Summitskills Regional Contact:

Owen Callaghan, Operations Manager
Summitskills
37 Waterside Park
Hebburn
Tyne & Wear
NE31 1RS

www.summitskills.org.uk

Learning and Skills Council Contact:  sally.gardner@lsc.gov.uk

Click here for the SummitSkills North East Fact Sheet

Useful Links:  Asset Skills and Construction Skills

Overview of the Sector in the North East

SummitSkills is the Sector Skills Council for the UK’s building services engineering sector. This sector encompasses electro technical, heating, ventilating, air conditioning, refrigeration and plumbing industries. These occupational skills are applied in new installations as well as in service and maintenance of installed systems. It also has responsibility for the white and brown goods sector.

Until May 2003, much of this sector has been served by three National Training Organisations (NTOs), National Electrotechnical Training (NET), Engineering Services Training Trust Ltd (ESTTL) and British Plumbing Employers’ Council (Training) Ltd (BPEC). These organisations, in turn, previously acted as Industry Training Organisations and Lead Bodies following the withdrawal of electrical, heating and ventilating and plumbing from scope to the Construction Industry Training Board in 1990. This withdrawal from scope was partly in recognition that the needs of the sector were quite different from those of firms engaged in typical construction activities and partly because of clear evidence that the sector’s training needs were not being addressed properly within the larger statutory board.

The UK’s building services engineering sector has an annual turnover of £19.3bn, represents between 2% and 3% of the GDP and employs almost 600,000 individuals in over 54,305 businesses. 

All of the large, most of the medium and many of the SMEs in the sector are members of their relevant trade associations, the memberships of which are considerably biased towards SMEs. Figures indicate that between 80% and 85% of the work carried out in the sector is undertaken by employers who are members of one of the 5 sponsoring trade associations.

All of the research which has been conducted within the sector confirms the large number of micro businesses and people who are self-employed. The following statistics give an idea of the composition of businesses within the sector; 90% of companies had less than 10 employees, 8% had between 11 and 50, and only 2% had more than 50. 

The sector employs less than 11% females and fewer than 2% from ethnic minority backgrounds. It also suffers from an ever-ageing employee profile.

Over all, the new build market is anticipated to increase by 4% in 2005 and 6% in 2006. This is in addition to the service and maintenance activities and re-vitalization work that is currently under way. This increase is evident across all the industries under SummitSkills footprint.

Parts of the industry that fall under SummitSkill footprint, employ contractors and sub contractors and are very mobile. The anticipated shortages in certain occupational categories is expected to worsen as large projects are commissioned in London and the South East. The requirement for skilled building services engineering trades in support of the Olympic building programme and the London Gateway initiative will exacerbate the skills shortages in the region.

Key issues facing the sector now and in the future

The sector is currently experiencing a mini-boom at the same time as it is experiencing a skill shortage exacerbated by the boom and bust nature of the wider construction industry. Major building projects in the South East contribute to skill shortages as the sector has a mobile workforce used to working away from home and attracted to the money that can be made on these projects.

Government regulation in health and safety areas, and continual technological change in the products and equipment has had a major impact on training activity, assessment and certification in parts of the sector. 

Evidence show the workforce to be ageing (this is especially significant as many workers wish to retire early due to the nature of the work). (LSC 04/05 SoP)

Changes to the Building regulations came into effect in Jan 2005. Two major impacts come from:

• The requirement for self-certification for building services installations by competent persons. (LSC 04/05 SoP)
• The requirement for upgrading the energy efficiency of gas fired domestic heating, when new boilers are installed. (LSC 04/05 SoP)

Other regulations are in the offering that will require specialist training. These regulations will be around energy footprints of buildings.

