maximising employment and skills in the offshore … employment and skills in the offshore wind...

Maximising employment and skills in the offshore wind supply chain

Evidence Report 34August 2011

Volume 1 – Main report

Header title here…

Maximising employment and skills in the offshore wind supply chain Volume 1 – Main report

Scott Dickinson, Jonathan Cook, Jean Welstead, Grendon Thompson, Alasdair Yuille

SQW

Katherine Chapman

Policy Analyst

UK Commission for Employment and Skills

August 2011

Foreword

The UK Commission for Employment and Skills is a social partnership, led by

Commissioners from large and small employers, trade unions and the voluntary sector. Our

mission is to raise skill levels to help drive enterprise, create more and better jobs and

promote economic growth. Our strategic objectives are to:

• Provide outstanding labour market intelligence which helps businesses and people make

the best choices for them;

• Work with businesses to develop the best market solutions which leverage greater

investment in skills;

• Maximise the impact of employment and skills policies and employer behaviour to

support jobs and growth and secure an internationally competitive skills base.

These strategic objectives are supported by a research programme that provides a robust

evidence base for our insights and actions and which draws on good practice and the most

innovative thinking. The research programme is underpinned by a number of core principles

including the importance of: ensuring ‘relevance’ to our most pressing strategic priorities;

‘salience’ and effectively translating and sharing the key insights we find; international benchmarking and drawing insights from good practice abroad; high quality analysis

which is leading edge, robust and action orientated; being responsive to immediate needs

as well as taking a longer term perspective. We also work closely with key partners to

ensure a co-ordinated approach to research.

In November 2010, the UK Commission appointed SQW to carry out research into the

employment and skills opportunities associated with the offshore wind energy sector and its

supply chain. The assignment was linked to the UK Commission’s research programme to

assist its work to reduce skills gaps and shortages; increase opportunities to boost skills and

productivity; and improve learning supply. The project linked, in particular, to UK

Commission-sponsored research into rebalancing the UK economy. This study tested the

sector-specific approach to understanding the opportunities and issues associated with an

emerging sector, and its contribution to rebalancing the economy. It identified issues

associated with maximising the employment and skills opportunities in the offshore wind

supply chain and implications for actions to address these issues for government, employers

and training providers.

Sharing the findings of our research and engaging with our audience is important to further

develop the evidence on which we base our work. Evidence Reports are our chief means of

reporting our detailed analytical work. Each Evidence Report is accompanied by an

executive summary. All of our outputs can be accessed on the UK Commission’s website at

www.ukces.org.uk.

But these outputs are only the beginning of the process and we will be continually looking for

mechanisms to share our findings, debate the issues they raise and extend their reach and

impact.

We hope you find this report useful and informative. If you would like to provide any

feedback or comments, or have any queries please e-mail [email protected]

, quoting the

report title or series number.

Lesley Giles Deputy Director UK Commission for Employment and Skills

Table of Contents

Executive Summary .............................................................................................. i Introduction ............................................................................................................................ i

Public policy environment .................................................................................................... i

State of the offshore wind energy sector ........................................................................... ii

Factors affecting the growth in employment and skills in the offshore wind energy sector ........................................................................................................................ iv

Locating the potential for growth ........................................................................................ v

Implications for action ......................................................................................................... vi

Potential actions for government ...................................................................................... vii

Potential actions for employers and training providers ................................................. vii

Potential actions for sub-regional partnerships ............................................................. viii

1 Introduction .................................................................................................. 1

1.1 Research ................................................................................................................... 1

1.1.1 Aims of the research ............................................................................................... 1

1.1.2 Approach to the research ....................................................................................... 2

1.2 Structure of the report ............................................................................................. 2

2 Public policy background ........................................................................... 4

Chapter Summary ................................................................................................................. 4

2.1 Introduction .............................................................................................................. 5

2.2 The European policy dimension ............................................................................ 5

2.3 UK economic context .............................................................................................. 8

2.3.1 Rebalancing the UK economy ................................................................................ 8

2.3.2 Role of the state in times of economic austerity .................................................. 9

2.4 UK energy policy...................................................................................................... 9

2.5 National skills strategies ....................................................................................... 11

2.6 National strategies for green jobs and green skills ........................................... 13

2.6.1 Best market solutions ........................................................................................... 14

2.7 Local and regional economic development ........................................................ 15

2.8 Conclusions ........................................................................................................... 18

3 Structure and scale of the offshore wind energy supply chain ............. 21

Chapter Summary ............................................................................................................... 21

3.1 Introduction ............................................................................................................ 22

3.2 Key features of the development of the offshore wind energy sector ............. 22

3.2.1 Initial development ................................................................................................ 22


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3.3 Stages of development and associated occupations ........................................ 24

3.4 Current scale of employment ............................................................................... 27

3.4.1 Potential development paths ................................................................................ 28

3.5 Factors limiting the growth ................................................................................... 29

3.6 Employment projections by stage of development ........................................... 32

3.7 Conclusions ........................................................................................................... 34

4 Issues on skills, labour and training ........................................................ 35

Chapter Summary ............................................................................................................... 35

4.1 Introduction ............................................................................................................ 36

4.2 Skills shortages and skills gaps .......................................................................... 36

4.2.1 Current evidence on skills shortages and skills gaps ....................................... 36

4.2.2 Causes of skills issues ......................................................................................... 38

4.2.3 Future developments exacerbating skills issues ............................................... 39

4.3 Importance of timing ............................................................................................. 40

4.4 Supply of labour ..................................................................................................... 44

4.4.1 Short-term solutions: Experienced staff from other sectors ........................... 45

4.4.1.1 Opportunities and challenges in attracting experienced workers ................... 48

4.4.2 Short-term solution: International labour ........................................................... 49

4.4.3 Medium-term solution: Apprentices .................................................................... 49

4.5 Education and training provision ......................................................................... 51

4.5.1 How have training providers been responding to the sector’s needs? ........... 51

4.5.2 How has the sector responded so far? ............................................................... 56

4.6 How has the supply chain overall responded to the skills challenge? ............ 59

4.7 Conclusions ........................................................................................................... 59

5 Mapping employment and skills opportunities linked to offshore wind energy generation...................................................................... 62

Chapter Summary ............................................................................................................... 62

5.1 Introduction ............................................................................................................ 63

5.2 Factors affecting the location of employment .................................................... 63

5.2.1 Location of wind farms ......................................................................................... 63

5.2.2 Port locations ......................................................................................................... 64

5.2.3 Transport costs ...................................................................................................... 65

5.2.4 Existing expertise .................................................................................................. 65

5.3 Quantitative evidence on current employment .................................................. 66

5.4 Key issues to draw out for policy makers, local economic development and training provision ................................................................................. 73


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6 Findings and implications for action ....................................................... 74

