ENGINEERING CONSTRUCTION INDUSTRY TRAINING BOARD Report of the trustees and accounts for the year-ended 31 December 2016 ENGINEERING CONSTRUCTION INDUSTRY TRAINING BOARD Report of the trustees and accounts for the year-ended 31 December 2016 Presented to Parliament pursuant to Section 8(4) of the Industrial Training Act 1982 Ordered by the House of Commons to be printed 29 June 2017 HC 75 © Engineering Construction Industry Training Board copyright 2017 The text of this document (this excludes, where present, the Royal Arms and all departmental or agency logos) may be reproduced free of charge in any format or medium provided that it is reproduced accurately and not in a misleading context. The material must be acknowledged asEngineering Construction Industry Training Board copyright and the document title specified. Where third party material has been identified, permission from the respective copyright holder must be sought. Any enquiries related to this publication should be sent to us at Engineering Construction Industry Training Board, Blue Court, Church Lane, Kings Langley, Hertfordshire, WD4 8JP This publication is available at https://www.gov.uk/government/publications Print ISBN 9781474145794 Web ISBN 9781474145800 ID 26051708 07/17 Printed on paper containing 75% recycled fibre content minimum Printed in the UK by the Williams Lea Group on behalf of the Controller of Her Majesty’s Stationery Office CONTENTS Chairman’s Introduction 1 Chief Executive’s Review 2 About the ECITB 4 Performance Review 2016 6 Looking Ahead 2017 19 Financial Report 24 Results for the Year 25 Commentary on Financial Results 26 Remuneration Report 30 Governance Statement 33 The Certificate and Report of the Comptroller and 40 Auditor General to the Houses of Parliament Financial Accounts for the year ended 31 42 December 2016 Organisational Details 72 Appendices 73 CHAIRMAN’S INTRODUCTION In a year of seismic political and economic events, 2016 proved no less eventful for the ECITB and the engineering construction industry. The economic outlook remained challenging across many parts In July 2016, the government announced plans to reform technical of the industry. In the offshore oil and gas sector in particular, education in England, drawing on the recommendations of the companies continued to adapt to the ‘new normal’ of lower oil prices, Sainsbury Review. As part of this plan, the government announced with further job cuts and new exploration opportunities placed on a review into the Industrial Training Boards to report in 2017. This hold. Elsewhere, investment remained muted and although there has been a major focus of activity for the ECITB Board and Executive were some signs of optimism on the horizon, with new commitments Teams and will continue to be so in 2017. Its findings will be taken into on infrastructure and a green light on nuclear new build, the short- account in the ECITB’s strategy. term outlook at the end of the year remained difficult. As we look to the year ahead, I am conscious that we have a great In spite of the challenges facing industry, the need to train and deal to do. With the strong new mandate secured through our levy upskill the workforce remains a constant and arguably, in the face consultation, the ECITB is in an excellent position to build on its of the decision to leave the European Union, has never been more successes and continue to drive skills growth across the industry. This important. In an industry characterised by fluctuating demand and a vital work is essential to ensure that the industry builds a secure and mobile workforce, training budgets are often the first to be cut during sustainable workforce for the future. a downturn. Yet industry must also be prepared for the next upturn and without ongoing investment in people and skills, the delivery of future projects will be put at risk. Over the last 25 years, the ECITB has ensured training occurs regardless of the economic climate and remains critical to driving up skills levels across the engineering construction industry. In 2016, the ECITB responded to the challenges facing industry by Shirley Watson consulting on a new industrial training levy proposition. This received Interim Chairman significant backing from levy-payers across the industry. It was a notable achievement and real vote of confidence, demonstrating the significant value that the industry continues to place in the ECITB. 2016 also saw a number of Government policy initiatives, with major strategic implications for the ECITB. The first of these was the machinery of government changes announced in July 2016, which resulted in sponsorship of the ECITB moving from the Department of Business, Innovation and Skills to the Department for Education. This has necessitated establishing new relationships and partnerships within Government, a process which we will continue to build on during 2017. Annual Report 2016 1 CHIEF EXECUTIVE’S REVIEW 2016 saw the ECITB mark its 25th Anniversary. The fundamental The significant strength of this new mandate provided the need for the ECITB has not disappeared and over the last 25 years the foundation of the development of a new strategy for the ECITB. organisation has been a beacon of stability in an otherwise changing The new 3 year strategy, nested in a 10 year horizon, will enable the skills landscape, having consistently provided industry-focused organisation to continue to provide the existing high level service training solutions, qualifications and awards. However, we have not to industry, while also addressing skills policy initiatives from the stood still either and 2016 saw the ECITB further evolve in response English, Scottish and Welsh governments. How we will achieve this is to challenges within the engineering construction industry and the outlined in the ‘Looking Ahead’ section of this document. introduction of new Government policy initiatives. After the apprenticeship levy, the most significant skills policy New capabilities were added including a policy team and an initiative undertaken by the UK Government in 2016 was the Post-16 enhanced labour market intelligence function, which will enable the Skills Plan, published in July. The plan outlines the Government’s ECITB to more effectively capture emerging skills trends and become approach to reforming technical education in England, centred on a more valued partner with national governments and industry. We the creation of a clear, dual track system of post- 16 learning. The also undertook a thorough review of the organisation and carried overarching goals of the plan have significant implications for the out a successful restructuring exercise to reduce the headcount, future