Mindful of the Gap
Key planks of policy won’t be delivered if water and workforce skills shortages aren’t tackled urgently. Nick Ellins has a strategic solution and is working to put the issue on the highest agendas.
At Water UK’s City Conference earlier this year, the investor keynote speaker Perry Noble, infrastructure partner at Hermes, said water leaders’ ability to attract and retain talent would be biggest single factor differentiating winning from losing companies. This must have been music to Nick Ellins’ ears. In his role as Chief Executive of Energy and Utility Skills, one of his missions is to put the need to tackle the sector’s workforce and skill shortages on the highest level agendas. “It’s not an HR issue,” he asserts, adding that workforce considerations should be part and parcel of every document, strategy and initiative that the sector produces – be it a price review methodology, a market reform strategy or a consultation on resilience.
He’s not wrong. There will be 221,000 vacancies to be filled across the energy and utilities sector during the next decade – brought about through 100,000 existing employees retiring and 90,000 people who will leave to find new roles. The industries report high demand for different and often high-level skills to keep up with the rapidly evolving needs of the sector; 36% of hard-to-fill vacancies were driven by a lack of proficient skills, well above the 23% national average and notably higher than any other sector.
Compared to Other Sectors
Moreover the sector does not compete well with others in the desirability stakes: the 2015 Employer Skills Survey reported that around 1% of higher education leavers choose to enter the UK energy and utilities sector, and that there are fewer than 5% of engineering graduates employed within it. Meanwhile the retail sector attracts twice as many science, technology, engineering and maths graduates.
Geographical and Role-Specific Issues
There are particular local and regional pressures to consider too, with skills shortages greatest in Northern Ireland, followed by Yorkshire and the Humber, the East of England and the East Midlands. The water sector specifically is short of many roles, including chartered engineer, portfolio/programme manager, and data scientist. 18% of the water workforce is over 55. Seventy three percent are male and only 6% come from minority ethnic backgrounds.
So far so bad, but consider the pivotal role the sector plays in the country and it looks even worse. Water and energy companies provide essential services every day to 65 million consumers and businesses; services that are critical to our health and wellbeing. The sector is also critical to the UK economy and is the largest single contributor to the National Infrastructure Delivery Plan. “Our sector should be the apple of the eye of departments like the Treasury as a major stakeholder in the Industrial Strategy,” Ellins mulls. But hitherto this has not been the case.
A strategic solution
Ellins’ response has been to mastermind a brand new approach. Since taking up post, he has worked to resurrect in a refined form the 2014-16 Energy & Efficiency Industrial Partnership, in the shape of the Energy & Utilities Skills Partnership. Now chaired by UK Power Network’s Basil Scarsella, this Partnership brings together sector employers from England, Wales, Scotland and Northern Ireland and has published the first-ever strategic workforce and skills strategy for the whole sector across those four geographies.
The strategy has a simple goal: “to secure the right people, with the right skills and behaviours, in the right place, at the right time, at an affordable cost”. To this end, it pulls together evidence of need and suggests a way forward. Three priorities have been identified for the period through to 2020/21. See priority lists below.
Ellins says that never before have all energy and utilities industries across the UK pulled together in this way. Nor have they been so focused in their priorities. He explains the previous Industrial Partnership floundered primarily because the government unexpectedly withdrew its funding (£2 for every £1 invested by companies), but also because by its own admission it aimed to do too much in too many areas and could not maintain the focus.
But the really clever thing about the new strategy is that it has been designed to tap into things already on the policy agenda, spelling out that they simply won’t be deliverable without an adequately skilled water and energy sector. Things like the Industrial Strategy; the drive to increase productivity; the smart agenda; and the National Infrastructure Plan.
Ellins explains: “We have mapped our sector and its skills needs against the economy, the environment and wider society, so its criticality becomes clear and what we are saying makes sense to those outside the sector.” For instance: “Of the half a trillion [pounds] of economic investment in the National Infrastructure Plan, we are responsible for delivering 56-57% of it. So it is all predicated on utility sector skills.”
Working together, the sector and Energy & Utility Skills have already got some powerful initiatives underway, including:
- Competency Accord – 27 companies are supporting a scheme to enable staff to move smoothly between equivalent positions without having to re-prove themselves for each specific company or industry. Ellins describes this as “skills passporting, to let the talent flow.”
- Talent Source Network – this is a digitally administered national talent pool which brings together employers, training and education organisations, and thousands of people who are looking for work and interested in the sector.
