Research of the Skills Gap within Sheffield City Region Report June 2012

Transcription

1 Research of the Skills Gap within Sheffield City Region Report June 2012 in association with Skills Strategy Research Les Newby Associates and Geoff Fieldsend: Specialist Advisor, Skills and Funding Quantum Strategy and Technology: Specialist Advisors, Low Carbon PCP Market Research: Telephone Surveys

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3 Key Findings 1 1. Introduction Economic Forecasts 40 GVA and output 41 Employment change 43 Impact on demand for skills and qualifications 47 Replacement demand 48 Transformational projects 50 Combined Impact on employee requirements Business Expectations 57 Occupation and skills needs 62 Graduates 65 Apprenticeships 69 Workforce development and local training provision 73 Longer term outlook 79 Exporting 80 Summary Low Carbon and the Environmental Sector 84 The low carbon sector 84 Embedding low carbon skills into the economy 86 Low carbon buildings and the Green Deal 94 Offshore wind 98 Bioenergy 98 Green infrastructure 99 International perspective 100 Summary The Provider Perspective 103 Employer Intelligence 104 The role of the official data sources 105 Other sources of labour market information 106 Other drivers of curriculum planning 108 Qualifications 109 Balancing Demand and Supply 109 New provision 109 Conclusion Supporting Documents 112

4 Key Findings Introduction The past two years have seen unprecedented economic and political change. A combination of a new UK government and global recession have led to a series of organisational and policy changes which present a new set of challenges for those involved in accelerating and supporting economic growth. There is a need to better understand growth factors, sectors and opportunities, and link this to demand for new and emerging skills. This key findings chapter (which can be read as a stand-alone document) presents the headline messages for the Sheffield City Region LEP area arising from a major study into the skills that will be required by employers across the four Yorkshire Local Enterprise Partnership (LEP) areas 1 in the short to medium term. ekosgen and associates were commissioned to carry out the study which covers employers and provision in all sectors and considers replacement demand as well as that arising from growth in new and established sectors. The study comprises a number of elements relating to both the supply and demand of skills, which can be summarised as: Demand Side Economic Forecasts: The Regional Economic Intelligence Unit has produced bespoke economic forecasts at local authority and LEP level to identify where, both geographically and sectorally, job opportunities are likely to come from in the future. This includes policy on scenarios which take account of planned transformational developments designed to increase employment and economic growth, including the Enterprise Zone. Business Survey: A telephone survey of 899 Sheffield City Region businesses to gather intelligence on recruitment plans and related skills requirements over the short (next three years) and medium term (next three to five years). The survey covers a number of core topics including graduates, apprenticeships, and local training provision as well as export activity. LEP specific qualitative research: Each LEP has identified areas of interest for further research. In Sheffield City Region, this has involved further research into the needs of the LEP s priority sectors advanced manufacturing; creative and digital industries; retail; property and construction; tourism, leisure and sport; and healthcare technologies. The findings of this strand are presented in a separate report. Low carbon: In recognition of the growth opportunities arising from the development of a low carbon economy, a strand of the research has been dedicated to researching the skills needs of the sector. Supply Side Provider Survey: A survey of 25 training providers to gain an understanding of (i) how providers currently plan provision and the type of information they use to support this process, (ii) their views on the availability of qualifications and the extent to which provision meets employer demand, and (iii) barriers to offering new provision. Provider Business Planning Workshops: Alongside the provider survey, two SCR providers 2 were selected to participate in a series of in-depth business planning workshops to review curriculum planning processes, the internal and external barriers 1 Sheffield City Region LEP (including Local Authority Areas in Derbyshire), Leeds City Region LEP, York, North Yorkshire and East Riding LEP and the Humber LEP 2 Eight in total across the four LEP areas 1

5 providers face in responding to employers needs and how providers can use intelligence, including that gathered through the business survey, to support this process. Economic Trends and the Implications for Skills Needs The research has incorporated economic analysis on the future of the Sheffield City Region LEP area from 2012 to It is based on economic modelling to predict economic output/growth and employment across the City Region, how this varies for different industrial sectors, and the impact it will have on skills requirements. These key findings provide a summary of the more detailed analysis, which is contained in the main report. The work includes core (baseline) analysis based on overall indications and assumptions about the economy, and also looks at the impact of a spread of planned transformational projects. The analysis also includes a review of replacement demand, focusing on older workers leaving the workforce - i.e. the number of new employees that will be required to replace others who are leaving an industry, for instance through retirement A summary of the key trends has been produced for each Local Authority and is included in an accompanying Annex. The core data spreadsheets have also been made available alongside this analysis to enable LEP level and local authority level analysis to meet specific requirements. Sheffield City Region Economy: Output In Sheffield City Region, total GVA is expected to increase by around 1.37bn between 2011 and 2015 (+6%), with a further increase of 2.83bn (+11%) to The balance of the economy will continue to change, with the private sector becoming more important as the contribution of the public sector to GVA declines a result of a net decrease in the GVA generated by public administration and education 3 reflecting current and planned public sector spending cuts. While reduced the public and industrial sectors will continue to make the largest contribution, partly reflecting below average growth in business services (+18% compared to +24% regionally and +37% nationally). Sheffield City Region Ouput By Industry 2011 Total = 25,070m Construction 7% Other 6% Transport & Comms 10% Public Sector 25% Transport & Comms 11% Sheffield City Region Ouput By Industry 2020 Total = 29,269m Construction 8% Other 6% Public Sector 23% Retail and Distribution 16% Fin. & Prof. Bus. Services 17% Retail and Distribution 17% Fin. & Prof. Bus. Services 17% Industrial 19% Industrial 18% The contribution of retail and distribution, construction and transport and communications is expected to increase by This reflects the high growth rates forecast for transport and particularly construction. The timing of the expected growth varies by sector. While the trend in most sectors - and especially health, wholesale and banking and insurance - is for the majority of growth to 3 While GVA generated by public administration is expected to decline between 2011 and 2015 and then again between 2015 and 2020, education is expected to experience growth in the latter period, although this is insufficient to fully offset the loss to

6 occur between 2015 and 2020, manufacturing is expected to experience significant growth to 2015, after which point growth is more subdued. Overall manufacturing will account for almost a quarter (23%) of the total output growth to 2015 (compared to 8% of the total growth between 2011 and 2020). Sheffield City Region, net change in GVA by sector Source: Regional Economic Intelligence Unit, 2012 Net Change 000s 500, , , , , , , , ,000 50, , Growth in GVA is expected to vary considerably by local authority, ranging from 12% in Chesterfield to 20% in Bolsover and Doncaster. The majority of authorities underperform the national average, including Sheffield despite being the largest economy in the sub-region. Baseline Economic Growth (GVA) Forecasts (absolute figures, million) Area % change Bolsover 989 1,041 1,117 1, % 12.2% 20.4% Doncaster 4,045 3,975 4,253 4, % 12.2% 20.1% Rotherham 3,708 3,399 3,633 4, % 12.0% 19.7% UK 6.3% 12.2% 19.2% NE Derbyshire 1, ,057 1, % 10.5% 18.8% Barnsley 2,529 2,441 2,596 2, % 10.4% 17.4% Bassetlaw 1,794 1,808 1,927 2, % 9.7% 16.9% Yorks & Humber 83,829 82,883 87,170 96, % 11.1% 16.8% Sheffield CR 25,965 25,070 26,441 29, % 10.7% 16.8% Sheffield 8,781 8,424 8,728 9, % 10.4% 14.4% Chesterfield 1,724 1,684 1,743 1, % 8.5% 12.3% Source: Regional Economic Intelligence Unit, 2012 Sheffield City Region Economy: Employment Workplace Based: Full-time equivalent employment (FTE) within the City Region will increase, with the creation of 32,600 FTE positions (+5%). While FTE employment will increase in line with national levels to 2015, the rate of increase falls behind the national rate after this point. Growth is expected to be highest in Bassetlaw and Bolsover and modest in both Sheffield and Chesterfield. 3

7 Sheffield City Region, employment change Source: Regional Economic Intelligence Unit, % 9.0% 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% Workplace based (FTE positions) Resident based (residents) Resident Based: The number of residents from the City Region who are in employment will increase, with around 46,000 additional residents entering employment by 2020, suggesting that residents will take up jobs outside the city region, work part time or displace those currently travelling into the area to work. The majority of this growth will occur post In contrast to the number of FTE employment opportunities, the increase in residents entering employment in Sheffield will exceed the national average (+9% compared to +8%). Similarly in Chesterfield, the resident based employment growth will be more than double the workplace based increase. This contrasts with the picture in Doncaster and Bassetlaw, where marked expected increases in FTE employment within the local authority areas are not matched by the increase in the numbers of local residents in employment. Workplace Based Baseline Employment Forecasts by Sector As with other areas, employment growth will largely by led by the private sector. The largest net increases are expected to arise from business services, with a net increase of over 8,900 FTEs by This is followed by construction and transport which will create approximately 7,000 and 6,700 FTE positions respectively, reflecting the high growth rates projected for these sectors. Sheffield City Region, sectors forecast to grow - by total net FTE change Source: RegionalEconomic Intelligence Unit, ,000 5,000 4,000 Net Change FTE s 3,000 2,000 1, , The other main sources of growth will be other services and health, with the latter reflecting an increased demand for health services as the population ages. 4

8 Top 10 Sectors by Absolute Rise in Employment to 2015 and forecast change in employment forecast change in employment 1 Business Services 4,829 1 Business Services 8,959 2 Other Services 4,723 2 Construction 7,038 3 Construction 4,504 3 Transport 6,712 4 Transport 2,724 4 Other Services 5,861 5 Other Fin. & Bus. Ser. 2,015 5 Health 4,254 6 Retailing 1,934 6 Other Fin. & Bus. Ser. 4,178 7 Hotels & Catering 1,849 7 Hotels & Catering 3,734 8 Communications Retailing 2,874 9 Other Mining Communications 1, Health Wholesaling 868 Source: Regional Economic Intelligence Unit, 2012 One of the greatest challenges will come from the continued decline in manufacturing employment in spite of hopes of an export led recovery. The decline in the number of FTEs in the sector by almost 10,000 will reduce employment numbers to just over 80,000 by The loss of jobs in in the public sector will also have a major impact at a local level. As elsewhere in the UK, the majority of manufacturing sub-sectors are forecast to lose employment. Substantial losses are forecast for the manufacture of electrical and optical equipment and particularly the metals sub-sector an important employment specialism in the City Region. Paper and printing, minerals, machinery and equipment, plastics and wood will experience employment growth between 2011 and 2015 although the increases will be modest and with the exception of paper and publishing, decline is forecast post Sheffield City Region, manufacturing sub sectors -total net FTE change Source: RegionalEconomic Intelligence Unit, 2012 Net Change FTEs 1, ,000-1,500-2,000-2,500-3,000-3,500-4,

9 Impact on Demand for Skills and Qualifications The forecasts indicate that higher level qualifications will become more important, with demand increasing most significantly at Level 4 and 5. The majority of this growth will occur after The increase in demand for people with low or no qualifications will be less pronounced, although in actual terms demand will remain substantial with over 204,000 employees below Level 2 and a further 185,000 employees holding qualifications at Level 2. Forecast Demand for NVQ Level (for whole LEP area) Nos. of employees required with Percentage change qualification level (000s) NVQ Equivalent Level % 4.3% 5.8% Level % 4.6% 7.8% Level % 2.4% 4.5% Level % 2.4% 4.3% Level % 2.1% 4.0% Level % 1.9% 4.0% Source: Regional Economic Intelligence Unit, 2012 There will be an increase in demand for a range of higher level qualifications, and particularly higher HNC, HND and BTECs, first/foundation degrees and HE diplomas. There will also be an increase in demand for higher degrees and post nursing qualifications linked to the projected increase in health related employment. Trade apprenticeships are forecast to see lower levels of growth, potentially reflecting the lower number of manufacturing jobs available. The economic model does not separate out higher level apprenticeships where greater increases might be expected, given the general trend towards higher level qualifications. Forecast Demand for Selected Qualifications (for whole LEP area) Nos. of employees required with qualification level (000s) Selected Qualifications Percentage change Higher Degree % 4% 6% First/Foundation degree % 5% 8% Diploma in higher education % 5% 8% HNC HND BTEC etc higher % 4% 9% Nursing etc % 6% 8% A level or equivalent % 3% 5% OND ONC BTEC etc national % 3% 5% City & Guilds advanced craft % 2% 4% Trade apprenticeship % 2% 4% O level, GCSE grade A-C or equiv % 2% 4% Source: Regional Economic Intelligence Unit, 2012 The range of qualifications where an increase in demand is expected reflect both growth from private sector investment as well as increasing employment in heath and education

10 Replacement Demand Replacement demand, as a result of workers retiring from the workforce, affects all sectors. The public sector (health and education) is particularly affected, as are some private sector areas, notably retailing and business services. Of the major sectors, only hotels and catering has a predominantly younger workforce. Replacement Demand by Sector 2015 and 2020 Replacement demand (no. of workers) Sector % of workforce over 55 in 2011 by 2015 by 2020 Other Services 21% 3,800 10,950 Health 16% 2,300 10,050 Business Services 18% 3,200 8,150 Education 20% 1,500 8,050 Retailing 16% 2,400 6,850 Wholesaling 20% 1,900 5,550 Transport 19% 1,300 3,900 Public Administration & Defence 16% 500 3,500 Metals 30% 900 3,450 Construction 16% 700 3,350 Hotels & Catering 10% 1,500 3,150 Other Financial & Business Services 27% 800 2,550 Other Mining 43% 1,300 1,500 Communications 16% 200 1,350 Food, Drink & Tobacco 15% 200 1,150 Banking & Insurance 9% 200 1,050 Source: Regional Economic Intelligence Unit, 2012 There will also be replacement demand across all occupation types. In some cases the occupations relate to specific sectors, such as the increases in teaching and research professionals and transport and mobile machine drivers and operatives, while others will cut across a number of sectors, including elementary administration and service occupations and corporate managers. Replacement Demand by Occupation 2015 and 2020 Occupation % of workforce over 55 in 2011 Replacement demand (no. of workers) by 2015 by 2020 Elementary Administration & Service Occupations 19 3,900 9,600 Corporate Managers 15 1,600 8,500 Administrative Occupations 18 2,100 8,150 Teaching & Research Professionals 24 1,600 6,700 Managers and Proprietors in Agriculture & Services 27 2,500 4,950 Transport and Mobile Machine Drivers & Operatives 28 1,400 4,600 Business & Public Service Associate Professionals 18 1,300 4,500 Skilled Metal & Electrical Trades ,500 Caring Personal Service Occupations ,900 Process, Plant and Machine Operatives ,400 Sales & Customer Service Occupations 17 1,200 3,350 Secretarial & Related Occupations ,100 Source: Regional Economic Intelligence Unit, 2012 Given the relatively low levels of employment growth forecast in some local authority areas, replacement demand as older workers leave the workforce will be an important source of 7

11 employment and training opportunities for local residents in the Sheffield City Region area. It may also present an opportunity for employers to upskill their existing workforce. The forecasts also indicate that while many lower skilled jobs will require replacement workers, there are a number of skilled positions in manufacturing and transport which will create a steady stream of opportunities. Transformational Investments Economic development projects which are expected to have a major impact between 2012 and 2020 have been identified by partners in Sheffield City Region and their potential impact has been calculated using the Regional Econometric Model. This includes converting the gross number of jobs created by a project itself to the net additional jobs expected to be created in the local economy overall. High Likelihood Transformational Projects Included in the Modelling Project Local Authority Gross Jobs Gross Jobs Enterprise Zone Sh/Roth/Bar 8,522 8,522 Inland Port Doncaster 6,717 6,717 FARRS/WRW RHd Airport Bus. Parks Doncaster 3,764 5,029 FARRS/WRW Doncaster Carr site Doncaster 3,598 3,598 Don Valley DN7 business parks Doncaster 2,183 4,017 Don Valley Power Station Doncaster 2,170 2,170 Barnsley Market Barnsley 1,873 1,873 M18 Strategic site, Westmoor Park Doncaster 1,870 1,870 Chesterfield Waterside Chesterfield 1,490 1,890 The Avenue (inc const & other manuf) NEDDC 1,390 1,700 FARRRS/WRW Bankwood lane Doncaster 1,290 1,404 AMP - Rolls Royce Rotherham Visions of China Rotherham Robin Hood Airport Terminal act. Doncaster 560 1,040 37,045 41,448 Source: Regional Economic Intelligence Unit, 2012 No rigid definition has been applied as to what constitutes a transformational project and this has been led by local partners perceptions of what will make a substantial difference to their local economies. Local partners have also provided an indication of the likelihood of projects progressing. The table below shows the baseline, workplace based, employment forecasts for 2015 and 2020, how these change when the suite of transformational projects are factored in, and the net number of jobs which is expected to be created by the transformational projects. In total the transformational projects have the potential to create just over 36,600 additional jobs by 2020, and double total employment growth from the baseline projection of 5% to 11%. The potential impact varies significantly by area. Over half of the projected positions are expected to be in Doncaster, reflecting the large number of projects with a high likelihood of proceeding in the Borough. This would have a significant impact leading to employment growth of 26% by 2011 (compared to baseline projections of 7%). 8

12 Transformational and Total Impacts by Locality Area Jobs 2011 (FTE) FTE Jobs 2015 FTE Jobs 2020 Core forecast Core forecast + Trans projects Trans projects impact Core forecast Core forecast + Trans projects Trans projects impact Sheffield CR 636, , ,442 20, , ,365 36,624 Doncaster 104, , ,117 11, , ,636 20,034 Sheffield 215, , ,240 2, , ,484 5,164 Rotherham 87,223 90,428 92,601 2,174 93,127 97,085 3,957 Barnsley 62,293 63,464 65,055 1,592 64,946 67,840 2,894 Chesterfield 41,284 41,236 42, ,037 43,642 1,605 NE Derbyshire 24,048 24,624 25, ,372 26,734 1,362 Bassetlaw 42,643 43,869 43, ,093 46, Bolsover 25,486 26,172 26, ,534 27, Source: Regional Economic Intelligence Unit, 2012 While the impacts in all other areas are much lower, the additional jobs created would help to close the gap with national employment growth in Barnsley, Sheffield, Chesterfield, and North East Derbyshire. The impact would be small in Bassetlaw and Bolsover, although total employment growth (relative to the employment base) would continue to be higher than the policy on scenario in some areas. The impact of the transformational projects has been forecast for sectors and occupations. The table below shows the ten sectors in which the employment impacts of the transformational projects will be greatest. Transformational and Total Impacts by Sector (ten with largest impacts) Sector Jobs 2011 (FTE) FTE Jobs 2015 FTE Jobs 2020 Trans projects impact Core forecast + Trans projects Trans projects impact Core forecast + Trans projects Industry Total 318,814 20, ,442 36, ,365 Transport 2,844 4,352 42,869 7,934 50,439 Business Services 30,161 3,165 77,093 6,178 84,235 Other Manufacturing NEC 23,148 2,745 8,488 4,994 10,573 Construction 15,215 2,445 46,906 4,273 51,269 Other Services 3,599 1,657 49,205 2,472 51,158 Other Fin. & Bus. Services 14,354 1,186 17,451 2,126 20,555 Wholesaling 27,011 1,223 41,067 1,753 42,809 Banking & Insurance 24, , ,551 Metals 4, , ,750 Hotels & Catering 14, , ,107 Source: Regional Economic Intelligence Unit, 2012 Transport is expected to experience the largest impact, with over 7,900 additional FTE positions if the transformational projects go ahead as expected, doubling the growth projected in the baseline scenario. This reflects plans for transport and logistics related developments in Doncaster, including those linked to the airport and the Finningley and Rossington Relief Road Scheme (FARRS). One of the most significant impacts of the transformational developments would be the creation of manufacturing jobs. This would help to stabilise the ongoing decline in these sub-sectors and lead to a net employment growth in other manufacturing between 2011 and

13 The developments are also expected to have a significant impact on other financial and business services, relative to the sector s current size. With business services, this reflects plans to further increase the presence of knowledge based services through the provision of new, high quality office space, including those proposed within the Enterprise Zone. The table below shows the ten occupations in which the employment impacts of the transformational projects are expected to be greatest. Transformational and Total Impacts by Occupation (ten with largest impacts) Occupation Jobs 2011 Jobs 2015 Jobs 2020 Trans projects impact Core forecast + Trans projects Trans projects impact Core forecast + Trans projects Occupation Total 782,083 24, ,808 42, ,915 Corporate Administrators 101,328 3, ,149 6, ,578 Transport Drivers and Ops 41,875 3,307 47,948 6,045 53,993 Admin & Clerical Occupations 62,833 2,483 64,125 3,939 65,403 Elementary: Clerical/Service 71,373 1,369 73,928 2,530 76,088 Bus/Public Serv. Assoc Prof. 36,583 1,560 39,263 2,513 41,809 Skilled Metal/Elec Trades 30,754 1,517 30,937 2,463 30,351 Skilled Construct. Trades 20,412 1,326 23,592 2,206 25,218 Elementary: Trades/Plant/Mach 29,665 1,164 31,689 2,120 33,532 Science/Tech Professionals 20,683 1,109 23,586 2,092 26,362 Process, Plant & Mach Ops 32,775 1,297 32,188 2,052 30,529 Source: Regional Economic Intelligence Unit, 2012 In summary, if they proceed, the transformational projects would help to accelerate growth in some local authorities, sectors and occupations. This includes transport and business services, while in others, including manufacturing sub-sectors and process, plant and machine operatives, they would help to reverse or ease decline. Combined Impact on Employment Requirements The combined impact of forecast economic change, the transformational projects and replacement demand will create a demand for new employees, whether that is to fill new jobs, replace people who leave directly, or to backfill positions if vacancies arising are filled internally. The following table shows the sectors in which the greatest number of employees is expected to be recruited by 2015 and By 2020, some 149,700 new employees will need to be recruited, either into new jobs or (mainly) as replacements for retiring workers, and this will have implications for company training and recruitment plans. While the scale of change increases post 2015 to some 24% of the workforce (over a five year period), even in the period to 2015 when economic growth is muted the scale of change is still significant at 9% or 57,800 positions. 10

14 Recruitment Needs to 2015 and 2020 by Sector Sector Employment 2011 Baseline Total recruits by 2015 including forecast, transformational and replacement No. % of 2011 total Total recruits by 2020 including forecast, transformational and replacement No. % of 2011 total Industry Total 636,088 57,854 9% 149,777 24% Business Services 69,098 11,195 16% 23,287 34% Other Services 42,825 10,180 24% 19,283 45% Transport 35,793 8,377 23% 18,546 52% Construction 39,957 7,649 19% 14,662 37% Health 90,542 2,600 3% 14,595 16% Retailing 54,742 4,110 8% 9,911 18% Other Financial & Business Services 14,250 4,000 28% 8,855 62% Wholesaling 40,188 2,779 7% 8,171 20% Hotels & Catering 30,570 3,828 13% 7,686 25% Education 51,762-1,307-3% 6,743 13% Other Manufacturing NEC 5,849 2,640 45% 5,074 87% Communications 14,213 1,330 9% 3,531 25% Source: Regional Economic Intelligence Unit, 2012 Key points to note are: The sectors in which the largest volume of recruitment is expected include Business Services, followed by other services and transport, all of which are expected to recruit over 18,500 employees by Both construction and health will also require over 14,500 recruits, with the majority of demand in health occurring post Despite overall manufacturing decline (in employment terms), there will be a requirement for new recruits in some sub-sectors, resulting from a combination of replacement demand and the transformational developments. Other manufacturing is forecast to experience the greatest level of recruitment although this is largely dependant upon the successful delivery of transformational investments. Recruitment will occur across a wide range of occupation types, although by far the greatest demand will be for Corporate Administrators and Transport Drivers and Operatives. This is followed by elementary (clerical/service) and admin and clerical occupations. The steepest rises in percentage terms are in Culture/Media/Sport Occupations, Transport Drivers and Operatives and business / public service professionals. 11

