Scottish Construction Sector and New Housing
In 2018 Scotland’s construction sector employed over 170,000 people (10% of Scottish workforce) with up to a further 60,000 self employed workers and consisted of 45,500 businesses. The sector contributes £21.5bn to Scotland’s GDP and 10% of Scotland’s GVA . The positive impact of the sector in the range of skills and training entry points includes foundation apprentices, modern apprentices, graduate apprentices, further education and higher education programmes. With over 30 organisations covering trade skills, industry bodies and professional and institution organisations the sector provides a series of skills support and careers entry routes. New housing supply contributes approximately 25% of the construction sector activity accounting for £5bn per year to the economy. Employment figures on the new housing sector in Scotland have previously illustrated over 31,000 direct jobs, over 22,000 indirect jobs and supported 4 jobs for every home built . The delivery of new housing supports the development of new communities, low cost energy efficient housing, stimulates innovation and provides significant additional benefits through investment in schools, transport infrastructure and community facilities.
Future Supply of New Housing and Skills Demand
During the pre-recession period 2003-2008 the average annual supply of new build housing completions  was approximately 25,000. Figure 1 illustrates the impact of the recession on the supply of new housing. During the period 2009 to 2017 the difference in the supply of new housing versus the pre-recession period was 81,400 homes.
Figure 1: Scotland’s annual new housing completions (1998 - 2018) 
The National Records of Scotland forecast that the Scottish population would grow by 5% from 2016 to 2041 . The number of households is forecast to increase by 13%. This 8% shift is primarily related to people living longer and smaller household sizes, with a specific increase in one person households in Scotland of 252,000 (2016-2041). This shift in household sizes has been occurring for a number of years prior to 2019, which has also led to pent up demand.
The Scottish government have invested significantly in affordable housing supply. A target of at least 50,000 affordable homes by 2021 was set during the current parliament period and represents a 67% increase in affordable housing supply .
Given the post-recession period under supply of new homes, the increasing number of households and future demand, it is estimated that Scotland would require to deliver at least 28,000 new homes per year for the next 10 to 15 years . This is a seismic shift (50% uplift) compared to the current 2017-18 completion delivery of 18,750 new homes . This will require significant additional skills supply and increased use of modern methods of construction, such as offsite construction techniques.
The impact of the recession on Scotland’s construction sector was the loss of over 40,000 jobs and some areas losing 45% of their workforce . The SME sector was particularly badly hit with many pulling back from housebuilding or closing. Economic reviews of the ‘10 years post-recession’ by the Office for National Statistics (ONS) found during the post-recession period 2009-2014 the UK construction sector was on average the weakest in terms of GVA recovery . The 2017 SDS report on ‘Jobs and Skills’ in Scotland found that the construction sector was one of the weakest sectors in terms of jobs recovery 2009-2014 . This is not surprising given the double dip recession, fragility during recovery and loss of key skilled workers both on site and non-site based. The sector has higher average age levels across the workforce, compared to other major industry sectors, with some construction sub-sector areas expressing concerns due to the number of retirements in particular subsectors within the next five years. The 2016 Farmer Review of the UK Construction Labour Model  highlighted key issues in relation to training models, workforce size and demographics.
In the coming decade there will be other skills pressures on the construction sector involving retrofit of existing stock, climate change plan targets, future installation of electric vehicle charging points, incorporation of new technologies and early years and new schools programs. As such the new homes sector skills provision will most likely require to adapt to meet future supply needs and pressures. The significant increase in new housing required was also stated by trade body Homes for Scotland in December 2018 , with key aspects that should be addressed to help towards growth including ‘encouraging more entrants to the sector’. This is perhaps even more profound given the impact of Brexit on the construction sector in the UK as a whole. Whilst the Scottish construction sector has approximately 3-4% EU workforce  the rest of the UK average is 9-10%. According to the 2017 Home Builders Federation Workforce Census  approximately 17% of the UK new house building sites workforce are from the EU countries. Furthermore EU workforce on new housing sites in London are typically 50%. Also recent studies by recruitment consultancies have found healthcare and construction to be the most affected sectors in terms of downturns of European web-based job seeking opportunities into the UK.