6.1 Non-skills issues facing the sector and potential responses ........................... 74

6.2 Issues affecting skills and labour supply ........................................................... 76

6.2.1 Occupations and skills where shortages are expected ..................................... 76

6.2.2 Factors affecting the supply of skills to the sector ............................................ 77

6.2.3 Bottlenecks on workforce planning and training ............................................... 78

6.3 Options for action on skills, the workforce and training ................................... 79

6.3.1 Potential actions for government ......................................................................... 80

6.3.2 Potential actions for employers and training providers .................................... 81

6.3.3 Potential actions for sub-regional partnerships ................................................. 82

6.4 Contribution to rebalancing the economy .......................................................... 95

6.5 Implications for other emerging sectors ............................................................. 96

6.6 Further research implications .............................................................................. 97

Bibliography ....................................................................................................... 99

Appendix A: Research and methodological issues ...................................... 105

Appendix B: List of consultees ...................................................................... 110


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Table of Graphs and Charts Figure 3.1 Potential offshore wind farm developments .......................................................... 23

Table 3.1 Occupation and skill level within each stage of the offshore wind farm supply chain ........................................................................................................................... 25

Table 3.2 Demand for skills in offshore wind in 2020 ............................................................ 33

Table 3.3 Demand for skills in offshore wind in 2020 ............................................................ 34

Figure 4.1: Employment growth under low scenario ............................................................... 41

Figure 4.2: Employment growth under medium scenario........................................................ 41

Figure 4.3: Employment growth under high scenario .............................................................. 42

Table 4.1: Top up training for offshore wind ........................................................................... 45

Table 5.1: Port locations with potential for Round 3 and beyond ......................................... 64

Figure 5.1: Number of employees working in Design and Manufacture sectors in UK district authorities in 2008 ....................................................................................... 68

Figure 5.2: Number of employees working in Construction and Installation sectors in UK district authorities in 2008 ....................................................................................... 69

Figure 5.3: Number of employees working in Operation and Maintenance sectors in UK district authorities in 2008 ....................................................................................... 70

Figure 5.4: Number of employees working in Planning, Development and Other Services sectors in UK district authorities in 2008 ............................................................... 71

Figure 5.5: Densities of businesses supplying or with the potential to supply the offshore wind sector in the North of England ....................................................................... 72

Table 6.1 Summary of skills issues, potential responses and evidence need for and support for action .................................................................................................................... 83

Table A.1 Definitions used for mapping ................................................................................ 107

Table B.1 Consultees ............................................................................................................... 110

Table B.2 Workshop participants ........................................................................................... 110


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Executive Summary

Introduction

The offshore wind energy sector has been identified as having the potential for

employment growth in the next decade. This study is intended to explore the extent and

nature of that employment growth and implications for government, employers and other

stakeholders in light of current spending and policy priorities. In particular the research

explores the role that skills demand and supply may play in helping the sector achieve its

full potential; and the lessons for other emerging sectors that might help to rebalance the

UK economy1

• risks to making the most of the employment opportunities afforded by offshore wind

energy generation; and

. The study’s aims were to identify:

• responses to those risks and potential actions that could be taken by government,

industry, firms, individuals and providers of education and training to make the most

of the offshore wind energy sector’s employment and skills potential.

The first phase of the research comprised a wide-ranging literature review on the public

policy environment and the offshore wind energy sector, including previous research on

employment forecasts, and a series of bilateral consultations with employers, training

providers and other stakeholders in the sector. The findings of this initial phase were

analysed and synthesised for calibration at two policy-workshops, which were also used

to discuss potential actions on skills issues. Two in-depth supply chain case studies were

conducted on existing offshore wind farms to draw out learning, practice and

observations for the future. In preparing the final report, the study also drew on the latest

employment forecasts for the sector.

Public policy environment

The review of the public policy environment identified factors influencing the UK offshore

wind energy industry and their implications for public policy on employment and skills in

the sector. The key findings were as follows:

• The UK is moving from a carbon intensive to low carbon economy. The UK

government is also seeking to rebalance employment from the public to the private

sector, as well as to rebalance the economy spatially and sectorally. These policy

objectives may impact on the development of the offshore wind energy sector. 1 This project links to another UK Commission project ‘Rebalancing the economy sectorally and spatially’ given its focus on understanding the employment and skills potential of a sector that is expected to grow, with a supply chain that is often associated with ‘peripheral areas’ and lagging regions. See Pringle et al, (2011) for the report on ‘Rebalancing the economy sectorally and spatially’.


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• Work undertaken on the ‘green economy’ in the European context indicates that the

responses to these challenges are likely to include efforts to ‘top-up’ (a) ‘generic skills’

e.g. leadership, communication, team working, project management; (b) ‘generic

green skills’ e.g. resource efficiency; and (c) ‘specialist green skills’, as part of efforts

to enable workers to make an effective transfer to the renewables sector. In the case

of offshore wind energy specifically, many of the skills required are traditional power

generation skills, e.g. those associated with electrical, mechanical and civil

engineering, and design.

• Public sector and/or coordinated industry-level intervention may be required in order

to ensure: (a) labour markets respond effectively to changes in the scale and nature

of demand, so that ‘bottlenecks’ in the development of the sector can be avoided; and

(b) in the context of greening and rebalancing the economy, geographical areas

losing jobs are able to attract new ones and equip residents to take new employment

opportunities.

• Governments and regulators are major factors in determining the scale and pace of

changes in the electricity generation market. In theory this gives rise to the possibility

of coordinating different public sector policies so that labour market polices

complement wider environmental, regulatory and industrial policies. However, there

is a risk of state or institutional failure to coordinate activity effectively that has to be

recognised and managed.

• Arrangements for the delivery of education, training and economic development in

England are in a state of flux, posing challenges and opportunities for the offshore

wind energy sector. The key challenge is to ensure opportunities offered by the sector

are visible, legible, accessible and affordable to those wishing to move into the sector.

The opportunity for the sector is to seek to influence changes in arrangements.

State of the offshore wind energy sector

In reviewing the state of the offshore wind energy sector, the study found a number of

important issues associated with its development so far, its current nature and its future

prospects. The key messages were as follows:

• The UK offshore wind energy sector is a nascent sector and a ‘follower’ in

international terms. The Crown Estate’s Round 3 licensing arrangements have

brought a ‘step change’ in the sector’s development2

2 To date the development of offshore wind farms in the UK has come from three rounds of licensing by the Crown Estate, plus the licensing of rights by the Scottish Government. Rounds 1 and 2 provided for around 8GW of generating capacity. In January 2010, the Crown Estate announced the successful bidders for each of nine Round 3 offshore wind zones within UK waters. Round 3 offered the potential for an additional 32GW generating capacity. The new offshore wind farms were expected to come on stream around 2015. The Crown Estate is an independent organisation, which manages the property

. There are different views of


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how the sector might develop over time in terms of the pace and scale of its

development and the structure that the sector may take.

• There are also different views with regard to the likely nature of employment and

careers in the sector. Some anticipate ‘contract work’ to account for much of the

sector’s employment, in line with the offshore oil and gas industry, and others

anticipate a majority of permanent staff. This has consequences for potential career

paths, and approaches to recruitment and training.

• A recent study of the sector sponsored by RenewableUK and Energy & Utility Skills

(the Sector Skills Council which includes power within its sector footprint) estimated

that employment in the offshore wind energy sector had quadrupled between 2007

and 2010 to stand at around 3,100 full-time equivalent jobs.