15 Recruitment Needs by Occupation Sector Employment 2011 Baseline Total recruits to 2015 including forecast, transformational and replacement net change % of on Total recruits to 2020 including forecast, transformational and replacement net change % of 2011 on 2011 Occupation Total 782,083 65,525 8% 164,632 21% Corporate Administrators 101,328 11,421 11% 27,750 27% Transport Drivers and Ops 41,875 7,472 18% 16,718 40% Elementary: Clerical/Service 71,373 6,455 9% 14,316 20% Admin & Clerical Occupations 62,833 3,391 5% 10,720 17% Managers and Proprietors 28,948 5,277 18% 9,844 34% Bus/Public Serv. Assoc Prof. 36,583 3,980 11% 9,726 27% Caring Personal Service Occs 57,235 1,103 2% 7,875 14% Science/Tech Professionals 20,683 3,403 16% 7,529 36% Business/Public service Prof. 21,321 3,033 14% 6,948 33% Skilled Construct. Trades 20,412 3,880 19% 6,406 31% Culture/Media/Sport Occs 15,301 3,533 23% 6,023 39% Health Associate Prof. 34,415 1,656 5% 5,940 17% Elementary: Trades/Plant/Mach 29,665 2,625 9% 5,618 19% Sales Occupations 46,944 2,492 5% 5,555 12% Teaching/Research Prof. 35, % 5,066 14% Leisure/Oth Pers Serv Occs 15,374 2,408 16% 4,201 27% Skilled Metal/Elec Trades 30, % 4,096 13% Customer Service Occupations 11,456 1,504 13% 3,499 31% Health Professionals 9, % 1,892 19% Source: Regional Economic Intelligence Unit, 2012 Conclusions The challenges which will impact on local and sub regional agencies are: The significant decline in public sector employment and continuing decline in manufacturing employment. In the latter case, while output will grow, employment will fall in the majority of sub sectors. Inevitably, many of those losing their jobs will seek employment in other sectors, and may require some retraining as well as support in seeking new opportunities. Plans for the Advanced Manufacturing Park and Enterprise Zone offer the potential to arrest employment decline in manufacturing and their success if of critical importance to the City region economy. Strong growth in business services, transport and construction will have implications for training, as will the significant increase in employment in other services, although the wide range of activity captured within the sector will make it difficult to identify specific requirements. There will also be a recovery of health related employment post 2015, partly a response of the ageing of the population, with implications for customer care and care skills. This increase in health related employment will not necessarily be delivered through the public sector directly. Levels of employment growth will vary across the City Region, with below average levels of growth in some of the City Region s largest areas including Sheffield and Barnsley as well as parts of Derbyshire. The number of residents entering employment (within or outside the local authority boundaries) is also forecast to be below the national average in the majority of areas, suggesting that high unemployment will persist for some years after employment has recovered nationally. 12

16 Increasing demand, particularly post 2015 for higher level skills, notably HE Diplomas, higher HND, HNC and BTECs, first/foundation degrees and higher diplomas, reflecting long term trends in the labour market. In spite of an up-skilling of the workforce, substantial numbers will remain in employment with qualifications below Level 2 suggesting that basic skills training will remain a priority for many years. Increasing numbers leaving the workforce (again a reflection of the ageing population), affecting virtually every sector resulting in a requirement for trained replacements. The proposed transformational projects have an important role to play in generating new employment at a local level, particularly in those areas where low levels of growth are projected and the developments have the potential to close the gap with the national average. It should be noted, however, that the full employment impact of many of the larger schemes will take some time to materialise. Nevertheless, progressing these schemes has to be a priority for the strategic partners in the LEP area. Despite the relatively slow employment growth forecast for the Sheffield City Region, the total number of new recruits required around 57,800 by 2015 and 149,700 by 2020 will have important implications for businesses and the type and volume of educational, training and skills development provision available in the City Region. 13

17 Business Expectations Introduction Identifying the skills that will be required by employers over the next three to five years is a core component of the study. This information was gathered through a large scale telephone survey of 3,106 employers located across the four Yorkshire LEP areas. A total of 899 businesses in the Sheffield City Region LEP took part in the survey. Recent Recruitment Difficulties and Current Skills Gaps Businesses in Sheffield City Region were asked whether they had experienced difficulty hiring staff within particular occupations or with particular skills over the past year. Relatively few businesses reported experiencing any difficulties in recruiting new staff. The most commonly stated occupational group in which businesses have had difficulty recruiting is in skilled trades occupations (20% of businesses), and the most difficult to recruit skills were technical and practical skills (15%) and job specific skills (11%). Less difficulty was reported in recruiting staff with more generic skills types such as team working, planning and organisation and problem solving (3% each). The majority of businesses stated that all their staff, across all occupation types, are fully proficient in their role. There was little variation by occupation type. Where staff were not fully proficient, businesses usually said that this was because they were new to the role (21%) or were still undertaking training (16%). For a significant minority of businesses, a lack of proficiency amongst staff is due to inappropriate (14%) or ineffective training (6%) and difficulties retraining (8%). Economic Expectations Businesses have a cautious view of the outlook for future prospects. Over the next three to five years, 43% of businesses anticipate that the local economy will slightly improve, while 27% expect it to remain the same and 21% think it will worsen. 14

18 Occupation and Skills Needs The survey sought to obtain a detailed profile of businesses occupational and skills needs over the next three years. Businesses were asked to consider their business plans, target markets, likely sources of revenue and projections of staff turnover to identify any anticipated change in employment levels across different occupational groups. They also commented on any changes in the importance of specific types of skills, competencies and qualifications. Expected Employment Change by Occupational Group Across all occupation types, the majority of businesses do not expect a change in the number of staff they employ over the next three years. Despite this, businesses may recruit staff in these occupations over this period, due to replacement demand (i.e. replacing a member of staff who leaves the company or takes on another role within the company). Where businesses are expecting to see a change in the number of people employed, the most commonly expected is a slight increase in employment in skilled trades (reported by 27% of businesses), administration and secretarial occupations (22%) and sales and customer services roles (20%). Few businesses expected employment levels to fall within any occupation type. Expected Change in the Importance of Skills Types The majority of businesses expect the skills required by their business to remain constant over the next three years. Up to one third of employers stated that some skills were becoming more important. IT/software skills (35%) and technical/practical skills (32%) were most commonly cited as of increasing importance. Few businesses expected any skills types to become less important. There is some alignment between anticipated occupational growth and skills that businesses have noted to be of increasing importance. Employment numbers are most commonly expected to rise in the skilled trades (27%) and sales and customer services (20%) occupations and similarly, a high proportion of businesses expect technical/practical (35%) and customer handling (32%) skills to increase in importance. However, whilst few businesses expect an increase in the number of managers (9%), a reasonably high proportion stated that management skills will be of increased importance (26%), suggesting that it is the skills of the existing workforce which need to be improved in this area. 15

19 Businesses who stated that some skills were becoming more important were asked to provide more detail. The table below shows the specific skills identified within the top three skills types where an increase in importance is expected. The survey findings highlight that the pace of technological development in relation to IT, manufacturing and engineering processes creates skills gaps for businesses. Skills expected to increase in importance IT/Software Technical/Practical Customer handing Keeping up to date with technology/software Accountancy CAD drawing Web design/advertising Social media Keeping up to date with technology/software Welding Operators Testing Communication Telephone skills Efficient customer handling Source: LEP Skills Survey 2012 Looking at the skills that will be of increasing importance within specific sectors: IT/software and technical/practical skills: These were both cited by a high proportion of businesses within the communications sector (71% and 54% respectively) and a low proportion of businesses within the health (23% and 16%) and transport (23% and 13%) sectors; Management skills: A high proportion of businesses within the communications (41%), low carbon (33%) and financial, professional and business services (33%) sectors stated this skills type would be of increasing importance. Few businesses within the hospitality (13%) and transport (3%) sector stated that the importance of management skills would increase. Graduates A profile of current and future graduate employment (in graduate-level jobs) is shown in the chart below. The key points to note are: One in five businesses currently employs graduates (19%), marginally lower than the regional average; Graduates are regarded as important amongst the majority of businesses that employ them, with over three quarters stating they are either very important (39%) or quite important (38%) to the business; 15% of businesses expect to recruit graduates over the next three years, and one quarter of these do not currently employ graduates; Over 40% of businesses which currently employ graduates state that they do not intend to recruit any more over the next three years; 74% do not employ graduates and do not expect to recruit graduates in the next three years. The sectors within which the highest proportion of businesses employ graduates are communications (53%), followed by the hospitality (35%), financial, professional and business services (30%) and education (29%) sectors. None of the surveyed businesses operating in the transport sector currently employ graduates and few do so in the other services (11%) and wholesale and retail (8%) sectors. 16

20 The proportion of businesses employing graduates increases with businesses size. Although the small sample size should be noted regarding large businesses, there is a significant difference in the proportion of small and micro businesses which employ graduates. Graduate employment and business size Employment Size Band No. Businesses employing graduates within each size band Micro (1-9) 69 15% Small (10-49) 69 20% Medium (50-249) 22 31% Large (250+ ) 7 44% Total Source: LEP Skills Survey 2012 Future Graduate Recruitment Businesses that currently employ graduates and said that they intended to recruit graduates over the next three years were asked how the number they planned to recruit compares to the number they have recruited over the past three years. Although 43% of those currently employing graduates stated that they have no plans to recruit more, the survey findings suggest that amongst those that do plan to recruit, levels of graduate recruitment will either remain stable (61%) or increase (28%). Businesses in the financial, professional and business services sector account for the largest proportion of businesses that will recruit additional graduates. Together with manufacturing businesses (14%) and businesses in the communications sector (13%), these three sectors account for over half of businesses who say they plan to recruit additional 17

21 graduates. This is reflected in the degree subjects which employers require in their graduate recruits, the most common being business-related subjects and engineering and technology. One quarter of businesses who intend to recruit graduates expect it to be difficult to recruit, most commonly because they feel that applicants will not have the skills the business requires. Apprenticeships Just under a quarter of businesses surveyed currently employ apprentices (24%). Over the next three years, 29% of businesses plan to recruit new apprentices. The proportion of Sheffield City Region businesses already employing or planning to recruit apprentices is higher than amongst businesses across the region as a whole. A high proportion of the businesses within the education sector (38%) currently employ apprentices. This is followed by the manufacturing (30%), construction (28%), transport (26%) and other (25%) sectors, each with an above average proportion of companies with apprentices. A particularly low proportion of businesses within the arts and culture (14%) and hospitality (9%) sectors currently employ apprentices. The proportion of businesses that employ apprentices increases with business size. Around half of medium (53%) and large (47%) businesses currently employ apprentices, compared to 29% and 14% of small and micro businesses respectively. 18

22 Apprentice employment by business size Employment Size Band Sample Businesses employing apprentices within each size band Micro (1-9) 67 14% Small (10-49l) % Medium (50-249) 39 53% Large (250+) 8 47% Total Source: LEP Skills Survey 2012 Plans to Recruit Apprentices The sector profile of those businesses that plan to recruit apprentices shows that a high proportion of responses are accounted for by the manufacturing (24%) and financial, professional and business services (16%) sectors. The marked difference between small companies and medium and large sized companies in terms of apprenticeship recruitment suggests that there is considerable untapped potential in this important cohort of employers, if partners can make a case to smaller businesses of the potential benefits which an apprentice could bring, and overcome perceptions that some companies are too small to employ an apprentice. Workforce Development and Local Training Provision Businesses were asked a series of questions relating to their plans to deliver training and develop their workforce s skills over the next three years, as well as their intentions to use external training providers. The survey also asked about awareness of training available both locally and regionally and businesses perceptions of training providers ability to meet skills needs. Over three quarters of businesses expect to provide formal training for their some or all of their staff over the next three years (76%). One fifth of businesses are not planning to provide any formal training. Micro businesses and those in the other services (67%), wholesale and retail (66%) and low carbon (64%) sectors are least likely to provide formal 19

23 training. Awareness of Training Provision Over two thirds of businesses stated they were very aware or aware of training offered by FE colleges (70%) and private providers (71%) in their local authority. The survey findings include: Businesses have a greater awareness of the training provision offered by providers in their local authority (compared with regionally); There is little difference in businesses awareness of the training offered by private sector providers and FE Colleges; The proportion of businesses that are aware of local provision (70% 71%) is higher than the proportion planning to use external providers over the next three years (61%). Over a third of businesses within the arts and culture, wholesale and retail and other services sector have little or no awareness of the training provided by both FE colleges and private providers in their local authority. Businesses within the health and education sectors have the greatest level of awareness. The majority of businesses which are planning to provide training expect to use an external provider to meet their training needs (74%) either solely (24%) or in conjunction with internal training (50%). A high proportion of business within the health (86%), education (85%) and manufacturing (83%) sectors expect to access 20

24 external provision to meet their training needs. Businesses in the transport (56%) and communications (54%) sectors are least likely to do so. When asked what would encourage them to procure more training from external providers, a high proportion of businesses stated that nothing would encourage them to procure more training externally (26%). Where a reason was provided, the main factors can be grouped under the following headings: Cost: The survey found demand for greater public subsidy (42%) and lower course fees (34%); Relevance: 38% would like training more tailored to their business needs; Location of delivery: More than one in five businesses stated that more training delivered in the workplace and more training available locally (29% and 24% respectively) would encourage them to procure more training. Exporting Whilst 11% of businesses currently generate part of their turnover from overseas sales, 14% of businesses say they are planning to sell to overseas markets over the next three years. Of those businesses that currently export their products and services, three quarters will increase this significantly (28%) or slightly (48%) over the next three years. Sheffield City Region businesses were more likely to state that they would need additional skills to develop or improve exporting than businesses in other parts of the region. The responses are shown in the table below. Skills to enable the business to understand and develop a presence in overseas markets accounted for three of the top four responses. The Low Carbon and Environmental Sector The low carbon and environmental sector is a significant growth area of the UK economy. This growth is driven by a combination of government policies and legislation, rising energy prices, concerns about the security of traditional energy supply and fuel poverty. The recent Prospects for Green Jobs Report for Yorkshire Cities and others in Yorkshire and Humber 4 estimates that there were over 90,000 green jobs in the region in 2009, which represented around 3.6% of total employment. The key sectors with significant growth potential were identified as follows: Major investment projects in offshore wind, biomass power generation, biofuels and biorefining and carbon capture and storage (CCS); Onshore wind, biomass heat, energy-from-waste and microgeneration (albeit on a smaller scale than the major projects); Large scale low carbon building retrofit programmes linked to the Green Deal; Waste recycling and reuse; Environmental consultancy and other professional services linked to the growth of the green economy (e.g. finance, carbon accounting and legal). The most likely scenario for the selected growth sectors in the Green Jobs Report shows that employment in Yorkshire and Humber will double from its current level of 21,700 to 45,500 by A summary of the scope of the green jobs definition is shown in the diagram below. This covers the three strategic drivers, supply sub-sectors and cross-cutting activities of consultants, professional service providers and contractors. 4 The Prospects for Green Jobs to 2020: Final Report for Yorkshire Cities by Quantum Strategy and Technology, BE Group and the University of Hull, June

25 Green Jobs Definition and Scope Strategic Drivers Low Carbon and Environmental Goods & Services (LCEGS) Supply Sub-sectors Markets Local, UK, International Decarbonising the Energy System Improving Resource Efficiency Preserving and Enhancing the Natural Environment Nuclear Energy Renewable Energy Energy Efficiency & Services Energy-from-waste Energy Infrastructure Low Carbon Buildings Low Carbon Transport Carbon Finance New Technologies (e.g. CCS) Waste Minimisation Waste Recycling & Reuse Water Recycling and Reuse Sustainable Materials & Products Eco-design and Processes Green Infrastructure Eco-systems & Biodiversity Marine Environment Climate Change Adaptation Water Supply & Wastewater Other EGS sub-sectors Professional and Financial Services Multi-disciplinary Consultants and Contractors Agriculture & forestry Mining & quarrying Power generation, transmission & distribution Manufacturing Construction Wholesale & retail Transport & logistics Service industries Public administration In the Sheffield City Region LEP area, a recent Mini-Stern project estimated that nearly 6,200 jobs and GVA growth of 293 million per year will be generated over the next 10 years through the implementation of carbon reduction measures. This section presents a summary of the low carbon report produced by Quantum as part of the overall LEP skills research study. The findings focus on low carbon topics that Sheffield City Region LEP identified as a focus for the study: Embedding low carbon skills Leadership for the low carbon agenda Low carbon innovation Low carbon buildings and the green deal Skills needs in other LEP areas: offshore wind, bioenergy, green infrastructure Embedding Low Carbon Skills - across all sectors of the economy to reduce demand for carbon intensive energy and to increase the efficient use of other key resources such as water and raw materials. Generic low carbon/resource efficiency skills needed across all businesses especially SMEs; More specialised higher level skills needed for the carbon/energy intensive businesses e.g. energy and environmental management (see skills portfolio and ladder); Risk management skills (e.g. flood risks) needed in business for climate change adaptation; STEM skills are seen as an existing and future shortage area; Growing requirement for flexible and transferable skills; Developing a vision and roadmap for the low carbon economy at a LEP level to act as spur for businesses and training providers to take action; Helping employers to engage with schools, colleges and the HE sector to both embed and promote low carbon skills/sustainability awareness and careers within the curriculum subjects provided; Encouraging colleges and businesses to respond to the skills need by providing basic induction courses covering the fundamentals of sustainability and resource management (see skills 22

26 Ability to make the business case for investment in low carbon measures is critical; Sustainable procurement skills increasing in importance as low carbon and environmental drivers are impacts on supply chains; Embedding low carbon and resource efficiency measures into a company or organisation requires driving from the top; Large energy intensive industries usually have the necessary leadership skills but smaller firms do not; Need for management training in colleges to embrace the low carbon agenda link to work by BITC, CLCF and others; Need to stimulate innovation by raising awareness of the low carbon market opportunities and the funding sources for low carbon R&D, demonstration and technology transfer. portfolio and ladder); Networking and mentoring at a LEP level that engages local companies with key messages about the low carbon economy and support to build-up skills and awareness amongst local business leaders in collaboration with organisations such as the Carbon Trust and CO2Sense; Devising a City Region programme of leadership development that provides training to local business/public sector leaders (e.g. linked to the work of the CLCF on the circular economy); Providing mentoring support to start-ups and SMEs to provide them with the information and knowledge about the low carbon drivers, market opportunities and funding sources for R&D and innovation (e.g. drawing on the Low Carbon Innovation Coordination Group); Providing opportunities for start ups and SMEs to share skills though events or industrial park sites e.g. the AMP. Leadership for Low Carbon The primary research identified leadership for embedding low carbon approaches as a key issue in SCR. There are two key aspects of leadership: from policy-makers; and amongst senior business managers. Considerably uncertainty and change in government policy relating to low carbon leading to delays in business investment decisions Business leaders require certainty and strong political leadership Role for the LEP to make the case to government, and make the case to businesses locally for energy and resource efficiency SCR Low Carbon Sector Group has an important role to play in this and the LEP could promote the importance of an understanding of sustainability issues and skills to its business partners Strong leadership skills are needed amongst business managers to drive through change relating to low carbon Larger companies and those who have high energy bills most likely to have integrated energy management into their company key performance indicators Smaller companies less likely to have taken this step, may be finding it more difficult to access external support to improve their energy and resource management Low Carbon Innovation Local economic performance is related to levels of innovation. Low carbon innovation requires the skills needed for innovation more generally, allied to an understanding of market drivers and opportunities in the low carbon economy Specific areas of knowledge required include patents, design rights, intellectual property rights, and skills in management of technical risk and understanding of innovation Understanding of the funding available in this field is also important (for example, through the EU s 7th Framework Finding the appropriate contact within a partner organisation or business can be time-consuming Networks such as those established at the AMP provide a route to overcome these difficulties Mentoring could help newly established companies and SMEs find the 23

27 Programme, Intelligent Energy Europe, the Technology Strategy Board, Carbon Trust and the Energy Technologies Institute) Partnership working between businesses and with partners including universities can enabled knowledge transfer information they need on low carbon from someone with a good knowledge of market drivers Low Carbon Buildings and Green Deal A range of skills will be needed to deliver the Green Deal and ECO retrofit schemes and to deliver new build construction to increasingly lower carbon standards in line with building regulations and planning policies. Skills gaps and issues are similar for delivering low carbon retrofit improvements under Green Deal and for new build; Large companies are likely to dominate the market but there will be subcontracting opportunities for smaller firms; Research shows that two-thirds of the workforce need to improve their skills to ensure the success of Green Deal; Uncertainty around the form and demand for Green Deal makes it difficult for companies and training providers to plan ahead to tackle the skills gaps; Key issues/gaps include: Recruitment and training of skilled assessors for Green Deal (critical role); Skills associated with solid wall insulation especially external wall rendering; Installation of energy efficient equipment and microgeneration (e.g. boilers, mechanical ventilation and heat pumps) to a high standard; Communicating with the customer to ensure that equipment is used correctly to maximise the savings; Trades need to understand better how their work links with others e.g. wall to roof and window to wall; Project management skills to ensure that design standards are achieved in practice especially for airtightness; Need for flexible skills, multi-skilling (rather than a single trade craft) and career pathways through qualifications frameworks; Research for the Green Deal Skills Alliance showed that tutors do not always have the most up to date knowledge on the latest developments in technologies and products. Colleges need to work with the National Occupational Standards coming out on Green Deal from the Green Deal Skills Alliance but also to link with local construction firms and Green Deal providers as well as local authorities to tailor courses to ensure high local take up; Training needs to be appropriate to measures identified locally and to local building types; Ensuring that trainers are kept up-to-date on technology and product developments e.g. by working with Green Deal providers and facilitating visits to demonstration homes; LEPs have a role in acting as facilitators to bring together expertise to improve the training offer and provide intelligence and coordination in the local approach to Green Deal. 24

28 Offshore Wind: A wide range of skills will be needed over the next 10 to 12 years to develop, build, install and maintain the major offshore wind farm investments off the East Coast. 5,000+ local jobs building-up mainly from Raising awareness of career/job ; opportunities in the sector to: Main demand is for semi-skilled mechanical and electrical technicians for schools to encourage young people to study the STEM subjects; manufacture and assembly operations; Also demand for skilled trades e.g. skilled fitters, welders and electrical/hv careers advisors and those who are working with the unemployed and disadvantaged groups. engineers; Forging closer relationships between the Also for vessel crews and O&M engineers with offshore training and major employers in the offshore wind sector and the training providers; experience; Helping local firms, especially SMEs, to Competition for same skills from other industries e.g. power and utilities; understand the market opportunities and procurement requirements in the sector; Big gaps emerging with ageing workforce Building capacity in mechanical and especially electrical technicians and engineers; A major challenge will be the electrical electrical disciplines especially at levels 3 and 4 (e.g. current RGF project on the North Bank); engineering skills required to connect Identifying specialist training which could offshore wind and other renewable energy generation to the grid and to control the network to deliver power where and when it is needed; be carried out locally e.g. covering health & safety offshore and electrical/mechanical O&M skills for offshore work. Supply chain opportunities for firms outside the Humber area e.g. gearboxes, bearings, switchgear, fabrications, forgings, castings and machined parts. Bioenergy: This sector covers: Biomass power including biomass co-firing and dedicated biomass power stations; Anaerobic digestion (AD) of organic wastes to produce electricity and heat; Biomass heat production for domestic, commercial and industrial applications including district heating. About 4,000 new jobs in the biomass industry in Y&H by 2020 in feedstock production/distribution, biomass conversion and O&M; Skills levels identified for each part of the supply chain; Woodfuel and energy crop supply chains are still immature; Lack of skilled technicians/ operatives for medium scale biomass and AD plants; Lack of trained and appropriately accredited domestic biomass boiler installers; Manufacturing and engineering services constraints exist for most sectors of the biomass industry; Extremely limited UK manufacturing and fabrication capabilities for biomass technologies and equipment including domestic boilers. Ensuring that those involved in the development of bioenergy technologies, product and services take account of the principles which are articulated in the Government s Bioenergy Strategy Growing and management of energy crops e.g. need to update best practice guidance for planting and establishment and to support trial work on planting and management techniques; Bringing undermanaged woodlands back into management to improve their sustainability and to provide a source of local biomass materials; Improving the distribution system and the associated skills/resources for energy crops and woodfuel; Working with training providers to address the lack of skilled technicians and accredited installers; Stimulating innovation in the biomass supply chain, developing links with local universities and research organisations working in this field such as the University of York, NNFCC and the Food 25

