Analysis

National Skills Academy for Rail Chief Executive NEIL ROBERTSON examines efforts to develop a wider skills base that will help to combat the growing threat of an impending skills shortage

Skills threat.

FOlLOWING Nigel Harris’s editorial on the value of rail jobs ( Comment, RAIL 919), I thought it would be good to follow up with some thoughts.

The rail industry has made a step change in training in recent times, particularly through apprenticeships. It has recognised the need for increased diversity and has started to address this. It will be important in the coming period to show evidence of recruiting from disadvantaged backgrounds.

Where is rail on people and skills?

The mindset has changed. It is now accepted that apprenticeships and diversity are important, and opportunities are being sought to increase both.

Low turnover of staff, traditional culture and poor perceptions of transport careers have all prevented progress. Rail has doubled gender diversity from 8% female to 17% female in five years, but there is still a long way to go.

COVID has had a dramatic impact on transport, with huge declines in recruitment in previous growth sectors such as aviation and increases in important but less economically valuable roles such as couriers. This has set back the cause, although rail has done a good job of protecting apprenticeship schemes.

Rail has received considerable public funding during the crisis. But there is no such thing as a free lunch. This investment will be expected to be repaid through increased socio-economic returns - specifically, recruiting from disadvantaged areas and supporting wider efforts to reduce unemployment (for example, through work experience schemes such as kickstart).

As noted by Nigel, rail infrastructure remains one of the best forms of job creation - but only if done well. By this, we mean increased productivity (the Living Lab project focuses on this, as does the sector deal), social inclusion and (increasingly) reduced carbon. Road, rail and energy are all predicted to grow, and will have skills shortages made worse by changes to migration policy. We have a once in a generation requirement to train a new cohort of young (and not so young) British residents from less advantaged backgrounds into transport operations and infrastructure roles, and construction. The National Skills Academy for Rail (NSAR) has clear data on this shortage

- for example, we need 15,000 new people per year to build infrastructure.

A further dimension is ‘levelling up’, where investment and the Treasury’s ‘Green Book’ changes will prioritise previously ‘uneconomic’ schemes in the North. Woe betide the asset owner who does not train and deploy local people.

For example, research shows that HS2 will create 30,000 jobs, of which

17,000 are new and 13,000 will go to those already in the construction industry.

The economic value of these is £6.3 billion. If 10% of these new workers are drawn from disadvantaged backgrounds, the value is £8.3bn; if 20% then £10bn. We are only now working on how to do this systematically, and have only recently developed this measurement approach.

Nearly all the sector deals, recovery plans and local plans emphasise skills - and rightly so. Research shows that increasing skills leads to the best long-term productivity outcomes.

Young people and employers There are three main streams of activity: promotion and attraction, education and training. Employers need to understand and work with all three.

Promotion and attraction:

This is when we encourage young people to consider careers in relevant STEM (science, technology, engineering and mathematics) subjects and in rail occupations.

There are a number of these

(the Routes into Rail website was launched in November, RAIL 919). Many involve schools, some involve parents, and some involve community groups, such as Amey’s excellent programme on rail engineering with the Girl Guides and Brownies.

It’s true. Research shows that only 30% of young people would consider a career with us, but this increases to 60% after a meaningful intervention. But meaningful interventions are not cheap - the work is somewhat

fragmented, and we find it harder to reach disadvantaged areas and diversity priority groups.

Education: The Department for Education cannot be accused of lacking energy in this area. A blizzard of new programmes (apprenticeships, traineeships, T-levels), together with a range of funding and differing work experience rules, results in a confusing situation for employers. You need an algorithm to understand them. Organisations such as NSAR spend much time explaining them to their employer members.

Used well, these are opportunities for employers to: a) get funding for apprenticeships; and b) support the wider education of young people so they arrive later - educated but untrained. This halves the cost of doing both education and training, as we have to do with full apprenticeships. HNDs are similarly useful, so it is worth employers supporting these directly, and our promotion and attraction activities encouraging young people toward them.

Training: Employers understand this, and are getting better at doing apprenticeships, as they did in the distant past.

The Strategic Transport Apprenticeship Taskforce is revising its strategy, and we can expect further targets, use of procurement levers, continued emphasis on apprenticeships for new and existing staff, and reskilling those from hard-pressed sectors.

This sounds straightforward - and it partly is. Take on a few more apprentices, offer a few more placements, upskill a few more supervisors, and employ a few more project managers from aviation.

But the elephant in the room here is digital skills - virtually all sectors (and especially transport) are miles behind our international competitors in deploying technology. And even if we wanted to, we couldn’t, because the skills are in such short supply. For example, there are ten vacancies for every data analyst candidate.

Employers pride themselves on being at the forefront of this - and they are. But the requirements for digital, data and software technicians will risk growth, produce wage inflation, and affect the ROI (return on investment) and performance of projects. Please take on a data analyst apprentice soon - NSAR will help you!

Another new frontier is carbon, but the requirement here is mostly for many more electrical and systems engineers. The problem is: they too were at the top of the skills shortage list…

Having a good story on skills, social inclusion and diversity has moved from ‘desirable’ to ‘essential’ in the company role description. Those benefiting directly or indirectly from public funding will have to try even harder. Unemployment will dominate government thinking for five years. But encouraging progress has been made - we know what to do and substantially how to do it.

Barriers

Short-term thinking and business confidence are the main barriers that need to be addressed, and the more that can be done on this the better.

The average forward business confidence of a rail supplier is between 11 and 23 months. The return on investment time to break even on a level 3 apprentice is 39 months. Why would you? Only if you care. Fortunately, many do.

Equally, other investments that would improve productivity often have similar payback times - for example, new technology. Again, short-term views mean that the investment often doesn’t happen. That’s why we have the highest wage inflation of any major sector, at 5.6%.

Confusion about the training bureaucracy is also a barrier. That’s why NSAR exists.

Migration

The final thing to mention is migration. We have recently met our construction and some rail engineering demand peaks with EU labour. New migration rules from next month will make this much harder, especially at level 2.

At level 3 and above, we prepared a detailed statement of skills shortages to try to get our key roles onto the shortage occupation list. They thought it was good data, but then ignored all of it! So, we don’t have any of our key roles on the list, apart from some digital ones.

But there are other routes. And our salaries are high enough to help build migration ‘points’.

Conclusion

In summary, there are seven reasons to train apprentices and support this wider people agenda: ■ We have to - to meet government levelling-up expectations (they might not fund us next time).

■ It will be harder to get EU labour. ■ You can upskill your existing staff.

■ It’s three times cheaper than paying for wage inflation.

■ It will improve your business agility and potentially diversity.

■ It’s great PR.

■ It’s a good thing to do.

“We have a once in a generation requirement to train a new cohort of young (and not so young) British residents from less advantaged backgrounds into transport operations and infrastructure roles, and construction.”