• There are a number of studies forecasting employment needs for the sector and for

each link in the supply chain. The forecasts depend on a number of assumptions,

such as share of manufacturing carried out in the UK and the likely scale of exports.

The most recent forecasts indicate that the lower end expectations are for the sector

to directly employ around 12,000 jobs by 2020 and at the higher end the sector is

expected to directly employ over 40,000 jobs (including indirect jobs, the range is from

around 19,000 jobs to nearly 70,000 jobs). A series of recent announcements by

major international players in the sector to locate manufacturing in the UK are

encouraging.

• The sector is often studied in terms of the different phases of development: Planning

and Development; Design and Manufacture; Construction and Installation; and

Operation and Maintenance; plus associated Services, such as legal and financial

expertise. Each phase has its own occupation and skill needs, which face different

pressures in terms of competing demands for skills and the scale and timing of

demand for labour. Therefore, it is important to remember that different elements of

the supply chain will experience different pressures at different times and will respond

in different ways.

• A number of Sector Skills Councils are relevant to offshore wind energy, reflecting the

multifaceted nature of the sector, drawing as it does on manufacturing, mechanical,

electrical, design, construction and maritime skills. This means that any public sector

intervention or coordinated action needs to take account of interactions with a number

of other sectors.

portfolio owned by the Crown, The estate includes extensive marine assets across the UK. Given its ownership of marine assets, The Crown Estate is a key player in the offshore wind energy sector. In effect, it is the landowner for many offshore wind farms in UK waters.


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Factors affecting the growth in employment and skills in the offshore wind energy sector

The study looked at the factors affecting the growth of employment in the sector and the

factors affecting the supply of skills including responses of employers and training

providers to date. The key findings were as follows:

• Round 2 wind farms (the second round of commercial offshore wind farms announced

by the Crown Estate) were not associated with significant skills issues except for

some specialist roles. Skills issues were anticipated by employers as part of Round 3

development and deployment (the third round of commercial offshore wind farms

announced by the Crown Estate) including: planners, Environmental Impact

Assessment specialists, engineers, cable jointers, wind turbine technicians and

project managers.

• A concern in relation to general ‘skills in the offshore context’ was identified, such

as health and safety and survival skills.

• The lack of ‘sector attractiveness’ (shared with engineering and manufacturing),

competition with other sectors (e.g. offshore oil and gas) for similar skills and

difficulties coordinating skills and training needs across the supply chain were cited as

potential causes of concern.

• Shortages of labour for some roles in the supply chain were reported, in particular

those relating to the Planning and Development stage. ‘Pinch points’ were identified

as likely when the sector starts to scale up activity further from 2013 onwards, when

other sectors, for example nuclear, are also expected to grow. Furthermore, there

were significant concerns from employers over the capacity of the sector to cope with the high absorption rates implied by the scale of growth that is anticipated.

• In the short term, the supply of labour to meet future demand is likely to come from

other sectors, including offshore oil and gas, automotive and aerospace, and the

military; although there are challenges in attracting experienced workers such as

higher wages and benefits in other sectors. Alternatively labour may be sourced

internationally. In the medium term apprenticeships were cited as a key source of

skilled labour.

• The research reviewed the responses to skills issues of training providers and firms in

the sector’s supply chain. It found examples of firm-level initiatives, and industry and education provider collaboration to meet skill needs. These mostly arose as a

result of direct interaction between employers and providers, often building on existing

relationships. For example, a new consortium of employers and training providers

formed in response to the opportunities associated with the London Array that builds


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on previous partnership working between education providers and offshore wind farm

owners. There was evidence of difficulties in planning and investing in training

initiatives given the embryonic nature of the sector and its fragmented supply chain.

• There was reluctance amongst some consultees to ask for further public intervention

on skills issues, arguing that what was most required from the state was greater

certainty for the industry’s regulatory framework. However, others expressed a desire

for some central coordination of the industry’s activity with regard to employment and

skills and thought governments were best placed to provide the necessary leadership.

Locating the potential for growth

The study used a number of sources to map locations with potential for employment

growth, and to identify where possible the limitations to, and opportunities for, maximising

employment in those areas. Key findings were as follows:

• Several factors influence the location of employment opportunities in the offshore

wind energy sector, including proximity to Round 3 zones, port infrastructure and

access to key suppliers.

• Proximity to Round 3 zones may well contribute to some local employment

opportunities, but alone it is unlikely to lead to substantial local employment growth. A

supportive environment is vital for the exploitation of opportunities. A supportive

environment may include investment in appropriate physical infrastructure (such as

port and other facilities), availability of existing skills in the workforce, access to

research and technological expertise and an existing relevant business base.

• The working patterns and arrangements for Round 3 wind farms, which will be a long

way from the coast, may limit the potential for local employment as operation and

maintenance staff are located on offshore rigs.

• A number of locations likely to see employment growth associated with the offshore

wind energy sector in the UK have been identified using quantitative mapping work,

based on existing concentrations of activity within the supply chain or within related

sectors and sub-sectors. The areas include: the east coast of Scotland, the Glasgow-

Edinburgh belt, the North of England (notably around Leeds, Sheffield, Manchester,

Hull and Humber, Cumbria and parts of the North East), the Midlands (especially

around Birmingham) and the South West and South Wales (in particular around

Bristol). There are also other pockets of activity, for example in East Anglia and the

South of England associated with wind farms such as the London Array.


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• This suggests that there may be some clustering of activity, but one or two locations

are unlikely to come to dominate employment in the sector’s supply chain as it relies

on existing patterns of business location. The locations identified through the mapping

work align with policy objectives to rebalance the economy spatially (i.e. away from

reliance on London and the South East) as many of the concentrations of activity are

outside the South East of England, although the scale of jobs that may be created in

offshore wind represent only a very small contribution to spatial rebalancing.

• In order to support the sector’s development (and spatial rebalancing), there are

potential implications from the analysis for national and sub-national policy-making,

local economic development and training provision. In particular, there may be

arguments for creating or developing physical and soft infrastructure that can support

employment growth in key clusters. This may include port facilities and supply chain

initiatives that lie beyond the scope of this study.

Implications for action

Drawing on all the evidence gathered, suggestions for action to help maximise

employment and skills opportunities in the offshore wind sector have been developed.

These suggestions were developed in response to the following tests:

• Is there a case for government spending or intervention e.g. due to a ‘market failure’?

• Is there a role for non-government actors and local or sub-national bodies, e.g. in

undertaking activity to meet national or sub-national labour market needs?

• Is there potential for government support to encourage or enhance market and

voluntary activity, e.g. links between employers and training providers, which would

become sustainable once the approach had been tested?

The tests were informed by the stated spending and policy priorities of the UK

government and devolved administrations and the institutional capacity at national and

sub-national levels to lead employment and skills initiatives and promote sector

development. Based on this approach, a number of actions were identified for

government (in this context UK governments and national government agencies);

employers and training providers; and, over time, sub-regional partnerships, such as

Local Enterprise Partnerships (LEPs).


