Leo Quinn, CEO of Balfour Beatty, argues that Industry Training Boards need the same accountability as the companies that pay their levies.
Upgrading infrastructure has become a new Holy Grail for developed countries: a critical driver of economic growth, both in construction and as a built enabler. From transport systems to energy and housing, it underpins our lives.
Everyone suffers when it’s not up to the job. Here in the UK, we all know it needs upgrading and, in fact, there’s a wave of massive new projects on the blocks.
Yet these very plans are under threat: the way things stand we may not have the people to build them.
Today, the construction industry has a known shortage of skilled workers. By 2020, it needs another million workers – assuming we lose none of our current European employees, post-Brexit. To close that gap – to attract that number of people into the industry and train them properly – requires every part of the system to be pulling its weight.
Right now, the Construction Industry Training Board (CITB) is undergoing its triennial Consensus. That’s a vote by all those businesses that pay its costs, to agree it has their support to collect its funding levy from them for another three years.
Currently, the CITB occupies a pivotal role in providing all of us in the sector with the skilled workers we need. Bluntly, the present skills shortage shows it hasn’t been doing this for some time.
Acknowledging this, the government commissioned a review into the industrial training boards – including the CITB – by Paul Morell. The timing of the General Election delayed publication of his findings so that the Consensus process had to begin without sight of them.
“Combining the general lack of transparency on strategy, controls and fiscal approach, this is a level of accountability which would be deemed unacceptable in virtually any other public arena in the UK.”
So while we know that ministers backed its overarching conclusion that the CITB should continue, subject to a major overhaul, the industry has little idea what the specific reforms are and no assurances that CITB will implement them.
We are voting in the dark, recommitting to a levy – and thus to an organisation – whose potential ongoing failure would have a major impact on future economic growth.
The levy paid into the CITB, let alone its other income, provides it with a budget comparable to a good-sized public company. But while plcs are subject to rigorous corporate governance, CITB has a fundamental governance weakness: it is not closely and regularly accountable to the industry it exists to serve.
So while we welcome the CITB’s statement that it recognises its failings and has begun a reform process, we its stakeholders (in every sense: investors, customers, underwriters) need more much more information on what the reformed body will look like and what it will deliver.
Those of us who regularly must explain to shareholders and bankers how we are spending their money take it as read that we must furnish, check and justify every line in the information we publish justifying our performance.
Given that CITB raises £200m a year via the levy, the lack of detail in the information it has provided to date is truly concerning. And were the industry to vote “no” at Consensus and cause the CITB to be wound up, any and all liabilities run up (eg pension buy-out) would fall to the industry to settle – a severe inducement for levy payers not to exercise that prerogative.
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Combining the general lack of transparency on strategy, controls and fiscal approach, this is a level of accountability which would be deemed unacceptable in virtually any other public arena in the UK.
Today, the CITB occupies a central role in the skills crisis facing the construction industry, although it is one of very few remaining such training boards. To justify its continued existence alongside the wider apprenticeship levy, it must deliver what its levy payers – let alone the UK as a whole – critically need: the newly skilled workers to upgrade our infrastructure.
Based on the information released by the CITB to date, we have little basis for confidence and strongly believe this it too important to leave to chance.
Which is why Balfour Beatty is likely to vote against Consensus. Before making a final decision, however, we ask one more time to see detailed information in relation to the reform and governance issues raised above. And, while we do believe the recommendations to be published in Paul Morell’s full report should set a clear direction of travel for the CITB, we absolutely must have robust assurances that these recommendations will be fully implemented.
In brief, we need a new mechanism that provides an effective check on CITB’s delivery and clear sanctions in the case of failure.
This is not the first instance of the industry being told CITB will reform itself. This time, we cannot afford to lose another three years if it fails to deliver. The stakes are too high for us to sleepwalk over the skills cliff.
Leo Quinn is group chief executive of Balfour Beatty. He has served on the Construction Leadership Council which advises the government, as head of the Skills Workstream. In 2013, he founded The 5% Club, whose members aim to invest in skills training so that at least 5% of their workforce comprises apprentices, graduate trainees or sponsored students, within five years.