Client demand for skills cards will steadily increase within the industrial and commercial sector at craft, technical and professional levels. (LSC 04/05 SoP)

The Working Time Directive requires employers to include travelling time to and from a young person’s place of work (particularly apprentices under 18 years).  As a result, employers are increasingly looking towards adult new entrants as their recruitment preference. (LSC 04/05 SoP)

Government regulation in areas such as gas safety and safe handling of refrigerants require testing of workers on a regular basis. (LSC 04/05 SoP)

Multi-skilling across building services trades is an increasing trend by employers. SummitSkills developed a set of occupational standards around this area. A Multi- skilling Interest group has been set up by SummitSkills looking at the multi-skilling ethos and of how appropriate Multi-skilled personnel can be introduced. This term has been replaced by Integrated Systems Engineer because of the connotations around Multi-skilling.

Employment issues in the North East

Current and Forecast Recruitment Demand

Source: Warwick Institute for Employment Research

Note 1:        Consultants are included in professionals, and the admin personnel who work with consultants are included in administrative personnel

Note 2:        Estimates from Working Futures suggest replacement demand due to retirements and occupational and regional mobility would be 30% over 10 years. BSRIA has assumed 12% over four years (2004 - 2008). The expansion demand is derived from the change in forecasted employment from 2004 to 2008. The net result of these is the number of new entrants required.

The age profiles show that the workforce data beyond age 40 exhibit a trend greater than the national average for the age categories in general. The impact as these age groups leave the workforce will be considerable unless action to address this issue is taken now. The supply of new entrants to the sector will not be sufficient to cover the losses brought about by retirement. In addition to addressing the recruitment of young entrants to the workforce, efforts need to be made to attract workers from other sectors into the industry and also from those seeking to be trained in a particular skill set for a discipline encompassed by SummitSkills footprint.

Training activity

The sector is the second largest recruiter and trainer of Modern Apprentices in Great Britain with latest figures demonstrating a total of 18,341 currently in training.

Figures from Further Education Colleges in Great Britain show nearly 3,000 trainees began NVQ courses to be Plumbers in 2003/2004. Nearly 700 began Heating and Ventilation courses and nearly 300 Refrigeration and A/C.

2003/4 - 2735 apprentices were registered as Electrical Apprentices an increase of 7.5 % on the figure of 2544 for 2002/3.

Annual Recruitment

It is expected that the annual recruitment requirement will be approximately 3875.

Forecast industry recruitment requirement is:

• Electrotechnical including Electronic Servicing                               2440
• HVACR                                                                                        660
• Plumbing                                                                                        775

It is expected that to recruit adequately within the region, female employment will need to grow faster than male employment.

It is expected that to recruit adequately within the region, mature employment will need to grow.

Employment Issues in the North East

Current and forecast recruitment demand

Employment growth is predicted for the period 2008, however this compares favourably to the decline predicted for the whole of England. (Regional Fact Sheet 2005)

The sector has broadly predicted shortages of skilled labour over the 5-year period between 2004-2008.

IER forecast a significant demand for skilled Building Services sector workers to replace those lost through retirement-estimated to be around 3% per year for the period 2004-2008. (This is in contrast to the rest of the Construction Industry where a small decline is forecast-especially in skilled manual trades). (SS04)

The sector understands the need both to attract new entrants and the opportunity to attract back some who may have had training and experience in the sector but who will require retraining to meet today’s requirements. For example, a recent report conducted in part of the sector highlighted "that recruitment and retention of engineers is a critical problem". In particular, refrigeration and air conditioning contractors find it difficult to recruit installation and service engineers. This has seen companies in the Service and Maintenance sector recruit their engineers from the Royal Navy, while Refrigeration and Air Conditioning employers have been recruiting from the electro technical sector and providing these recruited people with Refrigeration and Air Conditioning training.

Recruitment difficulties and causes

There is currently a large-scale development at the Cobalt Business Park in Tyne & Wear and a number of proposed developments that will see the workforce in the sector remain broadly stable over the coming years. (Regional Fact Sheet 2005)

Nationally the proportion of companies reporting vacancies is 13%. (Regional Fact Sheet 2005 from NESS 2003)  From the same source the proportion of companies reporting HTF vacancies is 7%.