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Potential actions for government

Two actions were highlighted for government, and a third where intervention could

enhance the actions of others:

• First, there was broad consensus on the need for government action to create certainty for the sector in relation to regulation, pricing and planning arrangements (potentially including support for physical infrastructure), which would

facilitate skills and workforce planning in the sector.

• The second specific government action highlighted by consultees was to enable flexibilities in the funding for apprenticeships, for example flexibility to allow small

firms in the supply chain to ‘share’ apprentices (apprentices would not have a named

employer at the start of the scheme, as normally required). This could potentially

increase the absorptive capacity of the sector by working with small firms, rather than

relying mainly on large employers.

• There was also some evidence to suggest that, given uncertainties over the sector’s

growth path (due in part to uncertainty over industry regulation and the planning

system), there may be a case for government support to scale-up industry-led skills development initiatives. This would signal government support for the sector

in the long term and assist in addressing barriers to employment and skills growth in

the short term. In practice, the most cost effective means of providing such short-term

support are contestable ‘challenge funds’ (e.g. Growth and Innovation Fund), where

employers and training providers have to demonstrate the additional impact

government support could provide, relative to what they would achieve on their own.

The extent to which governments may decide to intervene is likely to vary between the

four nations. The Scottish Government, for instance, is particularly committed to

renewable energy as a sector of economic growth, and has earmarked funds to be

invested in physical infrastructure (such as ports) and may be keen to enhance the

actions of industry-led initiatives working with development agencies (e.g. Scottish

Enterprise, Highlands and Islands Enterprise and Skills Development Scotland).

Potential actions for employers and training providers

The consultations and workshops highlighted areas for action by employers, employer

bodies, and education and training providers, sometimes in partnership. In some cases,

these built on existing initiatives or examples of good practice that could be shared. Key

actions for this group include:


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• The development of employer networks to share information, and/or operate ‘peer

reviews’ of employment and skills practices to generate a culture of learning and

investment in workforce development in the sector that may contribute to the

development of ‘high performance workplaces’.

• Greater coordination between employers and external training providers to

address a range of key issues, including providing timely labour market information (in

conjunction with sector bodies) to facilitate the development of course packages, the

use of external training providers to ease issues over absorptive capacity and lack of

capacity to deliver in-house training, and the investment in shared training facilities.

• Coordination between education and training providers in order to enable them to

specialise in certain aspects of a learning programme and therefore share the costs of

provision.

• Minimum professional standards developed on a voluntary basis (through

employers and employer bodies) or through formal licensing schemes that mean

providers keep down course development costs and individual members of staff avoid

repeating similar courses.

• Continuation (and scaling up as required) of existing initiatives on sector attractiveness, both generally and that target particular groups (e.g. ex-forces

personnel).

Potential actions for sub-regional partnerships

Finally, the potential role of sub-regional partnerships, such as LEPs in England, was

raised during the course of the study. The responsibilities, resources and capacity of

each LEP will vary from partnership to partnership, and those LEPs where the offshore

wind energy sector is prevalent could help to establish, bottom-up, local initiatives to help

maximise employment and skills in their areas. Potential actions may be in relation to:

promoting the sector as a source of employment; encouraging supply chain development

(possibly in conjunction with other LEPs); attracting inward investment (e.g. through

enterprise zones), and making the case to central government for funding for

infrastructure and/or employer-led initiatives (e.g. via the Regional Growth Fund in

England).


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1 Introduction This report, Maximising employment and skills in the offshore wind energy supply chain,

is one of a number commissioned by the UK Commission for Employment and Skills (UK

Commission)3

This report has a particular link to another UK Commission study on rebalancing the

economy (Pringle et al., 2011), given its focus on understanding the employment and

skills potential of a sector that is expected to grow, with a supply chain that includes high

value design, manufacturing, construction, installation and operation and maintenance;

which is often associated with ‘peripheral areas’ and lagging regions; and to date has

relied on the import of manufactured products.

. The study explores the extent and nature of employment growth in the

offshore wind energy sector and implications for government, employers and other

stakeholders in light of current spending and policy priorities.

1.1 Research

The research topic was selected on the basis of the sector’s strategic importance to the

UK economy and its employment and skills potential.

The offshore wind energy sector is strategically important to the UK’s response to man-

made climate change; long-term energy security; and efforts to ‘rebalance’ the economy.

An employment and skills system that works efficiently and effectively is essential if the

economic, environmental and employment potential in the offshore wind energy sector is

to be realised at national, regional and local levels.

It was also considered that the offshore wind energy sector could be used as a case

study to understand the role of skills in the supply chain dynamic and that there might be

lessons that could be transferable to other nascent sectors.

1.1.1 Aims of the research

The study’s aims were to identify:

• risks to making the most of the employment opportunities afforded by offshore wind

energy generation; and

3 Other commissions cover human capital reporting; skills and the transition from benefits to jobs with progression; rebalancing the economy; stimulating demand for intermediate level skills amongst employers; high performing workplaces; creating high level jobs; and development of intermediate skills and apprenticeships.


2

• responses to those risks with regard to actions that could be taken by government,

industry, firms, individuals and providers of education and training to make the most

of the offshore wind energy sector’s employment and skills potential.

In meeting the aims of the study, narrative was provided around the current and potential

locations for employment in the offshore wind energy sector and its supply chain, to

highlight implications for action at sub-national level (e.g. for newly formed Local

Enterprise Partnerships). In addition, transferable lessons for other sectors were drawn

out.

1.1.2 Approach to the research

The research adopted a mix of methods (see Appendix A) including:

• literature reviews covering methodological issues associated with defining the sector

and its supply chain; public policy on the development of offshore wind energy;

employment estimates and forecasts for the offshore wind energy sector; and lessons

from other sectors, e.g. in the development of offshore oil and gas industry and the

construction sector;

• 20 scoping consultations with representatives from industry and skills bodies,

individual businesses and training providers, academics, policy makers, and

commentators on the industry;

• two policy workshops (one in Edinburgh and one in London) to test findings and

discuss implications for action by government and other stakeholders;

• two in-depth supply chain case studies to understand how firms and training providers

indentify and respond to changes in the demand for and supply of skills; and

• desk-based analysis, including a review of employment forecasts and mapping of

activity in the offshore wind energy supply chain.

1.2 Structure of the report

The report has the following chapters:

• Chapter 2: Public policy background summarises some of the key economic and

policy variables affecting the offshore wind energy sector and their implications for

public policy on employment in the sector.


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• Chapter 3: Structure and scale of the offshore wind energy supply chain

provides a profile of the offshore wind energy sector, the issues it is facing, along with

a summary of current and potential levels of employment in different parts of the

supply chain.

• Chapter 4: Issues on skills, labour and training looks at skill shortage areas; the

possible timings of potential increases in demand for different types of skills and

occupations; short term and long term responses to the supply of skilled workers; and

the responses of education and training providers, with a focus on short term issues

and responses.

• Chapter 5: Mapping employment and skills opportunities linked to offshore wind energy generation describes factors affecting spatial patterns in the supply

chain for offshore wind energy, based on evidence of current and potential

employment needs and consultations; and looks at some of the challenges these

factors and patterns pose for local economic development.