29 & Environment Research Agency. Green Infrastructure: Broad ranging group of sectors covering landscaping, green spaces, environmental conservation and trees/timber. 4,000+ new entrants needed in Y&H over ; Skill levels, job functions and skills gaps identified by sub-sector; Cross-cutting issues and gaps include: Leadership and management skills; Skills deficit in qualified people with practical experience; Engaging with local communities and managing volunteers; Fund raising and accessing grants, sponsorship etc. Commercial and marketing skills e.g. for visitor attractions and woodfuel; Need to embed climate change issues and skills into the training programmes covering both mitigation (e.g. biomass) and adaptation (e.g. land management techniques to reduce the risk of flooding). Most of the training is done in-house by the businesses; Significant proportions of businesses do no training; Key barriers to training are lack of time and funds. For LEPs and local authorities: Disseminating information about career entry, progression and professional development opportunities; Promoting training in public engagement e.g. by sharing best practice among and between large employers; Encouraging employers to offer paid internship schemes, work experience, and sandwich placements; Conducting research into a CPD scheme for the industry and developing CPD frameworks; Highlighting areas of overlap and transferable skills across the various sectors to encourage career changes; Promoting training in community engagement and project management skills to improve career progression opportunities ; For training providers: Offering more flexible courses and modular courses at affordable prices to address the barriers of lack of time and funds; Increasing training provision in generating alternative income streams including communication and negotiation skills; Embedding climate change issues and skills into the training programmes; Developing and delivering a volunteer training framework for employers to standardise experience and maximise the value of volunteering to individuals; Encouraging HEI s to incorporate greater levels of practical conservation work on degree courses via sandwich placements, work experience and volunteering. International Perspective The global market for low carbon and environmental goods & services (LCEGS) was estimated to be worth 3.3 trillion in , a 3.7% growth on the previous year. Exportable skills in Y&H for global markets include environmental consultancy, energy management products and services, process engineering, innovative renewable energy technologies & components and carbon finance; Large firms are likely to have the skills needed for tacking international markets and may also be part multi-national organisations; Collaborating with UKTI and others (e.g. CO2Sense and the chambers of commerce) to ensure that trade advisors are in place with the appropriate knowledge and skills in the priority international markets for LCEGS; Encouraging the larger local companies working internationally (e.g. environmental consultancies) to bring back experiences, skills and knowledge of global markets and projects to share 26

30 Smaller local firms often lack the knowledge, resources and skills to tackle overseas markets; A wide range of support for new and experienced exporters is available through the export arm of UK Trade & Investment; However, a key issue is the knowledge and experience of the trade advisors in the international markets for LCEGS; Lack of foreign language skills in England compared with other major exporting countries. with the smaller local companies. Conclusions The low carbon sector presents a significant opportunity for businesses in the LEP, and the implications for training provision will increase as new opportunities are developed. A number of training providers have begun to develop specialist training courses / centres to meet the growing need for low carbon skills. While opportunities vary across Yorkshire, all four LEPs areas will benefit from the further growth in products, services and sales. There will be a need for training to support growth sectors, including the need to re-training workers from other sectors moving to take up new and in many cases better prospects in low carbon and renewable energy companies. The main areas of opportunity for Sheffield City Region are summarised in the table below. Sector/Activity Opportunity Embedding Low Carbon Across all sectors of the economy to reduce demand for Skills carbon intensive energy and to increase the efficient use of other key resources such as water and raw materials. This is particularly important in SCR where a number of important sectors and high intensity uses of energy. Leadership Skills for Low Leadership is required both from policy makers and within Carbon businesses to promote the importance of adapting to a low carbon economy. The LEP s Low Carbon Sector Group has an important role to play in making the case for change both to the business base, and to training providers. Low Carbon Innovation Exploiting the opportunities for low carbon innovation requires many of the same skills required for innovation and commercialisation more generally but with an understanding of the market drivers and opportunities in the low carbon economy. The LEP has a role to facilitate information and knowledge sharing between businesses. Low Carbon Buildings and A range of skills will be needed to deliver the Green Deal Green Deal and ECO retrofit schemes and to deliver new build construction to increasingly lower carbon standards in line with building regulations and planning policies. This includes both training new entrants to the industry and updating the skills of existing construction sector employees. The LEP can bring partners together to increase intelligence about the needs and opportunities and co-ordinate the approach across SCR. Offshore Wind: A wide range of skills will be needed over the next 10 to 12 years to develop, build, install and maintain the major offshore wind farm investments off the East Coast. There is an opportunity for SCR businesses to play a role in the supply chain of this sector. 27

31 Bioenergy: Green Infrastructure International Perspective This sector covers: biomass power including biomass cofiring and dedicated biomass power stations; Anaerobic digestion (AD) of organic wastes to produce electricity and heat; biomass heat production for domestic, commercial and industrial applications including district heating. Whilst not a major sector in SCR, there are nonetheless opportunities for diversification / new entrants to the market. Broad ranging group of sectors covering landscaping, green spaces, environmental conservation and trees/timber. The global market for low carbon and environmental goods & services (LCEGS) was estimated to be worth 3.3 trillion in , a 3.7% growth on the previous year. Many of the major environmental consultancies etc have a presence in the SCR. THE PROVIDER PERSPECTIVE Introduction A telephone survey of 105 providers (FE colleges and work based learning providers), including 25 from the Sheffield City Region, was undertaken for the study. The survey explored providers use of labour market information, their views on the supply of, and demand for, skills provision, and the factors that influence or prevent the introduction of new courses. Employer Intelligence The survey asked providers to identify the importance of a range of information sources to their curriculum planning, and particularly to their curriculum planning over the longer term (two years+). As shown in the chart below, the headlines are that: Information about the types of qualifications that employers are likely to demand and information on employers current skills gaps are the most important sources; Employers skills needs over the next two years and their current recruitment needs are also important, more so than any intelligence relating to the three year+ outlook. One of the most significant findings from the survey is that there is a distinct contrast between the importance to providers of different types of labour market information and its perceived 28

32 quality. In no category from the above chart did more than five providers (20%) in the Sheffield City Region rate the information as very good, and against no category did the combined very good and quite good responses exceed 60%. The Role of Official Data Sources Sector Skills Council (SSC) research, participation statistics and the National Employer Skills Survey (NESS) are the official data sources with which providers in the Sheffield City Region are most likely to be familiar and are most likely to use for curriculum planning purposes. Knowledge and use of the Employer Perspectives Survey and the Annual Business Inquiry (now the Business Register and Employment Survey) is much lower, although these are neither sector specific nor focused exclusively on the demand and supply of skills, so it is to be expected that fewer providers use them. Other official data sources that have some influence on the long term planning process of Sheffield City Region providers include DWP claimant data and the Annual Population Survey, although in both cases a larger proportion of providers said that these have little or no influence than said they have some influence. The main limitations in the official data sources reported by providers are that: It is not sufficiently specific; There is not enough information relating to the two year+ outlook; It is out of date. Other Sources of Labour Market Information Providers also use various other sources of information to support their curriculum planning, including ad hoc or informal conversations with employers, research undertaken by the providers themselves and other research commissioned locally. The quality and granularity of the information gleaned from these less formal channels is seen to be better than the official or national data, but it also tends to be based on smaller samples that are not robust enough to justify curriculum change. The ideal for providers is therefore to have localised information which is: On a scale that provides a sound platform for decision making; or In a format that enables them to take forward more detailed conversations with employers about the specifics of their requirements. The Business Planning Process report expands upon both of the above points. Other Drivers of Curriculum Planning The survey asked providers to identify the three most important factors that influence their curriculum planning processes, be that in relation to labour market information or other drivers. This was via an open-ended question, the results from which have been grouped and show that: The needs of businesses is the most influential factor behind curriculum planning decisions, cited by 13 of the 25 providers in the Sheffield City Region sample; Funding (nine providers) and learner need (five providers) are the second and third most influential factors. Having access to good quality labour market information is implicit within the needs of businesses and learner need responses and therefore clearly has an important part to play in curriculum planning. The proportion of funding responses is lower than in any of the other LEP areas, which in one regard is very encouraging but is also rather at odds with the view 29

33 (admittedly anecdotal) from skills stakeholders that public funding has a greater influence on provision in South Yorkshire than elsewhere in the region. Qualifications The Government s programme of qualification rationalisation appears to be having a mixed although not especially positive effect on providers in the Sheffield City Region. Whilst almost equal numbers said the programme of rationalisation was having no effect (11 providers) or a negative effect (12 providers), only two felt the effect was positive. Yet despite this, 15 of the 25 Sheffield City Region providers stated that there are sufficient qualifications available to them, and at appropriate levels, for the types of provision they offer (in proportionate terms this is very close to the regional average). Amongst the 10 providers who said there were insufficient qualifications, there was little consensus as to which curriculum areas or types of programmes were most affected. Examples include Advanced Apprenticeships, business studies and management training, but these are included here for the purposes of illustration rather than necessarily being the most important or priorities for action. Balancing Demand and Supply Demand Seven out of the 25 (28%) Sheffield City Region providers reported that they had experienced unmet demand (i.e. having insufficient places to satisfy all learner and employer demand) in the current academic year. This is in line with the survey wide finding of 34%, although lower than the 50% reported in the Leeds City Region. Across the seven providers, the only curriculum area or type of provision identified by more than one was Health and Social Care. The main reason behind the unmet demand is reported to be a lack of public funding or other funding issues. Supply The vast majority of providers 20 (80%) in the Sheffield City Region LEP and 85% of providers across the survey as a whole report having no unfilled places on any courses in the current academic year. Where over-supply has occurred, it is attributed to mainly to the economic climate and to individuals and employers being unaware of the availability of the provision. New Provision More than two thirds of the providers in the Sheffield City Region would like to be able to offer new or different provision but for a variety of reasons feel they are unable to do so. This is slightly higher than the survey-wide figure of 48%. The curriculum areas and programme types that they would like to offer vary significantly and in most cases were only mentioned by one provider. In general they refer to provision at Level 2 and above. The findings are more conclusive in terms of the reasons why providers are unable to introduce the new provision, with uncertainty over funding and the need for capital expenditure being far more prevalent than any of the other reasons given. Uncertainty over demand from employers (which again links back to the earlier points on labour market information) and a shortage of appropriate staff skills within providers were also mentioned. In Conclusion Providers in the Sheffield City Region, and in other Yorkshire and Humber LEP areas, are being hindered in their responsiveness to employer and learner demand by an absence of good quality, accessible and localised labour market information. In summary: 30

34 National data sources, such as SSC research and the NESS, provide useful contextual information for providers but are insufficiently detailed, localised or up to date to have a major influence on curriculum planning. Less formal channels, such as ad hoc employer engagement, employer forums (where they function effectively) and small scale research undertaken locally, provide more detail. However these are often lacking in scale and consistency. An information gap exists in relation to localised, qualitative information on learner and employer need that is sufficiently robust to justify curriculum changes. This topic is explored in further detail in the Business Planning Process report, where measures to address this gap, and their associated resource implications, are considered. Were localised, qualitative information on learner and employer need available, it would not change providers strategic direction or fundamentally alter their curriculum offer, but it would provide the evidence base for (and reduce the risk of) the introduction of new units and/or qualifications that are currently not being provided. Likewise the expansion or contraction of the number of places available on existing provision. The debate over whether the skills system is meeting the longer term needs of the economy has been ongoing for many years. Most recently, the Local Government Association has issued strong criticisms of the system and especially of the high numbers of learners in certain subjects relative to the employment opportunities in those vocations. The providers in the Sheffield City Region consulted for this research, argue that the solution is far more complex than simply steering learners towards subjects of economic importance or where there are shortages of skilled labour. A range of other factors needs to be considered, from IAG in schools to employers inability or unwillingness to fund training in what remains a very difficult economic climate, especially in this region. The survey of providers found: No evidence of over-supply or any obvious trends in unmet demand suggesting that if market failures do exist they are not reflected in high volumes of learners unable to undertake the provision they would like; Very few providers in the Sheffield City Region or in the other three LEPs mentioned economic need (short or long term) as being an important influence on curriculum planning. While employer need as a key driver is an important factor for providers, this was in response to short term skills gaps. Providers are prepared to consider the longer term, as evidenced by the presence of strategic plans across the City Region s providers and significant capital investment in low carbon skills at Barnsley College, for example. However medium/longer terms plans are restricted by uncertainty over future funding and an annual curriculum planning process that draws upon historical activity rather than forward looking forecasts. There is also a role for providers to work more closely with schools to inform and influence IAG such that young people have a better appreciation of the employment prospects of the vocations in which they are interested. Likewise, there is a wealth of empirical evidence available (including evidence that is tailored to the Yorkshire and Humber region) about the commercial returns to businesses of investing in training, yet the messages are not reaching employers regularly enough or with enough clarity. Through employer forums and the many other channels through which providers have contact with the business base, the case for investing in training, and the implications of not doing so, should be made more clearly. Alongside the LEPs work on future skills needs is a role for the Skills Funding Agency and its partners to consider whether the communication of funding eligibility changes can be made more visible or efficient. This is an operational issue, and in theory one that should be easy to 31

35 resolve, but it should not be underestimated as it is consistently cited by providers in the Sheffield City Region and elsewhere as being amongst the most prohibitive factors to employer and learner responsiveness. The more fundamental issue of providers responding to learners interests or preferences, regardless of whether a given sector requires more potential recruits, needs a multi-agency response, especially in the current policy context of freedoms and flexibilities and localism. In the more immediate term, however, LEPs should be encouraged by providers willingness to understand their priorities, the justifications for those priorities, and how they can work together. Awareness of the LEPs amongst providers varies significantly, to the point where awareness raising is recommended as a priority. A clearer understanding of the role and strategic direction of the Sheffield City Region LEP amongst providers should give a very solid basis upon which to take forward a fruitful relationship. Establishment of a Sheffield City Region-wide provider network with strong links to the LEP would provide a useful forum for closer joint working in the future. 32

36 Recommendations Economic Challenges with Implications for Skills and Training Following a difficult period, the Sheffield City Region is expected to experience an output-led economic recovery over the next few years. Whilst the overall increase in employment will be lower than in some areas, growth in sectors such as business services, construction and transport will offset the effects of public sector cuts and continued decline in manufacturing employment (despite the rising value of manufacturing output). The economic challenges, which will impact on local and sub regional agencies involved in skills and training, are: 1 Training/re-training/redeployment for those affected by the reduction in public sector employment and continuing decline in manufacturing employment. Reductions in employment in education and public administration, during the period will result in the loss of 6,000 FTE positions, with nearly 10,000 FTE posts lost from manufacturing by Many of these workers will seek new opportunities in other parts of the economy. 2 Training linked to increasing employment including: Higher level skills, to take advantage of strong growth in financial and business services, particularly post 2015, Care skills related to post 2015 increased health related employment, partly a response to the ageing of the population. Transport / logistics and construction related training, including apprenticeships. 2 Supporting job seekers, with greater efforts to provide those seeking employment with appropriate skills and advice about career opportunities, particularly in those Local Authority areas where new employment opportunities are likely to be low. 3 Accelerating transformational projects, although a number of these are not yet guaranteed to proceed, and some may take some years to realise their full employment potential, these projects are critical to job creation in a number of local economies particularly the Advanced Manufacturing Park and the Airport and logistics related developments in Doncaster. 4 Promoting higher level qualifications, including through IAG in schools, providing a better qualified younger workforce, based on increasing demand for higher level skills, notably first degrees and higher level HND, HNC and BTECs. 5 Continuing investment in basic training, responding to the substantial numbers in the workforce with qualifications below Level 2, both currently and over the next five to eight years. 6 Raising awareness of the ageing workforce, making employers aware of the numbers likely to leave the workforce over the next five to eight years, and the implications for training and recruitment. These areas of action will help Sheffield City Region deal with the number of new employees expected to take up positions in new and existing jobs around 58,000 by 2015 and 150,000 by 2020, and help training providers to tailor education, training and skills development to the needs of a growing and changing economy. Business Needs with Implications for Skills and Training Businesses in Sheffield City Region have mixed views on the outlook for the economy and the picture that emerges from the business survey is one of caution, with businesses expecting little change in their occupation and skills requirements for the foreseeable future. This perspective is similar to the results from the other parts of Yorkshire and the Humber and also reflects national business surveys. 33

37 The challenges which will impact on local and sub regional agencies involved in workforce development and local training provision include: 7 Making the case for training: one fifth of companies state that they will not provide any formal training. Micro and smaller business are less likely to train, and promoting the benefits of training to these enterprises should be a priority. Employer networks, such as those established by the LEP, provide an important route through which this message can be promoted. 8 Making businesses aware of what is on offer: around 40% of companies who are planning to provide training expect to increase their expenditure on workforce development over the next three years when compared with current levels. Two-thirds plan to use external training providers to deliver at least some of their training. However, around 30% of businesses are not aware of what training is available locally or within the wider region. 9 Addressing non-monetary barriers: more companies would use training providers if the training was more tailored to their business needs (32%) and if more training was delivered in the workplace or locally (29% and 23% respectively). The LEP partners should consider whether existing provision can be adapted to meet these demands, or whether there is a case for new provision being developed. 10 Examining the available resources and the case for stimulating demand through lower costs: more companies would use training providers if greater public subsidy was available (41%) or if course fees were lower (32%). This final point would have to take account of how external funding, such as ESF, is being deployed, and what types of companies or sectors merit additional support. It is clear from the survey that many smaller companies are unable or unwilling to invest in training. Graduates and Apprenticeships and the Implications for Skills and Training Sheffield City Region businesses are slightly less likely than the regional average to employ graduates in roles requiring graduate level skills just under one fifth of all businesses. Fifteen per cent of businesses in Sheffield City Region expect to recruit at least one graduate over the next three years, and of these, one quarter do not currently employ any. Whilst demand for employees with higher level skills will rise, there remains a large proportion of the business base which does not currently employ graduates and has no plans to recruit any. The challenges for local and sub regional stakeholders are: 11 Promoting graduate potential to businesses: Nearly three quarters of businesses (particularly micro and small businesses) do not, and do not intend to, employ graduates. Making employers aware of the benefits of employing graduates should be a priority for local partners. 12 Encouraging degrees which reflect demand: employers intend to recruit graduates with a range of degree subjects including: business-related subjects (27%), engineering and technology (22%), computer science (14%) and social studies (11%). The sector specialisms of the SCR economy are reflected in the fact that 9% of employers said they required graduates with degrees in the physical sciences. School leavers should be made aware, through IAG, of future employer demand to help make informed choices on undergraduate degrees and college courses. 13 Making graduates more work ready: just over one quarter of employers recruiting graduates expect some difficulties and two-thirds expect this will be due to applicants being unlikely to have the skills required by the business. Take up of apprenticeships seems to be above the regional average amongst businesses in Sheffield City Region, with just under one quarter already employing at least one apprentice. 34

38 The efforts which have been put into promoting the take up of apprenticeships may be starting to take effect, as a higher proportion of businesses surveyed plan to recruit new apprentices over the next three years (29%). The ongoing challenges for local and sub regional stakeholders are: 14 Continuing to promote apprenticeships in high demand sectors: businesses in the education, manufacturing, construction and transport sectors are most likely to employ apprentices, and employment is expected to grow in three of these sectors. In manufacturing, the ageing of the workforce will create opportunities from replacement demand, and the transformational projects have the potential to offset some of the expected decline in employment. 15 Redoubling efforts in sectors where take up is low: including health, arts and culture and hospitality. Fewer than one in ten businesses in the hospitality sector employ apprentices, and take up is expected to remain lower than in other sectors. This may reflect the use of in-house training programmes by some of the larger employers, as well as a large number of smaller businesses within the sector (see below). 16 Providing support which allows smaller companies to provide apprentice places: larger companies are more likely to employ apprentices. Only 10% of business employing less than 10 people, and 25% of companies employing up to 49 employees have apprentices, compared to some 35% of medium and large sized companies. Removing barriers to small companies taking on apprentices, and increasing small businesses awareness of how an apprentice could contribute to meeting their business objectives, should be a high priority for training providers and other stakeholders. The Green Economy and the Low Carbon Sector: Challenges with Implications for Skills and Training The green economy and the low carbon sector is virtually unique in the combination of growth opportunities and the range and diversity of skills and occupations needed to support future development. This includes highly technical skills to those linked to business services and customer care. The table below set out the principle areas for development. Sector/Activity Embedding Low Carbon Skills Leadership Skills for Low Carbon Low Carbon Innovation Low Carbon Buildings and Green Deal Opportunity Across all sectors of the economy to reduce demand for carbon intensive energy and to increase the efficient use of other key resources such as water and raw materials. This is particularly important in SCR where a number of important sectors and high intensity uses of energy. Leadership is required both from policy makers and within businesses to promote the importance of adapting to a low carbon economy. The LEP s Low Carbon Sector Group has an important role to play in making the case for change both to the business base, and to training providers. Exploiting the opportunities for low carbon innovation requires many of the same skills required for innovation and commercialisation more generally but with an understanding of the market drivers and opportunities in the low carbon economy. The LEP has a role to facilitate information and knowledge sharing between businesses. A range of skills will be needed to deliver the Green Deal and ECO retrofit schemes and to deliver new build construction to increasingly lower carbon standards in line with building regulations and planning policies. This includes both training new entrants to the industry and updating the skills of existing construction sector employees. The LEP can bring partners together to increase intelligence 35

39 Sector/Activity Opportunity about the needs and opportunities and co-ordinate the approach across SCR. Offshore Wind: A wide range of skills will be needed over the next 10 to 12 years to develop, build, install and maintain the major offshore wind farm investments off the East Coast. There is an opportunity for SCR businesses to play a role in the supply chain of this sector. Bioenergy: This sector covers: biomass power including biomass cofiring and dedicated biomass power stations; Anaerobic digestion (AD) of organic wastes to produce electricity and heat; biomass heat production for domestic, commercial and industrial applications including district heating. Whilst not a major sector in SCR, there are nonetheless opportunities for diversification / new entrants to the market. Green Infrastructure Broad ranging group of sectors covering landscaping, green spaces, environmental conservation and trees/timber. International Perspective The global market for low carbon and environmental goods & services (LCEGS) was estimated to be worth 3.3 trillion in , a 3.7% growth on the previous year. Many of the major environmental consultancies etc have a presence in the SCR. A number of training providers in the city region have already invested in meeting the needs of low carbon and renewable energy. There is considerable interest in supporting company training needs. Further development will be best supported by: the relevant Sector Skills Council articulating employers needs; regular communication between training providers and local employers via networks such as the Low Carbon Sector Group; and periodic training demand updates to ensure local supply meets current and future demand in a diverse and fast growing series of sub sectors. Exporting Whilst just over one in ten Sheffield City Region businesses currently export, this will increase by around one quarter if businesses who say they intend to start exporting over the next three years actually do so. Businesses in the city region identified a number of skills requirements they will need to meet if they are to achieve this aim. The challenge for local skills and business support providers is to: 17 Help businesses access the skills they need (whether through recruitment or the use of external support services) to develop a presence in overseas markets, and the practical skills required to exploit this. There is also a need to continue to raise awareness amongst businesses in sectors which do not have a history of exporting, and smaller businesses, about the opportunities outside the UK. Reconciling Economic Priorities and Employer Demand to Training Provision The providers in the Sheffield City Region (and across the region as a whole) consulted for this research consider that making training provision directly relevant to economic priorities is not always straightforward, particularly when employer demand is uncertain. A range of other factors needs to be considered in dealing with learner and employer demand, from IAG in schools to employers inability or unwillingness to fund training in what remains a very difficult economic climate. The ongoing challenges for local and sub regional stakeholders are: 36