engineering construction workforce and are to be welcomed. streamline processes and save money. Furthermore, international operations were de-risked and scaled down by ending training In Scotland and Wales, the current approach to apprenticeships will provision overseas. continue, albeit with some additional initiatives. However, there are no plans to adopt the apprenticeship reforms being enacted The announcement of the apprenticeship levy in July 2015 prompted in England. The Scottish Government will continue to expand a consultation exercise with the industry on the future of the its modern apprenticeship programme, as well as foundation industrial training levy which was concluded in October 2016. An apprenticeships, which are targeted at school pupils, and higher level overwhelming majority of levy payers confirmed their support for the graduate apprenticeships. A new Science, Technology, Engineering ECITB. Overall, support grew by 10% from the previous consultation and Mathematics (STEM) strategy for Scotland has also been with 78% (2014: 68%) of levy payers, representing 87% (2014: published for consultation. 76%) of the aggregate levy, confirming their support for the ECITB. The breadth of support within the industry also increased, with Despite the ongoing challenges facing parts of the industry, the companies from across the industry backing the proposals, including provision and cultivation of high-quality technical skills remain those in the nuclear, subsea and renewables sectors, as well as the a necessity. Indeed, without appropriately trained workers, the traditional ECI sectors. industry would be unable to operate. While new projects are on hold in some sectors, it is important that companies continue to invest in developing a pipeline of skilled workers to ensure they are ‘delivery build, which we know has enormous potential for the UK economy, ready’. It will also be important to ensure any changes that affect skills and jobs. With budgets remaining tight, it becomes ever more the engineering construction industry are coherent across England, important to invest in people to ensure that we have the right skills Scotland and Wales. and people when a more sustained recovery begins. As part of the Post-16 Skills Plan the Government announced a Our priorities for 2017 are clear and outlined in the ‘Looking Ahead’ review of the Industrial Training Boards to explore ways in which section in this year’s Trustees Report. We will continue to engage both ITBs can further drive up skills and productivity in their closely with Government to ensure the needs of the engineering respective industries. It will make recommendations to Government construction industry are reflected in policy making and it will be to take effect following the current levy period. A call for evidence equally important that we can meet the government’s aspirations is scheduled to be published in early 2017 inviting feedback from for skills in the industry. Establishing a successful labour market and interested stakeholders, with the final report expected a few technology intelligence function will provide valuable input into months later. The focus of the review to date has been mainly on the future plans and industry forums. construction industry and it is likely the report will be predominantly for the CITB. The ECITB policy team will remain closely involved with the review until it is complete. Engineering construction is a highly skilled industry which supports the nation’s critical infrastructure. Throughout 2016, I was privileged to meet many of our in-scope employers across a wide range of sectors, with learners, stakeholders in Government and training Chris Claydon providers. It is clear that we must continue to attract and retain Chief Executive talent, despite often difficult trading conditions. Our graduate retention and pre-apprentice programmes made a significant contribution to supporting young entrants into the industry this year and are set to continue in 2017. 2016 was difficult for the engineering construction industry in many of our sectors, with the sharp drop in new apprenticeship starts providing stark evidence of the challenges faced by many companies. The outlook for 2017 looks a little better, particularly for nuclear new ABOUT THE ECITB Our mission: Delivering engineering construction excellence through leadership on skills. 4 ECITB Established in 1991 the ECITB was formed in recognition of the engineering construction industry’s vital role in the UK economy, and the requirement for a statutory body to meet the special training needs of the industry: an industry that is characterised by a highly mobile labour force and where there are few incentives for individual employers to train. The engineering construction industry (ECI) delivers and maintains the nation’s critical energy infrastructure, including in the oil and gas, nuclear and renewables sectors, alongside major process industries, such as chemicals, pharmaceuticals, food processing, water and waste treatment. The ECITB is the skills, standards and qualifications body with statutory responsibility for the development of the engineering construction workforce in Great Britain. It works closely with employers and governments to attract, develop and qualify engineering construction personnel in a wide range of craft, technical and professional skills and disciplines. The ECITB’s vision is to be the leading industry authority on engineering construction skills, working in partnership with business and government to deliver a highly skilled workforce, offering value by enabling industry to compete globally. This means constantly evaluating and improving our focus, our operations, our relationships and our governance Charitable Activities The ECITB is a registered charity in England (Registered Charity No. 264506), with four main areas of activity, focused on facilitating employment, skills development and training for the industry. APPRENTICESHIPS & CAREERS TECHNICAL PROGRAMMES • Meeting national economic needs for skills. • Ensuring skills are retained and utilised. • Supporting the next generation of apprentices. • Flexible training programmes. • Industry relevant apprenticeships. • Upskilling and reskilling existing employees. • Quality assured training. MANAGEMENT & PROFESSIONAL AWARDS & QUALIFICATIONS • Developing tomorrow’s managers. • Guaranteeing quality in the system. • Comprehensive range of technical, supervisory and • Setting standards, assuring competence, developing managerial training. VQs and accrediting and assuring training providers and • Continuous professional development. assessment. • The ECITB is the industry Awarding Body. Annual Report 2016 5