- Procurement Skills Accord – 26 organisations signed a pledge at the House of Lords to contribute their fair share to training and development of staff and not to poach staff from each other. This is to rebalance the situation where some companies effectively become “trainers for the industry” by investing in professional development but then lose staff to other firms.
- Apprenticeship Levy – under this new scheme from the Department for Education, employers with a pay bill of over £3 million from April 2017 are paying 0.5% into a fund that the government will use to double investment in apprenticeships by 2020, to £2.5bn. The scheme has its faults, relating both to its implementation and its underpinning principle (for instance, around 85% of skills needs in utilities relate to continuous up-skilling, and yet funding the Levy is mandatory). However, the sector has opted to embrace the Levy and in fact has become the first industry anywhere to provide graduate apprentices, through the English Trailblazer system.
Collaboration and partnership
Ellins has another key message to share regarding the Skills Strategy: that the industry has shown leadership, but that it will be critical to partner with government, regulators and other stakeholders now to deliver and progress it. He argues recruitment and retention issues should not be viewed by these stakeholders as market risks for each individual company when they are systemic.
Moreover that many of these stakeholders are at the mercy of skills shortages and competition for talent themselves, and that a collective voice is a more powerful one. He has written a list on how they can support the strategy going forward. Failure to take action now could have devastating consequences for the sector, the economy and our entire society.
Priorities in the Skills Strategy
Priority 1 – Increase sector attractiveness to win talent in a highly competitive recruitment environment.The sector will:
- Create and communicate a compelling sector value proposition, in order to be attractive and credible to our current and future workforce.
- Take an inclusive approach, ensuring our sector can appeal to all communities, abilities, generations and genders, including extending opportunities to hard- to-reach talent pools in order to attract and retain diverse talent.
- Work with schools and colleges to inspire and attract more young people, improving retention rates and making the transition to employment as easy as possible.
- Implement innovative new approaches to talent retention. This will include ensuring our best talent does not flow to other sectors, managing the impact on the workforce from cyclical price review investment and working smarter to keep those skilled candidates who apply for roles, but are unsuccessful on that occasion.
Priority 2 – Maximise investment in skills. This involves securing commitment for further investment in skills from asset owners and their vital delivery partners, and building a sustainable pipeline of apprenticeships. It will ensure that the people who are recruited can acquire the required skills, proficiencies and behaviours quickly and effectively and that existing employees are motivated by opportunities for upskilling and progression.The sector will:
- Develop and provide more accessible and effective entry routes to employment, including placements, traineeships and apprenticeships.
- Build high-quality apprenticeships, in full recognition of the developing approaches of government in Wales, Northern Ireland, Scotland and England.
- Derive maximum value from the new UK-wide apprenticeship levy, helping to develop sustainable skills investment approaches that can operate efficiently across the four nations.
- Invest in retraining, upskilling and retention, working towards an increasingly professionalised workforce
- Encourage supply chain investment in skills through procurement and across the vital supply chain delivery partners.
Priority 3 Targeted action – to address specific challenges and issues including:
- Collectively improving longer-term workforce planning and intelligence
- Enabling workforce mobility and easier skills transfer, including sector-wide mobility and skills accords
- Providing consistent quality of training, more demanding and evolving standards, and robust industry assessment that is trusted and led by sector employers
- Continuing to attract non-UK-based skilled workers and securing workforce sustainability, as we move towards the planned exit from the European Union in 2019
Nick Ellins writes…what can you do to support the strategy?
- We are in open competition for talent with many employers in the UK economy. Improving our sector attraction is incumbent on us all – policy makers, regulators, the regulated, delivery partners and the supply chain. Irrespective of market tensions, we collectively perform a valuable and critical service for society and need to promote fulfilling and worthwhile careers to remain sustainable.
- Recognise the importance of maintaining a sustainable and skilled workforce explicitly within all future visions, strategies and policies of the main sector sponsoring government departments, regulators, arm’s length bodies and regulated businesses.
- Connect the fast-changing UK skills and workforce policy currently within industrial strategy, productivity, infrastructure investment and education, to the long-term plans, price reviews and goals of UK-wide sponsoring government departments and utility regulators. Joined up UK thinking is vital for better regulation and cost efficiencies. Action is needed now.
- Seek consistent application of skills and workforce policy across our four nations. Whilst utility-based businesses increasingly operate in markets right across the UK, these employers will shortly face four different and completely unconnected skills environments, including the increased costs, red tape and workforce consequences that will result from them.
- Resilience duties of regulators should include ensuring a sustainable and competent sector-wide workforce, including recognising the workforce within the vital policy making and regulatory bodies.
This article is based a version that was published in The Water Report and has been reproduced here with its kind permission.