40 18 Prioritising localised, qualitative information on learner and employer need to help providers with the evidence base for the introduction of new units and/or qualifications that are currently not being provided. The sector groups provide a useful vehicle for producing and testing locally-specific labour market information, although consideration should be given to ensuring that parts of the economy not covered by the sector groups, particularly financial and business services, are not overlooked. 19 Supporting providers and employers to work more closely with schools to inform and influence IAG so that young people have a better appreciation of the employment prospects of the vocations in which they are interested. 20 Encouraging closer communication and joint working between the LEP, representing employers in the area, and training providers, including through the establishment of a Sheffield City Region-wide provider network with strong links to the LEP. 21 Using employer networks to make the commercial case for training: there is considerable empirical evidence available about the commercial returns to businesses of investing in training, although many employers are not convinced. Employer forums and other intermediary channels should help make the case for investing in training. 22 Reconciling freedoms and flexibilities and localism, with strategic economic objectives should be a priority for the Skills Funding Agency, the LEP and training providers. Providers are prepared to consider the longer term although medium and longer terms plans are restricted by uncertainty over future funding and an annual curriculum planning process that draws largely upon historical activity rather than forward looking forecasts. The Skills Funding Agency could also consider whether the communication of funding eligibility changes can be made more visible or efficient. Final Remarks: A Challenging Agenda The need for high quality local training which meets the needs of local business is an economic imperative for the Sheffield, City Region. As the international and national economy recovers from a period of stagnation, the competitiveness of companies becomes critical to economic and employment growth and will be crucial in ensuring that the Sheffield City Region matches and if possible exceeds the economic performance of other areas. Growth in the City Region will be slower than at national level, and there are a number of challenges in both dealing with job losses in important sectors, and capitalising on growth in a number of high value added sectors. The strengthening of local training provision, as well as efforts to increase the recruitment of apprentices and graduates will make a valuable contribution to economic growth and to supporting the successful delivery of a number of transformational projects. This research has indicated a range of actions for intermediary agencies and training providers which will strengthen the support available to the Sheffield City Region business base. 37

41 1. INTRODUCTION Background to the Study 1.1 The past two years have seen unprecedented economic and political change. A combination of a new UK government and global recession have led to a series of organisational and policy changes which present a new set of challenges for those involved in accelerating and supporting economic growth. There is a need to better understand growth factors, sectors and opportunities, and link this to demand for new and emerging skills. 1.2 ekosgen and associates were commissioned to carry out this major study into the skills that will be required by employers across the four Yorkshire Local Enterprise Partnership (LEP) areas5 in the short to medium term and to work with providers to identify ways that they can respond to this information and ensure that these skills are available. This involves understanding the information providers require, the challenges they face in responding to employers needs and developing new provision, and identifying ways in which any barriers can be reduced. The study covers employers and provision in all sectors and considers replacement demand as well as that arising from growth in new and established sectors. Description of the study 1.3 The study comprises a number of elements relating to both the supply and demand of skills, which can be summarised as: Demand Side Economic Forecasts: The Regional Economic Intelligence Unit has produced bespoke economic forecasts at local authority and LEP level to identify where, both geographically and sectorally, job opportunities are likely to come from in the future. This includes policy on scenarios which take account of planned transformational developments designed to increase employment and economic growth, including Enterprise Zones. Business Survey: A large scale survey of 3,106 businesses located across the four Yorkshire LEP areas to gather intelligence on recruitment plans and related skills requirements over the short (next three years) and medium term (next three to five years). The survey is designed to identify the specific skills requirements of employers and covers a number of core topics including graduates, apprenticeships, and local training provision as well as topics of interest to each LEP including export activity, the recruitment of young people and IT/computing skills. LEP specific qualitative research: Each LEP has identified areas of interest for further research. In Sheffield, this has involved further consultation with businesses / the sector groups operating in six of the LEP s priority sectors (low carbon being dealt with separately, see below) creative and digital industries, medical technologies, advanced manufacturing; tourism, hospitality and sport; property and construction and retail. This builds on the information gathered through the survey and economic modelling work to provide a more detailed insight into the skills needs of these businesses. The findings of this strand are presented in a separate report. Low carbon: In recognition of the growth opportunities arising from the development of a low carbon economy, a strand of the study has been dedicated to researching the skills needs of the sector. This has focused on low carbon topics selected by the LEP and has included interviews with businesses, colleges, universities, business support agencies, 5 Sheffield City Region LEP (including Local Authority areas in Derbyshire), Leeds City Region LEP, York, North Yorkshire and East Riding LEP and the Humber LEP 38

42 alongside a literature review. The chapter in this report draws on an accompanying report which sets out the future occupation and skills needs across the four LEPs, highlighting those issues most relevant to Sheffield City Region. Supply Side Provider Survey: A survey of 105 provider staff to gain an understanding of (i) how providers currently plan provision and the type of information they use to support this process, (ii) their views on the availability of qualifications and the extent to which provision meets employer demand, and (iii) barriers to offering new provision. The findings from this strand of the research are presented in a separate report. Provider Business Planning Workshops: Alongside the provider survey, eight providers 6 were selected to participate in a series of in-depth business planning workshops. This consisted of two to three workshops to review curriculum planning processes, the internal and external barriers providers face in responding to employers needs and exploring how providers can use intelligence, including that gathered through the business survey, to support this process. Structure of the Report 1.4 This report sets out the findings for Sheffield City Region, bringing together the findings from the different strands of research in a series of thematic chapters. The report is structured as follows: Chapter two sets out analysis of the economic forecasts; Chapter three provides a detailed overview of the business survey findings; Chapter four presents a summary of the low carbon research; and Chapter five sets out the findings of the provider survey. 1.5 There are a number of supporting documents and datasets which provide further detail and which would enable local partners to carry out additional analysis to meet specific requirements. These include: The Business Planning Process Report; Summary papers setting out detailed findings for the creative and digital industries, medical technologies, advanced manufacturing; tourism, hospitality and sport; property and construction and retail sectors; The Low Carbon Report; Data gathered through the business survey by LEP, sector, business size band and local authority; Data gathered through the provider survey by LEP; The economic forecasts dataset produced by the Regional Economic Intelligence Unit; and Summaries of the economic forecasts for each local authority. 6 Comprising two from each LEP area 39

43 2 ECONOMIC FORECASTS Introduction 2.1 This chapter summarises economic forecasts for the Sheffield City Region LEP area from 2012 to It is based on economic modelling to predict economic output/growth and employment across the City Region, how this varies for different industrial sectors, and the impact it will have on skills requirements. 2.2 The work includes core (baseline) analysis based on overall indications and assumptions about the economy, and also looks at the impact of a spread of transformational projects. These are sizeable investments or initiatives expected to create new jobs and skills demands, and which will not have been factored into the baseline analysis. This chapter sets out the potential gross and net impact of those projects with a high likelihood of proceeding. 2.3 The analysis also includes a review of replacement demand, focusing on older workers leaving the workforce - i.e. the number of new employees that will be required to replace others who are leaving an industry, for instance through retirement. Put together, the analysis presents an estimate of the number of people needed to go into different industrial sectors and the types of qualifications and skills levels they will need. This will be of value in informing the skills provision required to meet future economic and employment needs in the City Region. Interpreting Economic Forecasts 2.4 The following points should be borne in mind when interpreting the data. The results are indicative rather than exact: While econometric modelling is carried out using the best available data (which was updated in March/April 2012) and expertise in the field (the Regional Econometric Model used is supported by Experian and operated by REIU); the results produced are illustrative rather than exact. They provide an indication of what is likely to happen based on the available evidence, but scope for variation and unexpected changes exists and should be factored into interpretation. There is likely to be more variation in longer term forecasts: The likelihood of variations increases for data that is projected further into the future. For this analysis, confidence in the results for 2015 should be greater than in those for Sectoral data is based on standard industrial sectors, rather than priority sectors: All sectoral data is based on standard industrial sectors. These are not the same as the priority sectors within the LEP area, which are based on tailored definitions and often cut across a number of sectors and/or just consider parts of particular sectors. Linkages between sector growth and occupational needs: Data limitations mean that whilst growth of sectors and changing occupational demands can be separately modelled, the occupational needs within sectors cannot. 2.5 The data in this chapter has been modelled by the Regional Economic Intelligence Unit who are able to advise on any technical queries regarding the work or additional analysis. 2.6 This Chapter is based on LEP level data, with comparison to national and regional data where appropriate. This is intentionally a summary analysis of a very extensive array of available data. A summary of the key trends has been produced for each local authority and is included in an accompanying annex. The core data spreadsheets have also been made 40

44 available alongside this analysis to enable LEP level and local authority level analysis to meet specific requirements. Overall Economic Forecast and Growth Projections GVA and Output 2.7 The economic forecasts provide very detailed projections for GVA at both a sub regional, local and sectoral level. These provide an insight into how the economy is expected to change over the next ten years. 2.8 In Sheffield City Region, total GVA is expected to increase by around 1.37bn between 2011 and 2015 (+6%), with a further increase of 2.83bn (+11%) to While this is below the national Change in GVA, by total net increase Source: Regional Economic Intellingence Unit, 2012 GVA % Change 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% UK Leeds City Region Yorks and Humber Sheffield City Region YNY&ER LEP Humber Ports City Region average, it is the second highest increase of the Yorkshire LEPs and broadly in line with the regional forecast. As with patterns elsewhere, the majority of growth is expected to occur post The balance of the economy will continue to change, with the private sector becoming more important as the contribution of the public sector to GVA declines a result of a net decrease in the GVA generated by public administration and education7 reflecting current and planned public sector spending cuts. The City Region economy will grow to some 29.3billion by 2020 and while reduced the public and industrial sectors will continue to make the largest contribution, partly reflecting below average growth in business services (+18% compared to +24% regionally and +37% nationally). Sheffield City Region Ouput By Industry 2011 Total = 25,070m Construction 7% Other 6% Transport & Comms 10% Public Sector 25% Transport & Comms 11% Sheffield City Region Ouput By Industry 2020 Total = 29,269m Construction 8% Other 6% Public Sector 23% Retail and Distribution 16% Fin. & Prof. Bus. Services 17% Retail and Distribution 17% Fin. & Prof. Bus. Services 17% Industrial 19% Industrial 18% 7 While GVA generated by public administration is expected to decline between 2011 and 2015 and then again between 2015 and 2020, education is expected to experience growth in the latter period. Although this is insufficient to fully offset the loss to

45 2.11 The contribution of retail and distribution, construction and transport and communications is expected to increase by This reflects the high growth rates forecast for transport and particularly construction and large net increases In actual terms, construction is expected to increase by over 620m, followed by manufacturing, other services, health and business services all of which are expected to experience a net increase in excess of 400m. Collectively these five sectors account for 60% of the total GVA increase. Sheffield City Region, net change in GVA by sector Source: Regional Economic Intelligence Unit, 2012 Net Change 000s 500, , , , , , , , ,000 50, , The timing of the growth varies by sector. While the trend in most sectors - and especially health, wholesale and banking and insurance - is for the majority of growth to occur between 2015 and 2020, manufacturing output is expected to experience significant growth to 2015, after which point growth is more subdued. Overall manufacturing will account for almost a quarter (23%) of the total output growth to 2015 (compared to 8% of the total growth between 2011 and 2020). Construction and other services will also make a significant contribution to output growth to The sectors that see the biggest absolute rises in output by 2015 and 2020 a product of their initial size and percentage growth are shown in the table below. Top 5 sectors by absolute rise in output to 2015 and Sector Forecast change in output ( m) Sector Forecast change in output ( m) 1 Manufacturing Construction Construction Manufacturing Other Services Other Services Business Services Health Transport Business Services Source: Regional Economic Intelligence Unit 2012 *Manufacturing increase (2011 and 2020) driven by significant increases in machinery and equipment (+ 172m / +43%), minerals (+ 130m / +41%) and food, drink and tobacco (+ 151mm / +17%) The top 5 sectors collectively account for a high proportion (79%) of net output growth between 2011 and 2015, indicating how these sectors drive growth and compensate for decreases in other sectors. The latter is not restricted to one area of the economy and 42

46 includes public administration, education, and industrial sectors (such as fuel refining, metals and textiles) Growth in GVA is expected to vary considerably by local authority, ranging from 12% in Chesterfield to 20% in Bolsover and Doncaster. The majority of authorities underperform against the national average, including Sheffield despite being the largest economy in the sub-region. Baseline Economic Growth (GVA) Forecasts (absolute figures, million) Area % change Bolsover 989 1,041 1,117 1, % 12.2% 20.4% Doncaster 4,045 3,975 4,253 4, % 12.2% 20.1% Rotherham 3,708 3,399 3,633 4, % 12.0% 19.7% UK 6.3% 12.2% 19.2% NE Derbyshire 1, ,057 1, % 10.5% 18.8% Barnsley 2,529 2,441 2,596 2, % 10.4% 17.4% Bassetlaw 1,794 1,808 1,927 2, % 9.7% 16.9% Yorks & Humber 83,829 82,883 87,170 96, % 11.1% 16.8% Sheffield City Region 25,965 25,070 26,441 29, % 10.7% 16.8% Sheffield 8,781 8,424 8,728 9, % 10.4% 14.4% Derbys. Dales 1,362 1,314 1,386 1, % 8.3% 14.2% Chesterfield 1,724 1,684 1,743 1, % 8.5% 12.3% Source: Regional Economic Intelligence Unit Key points on the overall growth forecasts are that: Output growth in Sheffield City Region is expected to be modest up to 2015, in line with the regional average but below the UK figure. Growth increases notably after 2015, although it continues to be below the national average. Manufacturing remains very important to the economic growth of Sheffield City Region, a result of strengths in a number of sub-sectors and modest growth in some important parts of the service sectors. Growth varies across different parts of the City Region. Increases (of around 19%-20%) over a ten year period are notably higher in Bolsover, Doncaster and Rotherham. The forecast modest level of output growth for Sheffield, the largest local economy in the City Region, is a distinctive feature when compared to other City Regions. Headline Employment Forecasts 2.18 The table and chart below set out forecasts for both residence and workplace based employment. The residence based estimates (displayed as the green bar on the chart) are based on the number of residents within a local authority area who are in employment, regardless of where the job may be. The workplace based estimates (displayed as the purple bar on the chart) are based on the number of people employed within a local authority area, regardless of where they may live. The latter is measured in full time equivalents, and therefore overall job numbers will increase when part time employment is accounted for. 43

47 Residence and Workplace based Employment Change by Area Area s Workplace Based - FTEs Residence Based - Residents Bassetlaw % 5.1% 8.1% Sheffield % 5.7% 9.1% Bolsover % 5.2% 8.0% UK 29, % 4.1% 7.8% Doncaster % 3.2% 7.0% Barnsley % 4.9% 7.2% Rotherham % 3.0% 6.8% Yorks and Humber 2, % 5.0% 7.1% UK 25, % 4.1% 6.5% Bolsover % 4.3% 6.3% Derbyshire Dales % 3.5% 5.7% Rotherham % 4.4% 6.0% North East Derbyshire % 3.0% 5.5% Sheffield City Region % 4.3% 6.0% Yorks and Humber 2, % 2.8% 5.2% Doncaster % 3.7% 4.5% Sheffield City Region % 2.9% 5.1% Chesterfield % 2.6% 4.0% Barnsley % 2.3% 4.3% North East Derbyshire % 3.0% 2.8% Sheffield % 2.3% 3.5% Bassetlaw % 2.3% 1.9% Chesterfield % 1.9% 1.8% Derbyshire Dales % 1.0% 0.0% Source: Regional Economic Intelligence Unit Key points are that: s Workplace Based: The level of FTE employment within the City Region will increase, with the creation of 32,600 FTE jobs (+5%). While growth forecasts are in line with national levels to 2015, they fall behind after this point. Growth is expected to be highest in Bassetlaw, Bolsover, Doncaster and Rotherham and modest in both in Sheffield and Chesterfield. Sheffield City Region, employment change Source: Regional Economic Intelligence Unit, % 9.0% 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% Workplace based (FTE positions) Resident based (residents) Resident Based: The number of residents from the City Region who are in employment will increase, with around 46,000 additional residents entering employment by 2020, suggesting that residents will take up jobs outside the city region, work part time or displace those currently travelling into the area to work. The majority of this growth will occur post In contrast to the number of FTE employment opportunities, the increase in residents in employment in Sheffield will exceed the national average (+9% compared to +8%). Similarly in Chesterfield, the resident based employment growth will be more than double the workplace based increase. 44

48 Baseline Employment Forecasts Workplace Based 2.20 As with other areas, employment growth will be led by the private sector. The largest net increases are expected to arise from business services, with a net increase of over 8,900 FTEs by This is followed by construction and transport which will create approximately 7,000 and 6,700 FTE positions respectively, reflecting the high growth rates projected for the sectors The other main sources of growth will be other services and health, with the latter reflecting an increased demand for health services as the population ages. The timing of the growth varies by sector, for example, while the majority of growth in construction and particularly other services is expected to have occurred by 2015, growth in health will occur post Growth in business services, other financial services and hotels and catering will be more stable over the ten year period Manufacturing, in spite of expectations for an export led recovery, will see further employment losses (although output will increase). Sheffield City Region, sectors forecast to grow - by total net FTE change Source: RegionalEconomic Intelligence Unit, ,000 5,000 4,000 Sheffield City Region, FTE change in major sectors Source: Regional Economic Intellingence Unit, Total FTEs (000s) Manufacturing Health Fin. Prof. & Bus. Services Education Retailing Net Change FTE s 3,000 2,000 1, , While public sector employment decline accounts for a substantial number of the jobs losses in the economy up to 2015, employment will stabilise thereafter, with a slight increase in education. This is not the case with manufacturing, where the job losses will increase in the period. 45

49 2.24 By 2020 the forecasts suggest the City Region will have lost almost 10,000 FTE manufacturing positions an 11% decrease when compared to 2011 employment levels As elsewhere in the UK, the majority of manufacturing sub-sectors are forecast to lose employment. Substantial losses are forecast for electrical and optical equipment and particularly metals an important employment Sheffield City Region, manufacturing sub sectors -total net FTE change specialism in the City Source: RegionalEconomic Intelligence Unit, 2012 Region The forecasts 500 suggest that five subsectors - - paper and ,000 printing, minerals, -1,500 machinery and -2,000 equipment, plastics and wood will experience -2,500-3,000-3,500 employment growth -4,000 between 2011 and However, the increases will be modest and with the exception of paper and publishing, are forecast to decline post Overall, the sectors with the ten largest employment increases to 2015 and 2020 are set out in the table below. This highlights the importance of growth in other services to 2015 as well as business services, construction and post 2015 health. Net Change FTEs 1,000 Top 10 Sectors by Absolute Rise in Employment to 2015 and Forecast change in employment Forecast change in employment 1 Business Services 4,829 1 Business Services 8,959 2 Other Services 4,723 2 Construction 7,038 3 Construction 4,504 3 Transport 6,712 4 Transport 2,724 4 Other Services 5,861 5 Other Fin. & Bus. Ser. 2,015 5 Health 4,254 6 Retailing 1,934 6 Other Fin. & Bus. Ser. 4,178 7 Hotels & Catering 1,849 7 Hotels & Catering 3,734 8 Communications Retailing 2,874 9 Other Mining Communications 1, Health Wholesaling 868 Source: Regional Economic Intelligence Unit,

50 Impact on Demand for Skills and Qualifications 2.28 The forecast changes in employment will impact on the skills and qualifications required of those in work. The table below summarises the number of employees (i.e. total number of people in employment, not full time equivalent) that will be needed with different qualification levels across the whole LEP area In terms of the changes in demand: Higher level qualifications will become more important, with demand increasing most significantly at Level 4 and 5. The majority of this growth will be post The increases in demand for people with low or no qualifications will be less pronounced, although in actual terms demand will remain substantial with over 204,000 employees below Level 2 and a further 185,000 employees holding qualifications at Level 2. Forecast Demand for NVQ Level (for whole LEP area) Nos. of employees required with Percentage change qualification level (000s) NVQ Equivalent Level % 4.3% 5.8% Level % 4.6% 7.8% Level % 2.4% 4.5% Level % 2.4% 4.3% Level % 2.1% 4.0% Level % 1.9% 4.0% Source: Regional Economic Intelligence Unit, In relation to particular qualifications: The demand for higher level skills will lead to an increase in a range of higher level qualifications, and particularly higher HNC, HND and BTECs, first/foundation degrees and HE diplomas. There will also be an increase in demand for higher degrees and post nursing qualifications linked to the projected increase in health related employment. Trade apprenticeships are forecast to see lower levels of growth, potentially reflecting the lower number of manufacturing jobs available. The economic model this does not separate out higher level apprenticeships where greater increases might be expected, given the general trend towards higher level qualifications. Forecast Demand for Selected Qualifications (for whole LEP area) Nos. of employees required with qualification level (000s) Selected Qualifications Percentage change Higher Degree % 4% 6% First/Foundation degree % 5% 8% Diploma in higher education % 5% 8% HNC HND BTEC etc higher % 4% 9% Nursing etc % 6% 8% A level or equivalent % 3% 5% OND ONC BTEC etc national % 3% 5% City & Guilds advanced craft % 2% 4% Trade apprenticeship % 2% 4% O level, GCSE grade A-C or equiv % 2% 4%

51 Source: Regional Economic Intelligence Unit The findings mirror those of the CBI s recent Building for Growth business survey on education and skills (2011). It found that while a majority of employers expect to increase their demand for employees with high level skills (+58%), more employers expect to decrease the numbers in their workforce with low level skills (28%) in the next few years than to increase them (23%). Employers further expect that it will be easier to recruit people with low level than high level skills. Replacement Demand 2.32 In simple terms replacement demand is the number of people who need to be brought into employment to replace those who are leaving it. It concerns those who are leaving employment in a sector for good usually through retirement rather than moving between jobs in different companies, and assumes that an equivalent number of new people will be needed to replace them In this analysis the forecast level of replacement demand is based on data on the age profile of the workforce in different sectors and occupations and assumptions about likely retirement patterns. The analysis excludes other factors that could also create replacement demand, but these are likely to be minor compared to the impact of retirement To ensure solidity of results and reflect the trend towards later retirement, REIU have used conservative estimates of the numbers expected to retire within the analysis. The methodology assumes that all those aged over 65 in 2011 will have left employment by 2015, and that this group plus half of those aged will have done so by If a less conservative estimate were used, replacement demand numbers could be expected to be up to around a third higher. The analysis has been carried out separately to that of employment and growth forecasts. Replacement Demand by Sector 2.35 Replacement demand increases with both the size of a sector and the age of the workforce. In Sheffield City Region, it is forecast that an additional 23,500 workers will be required by 2015 and 80,500 by Almost a fifth (18%) of the workforce is aged over 55, which is slightly higher than in Leeds City Region but lower than in the York, North Yorkshire and East Riding LEP area. This percentage is expected to increase to 19% by 2015 and 23% by There are sixteen sectors, including some manufacturing sub-sectors, where over 1,000 additional workers will be required to replace workers leaving the sector. The issue affects both private sector industries, notably other services and business services, and the public sector (health and education). Only hotels and catering and banking and insurance have a predominantly younger workforce. 48

52 Replacement Demand by Sector 2015 and 2020 Replacement demand (no. of workers) Sector % of workforce over 55 in 2011 by 2015 by 2020 Other Services 21% 3,800 10,950 Health 16% 2,300 10,050 Business Services 18% 3,200 8,150 Education 20% 1,500 8,050 Retailing 16% 2,400 6,850 Wholesaling 20% 1,900 5,550 Transport 19% 1,300 3,900 Public Administration & Defence 16% 500 3,500 Metals 30% 900 3,450 Construction 16% 700 3,350 Hotels & Catering 10% 1,500 3,150 Other Financial & Business Services 27% 800 2,550 Other Mining 43% 1,300 1,500 Communications 16% 200 1,350 Food, Drink & Tobacco 15% 200 1,150 Banking & Insurance 9% 200 1,050 Source: Regional Economic Intelligence Unit In effect the ageing of the workforce affects all sectors with very few exceptions. The numbers involved will increase markedly post 2015, even in the smaller sectors as illustrated in the table below. Replacement Demand by Sector 2015 and 2020 Replacement demand (no. of workers) Sector % of workforce by 2015 by 2020 over 55 in 2011 Machinery & Equipment 19% Rubber & Plastics 18% Paper, Printing & Publishing 21% Transport Equipment 28% Agriculture, Forestry & Fishing 23% Minerals 18% Electrical & Optical Equipment 9% Other Manufacturing 12% Gas, Electricity & Water 8% Wood & Wood Products 17% Chemicals 14% Textiles & Clothing 17% Source: Regional Economic Intelligence Unit 2012 Replacement Demand by Occupation 2.38 There will also be replacement demand across all occupation types. In some cases the occupations relate to specific sectors, such as the increases in teaching and research professionals and transport and mobile machine drivers and operatives, while others will cut across a number of sectors, including elementary administration and service occupations and corporate managers. 49