• Chapter 6: Findings and implications for action summarises the main findings

from the research and outlines potential actions for government, employers in the

offshore wind energy sector, education and training providers, sub-regional

partnerships and individuals. This final chapter sets out the implications on how the

offshore wind energy sector can contribute to rebalancing the UK economy, as well as

implications for skills policy and practice in other emerging sectors.


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2 Public policy background

Chapter Summary • The UK is moving from a carbon intensive to low carbon economy. The UK

government is also seeking to rebalance employment from the public to the private

sector, as well as to rebalance the economy spatially and sectorally. These policy

objectives may impact on the development of the offshore wind energy sector.

• Work undertaken on the ‘green economy’ in the European context indicates that the

responses to these challenges are likely to include efforts to ‘top-up’ (a) ‘generic skills’

e.g. leadership, communication, team working, project management; (b) ‘generic

green skills’ e.g. resource efficiency; and (c) ‘specialist green skills’, as part of efforts

to enable workers to make an effective transfer to the renewables sector. In the case

of offshore wind energy specifically, many of the skills required are traditional power

generation skills, e.g. those associated with electrical, mechanical and civil

engineering, and design.

• Public sector and/or coordinated industry-level intervention may be required in order

to ensure (a) labour markets respond effectively to changes in the scale and nature of

demand, so that ‘bottlenecks’ in the development of the sector can be avoided; and

(b) areas losing jobs, as part of the greening and rebalancing of the economy are able

to attract new ones and equip residents to take new employment opportunities.

• Governments and regulators are major factors in determining the scale and pace of

changes in the electricity generation market, in theory this gives rise to the possibility

of coordinating different public sector policies, e.g. so that labour market polices

complement wider environmental, regulatory and industrial policies. However, there is

a risk of state or institutional failure to coordinate activity effectively that has to be

recognised and managed.

• Arrangements for the delivery of education, training and economic development in

England are in a state of flux, posing challenges and opportunities for the offshore

wind energy sector. The key challenge is to ensure opportunities offered by the sector

are visible, legible, accessible and affordable to those wishing to move into the sector.

The opportunity is that the sector may be able to influence changes.


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2.1 Introduction

A number of public policies affect the scale and pace of the sector’s development, and

the responsiveness of education and skills providers to increased demand for different

types of skills. To provide the background context which informed this research, this

chapter looks in turn at:

• The European policy dimension – providing a wider international context to policy

issues and policy responses to labour market challenges in the renewables sector;

• The UK’s economic context – setting out the wider national economic context of

which the offshore wind energy sector is part;

• UK energy policy – underlining the importance of regulation and government policy

for the development of the sector;

• National skills framework and strategy – looking at new approaches to the labour

market and the options for public policy in the short term; and

• Regional and local economic development – summarising the different institutional

architectures in the UK and the challenges they face in promoting the development of

offshore wind energy and/or ensuring labour markets respond effectively to the

opportunities that arise from the sector’s growth.

2.2 The European policy dimension

UK energy markets and many elements of their associated labour markets operate within

an EU context. Therefore an understanding of this context is critical as UK policy does

not operate in a vacuum. Part of the EU’s response to the economic crisis that started in

2007 was the Europe 2020 Strategy (European Commission, 2011). Europe 2020

promoted smart, sustainable and inclusive economic growth. The EU made a series of

commitments with regard to achieving sustainable economic growth:

• reduce greenhouse gas emissions by 20 per cent, compared to 1990 levels, by

2020;4

• increase the share of renewables in final energy consumption to 20 per cent; and

• move towards a 20 per cent increase in energy efficiency.5

Europe 2020 also set out the implications of seeking sustainable economic growth as:

• building a competitive low-carbon economy that makes efficient, sustainable use of

resources; 4 The EU is prepared to reduce emissions by 30 per cent if other developed countries make similar commitments and developing countries contribute according to their abilities, as part of a comprehensive global agreement. 5 As above.


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• protecting the environment and preventing biodiversity loss;

• capitalising on Europe's leadership in developing new green technologies and

production methods;

• introducing efficient, smart electricity grids;

• harnessing EU-scale networks to give businesses (especially small manufacturing

firms) an additional competitive advantage; and

• helping consumers make well-informed green choices.

Given these ambitions and responses, the European Centre for the Development of

Vocational Training looked at the skills implications of ‘green jobs’ (CEDEFOP, 2010). Its

report highlighted the competition for skilled workers across the EU and the need for

coordinated action in order to prepare for this competition. It said:

…as governments and industry increase efforts to take advantage of the economic opportunities provided by the low-carbon economy, the need to ensure there is a workforce with the skills required to exploit those opportunities becomes more pressing. Growth in demand is likely to increase competition for workers with high-level, specialist skills. The skills strategies developed by government with the private sector need to recognise and anticipate this demand to ensure new and existing workers are equipped to support and share in the success of the these future growth sectors.(CEDEFOP, 2010, p. 7)

Following on from CEDEFOP’s work, the Employment Committee of the European Union

reported on employment issues across a range of ‘green jobs’ (EMCO, 2011). The report

noted job losses as well as job gains were likely outcomes from the ‘greening of the

economy’. The ‘greening’ process can therefore be expected to create winners and losers

at the level of individuals, firms and local and regional economies. EMCO also noted that

the employment implications of ‘greening’ the economy may be felt most immediately in

terms of the need for a re-allocation of labour from one activity to another, rather than an

overall increase in the demand for labour. The EMCO report made a number of general

recommendations, with the following most pertinent to this research:

• Europe to ‘seize the employment opportunities of greening the economy’;

• improvements in the ‘reactivity of labour markets’, i.e. responsiveness of labour

markets;

• workers to be equipped with the ‘right skills’ and enterprises to be able to ‘find

employees with the skills they need’;

• all relevant institutions at the international, national, regional and local level to be

involved and take on their responsibility’.


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As well as these general recommendations, EMCO noted “the issue is less about

genuinely new green skills and more about improving existing skills that can be applied in

green activities”. It said “particular attention should be paid to providing access to

affordable and profitable training opportunities to complement existing skills” (EMCO,

2011, p. iii). In making this point, EMCO’s report distinguished between ‘generic skills’

e.g. leadership, team working, project management; ‘generic green skills’, e.g. resource

efficiency; and ‘specialist green skills’. It concluded by arguing that topping-up existing

skills in order to ensure they were relevant to the green economy was more important

than generating new specialist green skills. As will be seen in chapter 4, this is relevant

to the offshore wind energy sector as many recruits are likely to come from related

sectors, with a requirement to top-up existing skills.

When reviewing how the labour market could be made to become more responsive,

EMCO argued that much of the ‘green economy agenda’ was “strongly policy-driven, with

governments setting the main rules of the process”; and, therefore, in principle this should

lead to “better preparation and management of the necessary adaptation and

restructuring” (EMCO, 2011, p. 13). As noted below, government regulation is particularly

important to the development of offshore wind energy, so this is a pertinent point. EMCO

suggested specific policy responses to assist the labour market to react effectively to

changes in demand. These included:

• flexible and reliable contractual arrangements between workers and employers;

• lifelong learning strategies for government, employers and individuals, given the

‘topping-up skills’ required;

• promotion of employment opportunities to women, in what have been traditionally

male-dominated occupations;

• mobile labour supported, for example, by language programmes and the recognition

of qualifications; and

• “effective and efficient active labour market policies” where “public employment

services…provide information, guidance, matching and training opportunities…”

(EMCO, 2011, p.14).

