Election candidates learn and share views on the construction industry
Radisson Hotel - 5 October 2011

About half of the candidates for 2011 States of Jersey elections took up an invitation to learn about and share views on the construction industry at a special event organised by the JeCC on 5 October.

All candidates were invited to the Radisson Hotel to hear a series of panel presentations and then take part in round-table question and answer sessions.

The aim was to give the island's prospective decision-makers an overview of the industry, and to draw particular issues of concern to their attention. The sector contributes about £226 million to the Jersey economy each year and employs over 5,000 islanders so it is crucial that prospective politicians understand the issues that are facing JeCC members in the coming term of government.

Jersey Construction Council Chairman Martin Holmes oversaw the evening’s discussions which centered around three topics: the economic benefits that the industry brings to Jersey; training and apprenticeships; and proposals for affordable housing. For each area, a member of the JeCC panel gave an overview of the current situation before posing a question and giving possible solutions and points to consider.

Below is a summary of the evening's debate.

Question 1: Economic Support

JeCC Vice Chairman David Morris presented an overview of the economic situation, explaining that the construction sector is the fourth-largest industry in the island, responsible for 6% (£225m) of the island’s gross value added. Further, construction employs 5,300 people in Jersey – or 10% of the island’s workforce. However, only 40 of the 1,000-plus construction businesses employ more than 20 people.

He said that when there is a steady stream of work, the workforce can be expected to be in regular employment. But when workflows fluctuate it is difficult for business to manage staffing levels, and this forces local employees to move elsewhere. At times of peak demand, business has to employ staff from outside the island. But all the evidence shows that the work is there and projects could be brought online in a manner that would create smooth workflows - £250m of private investment could begin right now (within areas approved in the Island Plan), but is being held up by Planning bureaucracy.

Construction is a diverse and mature industry, with member companies able to take on the smallest jobs and the largest, both public and private sector. Figures for the industry in the UK show that for every £1 spent on construction, more than £2.80 is delivered for the wider economy. Capital spending is one of the most effective ways in which the government can invest to stimulate the economy and secure long-term recovery.

At £600 a week (March 2010), average earnings were just slightly below the island average

Question 1 for Candidates
How would you create an environment in which the construction industry has access to a steady stream of work?

Options
• Reduce the amount of time that the Planning process takes, enabling private projects to go ahead faster. (This would lead to increased demand and a steady stream of work).
• Invest in new building projects. (From conception to completion, this process is likely to take five years).

Candidates' Views

It was agreed that the industry did need protecting, possibly by a fiscal stimulus programme being introduced or else by a system of reinvestment from Treasury coffers. Public-private partnerships were seen as desirable, and candidates wanted to see some of the most appropriate States capital projects being brought forward now, ie. those with the best cost-benefits going out to tender with immediate effect.

There was a suggestion of introducing financial incentives for households that act in an environmentally friendly manner and tax breaks for those using renewable initiatives.

Candidates also wanted to know to what extent firms from outside Jersey were active in the island, now and in the past. They wanted to know how much stimulus from government there had been already, and how much more could be expected. Where contracts are awarded off-island, they wanted to know what effect this was having on the local industry and wider economy.

On this subject, as candidates got to grips with the complexities of employment within the sector, they wanted to see a steady stream of labour being fed through the Highlands system and out into sustained local employment.

There were concerns about 'economic leakage' with both materials and labour having to be sourced from outside the island.

Question 2: Education and training

Marc Burton is the Chairman of the JeCC's Education, Training and Professional Development Sub-Committee. He led the candidates through the debate on education and training.

He reminded guests that the industry employs around 10% of the island's workforce and informed them that in the next five years 19% of this workforce is due to retire. With them, the industry loses the experience, skills and knowledge that have been built up over a lifetime. If those individuals can't be replaced locally then there is no choice other than to find staff from outside the island. The industry’s preference is to employ islanders, he stressed.

He pointed out that the sector provides work for many non-graduate islanders, and painted a picture of the industry's important role in helping to diversify the Jersey workforce. But he stated that as an industry the sector was not yet diverse enough – only 6% of staff are female.

He spoke of employment legislation, saying that staff can only be taken on if there is sufficient work to do, and he said that the industry looks to the States to help ensure that efficient processes are in place to ease the steady flow of applications through the planning process. If the stream of work dries up, those people may join other sectors - so reducing overall diversification - or leave the island all together.

In creating long and productive careers, the JeCC is committed to investing in training its staff, and Highlands College is vital in that. Although costs are set to rise tenfold, the industry will not compromise on training. He said it was regrettable that construction is often perceived as unrewarding, unattractive and only for those who cannot get into finance careers.

That was an unfair perception of an industry that offers jobs which are intellectually – as well as physically – challenging, he said. The JeCC are committed to changing the perception.