53 Replacement Demand by Occupation 2015 and 2020 Occupation % of workforce over 55 in 2011 Replacement demand (no. of workers) by 2015 by 2020 Elementary Administration & Service Occupations 19 3,900 9,600 Corporate Managers 15 1,600 8,500 Administrative Occupations 18 2,100 8,150 Teaching & Research Professionals 24 1,600 6,700 Managers and Proprietors in Agriculture & Services 27 2,500 4,950 Transport and Mobile Machine Drivers & Operatives 28 1,400 4,600 Business & Public Service Associate Professionals 18 1,300 4,500 Skilled Metal & Electrical Trades ,500 Caring Personal Service Occupations ,900 Process, Plant and Machine Operatives ,400 Sales & Customer Service Occupations 17 1,200 3,350 Secretarial & Related Occupations ,100 Source: Regional Economic Intelligence Unit, The number of workers required by 2020 will be highest for elementary administration and service occupations, corporate managers and administrative occupations. There will also be a significant demand for managers and proprietors in agriculture and services to There are a number of occupations where older workers make up a high proportion of the workforce and where replacement demand needs are acute (though not necessarily extensive in scale), including secretarial and related occupations and skilled metal and electrical trades. In contrast, occupations with a predominately younger workforce include customer service occupations, skilled construction and building trades and science and technology associate professionals. Replacement Demand by Occupation 2015 and 2020 Occupation % of workforce over 55 in 2011 Replacement demand (no. of workers) by 2015 by 2020 Business & Public Service Professionals ,900 Health & Social Welfare Associate Professionals ,550 Science & Technology Professionals ,850 Elementary Trades, Plant & Storage Related Occupations ,750 Skilled Construction & Building Trades ,600 Culture, Media & Sports Occupations ,050 Science & Technology Associate Professionals Leisure & Other Personal Service Occupations Textiles, Printing & Other Skilled Trades Customer Service Occupations Protective Service Occupations Health Professionals Skilled Agricultural Trades Source: Regional Economic Intelligence Unit, 2012 Transformational Impacts Analysis 2.41 The core (baseline) economic forecast is based on broad assumptions about economic and industrial change that are then applied at local level. Whilst it will account for a normal degree of flux in an economy, with some businesses closing and others opening up, it does not factor in specific and large scale changes that can have a disproportionate effect in a local area. Within the LEP area there are a number of planned and/or expected 50

54 investments/initiatives of this nature which are expected to have potentially transformational impacts on growth, jobs and resulting skills requirements Projects which are expected to have an impact between 2012 and 2020 have been identified by partners in the Sheffield City Region. Where data on the expected number and timeframe of jobs has been available, their potential economic impact has been estimated using the Regional Econometric Model. This includes converting the gross number of jobs expected to be created by a project itself to the net additional jobs created in the local economy overall No rigid definition has been applied as to what constitutes transformational and this has been led by local partners perceptions of what will make a substantial difference to their local economies Local partners have also provided an indication of the likelihood of projects progressing. The results in this chapter focus on the combined impact of all those projects where data has been available and there is a high likelihood of implementation. These projects, their locality and the number of gross jobs expected to be created by 2020, are listed in the table below. High Likelihood Transformational Projects Included in the Modelling Project Local Authority Gross Jobs Gross Jobs Enterprise Zone Shf/Roth/Bar 8,522 8,522 Inland Port Doncaster 6,717 6,717 FARRS/WRW RHd Airport Bus. Parks Doncaster 3,764 5,029 FARRS/WRW Doncaster Carr site Doncaster 3,598 3,598 Don Valley DN7 business parks Doncaster 2,183 4,017 Don Valley Power Station Doncaster 2,170 2,170 Barnsley Market Barnsley 1,873 1,873 M18 Strategic site, Westmoor Park Doncaster 1,870 1,870 Chesterfield Waterside Chesterfield 1,490 1,890 The Avenue (inc const & other manuf) NEDDC 1,390 1,700 FARRRS/WRW Bankwood lane Doncaster 1,290 1,404 AMP - Rolls Royce Rotherham Visions of China Rotherham Robin Hood Airport Terminal act. Doncaster 560 1,040 37,045 41,448 Source: Regional Economic Intelligence Unit When interpreting these findings it is important to note that (i) not all of these projects will proceed and some areas may have been more comprehensive and optimistic in forecasts than others, which accounts for some of the local differences; and (ii) the job figures are based on best estimates. In terms of impact, the largest numbers of major investment projects are in Doncaster, taking advantage of its strategic location and assets such as Robin Hood Airport. Overall Transformational Impacts by Locality, Sector and Occupation 2.46 The table below shows the core, workplace based, employment forecasts for 2015 and 2020, how these change when the suite of transformational projects are factored in, and the net number of jobs created by the transformational projects In total the transformational projects have the potential to create just over 36,600 additional jobs by 2020, and double total employment growth from the baseline projection of 5% to 11%. At the local level the key points to note are: The potential impact varies significantly by area. Over half of the projected positions are expected to be in Doncaster, reflecting the large number of projects with a high 51

55 likelihood of proceeding in the Borough. This would have a significant impact leading to employment growth of 26% by 2011 (compared to baseline projections of 7%). If the projects were to proceed they would account for 73% of Doncaster s total employment growth. While the impacts in all other areas are much lower, the additional jobs created would help to close the gap with national employment growth in Barnsley, Sheffield, Chesterfield, and North East Derbyshire. The transformational developments would account for between 41% (in Sheffield) and 68% (in Chesterfield) of total growth, reflecting the size of the districts in some cases and low level of jobs forecasts without the transformational projects. The impact would be negligible in Bassetlaw and Bolsover, although total employment growth (relative to the employment base) would continue to be higher than the policy on scenario in some areas, reflecting the high baseline projections. Transformational and Total Impacts by Locality Area Jobs 2011 (FTE) FTE Jobs 2015 FTE Jobs 2020 Core forecast Core forecast + Trans projects Trans projects impact Core forecast Core forecast + Trans projects Trans projects impact Sheffield CR 636, , ,442 20, , ,365 36,624 Doncaster 104, , ,117 11, , ,636 20,034 Sheffield 215, , ,240 2, , ,484 5,164 Rotherham 87,223 90,428 92,601 2,174 93,127 97,085 3,957 Barnsley 62,293 63,464 65,055 1,592 64,946 67,840 2,894 Chesterfield 41,284 41,236 42, ,037 43,642 1,605 NE Derbyshire 24,048 24,624 25, ,372 26,734 1,362 Bassetlaw 42,643 43,869 43, ,093 46, Bolsover 25,486 26,172 26, ,534 27, Source: Regional Economic Intelligence Unit, The impact of the transformational projects can also be forecast for sectors and occupations (although not for the qualifications they require). The table below shows the ten sectors which the transformational developments would have the greatest impact on in terms of the number of FTE positions created. Transformational and Total Impacts by Sector (ten with largest impacts) Sector Jobs 2011 (FTE) FTE Jobs 2015 FTE Jobs 2020 Trans projects impact Core forecast + Trans projects Trans projects impact Core forecast + Trans projects Industry Total 636,088 20, ,442 36, ,365 Transport 35,793 4,352 42,869 7,934 50,439 Business Services 69,098 3,165 77,093 6,178 84,235 Other Manufacturing NEC 5,849 2,745 8,488 4,994 10,573 Construction 39,957 2,445 46,906 4,273 51,269 Other Services 42,825 1,657 49,205 2,472 51,158 Other Fin. & Bus. Services 14,250 1,186 17,451 2,126 20,555 Wholesaling 40,188 1,223 41,067 1,753 42,809 Banking & Insurance 13, , ,551 Metals 19, , ,750 Hotels & Catering 30, , ,107 Source: Regional Economic Intelligence Unit,

56 2.49 The key points to note are: The top four sectors transport, business services, other manufacturing and construction - account for around two thirds (64%) of the total impact. Transport is expected to experience the largest impact, with over 7,900 additional FTE positions, doubling the growth projected in the baseline scenario. This reflects plans for transport and logistics related developments in Doncaster, including those linked to the airport and the Finningley and Rossington Relief Road Scheme (FARRS). One of the most significant impacts of the transformational developments would be the creation of manufacturing jobs. Almost 5,000 of the jobs created are expected to be in other manufacturing, with a further 850 in the manufacture of metals. This would help to stabilise the ongoing decline in these sub-sectors and lead to a net employment growth in other manufacturing between 2011 and The developments are also expected to have a significant impact on other financial and business services, relative to the sector s current size. With business services, this reflects plans to further increase the presence of knowledge based services through the provision of new, high quality office space, including at the proposed Enterprise Zone. Across most of the top 10 sectors, the increase resulting from the transformational projects would account for a least a third of the total growth. This increases to about 67% for wholesaling and all growth in manufacturing sub sectors, highlighting the importance of delivering these developments The transformational projects are also expected to impact on a wide range of occupations, with the top ten occupations (in terms of sizeable impact) forecast to increase by at least 2,000 employees. The key points to note are: The impact is greatest on corporate administrators, transport drivers and operatives and admin and clerical occupations a reflection of the sectoral impact. Without the transformational projects the number of employees in admin and clerical occupations is forecast to decline marginally. In proportionate terms the developments are also expected to have a significant impact on the number of workers employed in skilled metal and electrical trades and process, plant and machine operatives, although this will only help to minimise the decrease rather than generate growth. Transformational and Total Impacts by Occupation (ten with largest impacts) Occupation Jobs 2011 Jobs 2015 Jobs 2020 Trans projects impact Core forecast + Trans projects Trans projects impact Core forecast + Trans projects Occupation Total 782,083 24, ,808 42, ,915 Corporate Administrators 101,328 3, ,149 6, ,578 Transport Drivers and Ops 41,875 3,307 47,948 6,045 53,993 Admin & Clerical Occupations 62,833 2,483 64,125 3,939 65,403 Elementary: Clerical/Service 71,373 1,369 73,928 2,530 76,088 Bus/Public Serv. Assoc Prof. 36,583 1,560 39,263 2,513 41,809 Skilled Metal/Elec Trades 30,754 1,517 30,937 2,463 30,351 Skilled Construct. Trades 20,412 1,326 23,592 2,206 25,218 Elementary: Trades/Plant/Mach 29,665 1,164 31,689 2,120 33,532 Science/Tech Professionals 20,683 1,109 23,586 2,092 26,362 Process, Plant & Mach Ops 32,775 1,297 32,188 2,052 30,529 Source: Regional Economic Intelligence Unit

57 2.51 In summary: There is potential for the transformational developments to double employment growth to 2020 across the City Region from 5% to 11%. This is particularly true in Doncaster, where over half of the impact would be focused, while in other authorities, including Barnsley, Sheffield and Chesterfield, the impact would help to close the gap with national baseline projections. If they proceed, the transformational projects would help to accelerate growth in some sectors and occupations, including transport and business services, while in others, including manufacturing sub-sectors and process, plant and machine operatives, they would help to reverse or ease decline. Combined Impact on Employee Requirements 2.52 There are a number of challenges facing those involved in economic development and training provision across the Region. Many of these are a result of the slow recovery from the economic recession, with output and employment forecasts based on an implicit assumption of stronger, recovery post The combined impact of forecast economic change, transformational developments and replacement demand create a demand for new (although not necessarily additional)employees, whether that be to fill new jobs, replace people who leave directly, or to backfill positions if vacancies arising are filled internally The following table details the sectors that show the greatest overall number of new recruits needed, which is likely to be an indication of a need for additional training/skills provision Key points to note are: The total number of employees that need to be recruited around 57,800 by 2015 and 149,700 by 2020 is sizeable. A large proportion of this will result from replacement demand and will have important implications for the type and volume of educational, training and skills development provision that is offered. The sectors that will see the largest volume of recruitment are projected to be business services, followed by other services and transport, all of which are expected to recruit over 18,500 employees by Both construction and health will also require over 14,500 recruits, with the majority of demand in health occurring post Despite overall manufacturing decline (in employment terms), there will be requirement for new recruits in some sub-sectors, resulting from a combination of replacement demand and the transformational developments. Other manufacturing is expected to require the largest number of new recruits, although this is largely dependant upon the successful delivery of transformational investments. 54

58 Recruitment Needs to 2015 and 2020 by Sector Sector Employment 2011 Baseline Total recruits by 2015 including forecast, transformational and replacement No. % of 2011 total Total recruits by 2020 including forecast, transformational and replacement No. % of 2011 total Industry Total 636,088 57,854 9% 149,777 24% Business Services 69,098 11,195 16% 23,287 34% Other Services 42,825 10,180 24% 19,283 45% Transport 35,793 8,377 23% 18,546 52% Construction 39,957 7,649 19% 14,662 37% Health 90,542 2,600 3% 14,595 16% Retailing 54,742 4,110 8% 9,911 18% Other Financial & Business Services 14,250 4,000 28% 8,855 62% Wholesaling 40,188 2,779 7% 8,171 20% Hotels & Catering 30,570 3,828 13% 7,686 25% Education 51,762-1,307-3% 6,743 13% Other Manufacturing NEC 5,849 2,640 45% 5,074 87% Communications 14,213 1,330 9% 3,531 25% Source: Regional Economic Intelligence Unit The table below shows the occupations with the largest forecast recruitment needs. There are expected to be recruitment needs across a wide range of occupation types, although by far the greatest demand will be for corporate administrators. This is followed by transport drivers and operatives, elementary (clerical/service) and admin and clerical occupations. The highest levels in percentage terms, when compared to 2011 employment levels, are in transport drivers and operatives, culture/media/sport occupations, and science/technical professionals. Overall No. of Employees Needed for Occupations with Largest Increases Sector Employment 2011 Baseline Total recruits by 2015 including forecast, transformational and replacement No. % of 2011 total Total recruits by 2020 including forecast, transformational and replacement No. % of 2011 total Occupation Total 782,083 65,525 8% 164,632 21% Corporate Administrators 101,328 11,421 11% 27,750 27% Transport Drivers and Ops 41,875 7,472 18% 16,718 40% Elementary: Clerical/Service 71,373 6,455 9% 14,316 20% Admin & Clerical Occupations 62,833 3,391 5% 10,720 17% Managers and Proprietors 28,948 5,277 18% 9,844 34% Bus/Public Serv. Assoc Prof. 36,583 3,980 11% 9,726 27% Caring Personal Service Occs 57,235 1,103 2% 7,875 14% Science/Tech Professionals 20,683 3,403 16% 7,529 36% Business/Public service Prof. 21,321 3,033 14% 6,948 33% Skilled Construct. Trades 20,412 3,880 19% 6,406 31% Culture/Media/Sport Occs 15,301 3,533 23% 6,023 39% Health Associate Prof. 34,415 1,656 5% 5,940 17% Elementary: Trades/Plant/Mach 29,665 2,625 9% 5,618 19% Sales Occupations 46,944 2,492 5% 5,555 12% Teaching/Research Prof. 35, % 5,066 14% Leisure/Oth Pers Serv Occs 15,374 2,408 16% 4,201 27% Skilled Metal/Elec Trades 30, % 4,096 13% Customer Service Occupations 11,456 1,504 13% 3,499 31% 55

59 Health Professionals 9, % 1,892 19% Source: Regional Economic Intelligence Unit 2012 Key Challenges 2.57 The challenges which will impact on local and sub regional agencies are: The significant decline in public sector employment and continuing decline in manufacturing employment. In the latter case, while output will grow, employment will fall in the majority of sub-sectors. Inevitably, many of those losing their jobs will seek employment in other sectors, and may require some retraining as well as support in seeking new opportunities. Plans for the Advanced Manufacturing Park and Enterprise Zone offer the potential to arrest employment decline in manufacturing and their success is of critical importance to the City Region economy. Strong growth in business services, transport and construction will have implications for training, as will the significant increase in employment in other services, although the wide range of activity captured within the sector will make it difficult to identify specific requirements. There will also be a recovery of health related employment post 2015, partly a response to the ageing of the population, with implications for customer care and care skills. This increase in health related employment will not necessarily be delivered through the public sector directly. Variable employment growth across the City Region, with below average levels of growth in some of the City Region s largest areas including Sheffield and Barnsley as well as parts of Derbyshire. The number of residents entering employment (within or outside the local authority boundaries) is also forecast to be below the national average in the majority of areas (but not Sheffield), suggesting that high unemployment will persist for some years after employment has recovered nationally. Areas such as Doncaster and Bassetlaw are forecast to see a marked rise in employment within their boundaries, although this will not necessarily translate into a commensurate increase in the number of their own residents in employment. Increasing demand, particularly post 2015, for higher level skills, notably HE Diplomas, higher HND, HNC and BTECs, first/foundation degrees and higher diplomas, reflecting long term trends in the labour market. In spite of an up-skilling of the workforce, substantial numbers will be in employment with qualifications below Level 2 suggesting that basic skills training will remain a priority for many years. Increasing numbers leaving the workforce (again a reflection of the ageing population), affecting virtually every sector resulting in a requirement for trained replacements The proposed transformational projects have an important role to play in generating new employment at a local level, particularly in those areas where low levels of growth are projected and the developments have the potential to close the gap with the national average. It should be noted, however, that the full employment impact of many of the larger schemes will take some time to materialise. Nevertheless, progressing these schemes has to be a priority for the strategic partners in the LEP area As noted earlier, the total number of new recruits required around 57,800 by 2015 and 149,700 by 2020 will have important implications for businesses and the type and volume of educational, training and skills development provision available in the City Region. 56

60 3 BUSINESS EXPECTATIONS Introduction 3.1 Identifying the skills that will be required by employers over the next three to five year has been a core component of the study. This information was gathered through a large scale telephone survey of 3,106 employers located across the four Yorkshire LEP areas. 3.2 The survey comprised core questions which were asked to all businesses regardless of their location, followed by a series of questions relating to topics of interest selected by each LEP. Where businesses fall into two LEP areas i.e. Barnsley (Sheffield City Region LEP and Leeds City Region LEP) half of the businesses were asked the questions for Sheffield City Region LEP, while the remainder were asked the questions for Leeds City Region LEP. 3.3 A summary of the topics covered in the survey is shown in the table below: Business Survey Core Topics Occupation and skills needs Graduates Apprentices Longer term outlook Local training provision Workforce development planning Sheffield City Region LEP Topics Previous recruitment difficulties and skills gaps Exporting Source: LEP Skills Survey This chapter presents the key findings from the survey, highlighting differences by sector and business size (in employment terms) where sample sizes are sufficient. Profile of Business Respondents 3.5 A total of 899 businesses in the Sheffield City Region LEP took part in the survey. The sample includes responses from businesses in each local authority as shown below. This was based on the distribution of the population 8 across the area and adjusted to ensure that areas with a smaller base received a minimum of 60 responses each. This was not possible in Bolsover due a limited number of contacts. Survey Sample Local Authority No. % Employment Size Band No. % Sheffield % Micro (1-9) % Doncaster % Small (10-49) % Rotherham % Medium (50-249) 74 8% Barnsley % Large (250+ ) 17 2% Bassetlaw 64 7% Total % Chesterfield 62 7% North East Derbyshire 62 7% Bolsover 54 6% Total % Source: LEP Skills Survey The sample includes businesses from all employment size bands. Compared with the business base, micro businesses are under represented in the survey sample. Small, medium and large employers are over represented as they account for a greater proportion of employment in the LEP area. 8 The distribution of the population was used (rather than the business base) to avoid areas with larger business bases dominating the survey sample. 57

61 3.7 The survey was answered by businesses operating in all sectors of the economy, including the LEP s seven priority sectors, set out in the table below. The survey sample was designed so that 70% of responses were representative of the employment base in Sheffield City Region. The remaining 30% of the sample was targeted at businesses operating within the priority sectors, with the aim of ensuring that there was a robust base for analysis in each sector. In the case of the medical technologies sector, the small number of business contacts meant it was not possible to achieve this. 3.8 For the purpose of analysis each company was recorded once within the core sectors. Where applicable, companies were also recorded against each of the priority sectors. As such, the numbers shown against the priority sectors below are a sub-set of the core sector responses. Survey Sample Core Sectors No. % Priority Sectors No. % Manufacturing % Advanced Manufacturing 42 20% Wholesale and retail % Construction and Property 38 18% Construction 87 10% Retail 37 17% Health and social work 81 9% Low Carbon 36 17% Admin. and support 73 8% Creative and Digital 30 14% Education 58 6% Tourism, Leisure and Sport 26 12% Prof., scientific and technical 53 6% Medical Technologies 5 2% Other service activities 45 5% Total Low carbon 36 4% Transportation and storage 31 3% Arts, ent. & recreation 29 3% Information & comms 28 3% Financial and insurance 26 3% Accommodation and food 23 2% Agriculture 17 2% Real estate activities 17 2% Utilities - water 5 1% Mining and quarrying 2 0 Utilities - elec., gas 2 0 Public administration 2 0 Total % Notes: Public admin, education and health sectors are underrepresented due to a lack of contacts. Manufacturing and construction are overrepresented due to oversampling of priority sectors. All other sectors are broadly in line with the employment base. 58

62 3.9 The questionnaire was answered by individuals with a suitable level of seniority and relevant knowledge. As shown below, the vast majority were responsible for recruitment, planning and authorising of training and the training budget across the business. Recent Recruitment Difficulties and Current Skills Gaps 3.10 In addition to the core survey topics, the LEP partners in Sheffield City Region were interested in establishing whether local businesses had faced difficulties when recruiting people with the appropriate skills over the past year, and in whether there were skills gaps within the current workforce. Businesses in Sheffield City Region were therefore asked an additional set of questions on these topics. Considering their recruitment activity over the past year, businesses were asked whether they had experienced difficulty hiring staff within particular occupations, or with particular skills. Businesses were also asked about the extent to which their employees were proficient in their roles The questions in this section were asked of all businesses in the sample. However, throughout this section the sample size varies. Businesses that stated an occupational group or skills type was not applicable to their business have been removed from the analysis, which ensures that the data is not skewed by responses from those who did not plan to recruit staff in these positions or do not require certain skills. Previous Recruitment Difficulties 3.12 Relatively few businesses reported experiencing any difficulties in recruiting new staff. The most commonly stated occupational group in which businesses have had difficulty recruiting is in skilled trades occupations (20% of businesses). 59

63 3.13 This may due to the specific skills requirements that are often associated with these roles This finding is reflected in the skills types that businesses most commonly experienced difficulty in recruiting technical and practical skills (15%) and job specific skills (11%). Less difficulty was reported in recruiting staff with more generic skills types such as team working, planning and organisation and problem solving (3% each). Very few businesses reported that they had had difficulties when trying to recruit employees with foreign language skills. Current Skills Gaps 3.15 The majority of businesses stated that all their staff, across all occupation types, are fully proficient in their role Where businesses stated that not all staff were proficient, there was little variation by occupation type ranging from 9% reporting that some managers and directors were not fully proficient to 11% stating that not all of their process plant and machine operatives were fully proficient Business most commonly stated that staff were not proficient were because they were new to the role (21%) or were still undertaking training (16%). For a significant minority of businesses, a lack of proficiency amongst staff is due to inappropriate (14%) or ineffective training (6%) and difficulties retraining (8%). 60

64 Reasons why staff are not fully proficient No. % Staff are new to the role 32 21% Training is in progress 24 16% Development of new products and services 21 14% Staff have not received the appropriate training 21 14% Unable to recruit staff with the required skills 17 11% Introduction of new technology 16 10% Problems retaining staff 12 8% Introduction of new working practices 10 7% Training has not improved performance sufficiently 9 6% Other 29 19% Don t know 28 18% Source: LEP Skills Survey Sample of 154 responses Amongst staff that are not proficient, businesses most commonly stated that IT and software skills are required, cited by a fifth of businesses (19%). This skills type was also most commonly considered to be of increasing importance over the next three years (35% - see next section). Skills that need improving amongst staff that are not fully proficient No. % IT / software skills 30 19% Job specific skills 23 15% Customer handling skills 22 14% Technical or practical skills 21 14% Office admin skills 17 11% Management skills 13 8% Team working skills 12 8% Planning and organisation 11 7% Problem solving skills 10 6% Numeracy skills 6 4% Literacy skills 6 4% Foreign language skills 3 2% Other 20 13% No particular skills 16 10% Don t know 19 12% Source: LEP Skills Survey Sample of 154 responses More than two in five businesses which stated that not all of their staff were fully proficient said that this has an adverse effect on the business. The following aspects of the business have been affected: Staffing: increased the workload for other staff (18%); Costs: increased operating costs (10%) and outsourced work (3%); Working practices: difficulty introducing new working practices (12%) and meeting quality standards (9%); Competitiveness: loss of business or orders to competitors (10%) and delay in developing new products or services (6%) Businesses with staff that are not proficient plan to overcome this through increased training activity (36%) and increased on the job training through staff supervision (16%), appraisals (14%) and mentoring (5%). Rather than train their staff, a small proportion plan to reallocate work (6%) or change working practices (5%) A quarter of business had no plans to overcome the fact that not all staff were proficient in their roles (25%). The vast majority of these stated that the lack of proficiency had not negatively affected the business (85%). 61