These more specific labour market policy responses provide a guide to the types of

actions that might be required to ensure that the labour market can respond effectively to

the opportunities afforded by development of offshore wind energy in the UK.


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2.3 UK economic context

The fortunes of the offshore wind energy sector are linked to those of the wider economy,

as demand for energy is linked to economic growth and the sector’s access to resources

(for example finance, skills and equipment). The Office for Budget Responsibility noted

the UK economy experienced a 4.9 per cent reduction in Gross Domestic Product (GDP)

in 2009 (OBR, 2011). It reported that this fall was followed by a rise of 1.3 per cent in

2010. In November 2010, the OBR reported that while it expected economic recovery, the

return to growth would be at a slower pace than in the recoveries of the 1970s, 1980s

and 1990s (OBR, 2010). It foresaw “a rebalancing toward business investment and net

trade, with private consumption growth more subdued than in recent years” (OBR, 2010,

p. 7); with business investment rising by over 8 per cent a year between 2011 and 2014.

In its March 2011 review of the economic and fiscal outlook, the OBR said it expected

unemployment, as defined by the International Labour Organisation (ILO), to rise to 8.2

per cent in 2011, before falling gradually in subsequent years to 6.4 per cent in 2015

(OBR, 2011). Overall levels of employment were expected to stay steady at 29 million in

2011 (the same level as 2010), and then rise incrementally in 2012-15, to reach 30 million

in 2015. The forecasts indicate a tightening of the labour market in around 2015. As will

be noted below, this timing is within the period when an increase in demand for skills

required in the offshore wind energy sector is expected.

2.3.1 Rebalancing the UK economy

The Government has stated its wish to ‘rebalance the UK economy’ (HM Treasury and

BIS, 2011). The concept of rebalancing the economy has a number of dimensions

including moving:

• from over-reliance on banking and finance to other economic sectors, in particular

manufacturing;

• from over-reliance on employment and business in London and the South East of

England to building the economic base in the rest of the UK;

• from over-reliance on growth in public sector employment to an emphasis on private

sector employment growth;

• from over-reliance on running a trade deficit to producing more for export (or to

enable import substitution); and


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• from over-reliance on carbon-intensive industries and energy generation to a low

carbon economy6

The offshore wind energy sector provides an opportunity to help the rebalancing of the

UK economy sectorally, spatially and in terms of moving to a low carbon economy; as it

provides manufacturing employment, often in peripheral areas with a history of industrial

decline

.

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2.3.2 Role of the state in times of economic austerity

, although employment creation in offshore wind represents only a small

contribution to tackling these issues.

While setting out its ambition to rebalance the UK economy, the government was mindful

of the need to minimise government spending and promote private initiative and self-

reliance. The 2010 Comprehensive Spending Review asked tough questions for those

setting public sector budgets, in an effort to remove the national borrowing deficit in the

life of this parliament. This particularly highlighted the importance of activities aligning

with government priorities, having a strong rationale and delivering activities effectively

and at low cost. It also emphasised the need for consideration of alternatives for

implementation, i.e. whether non-state providers (or indeed citizens) could deliver

activities themselves, wholly, in partnership and/or based on achieved results, or whether

local bodies were best placed to deliver activities (instead of central government).

These issues guide how to determine whether the state should intervene and, if so, in

what form. In addition, and with continued emphasis from the previous administration, is

the importance of demonstrating ‘market failure’ as a rationale for state intervention, i.e.

the notion that an alternative outcome would result in a net gain for a market’s

participants. These points inform this research, particularly the implications for action.

2.4 UK energy policy

As noted above, government policy and regulation is a major factor in determining the

pace and nature of changes in green sectors in general. It is a major factor in the

generation of electricity and the offshore wind energy sector in particular.

The UK has a competitive energy market overseen by a regulator, Ofgem. The

challenges posed by climate change, depletion of relatively easily exploitable oil and gas

fields, and the need to replace ageing coal-fired and nuclear power stations led to a

government review of the electricity market. The UK government issued its consultation

6 See BIS (2009) for a BIS view on the move to a low carbon economy and BIS and DECC (2009) for its proposed approach to the development of the low carbon industry prior to the coalition government. 7 See separate study on ‘rebalancing the economy’ commissioned by the UK Commission, Pringle et al. (2011).

http://www.berr.gov.uk/files/file52165.pdf�

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on electricity market reform in December 2010 (HM Government, 2010a). The

consultation document noted:

• demand for electricity is expected to double by 2050;

• one quarter of existing generating capacity needs to be replaced by 2020;

• electricity generation needs to ‘de-carbonise’ in the 2030s;

• around 30 per cent of electricity in 2020 needs to be generated by renewable sources

(to come mainly from onshore and offshore wind), an increase of around 23

percentage points on today’s seven per cent share.

The consultation said “current arrangements need to be reformed to allow equal access

to the electricity market for a wider range of technologies” (HM Government, 2010a, p. 4),

including low carbon generation technologies (e.g. wind and tidal); nuclear power and

new fossil fuel power stations using carbon capture and storage (CCS) technology; and

technology to ensure more efficient management of demand for electricity. The costs of

the investments have been estimated by Ofgem to be in the order of £200 billion, of

which £110 billion is needed for new generation and transmission assets.

The government’s consultation is therefore of vital importance for the offshore wind

energy sector, in particular in creating the necessary conditions and stability for

investment in the offshore wind energy sector. The consultation sought views on:

• Carbon price support – to bring greater certainty to the additional costs of electricity

generation using carbon polluting technology; and, therefore, make low-carbon power

more attractive;

• Feed-in tariffs – using one of two models: ‘contract for difference’ (long-term contracts

with top-up payments, if wholesale prices fall to an unprofitable level; and refunds if

prices rise above a certain level); and a ‘premium feed-in tariff’ (a fixed payment on

top of the variable wholesale price of electricity) to encourage low-carbon generation;

• Capacity payments – to encourage the construction and maintenance of ‘flexible

reserve plants’ and demand reduction measures (‘negawatts’); and

• Emissions Performance Standards – to act as a ‘back-stop’ to limit how much carbon,

carbon intensive (coal-fired) power stations can emit.


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Over the period of the research, there was, therefore, some uncertainty as to the

regulatory environment under which the offshore wind energy sector might develop; given

different lobbying stances from different parts of the electricity generation sector and

uncertainty over government’s response. A White Paper is now expected in late summer

or autumn 2011. The uncertainty will affect investment decisions in the short term and the

final arrangements will have an impact on investment plans. These issues contributed to

a reported fall in the level of private investment in renewable energy as a whole in the

UK, down from the equivalent of $11billion in 2009 to £3.3 billion in 2010 (Stacey and

Hook, 2011). However, the UK index on offshore wind in the Ernst and Young (2011)

country attractiveness indices for renewables has held up well, remaining number one in

the world in February 2011.