6% of companies reported having a skills shortage vacancy. (Regional Fact Sheet 2005 from NESS 2003)

SummitSkills own analysis of the NESS 2004 estimated that 14%of all establishments within SummitSkills footprint had vacancies which is the equivalent of 9,465 jobs. This is slightly lower than the proportion for England as a whole(17%).  It is worth noting that NESS underestimated the number of employees as only companies with at least 2 employees were interviewed.

The vacancies within SummitSkills remit are mainly related to skilled trades. This accounted for 72% of all vacancies, 79% of HTF vacancies and 80% for skills shortage vacancies. The number of jobs affected by skills gaps amongst skilled trades is just over 12,000 which accounts for 45% of that occupational grouping.  (Regional Fact Sheet 2005 from SummitSkills)

The main cause of HTF vacancies are a low number of applicants with the required skills, not enough people interested in doing this type of work and a lack of qualification that the company demands.  In nearly all cases, the HTF vacancies have an impact upon the business, e.g. increased workloads for other staff (86%), creates difficulties in meeting customer service objectives (64%), loss of business to competitors (58%), causes delays developing new products or services (44%) and increased operating costs (42%). (Regional Fact Sheet 2005)

Attracting people into the sector

This sector actively needs to recruit more, and from less traditional sources, including older age groups, females and ethnic minorities. (SummitSkills 2004)

Workforce Development in the North East

Demand in the sector for relevant (job specific) skills and qualifications is increasing. This is of particular importance in the skilled trade group where recruitment and skills difficulties are acute. (SS04)

The large proportion of small businesses and sole traders indicate a clear need for generic business skills including ICT training. (SS04) SummitSkills companies are less likely (than the whole economy) to have training or business plans or training budgets agreed. (SS04)  

Learning and Skills Infrastructure in the North East

Lack of suitable courses in the area was stated to be a barrier for only 19% of construction companies compared to 25% nationally. (Regional Fact Sheet 2005 from NESS 2003)

Similarly, lack of suitable courses generally was considered a barrier for only 8% of companies in the NE compared to 19% in England as a whole nationally. (Regional Fact Sheet 2005 from NESS 2003)

Barriers to employers accessing the skills provision they need

Nationally, the proportion of firms that have provided funding for staff training within the previous 12 months was 66%. (Regional Fact Sheet 2005 from NESS 2003)

Over a third of firms (34%) reported no barriers to training, more than the national level of 26%.  Of those that did report barriers, lack of funding for training was the most common barrier cited by 34% of firms regionally and 44% of firms nationally. A significant barrier at national level was unwillingness of staff to train (16%), which was not found at regional level (3%). (Regional Fact Sheet 2005 from NESS 2003)

Any Other Employment and Skills Issues in the North East

A nation wide initiative to encourage colleges to sign up to the SNAP process has taken place this year. A list of SNAP centre has been published.

SummitSkills National Assessment Programme (SNAP is a fast track route for experienced workers to an NVQ). It operates on the same principles as Construction skills OSAT process. The possession of an NVQ or a suitable technical qualification is a pre requisite for an Engineering Services Skillcard. This is affiliated to the CSCS card and is a requirement to get on to the sites run by the large major contractors.

Businesses in the sector face competition of two different types. On large scale projects much work is undertaken on a competitive tendering basis under which lowest price has generally been the major deciding factor, in times of work shortages businesses often submit tender prices which are at or below cost so that they can retain the services of their prized engineers until the next contract is won, or they can loan these workers to other companies until their business picks up.

Government regulation - The sector has been affected by Government regulation in areas such as safe handling of refrigerants and gas safety (with a requirement for businesses to be registered with CORGI and an obligation on such businesses only to use operatives who have appropriate gas safety assessments). This has had a major impact on training activity, assessment and certification in parts of the sector.

Technology trends - The sector is faced with the effect of continual technological change in the products and equipment specified, requiring increased levels of skills and knowledge. Examples of this are in the increase in mechanical jointing of pipework at the expense of welding, the increase in “off site fabrication” because the appropriate skills are not available on site. Employers are beginning to appreciate the role which training must play in enabling their workforce to keep up to date with the technology. In addition, technology has already provided the sector with opportunities to diversify in areas such as data cabling and telecommunications. Ironically, specialist parts of the sector are finding an upsurge in demand for traditional methods and materials. There is now an increasing awareness of the real value of using traditional methods.  An example of this is the use of sheet lead as a roofing material. This work, which is generally carried out by specialists within the plumbing industry, is seeing resurgence in interest. This brings problems because the training and the people skilled in this discipline have been lost to the sector. The lack of these skills is causing problems for contractors working in this field.