65 Occupation and Skills Needs 3.22 The survey sought to obtain a detailed profile of businesses occupational and skills needs over the next three years. Businesses were asked to consider their business plans, target markets, likely sources of revenue and projections of staff turnover to identify any anticipated change in employment levels across different occupational groups. They also commented on any changes in the importance of specific types of skills, competencies and qualifications While all businesses were asked about each occupational category, the analysis excludes those businesses that stated that an occupation or skills type was not relevant to their activities (for example, caring, leisure and other service occupations which are only relevant to certain companies). As such the survey sample varies for each category in the following charts. This removes the influence of responses from businesses that do not, and do not plan to, employ or recruit staff in these positions. Expected Employment Change by Occupational Group 3.24 Across all occupation types, the majority of businesses do not expect a change in the number of staff they employ over the next three years. Despite this, businesses may recruit staff in these occupations over this period, due to replacement demand (i.e. replacing a member of staff who leaves the company or takes on another role within the company) Where businesses are expecting to see a change in the number of people employed, the most commonly expected is an increase in employment is in skilled trades (reported by 27% of businesses), administration and secretarial occupations (22%) and sales and customer services roles (20%). Few businesses expected employment levels to fall within any occupation type. Expected Change in the Importance of Skills Types 3.26 Businesses were asked whether any of the skills they used in their businesses would become more or less important over the next three years. The majority of businesses expect the skills required by their business to remain constant over the next three years Up to one third of employers stated that some skills were becoming more important. IT/software skills (35%) and technical/practical skills (32%) were most commonly cited as of 62

66 increasing importance. Few businesses expected any skills types to decrease in importance (see chart below) 3.28 Given the current climate and increasing levels of competition, the proportions of businesses expecting skills to increase in importance may seem low. This may be accounted for by those businesses that already view certain skills types as of high importance and do not expect this to change There is some alignment in the types of occupations and skills that businesses have noted to be of increasing importance. A relatively high proportion of businesses expect to increase the number of skilled trades (27%) and sales and customer services (20%) staff and similarly, a high proportion expect technical/practical (35%) and customer handling (32%) skills to increase in importance. Few businesses however expected an increase in the number of managers (9%), while a reasonably high number of businesses stated management skills will be of increased importance (26%), suggesting that it is the skills of the existing workforce which need to be improved in this area Businesses who stated that some skills were becoming more important were asked to provide more detail. The table below shows the specific skills identified within the top three skills types where an increase in importance is expected. The survey findings highlight that the pace of technological development in relation to IT, manufacturing and engineering processes creates skills gaps for businesses. Skills expected to increase in importance IT/Software Technical/Practical Customer handing Keeping up to date with technology/software Accountancy CAD drawing Web design/advertising Social media Keeping up to date with technology/software Welding Operators Testing Communication Telephone skills Efficient customer handling Source: LEP Skills Survey Looking at the skills that will be of increasing importance within specific sectors: 63

67 IT/software and technical/practical skills: These were both cited by a high proportion of businesses within the communications sector (71% and 54% respectively) and a low proportion of businesses within the health (23% and 16%) and transport (23% and 13%) sectors; Management skills: A high proportion of businesses within the communications (41%), low carbon (33%) and financial, professional and business services (33%) stated this skills type would be of increasing importance. Few businesses within the hospitality (13%) and transport (3%) sector stated its importance would increase. The Importance of Qualifications 3.32 Businesses identified a range of vocational and academic qualifications which they considered to be important. These most commonly included industry standard qualifications (63%), followed by NVQs (51%), with post graduate qualifications the least commonly cited (25%). Businesses in the Sheffield City Region were more likely than those in the other LEP areas to identify qualifications as important The high proportion of businesses that stated industry standard qualifications are of importance is unsurprising. In a number of sectors there is an emphasis on, or a legal requirement for, staff to have industry accreditation or qualifications, for example Construction Skills Certification Scheme (CSCS) cards or chartered staff in professional occupations. This is reflected in the sector profile, with businesses within the financial services (86%), transport (85%), education (81%) and construction (73%) sectors most commonly stating that this qualification type is important Businesses are not expecting the importance of qualifications to change over the next three years. The vast majority (92%+) expect no change in the level of importance associated with each qualification type. 64

68 Graduates 3.35 Businesses were asked about their current employment and future recruitment of graduates, in roles requiring graduate-level skills One in five businesses currently employs graduates (19%), marginally lower than the regional average. Graduates are regarded as important amongst the majority of businesses that employ them, with over three quarters stating they are either very important (39%) or quite important (38%) to the business. One in seven businesses expect to recruit graduates over the next three years, and one quarter of these do not currently employ graduates. However, of those businesses which currently employ graduates, over 40% do not intend to recruit any more over the next three years. Overall 74% of businesses do not employ graduates and do not expect to recruit graduates in the next three years. Businesses Currently Employing Graduates 3.37 The extent of graduate employment in Sheffield City Region varies considerably by sector. Of the survey responses, nearly a third are accounted for by businesses in the financial, professional and business services sector (30%), nearly three times as many as any other sector The sectors within which the highest proportion of businesses employ graduates are communications (53%), followed by the hospitality (35%), financial, professional and business services (30%) and education (29%) sectors. None of the surveyed businesses operating in the transport sector currently employ graduates and few do so in the other services (11%) and wholesale and retail (8%) sectors. 65

69 3.39 The proportion of businesses employing graduates increases with businesses size. Although the small sample size should be noted regarding large businesses, there is a significant difference in the proportion of small and micro businesses which employ graduates. Graduate employment and business size Employment Size Band No. Businesses employing graduates within each size band Micro (1-9) 69 15% Small (10-49) 69 20% Medium (50-249) 22 31% Large (250+ ) 7 44% Total Source: LEP Skills Survey 2012 Future Graduate Recruitment 3.40 Businesses that currently employ graduates and said that they intended to recruit graduates over the next three years were asked how the number they planned to recruit compares to the number they have recruited over the past three years. Although 43% of those currently employing graduates stated that they have no plans to recruit more, the survey findings suggest that amongst those that do plan to recruit, levels of graduate recruitment will either remain stable (61%) or increase (28%) Again, businesses in the financial, professional and business services sector account for the largest proportion of businesses that will recruit additional graduates. Together with manufacturing businesses (14%) and businesses in the communications sector (13%), these three sectors account for over half of businesses who say they plan to recruit graduates As with current graduate employment, over the next three years, a high proportion of businesses within the communications sector will recruit graduates (63%). Analysis of the findings by sector results in the following categories: Sectors with high and potential for increased graduate employment: The communications sector has the highest proportion of businesses that currently employ graduates (56%), and plan to recruit graduates over the next three years (63%). The hospitality (35%), financial, professional and business services (30%), education (29%) and low carbon (25%) sectors all have a reasonably high level of graduate employment. Between one fifth and one quarter of businesses in these sectors expect to recruit graduates over the next three years. With the exception of the hospitality sector, this will include recruitment by a small proportion of businesses that do not currently employ graduates. Sectors where graduate employment is likely to remain constant: The arts and culture sector has above average graduate employment (21%) and a small proportion of businesses expect to recruit over the next three years (7%). None of the businesses that do not currently employ graduates expect to recruit. 66

70 Sectors with low and potential for slightly increased graduate employment: The health (15%), manufacturing (14%), construction (13%) and other services (11%) sectors all have a below average proportion of businesses that currently employ graduates. Few businesses in these sectors expect to recruit graduates over the next three years (7% to 12%). Only in the manufacturing (6%) and construction (5%) sectors do businesses that do not currently employ graduates expect to recruit them over the next three years. Sectors where graduate employment is likely to remain low: There is little graduate employment in the wholesale and retail sector (8%), with few businesses expecting to recruit graduates over the next few years. None of the surveyed businesses in the transport sector currently employ graduates and none plan to recruit in this role. Graduate Recruitment Plans over the next three years within each sector Ranked by % of businesses that plan to recruit graduates over the next three years Sector Sample No. % of businesses that plan to recruit additional graduates % of businesses that do not currently employ graduates but expect to over the next 3 years Communications 27 63% 15% Low Carbon 36 25% 8% Education 58 22% 5% Hospitality 23 22% 0% Fin., Prof. & Bus. Services % 4% Other 26 19% 8% Health 81 12% 1% Manufacturing % 6% Construction 87 8% 5% Arts & Culture 29 7% 0% Other Services 44 7% 0% Wholesale & retail 130 4% 1% Transport 30 0% 0% Source: LEP Skills Survey Larger companies are more likely to plan to recruit graduates. However, amongst all sizebands, the proportion of companies planning to recruit graduates in the next three years is lower than the proportion who currently employ graduates In terms of degree subjects, businesses most frequently stated that they expect to recruit graduates who have studied business and adminstration (27%). This reflects the extent to which these professional roles, in finance or HR for example, are required by businesses across parts of the economy. Other subjects which were frequently identified include engineering and technology (22%), reflecting the importance of the manufacturing sector in Sheffield City Region, and computer science (14%). This is unsurprising given the high proportion of businesses within the information and communications sector which plan to recruit graduates. 67

71 Subjects or specialism businesses expect graduates recruited to have studied No. % Business and administrative studies (e.g. HR, financial management, marketing) 32 27% Engineering and technology 26 22% Computer science 17 14% Social studies (e.g. social work, sociology, politics, economics) 13 11% Any 11 9% Physical sciences (e.g. physics, chemistry, geology, physical geography) 11 9% Don t know 10 8% Education 9 8% Architecture, building and planning 7 6% Creative arts and design 7 6% Mass communications and documentation (media, publishing, journalism) 5 4% Medical related subjects (e.g. nursing, nutrition, ophthalmic, medical technology) 5 4% Mathematical sciences 4 3% Agriculture and related subjects 3 3% Law 3 3% Biological sciences 2 2% Medicine and dentistry 2 2% Historical and philosophical studies 1 1% Languages 1 1% Other 1 1% Source: LEP Skills Survey Sample of 120 responses Businesses held mixed views on how easy it would be to recruit the graduates they need. Nearly two thirds considered it would be either very easy (22%) or quite easy (39%), while just over a quarter of businesses expect it to be either quite difficult (18%) or very difficult (8%). The remaining 13% did not know Of those businesses that expect it to be difficult to recruit graduates, the most common reason was a lack of applicants with the required skills, noted by 63% of businesses (mirroring the views of businesses in the other Yorkshire and Humber LEP areas). Other reasons are shown in the table below. Reasons for difficulties in recruiting graduates No. % Applicants are unlikely to have the skills we require 20 63% Low volumes of applications expected 8 25% There will be a lot of competition to recruit graduates from other companies in our industry 8 25% The graduate salaries we are able to offer are not competitive 5 16% We need work experience/life skills as well as academic qualifications 1 3% We have retention problems with graduates 1 3% Source: LEP Skills Survey Sample of 32 responses A higher than average proportion of businesses within the communications sector (53%) and manufacturing sector (33%) expect it to be difficult to recruit graduates, although this finding should be treated with caution due to the small sample size. 68

72 Apprenticeships 3.48 Just under a quarter of businesses surveyed currently employ apprentices (24%). Over the next three years, 29% of businesses plan to recruit new apprentices. The proportion of Sheffield City Region businesses already employing or planning to recruit apprentices is higher than amongst businesses across the region as a whole. Businesses Currently Employing Apprentices 3.49 Two sectors account for almost 40% of the businesses that said they employ apprentices - manufacturing (21%) and financial, professional and business services (18%). This reflects a concentration of apprentices in these sectors (particularly manufacturing) as well as the sector profile of the survey sample A high proportion of the businesses within the education sector (38%) currently employ apprentices. This is followed by the manufacturing (30%), construction (28%), transport (26%) and other (25%) sectors, each with an above average proportion of companies with apprentices. A particularly low proportion of businesses within the arts and culture (14%) and hospitality (9%) sectors currently employ apprentices The proportion of businesses that employ apprentices increases with business size. Around half of medium (53%) and large (47%) businesses currently employ apprentices, compared to 29% and 14% of small and micro businesses respectively. 69

73 Apprentice employment by business size Employment Size Band Sample Businesses employing apprentices within each size band Micro (1-9) 67 14% Small (10-49l) % Medium (50-249) 39 53% Large (250+) 8 47% Total Source: LEP Skills Survey 2012 Plans to Recruit Apprentices 3.52 The sector profile of those businesses that plan to recruit apprentices also shows a high proportion of responses are accounted for by the manufacturing (24%) and financial, professional and business services (16%) sectors The key trends in terms of current and future apprentice employment are as follows: Sectors with high and increasing apprentice employment: A high proportion of businesses in the manufacturing and construction sectors currently employ (30% and 28% respectively) and plan to recruit (40% and 30%) apprentices. A small proportion of the businesses in these sectors which are planning to recruit apprentices do not currently employ any (3% and 1%). Sectors with low and increasing apprentice employment: The communications (21%) and low carbon (19%) sectors have a below average proportion of companies that currently employ apprentices. A high proportion of businesses in these sectors expect to recruit apprentices over the next three years (46% and 36% respectively). Sectors where apprentice employment is likely to remain low: A low proportion of businesses within the health (17%) and hospitality (9%) sectors employ apprentices and few expected to recruit within this role (16% and 22% respectively). 70

74 Apprentice recruitment plans over the next three years within each sector Ranked by % of businesses that plan to recruit apprentices over the next three years Business Sector Sample No. % of businesses that plan to recruit apprentices % of businesses that do not currently employ apprentices but expect to over the next 3 years Communications 28 46% 25% Manufacturing % 19% Low Carbon 36 36% 25% Education 58 34% 10% Other Services 45 33% 13% Construction 87 30% 11% Other 28 29% 4% Fin., Prof. & Bus. Services % 13% Arts & Culture 29 24% 14% Transport 31 23% 13% Hospitality 23 22% 17% Wholesale & Retail % 11% Health 81 16% 6% Source: LEP Skills Survey Businesses plan to recruit new apprentices across a wide range of subject / framework areas. The most commonly noted framework areas are engineering and manufacturing (29%) and business administration and law (23%). This reflects the high proportion of businesses in the manufacturing sector which intend to recruit apprentices, and also that business administration roles are applicable across the business base. Framework areas in which businesses are planning to recruit apprentices No. % Engineering and manufacturing technologies 41 29% Business administration and law 33 23% Construction, planning and the built environment 23 16% Health, public services and care 13 9% Information and communication technology 12 8% Retail and commercial enterprise 12 8% Education and training 10 7% Agriculture, horticulture and animal care 9 6% Leisure, travel and tourism 5 3% Arts, media and publishing 1 1% Other 1 1% Don t know 9 6% Source: LEP Skills Survey Sample of 143 responses The number of apprentices which each business plans to recruit tends to be small. Of those that were able to specify a number, two thirds of businesses expected to take on one or two apprentices (66%) and the majority expected to recruit five or less (85%). There were five businesses with plans to recruit a high number of apprentices: Retail and commercial enterprise and leisure, travel and tourism: one business planned to recruit apprentices across both these framework areas; Education and training: one business planned to recruit 25 apprentices; Agriculture, horticulture and animal care and health, public services and care: in each of these framework areas, one business planned to recruit 20 apprentices; Business administration and information and communication technology: one business planned to recruit 20 apprentices across both these framework areas. 71

75 3.56 Although 23% of businesses said they were planning to recruit apprentices, 38% stated that they regarded apprenticeships as an important qualification type. It is therefore important to understand the factors that may be preventing the 55% of businesses who said they had no plans to recruit apprentices over the next three years from taking on apprentices. The most common reason for not recruiting apprentices was a lack of business need, which was stated by nearly two thirds of those who do not plan to recruit apprentices (63%). A wide range of other reasons were also noted, which are shown in the table below. Reasons for not recruiting apprentices No. % We do not have a business need for them % The company is too small 61 14% Prefer to employ trained and experienced staff 44 10% Legal requirements, e.g. we cannot legally employ staff under a certain age 26 6% Budget / funding issues 23 5% We do our own training 21 5% We have recruited apprentices in the past and have had negative experiences 20 5% Current staff don t have the time to supervise apprentices 14 3% No reason, haven t thought about it 10 2% Availability of suitable candidates 10 2% Uncertain over the financial return to the business of employing apprentices 10 2% Company policy 5 1% Complexity of the process 4 1% Owner is retiring / closing business down 3 1% We don t really know how apprenticeships work 2 0% Lack of suitable training providers 1 0% Don t know 4 1% Source: LEP Skills Survey Sample of 864 responses 3.57 The proportion of businesses who said that perceived problems with the apprenticeship system discouraged them from recruiting apprentices was very low: Budget / funding issues 5%; Lack of time to supervise apprentices 3%; Complexity of the process 1% Lack of knowledge of the process 1% 72

76 Workforce Development and Local Training Provision 3.58 Businesses were asked a series of questions relating to their plans to deliver training and develop their workforce s skills over the next three years, as well as their intentions to use external training providers. The survey also asked about awareness of training available both locally and regionally and businesses perceptions of training providers ability to meet skills needs. Training Plans 3.59 Over three quarters of businesses expect to provide formal training for their some or all of their staff over the next three years (76%). One fifth of businesses are not planning to provide any formal training Analysis by sector highlights the communications (93%) and education (91%) sectors as having a particularly high proportion of businesses that intend to provide staff training. Sectors with a below average proportion of businesses that are planning to deliver training for staff include the other services (67%), wholesale and retail (66%) and low carbon (64%) sectors. 73

77 3.61 Larger businesses are more likely to be planning to provide staff training in the next three years. Whilst two thirds of micro businesses plan to provide training, all the businesses consulted that employ over 250 people are planning to provide training. Businesses expecting staff to receive formal training in the next three years Employment Size Band Sample Businesses expecting staff to receive formal training in the next three years Micro (1-9) % Small (10-49l) % Medium (50-249) 69 93% Large (250+) % Total Source: LEP Skills Survey A fifth of businesses do not plan to provide training for their staff (20%). Three quarters of these stated that this was because staff are considered to be fully proficient (75%). A wide range of other reasons for not undertaking training were also reported by a smaller number of businesses, see the table below. Reasons for not providing workforce development No. % All our staff are fully proficient % Our training is on the job training 14 8% External courses are too expensive 12 7% No reason in particular 12 7% The courses we are interested in are not available locally 6 3% No training course is specific enough for our line of business 5 3% Employees are too busy to go on training courses 4 2% The quality of the courses or providers locally is not satisfactory 2 1% Managers lack the time to organise training 2 1% Low market confidence/economic conditions 2 1% Difficult to get information about the courses available locally 1 1% The business is closing down/owner close to retirement 1 1% Don t know 5 3% Source: LEP Skills Survey Top 10 responses Training Expenditure 3.63 Over the next three years, the survey findings show that businesses who plan to train their staff expect to maintain (50%) or increase (41%) expenditure on workforce development, compared with current levels. Very few businesses expect a reduction in expenditure (4%). 74

78 3.64 Businesses in the manufacturing, low carbon, communications and financial, professional and business services sectors are most likely to be planning to increase expenditure on training Nearly a third of all businesses reported that nothing in particular would enable them to spend more on training see the chart below. Factors which would encourage businesses to spend more were related to finance (internal budget and funding availability) and business confidence (stable trading conditions and industry developments). 75

79 Perceptions of Training Providers 3.66 The majority of businesses expect to use an external provider to meet their training needs (74%) over the next three years, either solely (24%) or in conjunction with internal training (50%). The remaining 1% of businesses did not know how the training would be provided A high proportion of business within the health (86%), education (85%) and manufacturing (83%) sectors expect to access external provision to meet their training needs. Businesses in the transport (56%) and communications (54%) sectors are least likely to do so The main factors that would encourage businesses to procure more training from external providers are shown in the chart below. Again a high proportion of businesses stated that nothing would encourage them to procure more training externally (26%) Where a reason was provided, the main factors can be grouped under the following headings: Cost: The survey found demand for greater public subsidy (42%) and lower course fees (34%); Relevance: 38% would like training more tailored to their business needs; 76

80 Location of delivery: More than one in five businesses stated that more training delivered in the workplace and more training available locally (29% and 24% respectively) would encourage them to procure more training The survey findings suggest that the hospitality, transport and wholesale and retail sectors are particularly difficult to engage with external training. Within these sectors, a lower than average proportion of businesses expect to use external training over the next three years, and a third or more of businesses stated that nothing would encourage then to access more training from external providers The findings reported above are likely to have been influenced by businesses knowledge and opinions regarding the available training offer. This is discussed in the following section. Awareness of Training Provision 3.72 There is reasonably good level of self-reported awareness amongst businesses regarding the training provision available both locally and regionally. Over two thirds of businesses stated they were very aware or aware of training offered by FE colleges (70%) and private providers (71%) in their local authority The survey findings are detailed in full below. The main points are that: Businesses have a greater awareness of the training provision offered by providers in their local authority (compared with regionally); There is little difference in businesses awareness of the training offered by private sector providers and FE colleges; The proportion of businesses that are aware of local provision (70% 71%) is higher than the proportion planning to use external providers over the next three years (61%). 77

81 3.74 Over a third of businesses within the arts and culture, wholesale and retail and other sector have little or no awareness of the training provided by both FE colleges and private providers in their local authority. Businesses within the health and education sectors have the greatest level of awareness. Perceptions of Training Providers 3.75 There is a reasonable degree of confidence amongst businesses in providers ability to meet their training needs. There is a similar level of confidence in providers based in businesses local authority (71%) and regionally (68%) A high proportion of businesses in the communications sector lacked confidence that external providers would be able to meet their training needs (42%). This is reflected in the fact that this sector has the lowest proportion of businesses with plans to use external providers over the next three years. 78

82 3.77 Amongst the 20% of businesses who said that there did not have confidence in local training providers, the reasons were principally: a lack of availability of the required courses; and courses being insufficiently tailored to meet business needs. The survey results are shown in full in the table below. Reasons for lack of confidence in providers ability to meet training needs Local Authority Yorkshire and Humber The courses are No. % No. % Unlikely to be available 93 62% 54 51% Unlikely to be sufficiently tailored to the needs of our business 45 30% 23 22% Unlikely to be of the quality we would like 19 13% 11 10% Likely to be too expensive 12 8% 7 7% Likely to be out of date with industry developments, techniques or standards 8 5% 6 6% Likely to be too long 3 2% 2 2% Other 17 11% 21 20% Don t know 5 3% 8 8% Source: LEP Skills Survey Sample of 150 (local authority) and 105 responses (Yorkshire and Humber) Longer Term Outlook 3.78 Businesses have a cautious view of the future. Over the next three to five years, 40% of businesses anticipate that the local economy will slightly improve, while 27% expect it to remain the same and 21% think it will worsen. 79

83 3.79 A large majority of businesses are confident that they have the necessary skills to either maximise opportunities (where economic conditions are expected to improve) (93%) or that might help to less the impact (where economic conditions are expected to deteriorate) (87%). Exports 3.80 For a small proportion of businesses in Sheffield City Region, exporting is an important and growing aspect of their activity. The survey found: 11% of businesses stated that the export market was important; 11% of businesses currently generate a proportion of their turnover from exports; Over the next three years, 14% of businesses expect to sell to overseas markets; Of those businesses that currently export their products and services, three quarters will increase this significantly (28%) or slightly (48%) over the next three years Exports were considered to be important by a high proportion of businesses in the manufacturing (32%) and low carbon (21%) sectors. A slightly higher than average proportion of businesses in the information and communications (15%) and wholesale and retail (13%) sectors stated that exporting was important Sheffield City Region businesses were more likely to state that they would need additional skills to develop or improve exporting than businesses in other parts of the region. The responses are shown in the table below. Skills to enable the business to understand and develop a presence in overseas markets accounted for three of the top four responses. Skills requirements to develop or improve export trade over the next three years No. % Gaining overseas contacts 32 27% Researching market opportunities 29 25% Foreign languages 28 24% Overseas marketing 26 22% Establishing routes to market 21 18% Exporting strategy development 17 14% Modifying product or service for overseas market 17 14% Handling customs clearance 17 14% Managing risks from exposure to changes in exchange rates 16 14% Taxes 16 14% Costings for overseas markets 15 13% Organising international transport 14 12% Source: LEP Skills Survey Sample of 118 responses 3.83 Of those businesses that will require foreign language skills, the most common languages were German, French, Chinese, and Japanese There is some variation in the extent to which businesses will be able to rely on their existing staff to develop or improve export trade. The table below shows the skills needs 80

