reinforcement.

 

  1. It is time to ensure investment in the development of green jobs and skills. We need to act now if we are to meet net zero targets and we have already invested £63.5million in the network to deliver our Leading the North West to Net Zero plan.  The challenge is huge and as we move into recession and onto recovery we need to ensure that the UK is accelerating its innovation and capability and investing in the development of skills which are required to transform and transition to a net zero future. 

 

How can the UK ensure jobs are created in areas most impacted by the transition to a low-carbon economy?

 

  1. Green job creation can also be important to areas where a transition to a low carbon economy could cause significant job losses. UK Onward reported that in total, more than half (52%) of high emitting jobs are located in the North, with the least prosperous regions disproportionately rely on heavily emitting industries for jobs. In the North-West, we have a figure of 38% relying on those jobs at present.

 

  1. Industry rates for employed staff may vary between companies based on their regional location, but any notable differences are most likely to be from the use of national and locally sourced contracted labour.

 

  1. National contract partners utilised by the network businesses are likely to employ similar rates, but often companies use locally sourced supply chain partners where possible for more routine work which may be more cost effective.   

 

  1. In general, staff are pulled from a national labour pool which does not change significantly on a regional basis. Rates for skilled workers are similar all over the country regardless of location (with the exception of London weighting). Network companies must compete with each other to procure the skills that they require. This competition naturally has the effect of inflating prices in certain areas where skills are scarcer than in others. It is difficult for network companies to coordinate procuring these resources due to having different business plans and the varied timing of delivering projects.

 

  1. Electricity North West needs to make sure that we have the right people coming through into the business via our apprentice scheme to take on new green jobs, with electricity networks recognised as being a green option for job seekers.

 

  1. Electricity network operators, like us, are committed to leading the way to net zero and to supporting those most affected by the transition.  We need clarity, certainty and support from Government to ensure we can re-skill, re-train and support UK decarbonisation plans.

 

  1. What contribution can green jobs make to the UK’s economic recovery from Covid-19?

 

  1. Looking forward, ENWL are committed to investing in a net zero future and announced a £63.5m package of investment between 2019 – 2023 in our ‘Leading the North West to net zero plan.

 

  1. We believe that levelling up, clean growth, supporting green jobs and net zero ambitions are vital to achieving a sustainable and resilient recovery. We are investing £25m in strategic electricity infrastructure projects throughout our region at key sites where demand is expected to significantly increase. We are working closely with local government across our geography to map out and plan for the proliferation of green infrastructure projects.

 

  1. This investment, delivered in 2020 and 2021, will increase the number of green jobs and act as a direct economic stimulus in the North West region.

 

  1. Beyond 2025 there are bigger delivery challenges we need to consider, especially when considering the amount of reinforcement potentially required to electrify heat and other net zero related activity such as offshore wind and interconnectors, as well as the aforementioned skills shortages.

 

  1. However, this is also an opportunity, as co-ordination and a clear direction of travel across different sectors could create an opportunity for the UK to create a wide range of new jobs, and create, bolster and expand homegrown supply chains, with green jobs making a real difference to the economic recovery and bounce-back from Covid-19.

What additional interventions should be undertaken to aid in a ‘just transition’?

  1. We are currently conducting our largest ever engagement campaign with customers and stakehodlers to inform our business plans and two priorities are standing out:

 

  1. The North West has a higher than average population in fuel poverty (13% compared to a national average of around 10%) and so any investment we make we need to ensure is fair. It is a challenge to balance investment and ambition against cost when costs for customers are the same across the board. Increased investment in the network is essential to cope with rising demand on the electricity network as we shift away from carbon heavy fossil fuels to low carbon electricity. There is a question over how quickly this should happen, but the majority of our research so far suggests we should be prioritising investment sooner rather than later to get the most carbon benefit.

 

  1. In Greater Mancheser, the target for carbon neutrality is 2038, 12 years ahead of the UK target. This means that as the electricity network operator for the area we would potentially have to invest more, sooner, compared to other networks who are aiming to hit a 2050 target.

 

  1. We recognise that our regulator, Ofgem, has a difficult challenge ahead in assessing this need. We will be providing evidence from our local communities and our local stakeholders to submit a well-justified business case to meet this need, while also supporting customers in vulnerable situations who may find it more difficult to benefit from the longer term savings of having an electric vehicle or solar panels for example. Measures should be put in place to ensure that all have access to the benefits of the transition and that no one is left behind.

Prepared by:  Electricity North West

January 2021