Demographic changes - Given the sector’s traditional recruitment of 16-17 year old school leavers as new entrants, decreased birth rates in the late 20th century have reduced the availability of such individuals in the labour market. The situation has been further compounded through the pressures on young people (from parents, teachers, their peers, and especially Government policy in regard to education funding) to stay in full-time education for as long as possible. This has required action to increase the attractiveness of a career in the sector and also to consider the recruitment and training of individuals from older age groups, from ethnic minority groups and from women (both of which are under-represented in the workforce). The needs of employers in the sector can not be met by the restricted flow of new entrants in to the sector and SummitSkills is exploring the issues in order to arrive at a solution that will see more diversity and adult recruitment to the sector.

The largest changes in occupational patterns of employment are seen in the trend towards smaller units and to self-employment. This trend, which is not expected to change to any significant extent, presents SummitSkills with the dual challenge of convincing these smaller units to train new employees and also getting them to recognise the importance of skills development for those with the responsibility of running the businesses. (SS04)

Increasing demand for qualifications (proof of skills)

It is widely recognised that the demands of the sector for people with relevant qualifications  and skills has been rising in recent years with increased pressure initially driven by client bodies for individuals to hold evidence of their qualifications and competence. 

An example of this is the pressure by major contractors in the construction and building services industry for all operatives on all of their sites to hold a Construction Skills Certification Scheme (CSCS) card or an Engineering Services Skill Card (CSCS affiliated) by the end of 2005.  The major registration organisations in the sector have signed affiliation agreements with CSCS and are promoting the use of such cards to individuals working at all levels. This issue has also been identified by the Construction Industry Council (CIC), which suggests that the construction industry as a whole should be taking action to “promote the use of Occupational Standards as specifications of competence in tender documents building on exemplar projects and current best practice.”

At the domestic level, schemes have been developed to provide greater protection to customers.  These schemes, including Quality Mark in England and Wales and the Construction Licensing Executive in Scotland and Northern Ireland, generally approve both businesses and individuals which meet certain stated criteria, are helping to promote the achievement and maintenance of formal qualifications.

Total new work in the North East, £ million (current prices)

The following table gives a view on major projects under way and major projects that are anticipated in the North East.  This is a snap shot of the situation.  It will change over time.

Current major projects

• Cobalt Business Park outside Newcastle, consisting of 170,000 sq ft, with the potential to expand an extra 1.4 million sq ft.

Proposed major projects

• MGM, the US operator, has submitted planning for a regional casino in Newcastle.
• Quorum Development Partners plans to build a 1.5 million sq ft business park.
• Planning for the 1.5 million sq ft, £200 million regeneration of the former Tyne Brewery.
• Refurbishment and partial rebuilding of Oxclose Community School. The first project to be undertaken at Oxclose will be a new block for Performing Arts. All of the funding is part of Sunderland’s BSF bid as a Waveone Authority and will count towards the overall funds coming to the city’s secondary school. Value: £5 million. Client: City of Sunderland Council.

This is not a comprehensive list and will be supplemented by other major projects as they come on line.

It needs to be borne in mind that the building services in modern buildings can amount to 40% of the over all cost.

Additional Information

In the following table, we have data from the Labour Force Survey. This has a focus on the construction sector. The assumption is that a similar age profile for building services engineering is characterised by this data and that the same issues over an ageing workforce arise.

Age profile, construction, the North East and UK, 2004

Supporting Documents and Downloads

In Focus - Key Issues Affecting the Building Services Engineering Sector in the North East [pdf] (234 KB)

Executive Summary [pdf] (1.00 MB)

Sector Needs Analysis [pdf] (377 KB)