84 which businesses believe will mean they require additional staff. Most often businesses will require additional staff with language, market research, financial and strategic skills. Additional staff required to meet skills needs No. % Sample No. Foreign languages 16 57% 28 Researching market opportunities 16 55% 29 Costings for overseas markets 8 53% 15 Exporting strategy development 9 53% 17 Modifying product or service for overseas market 8 47% 17 Overseas marketing 12 46% 26 Gaining overseas contacts 14 44% 32 Managing risks from exposure to changes in exchange rates 7 44% 16 Taxes 7 44% 16 Establishing routes to market 9 43% 21 Handling customs clearance 5 29% 17 Organising international transport 4 29% 14 Source: LEP Skills Survey Summary Current Recruitment Difficulties and Skills Gaps 3.85 Relatively few businesses in Sheffield City Region which have tried to recruit staff over the past year have experienced difficulties in doing so. The occupational group in which difficulties are most likely to have been experienced is the skilled trade occupations, in which one in five businesses have found it hard to recruit appropriate staff. This corresponds to the skills types which have been difficult to recruit technical and practical skills (reported by 15% of businesses) and job specific skills (reported by 11% of businesses) Almost all businesses reported that their workforces were fully proficient in their roles, and there was very little variation between occupation types. Amongst the one in ten businesses who said that some of their staff were not fully proficient, this was most often because they were new to the role or still undertaking training. Occupation and Skills Needs 3.87 Businesses in the Sheffield City Region are slightly less optimistic about the prospects for the economy over the next three years than is the case amongst businesses in the region as a whole. It is perhaps unsurprising then that the vast majority of businesses are expecting little change in the number of people they employ, across all occupational categories Where employers are expecting an increase in the number of people they employ, the increase will be slight and will be concentrated in skilled trades, administrative and secretarial occupations and sales and customer service roles The vast majority of businesses did not think that any particular skills types would become more important to their businesses over the next three years. The two main exceptions to this were IT / software skills and technical / practical skills, which are expected to increase in importance by around one third of businesses. A wide range of specific skills needs were identified within these two categories, highlighting how the pace of technological development in relation to IT, manufacturing and engineering processes creates skills gaps for businesses. Graduates 3.90 One in five businesses currently employs graduates (19%), marginally lower than the regional average. Graduates are regarded as important amongst the majority of businesses that employ them, with over three quarters stating they are either very important (39%) or quite important (38%) to the business. However, over 40% of businesses which currently 81

85 employ graduates state that they do not intend to recruit any more over the next three years, and only one quarter of the businesses that are planning to recruit graduates do not currently employ any, suggesting that the demand for graduates amongst businesses in Sheffield City Region will be low in the coming years Businesses which do intend to recruit graduates are looking for recruits with a range of academic backgrounds, although business-related disciplines and engineering and technology subjects were most frequently cited. Around one quarter expected it to be difficult to recruit the graduates they need, most commonly as a result of a lack of skills amongst applicants. Apprenticeships 3.92 Business take-up of apprenticeships appears to be higher in the Sheffield City Region than in other parts of the region, with just under one quarter of those surveyed currently employing at least one apprentice, and 29% planning to recruit apprentices over the next three years. This finding is driven by a high proportion of businesses in the manufacturing and financial, professional and business services sectors using the apprenticeship model and planning to recruit further apprentices in future The number of businesses taking on apprentices in the communications and low carbon sectors is expected to rise, whilst take up will remain low in the health and hospitality sectors There is scope to increase the employment of apprentices within small and micro businesses, although partners and agencies will need to tackle the perception amongst many businesses who do not plan to recruit apprentices that the company is too small for them, or there is no business need for them. Workforce Development 3.95 Businesses in Sheffield City Region are more likely than the regional average to be planning to train their staff over the next three years. However, whilst three-quarters are planning to provide training, some 20% of businesses mainly micro businesses and those in the other services, wholesale and retail and low carbon sectors are not. Amongst those who are planning to train, 40% are planning to increase their expenditure on training, and three quarters are expecting to use external training providers for some or all of their training Businesses feel they are aware of the training provision available locally, and most are confident that training providers are able to meet their skills needs. Despite this, 30% of businesses said that nothing would encourage them to procure more training externally. Factors which could encourage businesses to procure more external training included: Cost: The survey found demand for greater public subsidy (42%) and lower course fees (34%); Relevance: 38% would like training more tailored to their business needs; Location of delivery: More than one in five businesses stated that more training delivered in the workplace and more training available locally (29% and 24% respectively) would encourage them to procure more training. Exports 3.97 For a small proportion of businesses in Sheffield City Region, exporting is an important and growing aspect of their activity. The survey found that 11% currently generate a proportion of their turnover from exports, while over the next three years, 14% of businesses expect to sell to overseas markets. Of those businesses that currently export their products and services, three quarters will increase this significantly (28%) or slightly (48%) over the next three years. 82

86 3.98 Sheffield City Region businesses were more likely to state that they would need additional skills to develop or improve exporting than businesses in other parts of the region. Skills to enable the business to understand and develop a presence in overseas markets accounted for three of the top four responses. 83

87 4 THE LOW CARBON AND ENVIRONMENTAL SECTOR Introduction 4.1 The low carbon and environmental sector is a significant growth area of the UK economy. This growth is driven by a combination of government policies and legislation, rising energy prices, concerns about the security of traditional energy supply and fuel poverty. The recent Prospects for Green Jobs Report for Yorkshire Cities and others in Yorkshire and Humber 9 estimates that there were over 90,000 green jobs in the region in 2009, which represented around 3.6% of total employment. The key sectors with significant growth potential were identified as follows: Major investment projects in offshore wind, biomass power generation, biofuels and biorefining and carbon capture and storage (CCS); Onshore wind, biomass heat, energy-from-waste and microgeneration (albeit on a smaller scale than the major projects); Large scale low carbon building retrofit programmes linked to the Green Deal; Waste recycling and reuse; Environmental consultancy and other professional services linked to the growth of the green economy (e.g. finance, carbon accounting and legal). 4.2 The most likely scenario for the selected growth sectors in the Green Jobs Report shows that employment in Yorkshire and Humber will double its current level of 21,700 to 45,500 by In the Sheffield City Region LEP area, a recent Mini-Stern project estimated that 6,200 jobs and GVA growth of 293 million per year will be generated over the next 10 years through the implementation of carbon reduction measures. 4.4 This strand of the study has been undertaken by Quantum. An accompanying report discussing the future occupation and skills needs across the four LEPs has been produced as part of the work. This chapter draws on the findings from that report and presents a summary of the low carbon topics that Sheffield City Region LEP identified as a focus for the study. The chapter is structured under the following sections: Embedding low carbon skills Leadership for the low carbon agenda Low carbon innovation Low carbon buildings and the green deal Skills needs in other LEP areas: offshore wind, bioenergy, green infrastructure 4.5 The findings are based on a review of reports on greening the economy as a whole, including leadership, Green Deal research on skills and jobs, and a review of training curricula and researching how larger companies provide their own training packages. Discussions and access to survey information was enabled through attendance at two of the Sheffield Low Carbon Skills Working Group meetings in May and June. A range of people were interviewed including those from colleges, universities, business support agencies and companies including the construction and manufacturing sectors. The Low Carbon Sector 4.6 In the Yorkshire Cities green jobs report, green jobs were defined as those concerned with activities that help to: Decarbonise the energy system examples include the generation of renewable energy, new energy infrastructure and low carbon buildings; 9 The Prospects for Green Jobs to 2020: Final Report for Yorkshire Cities by Quantum Strategy and Technology, BE Group and the University of Hull, June

88 Iimprove resource efficiency examples include recycling and reuse of waste or water, and sustainable products and materials; Preserve and enhance the natural environment examples include eco-systems and biodiversity, green infrastructure and sustainable agriculture. 4.7 A summary of the scope of the definition is shown in the diagram below. This covers the three strategic drivers, supply sub-sectors and cross-cutting activities of consultants, professional service providers and contractors. It also identifies the main markets for the technologies, products and services involved (i.e. the demand side). Green Jobs Definition and Scope Strategic Drivers Low Carbon and Environmental Goods & Services (LCEGS) Supply Sub-sectors Markets Local, UK, International Decarbonising the Energy System Improving Resource Efficiency Preserving and Enhancing the Natural Environment Nuclear Energy Renewable Energy Energy Efficiency & Services Energy-from-waste Energy Infrastructure Low Carbon Buildings Low Carbon Transport Carbon Finance New Technologies (e.g. CCS) Waste Minimisation Waste Recycling & Reuse Water Recycling and Reuse Sustainable Materials & Products Eco-design and Processes Green Infrastructure Eco-systems & Biodiversity Marine Environment Climate Change Adaptation Water Supply & Wastewater Other EGS sub-sectors Professional and Financial Services Multi-disciplinary Consultants and Contractors Agriculture & forestry Mining & quarrying Power generation, transmission & distribution Manufacturing Construction Wholesale & retail Transport & logistics Service industries Public administration 4.8 The definition also distinguished between green jobs based on the level of activity undertaken within low carbon sectors. A summary is shown in the table below. Green jobs definitions Primary green jobs Secondary green jobs Supply chain Business activities are wholly or mainly aimed at the low carbon and environmental markets. This includes energy management, renewable energy, environmental consultancy, green infrastructure, waste management and recycling, water supply and wastewater treatment and other environmental goods and services sub-sectors. Business activities are partially involved in the low carbon and environmental markets. This covers a wide range of subsectors such as agriculture, electricity production and distribution, energy equipment manufacture, construction and building trades. Businesses may not currently be involved in the low carbon and environmental markets but which have the potential to enter the supply chains especially in major growth areas such as offshore wind and carbon capture and storage. This covers sub-sectors such as castings, forgings, fabrications, bearings, gearboxes, pumps and valves. 85

89 4.9 Alongside the sector activity detailed above, low carbon approaches are applicable across the business base as businesses look to implement energy and resource efficient approaches. The aim of growing the low carbon supply side and reducing carbon across all sectors of the economy is illustrated in the figure below. Growing a low carbon and sustainable economy Embedding Low Carbon Skills into the Economy 4.10 This section first presents a review of recent literature defining low carbon skills. It then discusses primary research findings regarding the skill considered important for embedding low carbon approaches across the business base. These included energy and resource management, leadership, innovation and science, technology, engineering and maths (STEM) skills. Skills required for the low carbon sector 4.11 A profile of low carbon skills, by level and industry, is shown below. It illustrates that a basic level of understanding of sustainability, natural resources, global environmental impacts of goods and services, water, energy, transport and benefits of sustainable practices forms a foundation on which further skills can be built. The extent to which further skills are required varies by sector depending on carbon intensity or degree of regulation. 86

90 Low Carbon Skills Portfolio 4.12 Further detail on the types of occupations required for the low carbon sector and skills for adapting to climate change are detailed in the Skills for a Green Economy report (see the table below). This highlights the range of technical and knowledge intensive roles required by the sector. Skills for the low carbon industry, energy generation and industries with high energy requirements Scientists and engineers with training or transferable knowledge for nuclear and renewable energy (including wind and marine); Technicians with training or transferable knowledge to install energy efficiency measures and retrofit at a household and business premises level; Skills to design and adopt technologies, products and processes to minimise carbon emissions; Operator level actions to minimise carbon emissions (e.g. driving in a fuel efficient manner). Source: Skills for a Green Economy. Skills enabling adaptation to climate change Scientific and technical skills such as modeling and interpreting climate change projections; Risk management such as assessments of future resource availability; Skills to design and adopt technologies, products and processes to improve climate The skills ladder shown in the figure below illustrates the low carbon skills by level required across four different sectors. The rational for including these sectors is as follows: Manufacturing is included as a carbon intensive and highly regulated sector of huge importance in Sheffield City Region; 87

91 Construction is included as it is controlled by building regulations and planning and has a critical role in providing lower carbon housing and buildings. It is important for both new build and retrofitting existing buildings; Public sector is included as an example of how a service based organisation would require skills levels; Hairdressing is included as an example of a low carbon intensive sector. 88

92 Low carbon and sustainability skills ladder 89

93 4.14 Across all sectors, businesses require a range of skills to implement low carbon approaches. These are termed generic or light green skills in the government s Skills for a Green Economy 10 report. These include strategic business management skills to build resource efficient business models, financial accounting skills for carbon and natural environment accounting, and skills to design and adopt technologies, products and processes increasing resource efficiency It was widely agreed amongst industry members that all sectors required a greater level of basic knowledge and skills in sustainability, energy and resource management and carbon. This refers to the foundation level skills indentified in the figure on the previous page. These skills needs are driven by the fast pace of technological and market development in the low carbon sector Considering skills above this foundation level, energy management is seen as an important skills type. Businesses with high energy usage have increasingly included energy management within the role of facility or site managers, or taken on additional staff to carry out this function. The Carbon Trust recommends one full-time energy manager per 1 million annual energy spent. Large businesses recognise energy managers as vital to their business models in reducing energy demand. They expect this role to become increasingly important as energy prices continue to rise and measures such as the Carbon Reduction Commitment (CRC) are introduced. Businesses also expect it to become increasing difficult to retain and recruit staff with energy management skills as more businesses look to recruit employees with these skills. Energy management skills are similarly important for small businesses due to the impact of energy price fluctuations. For example, a start up business identified the unpredictable rises in energy costs as a significant risk for his fledgling business In addition to energy management, skills are needed in the broader field of resource management to improve the efficient use of other resources such as raw materials, water and transport. Process engineering, design and low carbon thinking skills will be needed to implement the necessary lean and sustainable manufacturing processes for resource efficiency In the transition to a low carbon economy, businesses and the public sector will increasingly procure in ways that drive resource efficiency through their supply chains. Procurement and contract management staff will need specific knowledge and skills to ensure that their suppliers are delivering low carbon products and services and they will be looking for innovation to reduce waste and energy consumption. Amongst supplier businesses, similar skills will be required in order to respond to this agenda. This may also increase the importance of environmental management systems in demonstrating suppliers credentials. The recently introduced energy management system, ISO , will provide a focus for improvements in energy efficiency and reductions in energy costs Management and financial analysis skills to build the business case for investment in energy and resource efficiency will also be needed. The Green Jobs report identified that the lack of such skills is a significant barrier to adopting energy and resource saving measures Science, Technology, Engineering and Maths (STEM) skills are seen as an existing and future skills shortage. For example, two Leeds-based large consultancy firms outlined skills requirements in the offshore wind/onshore wind sector (engineers), transport/public transport/road design, mechanical and electrical engineering (for buildings/construction), management services for buildings (energy management), and waste including energy from waste. These skills are important in adapting existing technology and processes to implement energy and resource efficient technology and processes

94 Leadership for Low Carbon 4.21 Leadership for embedding low carbon approaches has been strongly identified in the primary research. This is in relation to two aspects of leadership, firstly from policy makers, and secondly amongst senior business management. Policy makers 4.22 The Government s recent policies to stimulate the low carbon sector have been subject to uncertainty and amendment (for example, planning policy, Feed in Tariffs, Renewable Heat Incentive). This has made business investment decisions difficult. Strong leadership from government is sought by business leaders with concrete, reliable policies that provide a more certain environment for businesses to respond Whilst acknowledging these factors will be largely outside of the LEP s control, LEPs can act to help make a business case for energy and resource efficiency and help support business leaders. An example of local leadership on the low carbon agenda is provided below. Sheffield City Region Low Carbon Sector Group and Low Carbon Skills Working Group. The groups have the following aims: To assist businesses in identifying opportunities to exploit current and future green technology trends around low carbon energy, clean fuels, waste mitigation, water saving and environment conservation; Devise cross sector strategies to help local businesses become lean and efficient to meet UK climate change targets, shift to low carbon energy and improved demandside energy efficiency; thirdly, to tackle access to low carbon mobility; Deliver massive improvement in efficiency of businesses using local expertise in advanced manufacturing techniques Amalgamate this with low carbon resourcing and materials supply chains and assist the LEP in developing skills needs especially SMEs for eco-efficiency. They are working on a 5 10 year period ahead looking at building transformational projects using the city region s expertise in universities and businesses. The group are confident it has the available knowledge and expertise to provide the necessary thought leadership and focus to broker innovative thinking Business leaders 4.24 Strong leadership skills amongst business leaders are considered necessary for driving changes throughout business. The extent to which senior management is engaged with the low carbon agenda varies by business size. Leaders of larger companies face strong drivers to consider resource efficiency from investors, environmental managers and systems such as ISO14001 and ISO Many of those with larger energy bills will have already integrated energy management into their company key performance indicators and policies In contrast, smaller companies are less likely to focus on energy and resource management. There have been initiatives across the region designed to address this, such as the programmes run by Envirowise, WRAP, Business in the Community, CO2 Sense and Groundwork. Environmental standards have been developed for small to medium sized enterprises, such as the Acorn standard, an SME equivolent of ISO Given that the vast majority of the LEP business base is comprised of SMEs, the importance of engaging these business managers in resource efficiency should not be underestimated. A business case study on business leadership in low carbon is shown below. 91

95 Low Carbon Innovation 4.26 There is an established link at the LEP level between economic performance and the extent of local innovation activity 11. In the context of the transition to a low carbon economy, innovation can be classified within the following activities: New low carbon technologies (e.g. Pulse Tidal s tidal steam energy technology and ITM Power s hydrogen fuel cell technology). A high level of competition from overseas businesses is an issue for this sector; New products and materials for growth low carbon markets (e.g. Jennic s wireless communications systems for smart metering and Polymer Techniques new sealing technologies for the wind & wave market); Improvements to existing products to make them more energy and resource efficient (e.g. Xeros s washing machine); Improvements in energy and resource efficiency in businesses through better management and control systems, more efficient processes and supply chain management The skills needed for low carbon innovation are similar to those required for innovation and commercialisation more generally but based on an understanding of the market drivers and opportunities in the low carbon economy. This includes knowledge of patents, design rights, intellectual property rights, and skills in management of technical risk and understanding of innovation. A knowledge of the funding available for R&D and innovation in this field is also important (for example, through the EU s 7 th Framework Programme, Intelligent Energy Europe, the Technology Strategy Board, Carbon Trust and the Energy Technologies Institute) To further the development of innovative product and services, businesses can access skills and knowledge through partnership working. This can include working with businesses within the supply chain, universities (for example through Knowledge Transfer Partnerships) and sharing skills and knowledge between sectors (for example, knowledge within the aerospace sector about lightweighting could be transferred to other industries to reduce energy use). Businesses noted that the barriers to implementing these collaborations include difficulty finding the relevant contacts within a provider and time constraints 4.29 The Advanced Manufacturing Park (AMP) aims to support innovation within technology sectors including low carbon. By bringing together large companies with potential suppliers, start up businesses have access to wider skills and networks. They also have access to their target customer base. The AMP has several companies working on low carbon related enterprises, as detailed in the case study below. Low carbon companies situated in the AMP Polymer Techniques Paul Short is developing new sealing technologies in composites of polymer/super-alloy and elastomer which will offer OEM s and operators in wind, wave and nuclear power generation, semi-conductor manufacture and Chemical/Pharma industries the opportunity to enjoy longer periods of trouble-free operation. Paul chose to be based at Evolution on the Advanced Manufacturing Park because it s on the doorstep of his potential customers in nuclear and aerospace. Networking was an attraction, so seminars on nuclear developments have been useful. He has been able to access 11 LEP Network s recent report Creating Successful Local Economies: Review of Local Enterprise Partnership area economies in

96 additional skills and equipment he does not have such as trialling laser cutting on difficult to process alloys. The mix of advanced manufacturing skills such as powder metals, laser technologies, CNC machining and advanced cutting tool development provides a melting-pot environment promoting different ways of looking at things. Within the very near future Paul expects to be in full production, if growth meets expectation he ll require a new building which will need to be a design and built, but fears the park will be full by then. He would like to see an expansion of the park so he can stay on site. He knows he ll need to train his team as his processes are very niche and he plans to recruit from the graduate pool as he s not been impressed by school leavers letters he gets and fears they lack basic writing and numerical skills. He believes there has been a trend away from becoming graduate engineers but this appears to changing now and engineering once more appears to be attracting school leavers. What would help innovation would be more funding support (funding is successfully secured by Sheffield University, but more of this should be spread to smaller private entrepreneurs across the park), stable energy prices so if the park can develop more shareable renewable energy that would be great. Being competitive in a market where energy costs can increase by up to 50% significantly affects manufacturing start ups. ITI Energy Cleantech company with patented gasification technology, which when combined with the most up-to-date clean-up systems available, means it is able to convert municipal waste into energy more efficiently than any technology currently known. Iceotope Ltd Iceotope are developers of a revolutionary solution to prevent IT data centre servers from overheating. Iceotope's patented technology can dramatically reduce power consumption in data centres by cooling servers at the source of the heat: the component level Energy Jump Reducing impact on the environment through energy efficiency. Xeros Developing a washing machine that uses 90% less water than conventional machines. John Palframan, Technology Centre General Manager at Sheffield s Advanced Manufacturing Park says that to get innovation we need the government to take a lead on low carbon to meet our national targets, or we will potentially find our innovators going down the wrong routes, after the Environmental Technologies sector took a battering in the 2008 recession a lot of people disappeared from the sector. The Regional Development Agency funding that was formerly available encouraged enterprises to share risk and look at untried technologies. With funding so very difficult to get now, more enterprises and inventors have to turn to Business Angels to get investment. John is constantly told how hard it is to get access to funding. In terms of skills, John believes the top end PhD skills are there, however young people are often not work ready and as well as STEM skills and awareness of low carbon, they need to be prepared and want to work. The AMRC and Sheffield University are taking action to train engineering apprentices at a Training Centre being established through the Regional Growth Fund. Government funding allows this type of training centre to be built but it is not a Government led initiative, given the importance of training to support manufacturing and low carbon initiatives it is John s belief that Government should lead to ensure maximum impact The priorities for the LEP for addressing the skills needs noted above are as follows. 93

97 Embedding low carbon skills: The LEP can help businesses to engage with schools, colleges and higher education institutes to both embed and promote low carbon skills and sustainability awareness within provision. Businesses should include sustainability or low carbon, energy efficiency skills into induction programmes provided to employees. Developing a RoadMap for a low carbon LEP is important to enable businesses both large and small to see where they are headed in terms of low carbon and resource efficient business with potential new markets. This current lack of a vision holds back companies from knowing what their future skills needs are. The LEP could hold a workshop or series of events with business to promote the low carbon economic growth roadmap for local areas, with input from businesses leading the way and from the LEP. Leadership for embedding low carbon approaches: The LEP could lead a low carbon campaign to promote the concept and benefits of sustainability skills in leadership. This could link to a RoadMap or vision for the low carbon future of an area. In terms of influencing existing leaders, leadership and peer networking at a LEP level that engages local companies with key messages and support could be powerful in building up skills and awareness amongst local business leaders. This could include sharing information about the cost savings and other benefits achieved from energy and resource efficiency initiatives. This would need to be done across all sectors, or at least priority sectors for growth. A City Region programme of leadership development that provides training to local leaders (business/public sector) could be developed, this could be a short action learning set or coaching approach e.g. along the lines of Common Purpose 12, linked to the CLCF work on the circular economy and/or supported by Business in the Community. It would also need to engage SMEs, perhaps by linking larger companies to clusters of SMEs locally or though their supply chain. Innovation: The LEP and its partner companies could provide mentoring to start-ups and SMEs to provide them with the information and knowledge about the low carbon drivers, market opportunities and specific funding sources for R&D and innovation. This should draw on the work of the LCICG and the outputs from the TINAs. LEPs should look at key skills clusters and create conditions not just to grow new skills; but to bring skills sets together to help foster innovation, with a focus on low carbon, new markets. The LEP can play a strong role in facilitating knowledge sharing across sectors. Sheffield City Region s Low Carbon Sector Group Strategy for 2012 and beyond takes this approach. Low Carbon Buildings and the Green Deal 4.31 This sector is of interest across all LEPs, as building new developments to low carbon standards and retrofitting exiting buildings will generate significant occupational and skills demands. This section focuses on the skills needs generated by the Green Deal retro fit scheme The Green Deal is a Coalition Government financial mechanism which eliminates the need to pay upfront for energy efficiency measures and instead provides reassurances that the cost of the measures should be covered by savings on the electricity bill. The measures likely to be included in the Green Deal are shown in the table overleaf. 12 The Leadership Organisation see 94