2.5 National skills strategies

Skills policy in the UK is devolved. The Department for Business, Innovation and Skills’s

strategy document, Skills for Sustainable Growth (BIS, 2010) outlines the vision for skills

policy in England. In practical terms, four key points are potentially most relevant to

maximising employment and skills in the offshore wind energy sector:

• ‘support for the unemployed who are actively seeking work’;

• employers and citizens taking ‘greater responsibility for ensuring their own skills

needs are met’, with control devolved from central government to citizens, employers

and communities;

• information provided by the new all-age careers service; and

• employers working alongside Government and a re-modelled UK Commission for

Employment and Skills to identify and invest in the skills they need.

More specifically, in order to enhance industry-led skills development, Skills for

Sustainable Growth announced the introduction of a new time-limited Growth and

Innovation Fund, launched in March 2011. The Fund will provide up to £50 million a year

to:

• assist those looking to boost business performance and enhance skills through the

introduction of new professional standards, including occupational licensing and

training levies;

• support the 6th round of bids for National Skills Academies; and

• resource the Joint Investment Programme, which will provide public funding alongside

private sector funding for qualifications and units of qualifications to meet specific

skills needs.


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Employer-representative bodies, including Sector Skills Councils (SSCs), Industry

Training Boards and other professional or employer associations can bid for the fund.

In 2007, the Scottish Government set out its ambitions for skills and lifelong learning in

Skills for Scotland: A Lifelong Skills Strategy. There were three main areas: (a) individual

development; (b) responding to economic and employer need; and (c) creating cohesive

structures. The refreshed strategy, Skills for Scotland: Accelerating the Recovery and

Increasing Sustainable Economic Growth, published in 2010, supplements the original

Strategy. It sets out a ‘new flexible, responsive, partnership approach to meeting

Scotland's skills needs’. This refreshed skills strategy is part of the wider Scottish

Economic Recovery Plan: Accelerating Recovery (Scottish Government, 2010b) which

highlights the importance of the low carbon economy and the need to understand the

strategic priorities and mechanisms to help Scotland realise the scale of potential market

opportunities in a global context. Amongst other things, it also considers how to increase

support in innovation, investment and skills, the need to assist behavioural changes

among firms and individuals, and the need for a strategic and coherent approach across

the public sector, aligned with the low carbon market opportunities with the greatest

economic potential for Scotland.

In Wales, the agreement between Labour and Plaid Cymru Groups from 2007, One

Wales, identified the priority actions to address ‘the skills gap’. This included:

• developing a targeted programme to improve skill levels for current and future

workplace needs;

• creating and developing links between education and entrepreneurship;

• supporting the development of North East Wales Institute (NEWI) to full University

status;

• encouraging procurement which incentivises training opportunities for unemployed

people; and

• committing to a Wales Union Learning Fund and a Union Modernisation Fund.

In Northern Ireland, the Department for Employment and Learning (DEL) leads on labour

market issues. Success through Skills: The skills strategy for Northern Ireland was

launched in 2006. Success through Skills 2, an updated strategy, was the subject of a

consultation in 2010, and now has an implementation plan (DELNI, 2011). The strategy

has four aims: (a) raise the skills level of the whole workforce; (b) raise productivity; (c)

increase levels of social inclusion by enhancing the employability of those currently

excluded from the labour market; and (d) secure Northern Ireland’s future in a global

marketplace.


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2.6 National strategies for green jobs and green skills

Individual nations also have strategies and/or plans for the growth in ‘green jobs’ and also

infrastructure investment aligned with renewables. Most recently, Skills Development

Scotland published Skills Investment Plan for the Energy Sector in March 2011 (SDS,

2011). It reported the possibility of an additional 28,000 jobs in offshore wind energy in

Scotland by 2020. This was dependent on the capacity installed and the scale of

investment in Scotland. It argued for the need to maintain the flow of good quality

graduates; noted the significant increase in apprenticeships (c. 650 a year); and the need

to attract and support mature workers transferring to the renewables sector. It set out a

series of actions to raise awareness of the sector; develop skills for the sector; influence

the skills system and mainstream resource allocation to reflect the needs of the

renewables sector; build capacity and flexibility to meet industry needs; and use sector

intelligence to inform decision-making.

In Wales, Capturing the Potential: A Green Jobs Strategy for Wales, published in 2009,

identified skills for onshore and offshore wind energy as a priority. The framework for

delivery has three broad themes: (a) supporting business to help them successfully adapt

and seek competitive advantage through resource efficiency and new low carbon

products and services; (b) fostering innovation and technology to support the

development and commercialisation of new sustainable technologies, energy services

and low carbon products for the future; and (c) investing in a more sustainable economy

by making decisions and investment to drive the transition to a more sustainable low

carbon economy.

The Department of Enterprise, Trade and Investment (DETI) leads economic

development in Northern Ireland. It has a number of non-departmental public bodies,

including Invest Northern Ireland, which is “responsible for the delivery of the

Department's policies and strategies in relation to business support in Northern Ireland”.

DETI consulted on “incentivisation for offshore renewable energy generation” between

December 2010 and February 2011. The consultation built on the draft Offshore

Renewable Energy Strategic Action Plan 2009-2020 (DETI, 2009). It recommended

maintaining the current arrangements for Renewable Obligation Certificates (ROCs) for

offshore wind, but at the time of the consultation it was unaware of the content of the

wider Department of Energy and Climate Change consultations on electricity market

reform referred to above.

HM Government (2010c), with particular relevance to England, identified five challenges

for employers, the skills system and government in meeting the skills needs of the low

carbon economy as:


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• delivering significantly higher volumes of generic STEM skills at all levels;

• developing and delivering rapidly the specialist skills solutions that will be needed for

emerging sectors and technologies;

• getting more young people and adults interested in low carbon careers, skills and

qualifications;

• stimulating employer demand for and investment in low carbon skills; and

• replicating good practice rapidly in each of the above, within and between emerging

sectors.

2.6.1 Best market solutions

Skills for Sustainable Growth referred to the ‘best market framework’ developed by the

UK Commission. Best market solutions are particularly relevant to maximising

employment and skills in the offshore wind energy sector, as they seek to identify ways of

increasing the ambition and competitiveness of employers. The framework has four

broad principles:

• support businesses create jobs and more high skilled jobs;

• invest in the right skills;

• use information and incentives as the levers for raising investment in skills; and

• achieve more for less by empowering ‘customers’, focusing on outcomes (e.g. wages

and career progression) and trusting providers.

It also identifies a number of ‘levers’ to raise ambitions and competitiveness:

• minimum professional standards that can be developed on a voluntary basis or

through formal licensing schemes;

• procurement, which can include contractual obligations, e.g. government contracts

that build in clauses on the provision of apprenticeships;

• levies that may be voluntary or compulsory on employers in an industry; and

• human capital reporting, e.g. as part of performance management or financial

reporting systems.

Best market solutions also include efforts to build capacity and capability in order to

deliver skills for sustainable growth. Options on how to do this are set out below:

• Employer networks could share information, arrange peer reviews of employment and

skills practice, or establish formal arrangements, such as joint investment schemes.


