SJD Accountancy

Slump in construction apprenticeships despite recovery in building sector jobs

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The number of people starting construction industry apprenticeships has dropped by 42% since 2006/07, leaving the building sector facing skills shortages as demand recovers, according to data obtained by SJD Accountancy, one of the UK’s largest tax advisers and accountants to subcontractors in the building sector.

The official figures from the Skills Funding Agency, a government body, show that 15,890 people started construction apprenticeships in 2013/14, a decline from 2006/07, when 27,300 started apprenticeships. It is estimated that the construction industry needs 120,000 apprentices over the next five years to fill an emerging skills gap.

According to SJD Accountancy, the long-term decline in the number of construction industry apprenticeships is likely to have a greater impact on the construction industry as demand for skills continue to recover. Recent reports suggest that foreign bricklayers are now earning up to £1,000 per week in the UK due to a shortage of indigenous skills.

Official figures obtained by SJD Accountancy show that the number of construction industry jobs jumped by 5.7% over the past year, rising from 807,000 in 2013 to 853,000 in 2014, the first such increase since the recession in 2009.

Derek Kelly, Chief Executive Officer of SJD Accountancy, comments: “The building industry needs to create more apprenticeships as demand for skills recover, but despite Government efforts to support training programmes, the number of new apprenticeships appears to be in long-term decline.”

“We are seeing rising demand for subcontractors in many areas of construction as order books starts to fill up. If the building sector cannot secure the necessary skills, its recovery will be put in jeopardy. Recruiting foreign workers on high wages to fill skills gaps can delay projects and significantly increase costs, which is bad news both for contractors and the wider economy.”

He adds: “House builders are reporting that a shortage of skilled workers is slowing down the rate at which new homes can be constructed. While skills shortages can be alleviated in the short term by training school leavers and ex-military personnel, the UK’s long-term underproduction of constructions skills needs to be addressed, and apprenticeships are an important part of the solution.”

SJD Accountancy says that the tax break announced in the Autumn Statement, which will abolish employer National Insurance contributions (NICs) on income up to the upper earnings limit for apprentices aged 25 and under from 6 April 2016, may help to reverse the downward slide in the number of construction apprenticeships. The tax break is projected to cost the Treasury £490 million between 2016 and 2020.

Derek Kelly, Chief Executive Officer of SJD Accountancy, comments “This tax break is welcome news, but will not take effect for well over a year. With the construction industry, particularly housebuilding, performing well, and skills shortages worsening, the Government needs to consider more immediate measures in parallel to apprenticeships. The cost of training is currently not a tax deductible expense, but allowing contractors and subcontractors to offset the cost of training against taxable income would help ensure a closer match between the skills of the workforce and the skills which the industry requires.”

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