Given the previous effects of skills shortages in London during the 1980’s, 1990’s and 2004-2008, which attracted skilled operatives from across the UK to work in London, the UK wide effect of Brexit on the construction workforce is likely to further diminish the availability of future skills supply in Scotland. Potential issues related to Brexit are described further in Annex B.
Short Life Working Group on New Housing Construction Skills
The short life working group (SLWG) was established to assess and provide recommendations for skills needs the sector would require covering the short term (3 years), medium term (4 to 9 years) and long term (10 years+). The group would also discuss the role of new technologies and build methods, foresighting of key areas, the skills supply factors involving both professional and tradecrafts, potential shortages of skills in both public and private sector occupations and the future diversity of the workforce and attracting new entrants.
The SLWG group involved housebuilding companies, industry bodies, skills development, training and education providers and was supported by Scottish Government officials from the housing delivery team.
Five meetings took place between April 2018 and November 2018 involving different focus areas, these included:
1. Remit of SLWG, Timelines, Focus on short term key pressure skills needs, Example of proposals within South East Scotland City Region Deal for skills and presentations by CITB and SDS on existing data and also skills analysis projects currently ongoing.
2. Short courses - Bricklaying and major shortages of skills supply (potential new shorter course for housebuilders), regional variations in skills needs, future demands and upskilling.
3. Offsite construction and also medium term factors for the sector – other industry future skills needs and pressures (non-housing). This may assist to identify what aspects could be started in the short term to benefit the future medium to longer term needs.
4. Key statutory gateways skills pipeline and future technologies – included presentations and information provided by local authority building standards (LABSS), local authority planning officers and also future medium to long term industry technologies and influences (CSIC).
5. Utilities and building services, with focus on electrical skills and future increasing demand, water installations and pump systems including substructure. This meeting also included discussions and summary recommendations to be reviewed with feedback from SLWG members.
Invitations were also extended to external organisations to present or give input at specific SLWG meetings. This included CCG, Centre for Offsite Construction at Edinburgh Napier, heads of local authority planning (HOPS), local authority building standards (LABSS), Scottish Water, electricians industry body (SELECT) and SME companies involving bricklaying (Forth Brickwork) and water and waste pumping systems (ID Systems UK).
An agreed listing of potential recommendations were then formulated by the SLWG. This listing was then supplied back to the SLWG members and they were asked to state whether they were in agreement, and if not, to provide additional comments and feedback. Each SLWG organisation or member would respond individually and all responses were received by mid-January.
This report is the culmination of the SLWG’s work over the last 11 months and includes forty recommendations on the themes and topics considered. For the vast majority of the recommendations there was unanimous agreement from the SLWG members. In several areas such as ‘bricklaying for house building’, ‘multi-skills’ and ‘annual skills and employment touchpoint’ survey there were some disagreements and some of these aspects are captured in the report. In addition, the report includes information on progress to date as well as suggestions of how some of the recommendations and actions could be taken forward.
The report and recommendations are structured around key thematic areas that were discussed by the SLWG, which included:
- Specific early focus on skills pressures
- Tracking current skills supply and future need
- Funding and investment
- Statutory and regulatory pathways and skills
- Offsite construction sector
- Upskilling and career pathways
- Government and local authority policies
- Attracting future workforce
- Medium (years 4 to 9) to long term (years 10+)
Given the wide range of aspects covered over a short period it is important to emphasise that the thematic areas and recommendations are not set in stone. There could be other issues which may arise in the short term, particularly given the uncertainty around Brexit and other external factors, which the industry may need to address. It was not the purpose of the group to calculate or forecast specific numbers of future skills and professions. This should be a separate follow up research project which could utilise some of the insights, findings and recommendations of this report.
As will be found in the report a number of recommendations and aspects discussed by the SLWG are already being taken forward for further development. However, there is a need to engage with the wider industry and public sector areas aligned with new housing delivery on the recommendations provided by the SLWG. Following the feedback from the sector the proposal is for a ‘work plan’ to be developed indicating key stages, actions and identifying thematic leads from across the industry organisations and public sector to take forward and implement the recommendations.