Marc drew attention to the 10-point plan that the Jersey Construction Council has prepared for improving skills training. It includes initiatives that are aimed not only at schools, but also at adults who want a change of career.

Question 2 for Candidates

The construction industry is training islanders effectively – how will you help us to ensure they have long and rewarding careers in Jersey?

Options
• Create an environment for a steady stream of work
• Promote careers in construction in a positive light
• Support the construction industry’s ten-point development plan

Candidates' Views

The candidates fully supported the JeCC's ten-point plan, but (pre-emptively) raised the point of affordable housing saying that, once trained, staff couldn't necessarily afford to stay on in Jersey. They also acknowledged the difficulties of the employment cycle saying that it was almost impossible to maintain the correct balance among the workforce since staff couldn't be let go after a project was completed. In this respect, the candidates said that there weren't the flexibilities to react to market forces.

There was a suggestion that additional money should be put into training contracts, perhaps through an arrangement that pays below the minimum wage but that allows entrants to get on the career ladder in the first place.

The candidates were concerned about youth unemployment and suggested levying a tax on the industry to reinvest back into training. They said in this economic situation, courses should be expanded and not cut back. The role of Jersey Enterprise was mentioned and ideas for start-up programmes for business. Candidates acknowledged that other sectors enjoy access to the business incubator and perhaps that model could be introduced to construction.

There was some suggestion that although training is taking place, not all construction businesses play their part in supporting it by providing opportunities to place students. They wanted to see links to the capital projects taking place and the businesses investing in their staff. However, they acknowledged that attracting young people into the industry was a significant problem.

Candidates wanted to see a continued stimulus to ensure the training commitment. All agreed that Highlands was crucial in this sense and there was mention of Jersey providing cost-effective training packages aimed also at international students.

Pride in the industry was another popular theme and it was suggested that with proper certification and dedicated support for all trainees, any temptation to migrate into other sectors could be mitigated.

Question 3: Affordable Housing

Andy Fleet is Chairman of the Membership and Communication Sub-Committee. He explained that during the past two years, the Jersey Construction Council has played an active part in the public consultation process of the new Island Plan. It had taken part in both stages of the public consultation, he said, expressing views on the many issues that affect the construction industry. In particular, the JeCC have commented extensively on Policy H3 Affordable Housing, being strong supporters of the principle and the urgent need to supply affordable housing.

However, the JeCC is concerned with the method of providing the required amount of housing that is stated in the Island Plan. The majority of new housing is proposed in St Helier, on existing built-up areas, ie. brown field sites. All brown field sites will have an existing use value, and if a contribution for affordable housing of 12.5% (rising to 20% over five years) is applied to an existing developed site, it will not be viable and cannot be developed.

Andy explained that in all likelihood, the existing use of any given site will hold a greater value than the proposed housing development and therefore the site will not be sold. If this is the case then fewer houses will be built, not more, resulting in a shortage of supply and causing house prices to rise, on a simple supply and demand calculation.

If this happens the island will inevitably suffer from less affordable housing. The problem is that the Jersey policy is based upon the UK housing model, but in the UK low-cost land is allocated for low-cost housing.

Following the model through, it is unlikely that children born in country parishes will be able to remain living in country parishes through the supply of low-cost housing alone.

Question 3 for Candidates

The industry supports the construction of affordable housing – how would you help?

Options
• Affordable Housing could be provided on States owned assets
• Higher value assets such as JCG and South Hill could be sold and re- invested in housing.
• Disused glasshouses could be re-zoned as low cost land providing low cost housing

Candidates' Views

At the outset, there was an explanation from the former Planning Minister about this specific policy within the Island Plan, introduced this summer. He said that if the model proves not to work then after two years the States would have to look at rezoning land. He said that his priority had been to deliver the requirements of the plan without the need for rezoning. Further, he said that the figure of approx. 12.5% was not correct – but instead, that figure was a notional development value, a figure that should be negotiated from year to year and should be affordable for the industry. He said that in order to give stability to the industry, ongoing - and timely - negotiation would be vital.

Other comments from the candidates included views on public-private partnerships for States land and concerns over the ease of seeking Planning permissions, especially for older properties. They wanted to see some action on using tax policy to allow reinvestment into public ‘realm’ sites.

Candidates struggled to come up with a viable figure that defined affordable - £225/300k for market-delivery was mentioned. And within thoughts of shared equity, there was debate about how this might affect the free market. Clear political leadership was called for, and also guidance at a parish level since the Island Plan puts a lot of onus on parishes to decide their own futures. Some parishes are more capable and progressive than others.

Candidates wanted to see a model under which public-private partnerships could operate effectively:
land from the public + private build = share of the profit?
There was pressure to come up with a workable homebuyers’ scheme… and to ensure that it would be in balance with the needs of a currently fragile economy.

The Jersey Construction Council would like to thank all election candidates who attended this special event. The JeCC will follow up these important issues with the new house after the elections.