98 Green Deal measures (as at July 2011) Heating, ventilation and air Condensing boilers conditioning Heating controls Under-floor heating Heat recovery systems Mechanical ventilation (non-domestic) Flue gas recovery devices Building fabric Cavity wall insulation Loft insulation Flat roof insulation Internal wall insulation External wall insulation Draught proofing Floor insulation Heating system insulation (cylinder, pipes) Energy efficient glazing and doors Lighting Light fittings Lighting controls Water heating Innovative hot water systems Water efficient taps and showers Micro-generation Ground and air source heat pumps Solar thermal Solar PV Biomass Boilers Micro CHP 4.33 Successful delivery of the Green Deal will require the following roles: Green Deal Provider provision of financing plan to the client; Green Deal Assessor/Advisor carrying out inspection of a building and produce an Energy Performance Certificate (EPC). This will identify appropriate energy efficiency measures that qualify for Green Deal funding mechanism and provide advice on energy saving behaviours and improvements; Green Deal Installers Accredited installers to survey the property for particular measures, check these are appropriate for the age of the building and install them to the agreed manufacturer specifications and quality standards An indication of the numbers of new jobs sustained by the retrofit of low carbon measures in domestic and non-domestic buildings is given in the Mini Stern projects. The following table summarises the total numbers of jobs needed to implement the cost effective measures (i.e. those that would pay for themselves on commercial terms over their lifetimes) and cost neutral measures (i.e. those that could be paid for at no net cost to the local economy if the benefits from the cost effective measures were captured and re-invested in further low carbon measures). The job figures refer to those required to implement the measures over and above business as usual and include direct jobs plus indirect jobs based on composite supply chain and income multipliers. Job projections associated with the Green Deal in the Sheffield City Region LEP area Sector Low carbon measure Average jobs per annum (over 10 years) Domestic buildings Cost effective 684 Cost neutral 1195 Sub-total 1879 Non-domestic buildings Cost effective 950 Cost neutral 1011 Sub-total 1961 Total 3840 Source: Mini Stern Review for Sheffield City Region 95

99 Skills for the Green Deal 4.35 At the time of writing there is uncertainty around the Green Deal regarding the measures included and level of demand. This means businesses have found it difficult to predict their employment and skills needs with certainty. Existing research on the likely occupational impacts of the Green Deal has shown that across Yorkshire and Humber the roles in which there is an expected growth include 13 : Sales Energy Assessors/Advisors Installation of insulation and micro generation Logistics Customer Services 4.36 If the market is dominated by large companies, the opinion of stakeholders is that these businesses are likely to upskill their own employees rather than recruit from outside the business. The case study below illustrates the expected occupational needs of a large supplier in Sheffield City Region If the market is dominated by large companies, the opinion of stakeholders is that these businesses are likely to upskill their own employees rather than recruit from outside the business. The case study below illustrates the expected occupational needs of a large supplier. EON s feedback to the Sheffield Low Carbon Skills Group survey showed that they have medium certainty and cannot yet state job numbers but will need the following skills to respond to Green Deal: - Energy Assessors QCF Level 3 - Insulation Engineers qualified in Building Insulation and Treatments QCF / Apprenticeship - Microgeneration Engineers (working with the Green Deal Skills Alliance to review qualifications frameworks for microgeneration installation) - Project Managers Level Research for the Green Deal Skills Alliance highlighted significant skills gaps in relation to the Green Deal, with two third of the workforce requiring training. The key knowledge gaps indentified were regarding a lack of knowledge of building fabrics and the impact energy efficiency measures have on different types of building The business consultations undertaken identified current and future skills needs associated with the Green Deal. The skills need required for the Green Deal are the same as those for installing measures in new build properties. The specific skills noted are: External wall insulation installers there is a shortage of young tradespeople who want to enter the construction industry. A business based in the Sheffield City Region requires 3,000 5,000 people to upskill nationally to meet contracts in the north of England. Another national energy business stated that the supply chain does not have the resources to support demand for solid wall insulation; Installers need to be able to install equipment to a high standard and need to understand how it relates to other equipment e.g. a plumber fitting a boiler needs to seal pipes back up to avoid draughts and heat loss; 13 Pye Tait Consulting A Green Deal Competency Framework Jan

100 Trades need to understand how their work fits with others e.g. wall to roof; window to wall; Trades need to be able to communicate with the consumer to explain how they should use the new products, what the implications of turning up/down heating may be; Mechanical ventilation is often not properly fitted, resulting in noise and increased energy use, thus ventilation may be switched off resulting in damp and mould growth. There are currently no installer accreditations for fitting mechanical ventilation; Heat pumps are also not always properly fitted, even by MCS installers resulting in poor performance of the product Businesses felt that skills gaps in the sector would damage the industry s reputation and affect product take up. Where poor skills result in equipment underperforming, the industry tends to tackle the problem, but not until some properties have been fitted with poorly performing products. This can then affect take up of those measures which get a bad press In order to retain new skills, strong project management is needed to continue to raise awareness and maintain standards. There should be a greater focus on building performance matching design across the industry with robust testing of a sample of properties on handover taking place The primary research undertaken across the region has also highlighted a likely shortage of skills in relation to energy assessors and advisors and renewable energy installation. For example, Kirklees Council s WarmZone scheme experienced difficulties in recruiting suitably skills assessors to promote their scheme. This role will be critical in securing take up of the Green Deal offer. A high degree of subject and product knowledge and strong communication skills will be required to encourage clients to go ahead with an installation If there is a high demand for the Green Deal, concerns have been raised amongst companies consulted that the requirement for only existing tradespeople (e.g. plumbers, electricians) to upskill to install microgeneration products means there will only be limited scope to deliver large volumes of work The current uncertainty could risk creating skills gaps as companies delay training and investment until they have further information regarding the scheme and associated demand. This view was backed up by the GDSA research, which showed a lack of training, low awareness of the Green Deal in the workforce and a reluctance for SMEs and training providers to being training until a demand from consumers is seen. What Are the Priorities for Action? 4.45 There are similar skills gaps and issues for delivering low carbon retrofit improvements under Green Deal and for new build. Tackling skills and quality gaps for Green Deal will benefit the construction industry as a whole, providing these jobs can be retained for delivery of new build low carbon standards Colleges should work with the National Occupational Standards coming out on Green Deal from the GDSA but also link with local construction firms, and Green Deal providers as well as local authorities to tailor courses to ensure high local take up. Training needs to be appropriate to measures identified locally and to local building types and, as identified by businesses consulted in the general business survey, much training is seen as too generic. The GDSA survey of businesses rated Yorkshire and Humber s training provision as 5.5/10 for the extent it could deliver training on the skills and knowledge relevant to Green Deal. 97

101 4.47 As technologies and products develop, trainers themselves need to keep up to date. Research for the Green Deal Skills Alliance showed that tutors do not always have the most up to date knowledge. Companies providing Green Deal could assist in this by providing guest tutors or facilitating training visits to real homes. The LEP has a role in acting as facilitator to bring together expertise to improve the training offer and provide intelligence and coordination in the local approach to Green Deal. For example, Greater Manchester s LEP and the Greater Manchester Environment Commission are working together on the transition to a low carbon economy and have researched the retrofit programme opportunities to look at the scale of investment and market size, and secured 5 million from ERDF for its social housing retrofit programme to lay the foundations for the Green Deal supply chain 14. Skills needs in other LEP areas: offshore wind, bioenergy, green infrastructure Offshore Wind 4.48 The offshore wind sector is mainly of interest to Humber LEP and North Yorkshire LEP due to the geographic location of these areas. The sector is however still relevant to the Sheffield City Region LEP in the context of supply chain jobs and skills which are not location dependent and therefore a brief profile of the sector is detailed below The sector includes the manufacture, assembly, operation and maintenance of wind turbines. The forecast employment in across these activities is primarily based in the Humber area. The Parsons Brinckerhoff report identifies that the main demand will be for semi-skilled mechanical and electrical technicians. There will also be a significant demand for skilled fitters, welders and electrical engineers The skills needs outside of the Humber LEP area will be dependant on the extent to which the large manufacturers base their supply chain in the region 15. David Brown Gears, a gear manufacturer in Huddersfield, is an example of a businesses located outside the Humber area which is part of this supply chain The specific skills needs amongst supply chain businesses will depend on the equipment or component involved. The main skills issue will be tailoring existing skills to the offshore wind market rather than developing new skills. In the short term, businesses will require an understanding of the offshore wind market, the procurement processes, technical requirements, standards, prices and commercial terms of the market. Larger businesses will have greater capacity to undertake this market research. SMEs however may find this challenging. Bioenergy 4.52 The bioenergy sector is mainly of interest to the Humber LEP and North Yorkshire LEP due to the level of agriculture employment in these areas. However this sector is also relevant to Sheffield City Region LEP in the context of biomass power generation and heating. A brief summary of the sector is included below The bioenergy industry which includes the following main sub-sectors: Biomass power including biomass co-firing and dedicated biomass power stations; Anaerobic digestion of organic wastes to produce electricity and heat; Biomass heat production for domestic, commercial and industrial applications including district heating Humber Sub-Regional Renewable Energy Sector Skills and Training Study: Parsons Brinckerhoff January

102 4.54 The qualifications and skills for biomass power generation and heating are shown in the table below. These highlight a range of technical skills across a range of levels are required. Qualification and skills requirements for bioenergy Qualifications Medium and higher level skills (3 to 5) needed during the project assessment phase of system deployment; Lower to medium level skills (2 to 4) needed during the on-site works phase of system deployment; Lower to medium level skills (2 to 4) needed during the life cycle support (i.e. operation and maintenance) phase of system deployment. Skills Source: Barriers to Bioenergy Matrix, UK Bioenergy Strategy Anaerobic digestion: Lack of skilled technicians/ operatives - there is a need for installers and maintenance engineers plus skilled biologists to maximise gas yields; Medium scale biomass electricity plants >5MWe: There is a lack of experience in operating gasifiers. Technology requirements are: need a robust feedstock handling system; need more work on gas cleaning, in particular, hot gas cleaning; The lack of trained and appropriately accredited biomass boiler installers restricting the deployment of biomass heat. Potential customers have only a very small number of providers from whom they can request services. Green Infrastructure 4.55 Green Infrastructure covers a wide range of sub-sectors and activities including: Landscape design and landscaping services; Development and maintenance of public parks and green spaces; Development and maintenance of nature reserves and botanical gardens; Environmental conservation i.e. the management of landscape, habitats and species in urban, rural, coastal and marine environments; Establishment, care, maintenance and management of trees, woodlands and forests Whilst this sub-sector is most significant in to the York, North Yorkshire and East Riding LEP it is also relevant to other LEPs in the context of their green infrastructure plans. The future occupation and skills needs are detailed in full in the YNYER LEP report and a brief summary is included below LANTRA, the Sector Skills Council for the land based industries, has identified the three main activities within the sector. The skills needs associated with each activity are shown in the table below 16 : Horticulture, Landscaping and Sports Turf Machinery and IT Environmental protection and conservation Leadership and management For local authorities, community engagement and income generation Environmental Conservation Computer modelling of ecosystems, taxonomy and systematics, soil science, environmental epidemiology, sustainability science and planning, microbiology, energy supply and freshwater science Understanding the impact of climate change for land management Practical experience Trees and Timber Technical and practical job specific Practical experience Price negotiation Access to funding 16 LANTRA reports on Size, Structure and Skills in the three sectors (2011) 99

103 International Perspective Volunteer management and fund raising 4.58 The global market for low carbon and environmental goods and services sector was estimated to be worth 3.3 trillion in , a 3.7% growth on the previous year 17. The USA accounts for 19.5% of the global total followed by China (13%), Japan (6%), India (6%) and Germany (4%). The UK is ranked 6 th with a 3.7% share A breakdown of the market into major sectors shows that the: Low Carbon sector sales were estimated to be 1.6 trillion (48% of the total with the main sub-sectors being alternative fuels, alternative fuel vehicles and building technologies; Renewable Energy sector sales were estimated to be 1 trillion (31% of the total) with the main sub-sectors being wind, geothermal, biomass and photovoltaics (PV); Environmental Sector sales were estimated to be 0.7 trillion (21% of the total with the main sub-sectors being water supply & wastewater treatment and waste management & recycling High growth rate sub-sectors for the next two to three years are expected to include carbon finance, alternative energy sources (e.g. energy storage, hydrogen and fuel cells), renewable energy (e.g. wind, biomass and PV), energy management, carbon capture & storage (CCS) and environmental consultancy UK Trade & Investment (UKTI) has produced an e-booklet entitled Be inspired UK Low Carbon Know How which provides examples of the UK s knowledge and capabilities in providing low carbon solutions for international markets. This covers areas such as energy efficiency, wind power, marine energy, low carbon buildings, environmental consultancy and low carbon vehicles as well as sectors which support the development of the low carbon economy such as financial services, creative industries and information technology Exportable skills in the Sheffield City Region LEP area in the context of the global market opportunities include: Environmental consultancy with many of the major players having offices in the LEP; Carbon finance based on the large carbon-intensive industries; Energy management including building energy services/consultancy and design/manufacture of energy efficient products for the domestic, commercial and industrial sectors (e.g. insulation, motors & drives, lighting, heating and cooling); Process engineering skills and technologies for the carbon capture and storage sector; Renewable energy based on the development of innovative and competitive technologies, products and components for the wind, bioenergy and marine sectors; Energy infrastructure based on specialist capabilities in energy storage and hydrogen and fuel cells Large firms in the LEP area are likely to have the skills needed for tackling international markets and may also be part of multi-national organisations (e.g. as in the case of the large environmental and engineering consultancies). 17 Low Carbon and Environmental Goods & Services (LCEGS) Report 2010/11 for the Department of Innovation and Skills (BIS): May

104 4.64 However, smaller local firms often lack the knowledge, resources and skills to tackle overseas markets, as is apparent from the business survey findings on skills needs for exporting. Support is available from the export services arm of UKTI which includes international trade advisors who provide professional advice on a range of UKTI services, including financial subsidies, export documentation, contacts in overseas markets, overseas visits, e-commerce, export training and market research. The support includes training for new and inexperienced exporters (Passport to Export) and the Gateway to Global Growth service for experienced exporters These services are delivered regionally through the UKTI Yorkshire team. A key issue in this context is knowledge and experience of the trade advisors in the international markets for the low carbon sector. There is a role for LEPs to consider how they might collaborate with UKTI and others (e.g. CO2Sense and the chambers of commerce) to ensure that trade advisors have the appropriate knowledge and skills in the priority international markets for the sector There is also scope for the LEPs to encourage the larger local companies working internationally (e.g. environmental consultancies) to bring back experiences, skills and knowledge of global markets and projects to share with the smaller local companies. Conclusions 4.67 The low carbon sector presents a significant opportunity for businesses in the LEP, and the implications for training provision will increase as new opportunities are developed. A number of training providers have begun to develop specialist training courses / centres to meet the growing need for low carbon skills While opportunities vary across Yorkshire, all four LEPs areas will benefit from the further growth in products, services and sales. There will be a need for training to support growth sectors, including the need to re-training workers from other sectors moving to take up new and in many cases better prospects in low carbon and renewable energy companies The main areas of opportunity for Sheffield City Region are summarised in the table below. Sector/Activity Embedding Low Carbon Skills Leadership Skills for Low Carbon Low Carbon Innovation Low Carbon Buildings and Green Deal Opportunity Across all sectors of the economy to reduce demand for carbon intensive energy and to increase the efficient use of other key resources such as water and raw materials. This is particularly important in SCR where a number of important sectors and high intensity uses of energy. Leadership is required both from policy makers and within businesses to promote the importance of adapting to a low carbon economy. The LEP s Low Carbon Sector Group has an important role to play in making the case for change both to the business base, and to training providers. Exploiting the opportunities for low carbon innovation requires many of the same skills required for innovation and commercialisation more generally but with an understanding of the market drivers and opportunities in the low carbon economy. The LEP has a role to facilitate information and knowledge sharing between businesses. A range of skills will be needed to deliver the Green Deal and ECO retrofit schemes and to deliver new build construction to increasingly lower carbon standards in line with building regulations and planning policies. This includes both training new entrants to the industry and updating the skills of existing construction sector employees. The LEP can bring partners together to increase intelligence 101

105 about the needs and opportunities and co-ordinate the approach across SCR. Offshore Wind: A wide range of skills will be needed over the next 10 to 12 years to develop, build, install and maintain the major offshore wind farm investments off the East Coast. There is an opportunity for SCR businesses to play a role in the supply chain of this sector. Bioenergy: This sector covers: biomass power including biomass cofiring and dedicated biomass power stations; Anaerobic digestion (AD) of organic wastes to produce electricity and heat; biomass heat production for domestic, commercial and industrial applications including district heating. Whilst not a major sector in SCR, there are nonetheless opportunities for diversification / new entrants to the market. Green Infrastructure Broad ranging group of sectors covering landscaping, green spaces, environmental conservation and trees/timber. International Perspective The global market for low carbon and environmental goods & services (LCEGS) was estimated to be worth 3.3 trillion in , a 3.7% growth on the previous year. Many of the major environmental consultancies etc have a presence in the SCR. 102

106 5 THE PROVIDER PERSPECTIVE Introduction 5.1 In March and April 2012, a telephone survey was undertaken with 105 providers (FE colleges and work based learning providers) across the Yorkshire and Humber region as part of the LEP Skills Research project. The distribution of providers across the LEP areas was relatively even, with 25 interviews being completed in the Sheffield City Region. 5.2 The survey was undertaken with one individual per organisation, with the interviewers requesting to speak to someone that had responsibility (in full or in part) for curriculum planning. Each consultation lasted for an average of around 15 minutes and covered three broad areas: The type of labour market information that providers use for curriculum planning and how highly they value it; The balance between the supply of, and demand for, skills and qualifications; Factors influencing the introduction of new provision. 5.3 Within the above were various lines of enquiry, each of which is covered in the subsections that follow. 5.4 It is recommended that this chapter be read in conjunction with the report summarising the findings from the Business Planning Process research undertaken during May and June The report adds further qualitative insight to some of the issues raised here and considers in more detail the types and formats of labour market information that providers would like to receive. Provider Profile 5.5 Of the 25 providers surveyed in the Sheffield City Region, 17 are private training providers and five are colleges (FE, specialist or residential). The sample also included an adult community learning provider and two local authorities. 5.6 The majority (80%) of the providers in the Sheffield LEP area sample employ fewer than 50 people (see table below). This reflects the prevalence of private training providers in the sample and is broadly in line with the other LEP areas (69% of the 105 providers surveyed employ fewer than 50 people). The distribution of the Sheffield LEP sample by local authority is also shown below. Size of Provider Organisations Location of respondents No of Employees No. % Sheffield 8 32% 1 to % Rotherham 7 28% 10 to % Barnsley 5 20% 50 to % Doncaster 5 20% 250 or more 4 16% Total % Not stated 5 20% Total % 5.7 The majority of the individuals consulted for the survey in the Sheffield LEP (72%) have worked at their provider for five or more years and have responsibility for: Developing and/or sourcing new provision (84%); Negotiating training packages with employers (80%); Planning the curriculum (in full or in part) (76%). 103

107 Other elements of their roles include having responsibility for higher education, piloting new training programmes and sourcing new qualifications. ` Curriculum Planning 5.8 It is clear from the survey that providers draw on multiple sources of labour market information to inform their curriculum planning decisions. Below we consider the role of this information and providers views on its quality and limitations. Spatial Dimension 5.9 Providers were asked to rank the relative importance of local, regional and national information for their curriculum planning processes. Unlike in other areas, where local information received the highest proportion of most important responses, it was split equally amongst the Sheffield providers with regional information. National information is clearly (and predictably) the least important of the three sources, as it is amongst providers in the other LEPs. Employer Intelligence 5.10 The survey gave providers a list of information sources and asked them to identify the importance of each to their curriculum planning, and particularly to their curriculum planning over the longer term (two years+). The results from the Sheffield City Region providers are shown in the chart overleaf and mirror those elsewhere in the region. The key points to note are that: Information about the types of qualifications that employers are likely to demand and information on employers current skills gaps are the most important sources; Employers skills needs over the next two years and their current recruitment needs are also important, more so than any intelligence relating to the three year+ outlook. 104

108 5.11 One of the most significant findings from the survey is that there is a very distinct contrast between the importance to providers of different types of labour market information and its perceived quality. As shown in the chart below, in no category did more than 20% of providers in the Sheffield City Region rate the information as very good, nor did the combined very good and quite good responses in any category exceed 60% Nonetheless, Sheffield City Region providers tended to be slightly more positive about the employer intelligence available to them than their counterparts across the region (and especially those in the Leeds City Region). For example, more than half of the providers in the Sheffield City Region sample consider information about employers current demand for apprentices and information about their recruitment needs to be of either good or very good quality, the findings across the region as a whole were 40% and 38% respectively. The Role of Official Data Sources 5.13 As shown in the chart below, Sector Skills Council (SSC) research, participation statistics and the National Employer Skills Survey (NESS) are the data sources with which providers in the Leeds City Region are most likely to be familiar. Knowledge of the Employer Perspectives Survey and the Annual Business Inquiry (now the Business Register and 105

109 Employment Survey) is much lower, although these are neither sector specific nor focused exclusively on the demand and supply of skills, so it is not surprising that fewer providers had a detailed knowledge of them A finding very closely linked to the above is that across all of the official data sources listed in the survey, it is SSC research, participation statistics and NESS that have the greatest influence on curriculum planning (as judged by adding together the significant influence and some influence responses see the chart below). This is generally true of providers in the other LEP areas Whilst the other data sources in the chart are relevant to curriculum planning in the Sheffield City Region, a greater proportion of providers said that these have little or no influence as said they have some influence. Other Sources of Labour Market Information 5.16 In addition to official data, the survey shows that providers use various other sources of information to support their longer term curriculum planning. As shown in the chart overleaf 19, these include ad hoc or informal conversations with employers, research undertaken by the providers themselves and other research commissioned locally The significant finding here is that the quality of the information gleaned from these less formal channels is seen to be better than the formally produced data. As highlighted through the Business Planning Process work, it is based upon smaller samples than the official data, and in many cases does not yield enough confidence in the results upon which to 19 Other in the chart includes information from Jobcentre Plus, local authorities and Chambers of Commerce. 106

110 base or change curriculum planning decisions, but its granularity is generally thought to be better. The ideal for providers is therefore to have localised information which is: On a scale that provides a sound platform for decision making; or In a format that enables them to take forward more detailed conversations with employers about the specifics of their requirements The Business Planning Process report expands upon both of the above points. Limitations in the Data 5.19 Despite the perceived importance to providers of labour market information for curriculum planning purposes, and as mentioned earlier, it is seen to have considerable limitations As shown in the table below, the most common criticisms are that: It is not sufficiently specific; There is not enough information relating to the two year+ outlook; It is out of date Against most of the categories, providers in the Sheffield City Region are slightly less critical about the labour market information than providers in other LEPs, although it is important to note the small samples at LEP level (for example, a gap of eight percentage points in the Sheffield figures actually only accounts for two providers). Even so, it is clear that the Sheffield City Region providers think there is scope for the information to better meet their needs. When asked what impact this would have, half of them said it would prompt them to consider introducing new provision and/or would cause them to consider changes to their current offer (generally small scale changes, such as increasing or decreasing the number of places on specific courses). 107