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• Tools can be used to deliver a culture of ‘high performing workplaces’ and learning,

including Investors in People, Union Learn and time off work for learning.

• Financial tools (including subsidies and loans to students and learners), pay back

clauses in employment contracts that can recompense employers for lost investment

in training staff who subsequently leave, and tax incentives that may encourage

employers to invest in training.

• Information is a fourth option, e.g. use of labour market information (especially by

employers and training providers), information campaigns (e.g. on career paths and

returns to qualifications), advice and guidance for employers and individuals, and

business brokerage (bringing together businesses, training providers and learners

more effectively).

These levers and capacity building measures illustrate the kinds of intervention that may

be applied to the offshore wind energy sector.

2.7 Local and regional economic development

This section looks briefly at challenges and arrangements for promoting economic

development in the different parts of the UK. This provides background information for

Chapter 5, which maps locations of potential employment opportunities related to

offshore wind, and informs the discussion of potential actions that may be needed to

address employment and skills issues facing the offshore wind energy sector.

The development of the offshore wind energy sector and wider efforts to move to a low-

carbon economy have spatial implications as some areas may lose out as carbon pricing

increases local firms’ costs of production to a point where they are no longer competitive;

while some places may benefit from the shift, as a new sector and its supply chain create

employment opportunities. In some cases, e.g. Tees Valley, the threat and the

opportunity are located in the same place.

Recent research (Jones, 2010) has argued that regions with below average Gross Value

Added per capita (such as the North East, Yorkshire and Humber and Wales) were more

reliant on energy intensive manufacturing than elsewhere in the country. As such, it was

argued these regions had most to lose from high energy prices, as they increased the

costs to local manufacturing firms. Thus, all other things remaining equal, in the short

term these regions were likely to be vulnerable to the shift towards a low-carbon

economy, as carbon pricing increased energy prices and costs of production. Therefore,

compensating activities, to offset the potential loss of manufacturing jobs, may be


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required in order to mitigate economic and spatial imbalances associated with the shift to

a low-carbon economy.

Furthermore, the research showed that regions which were least reliant on manufacturing

industry for employment (London, South East, South West and East of England) had a

greater share of spending on research and development (R&D) activity. Thus, in so far as

the distribution of R&D spending on energy followed the overall pattern of R&D spending

in the UK, ‘lagging regions’, were likely to lose out. This may in turn reduce their ability to

re-orient their existing industries to low carbon production and/or attract new investments

in low carbon energy generation. However, there has already been some public sector

intervention in an effort to ensure new green jobs are attracted to ‘lagging regions’ and

there is some evidence this has been successful in attracting investment, e.g. Mabey

Bridge in Wales. Thus, it is likely that labour market interventions will need to form part of

a mix of public policy interventions, for example funding for R&D and infrastructure to

support inward investment, if they are to be effective in rebalancing the UK economy.

The UK has asymmetric arrangements for the development and delivery of public policies

and programmes on employment and skills, and economic and business development.

In the devolved administrations, the institutions and arrangements currently appear to be

more stable than in England. Arrangements in England were undergoing significant

changes at the time of writing. Regional Development Agencies (RDAs) were closing

down and Local Enterprise Partnerships (LEPs) were being established. Arrangements

for skills, and economic and business development at the national level were also in a

state of flux.

The October 2010 White Paper Local Growth: realising every place’s potential (HM

Government, 2010b) sets out the government’s proposals for the abolition of RDAs and

the process for setting up LEPs in England. The transition from RDAs to LEPs was taking

place at the time of the fieldwork. The government has suggested (but not prescribed) a

number of possible roles for LEPs, as set out in the Local Growth White Paper, including:

• working with government to set out key investment priorities;

• coordinating proposals or bidding directly for the Regional Growth Fund;

• working with the private sector, including through support to high growth businesses,

ensuring business is involved in the development and consideration of strategic

planning applications, and leveraging funding from the private sector;


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• working with local employers, Jobcentre Plus and learning providers to help local

workless people into jobs;

• exploring opportunities for developing financial and non-financial incentives on

renewable energy projects and Green Deal.

Although RDAs will still exist to the end of the 2011/12 financial year, much of their

activity had ceased at the time fieldwork was carried out. As part of both cuts to public

sector budgets and a new philosophy regarding the role of the state in economic

development, a number of activities carried out by RDAs will cease, including their work

on skills and sector development, both of which have been pertinent to the development

of the offshore wind energy sector. For example, in England, RDAs worked with The

Crown Estate to run a series of supply chain development events, aimed at preparing

firms for the business opportunities offered by the sector. As a result of the RDAs’

abolition a number of support activities for the offshore wind energy sector will cease.

RDAs also operated specific initiatives aimed at supporting the sector, for example, The

Northern Way (which was supported by the three RDAs in the North of England)

commissioned research on the offshore wind energy supply chain in the North, as a

precursor to establishing an Offshore Wind Energy Supply Office, drawing on lessons

from the offshore oil and gas sector. Some of the findings from this research are reviewed

in Chapter 5 and some of the implications of the changes in the UK government’s

approach to economic and labour market development are reviewed in Chapter 6.

The 2011 Budget introduced further tools in the drive towards localism, as part of wider

efforts to develop a framework with incentives to support local economic growth, including

the introduction of 21 new Enterprise Zones (with tax and planning incentives), offering

the opportunity for areas to put in Enterprise Zone bids to target renewables, green

technology in general or offshore wind in particular. The onus would then be on local

partners to provide a supporting training offer.

Recent academic research (Dawley et al., 2010) pointed to the importance of regional

and local economies demonstrating ‘resilience’ in the face of economic change. In the

case of lagging regions, the research indicated the important role that ‘interventionist

strategies’ could play in enhancing regional and local adaptability to changing conditions.

In particular, the research highlighted the importance of developing new ‘branches’ of

economic activity that opened up new ‘development paths’ in an area. An example of this

type of intervention, the National Renewable Energy Centre (NaREC) in the North East of

England, was cited. The centre was developed with support from the RDA, One North

East. NaREC built on the region’s industrial strengths and opened up the possibility for

the region to adapt to and exploit markets in new products and services related to


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renewable energy, an example of what has been termed ‘smart specialisation’. Policies in

other UK nations, e.g. the National Renewables Infrastructure Plan produced by Scottish

Enterprise and Highlands and Islands Enterprise, follow this approach by providing a

public sector steer to developments in the renewables sector in general, including

offshore wind energy.

In conclusion, in the context of spatial development, there is evidence of a need for public

sector intervention to steer the sub-national economies on to new development paths;

and that policies on spatial planning, sector development and labour market intervention

need to be coordinated, in order to have maximum effect. These and other issues linked

to coordination of activity at different spatial levels are returned to in Chapter 6.

2.8 Conclusions

This chapter has reviewed key elements of the public policy terrain. It has shown that

wide ranging steps are being taken in order ‘to green the economy’. The process of

‘greening the economy’ will generate winners and losers among businesses, workers and

places. A significant economic, social and environmental challenge is for the labour

market to re-allocate workers from declining sectors to sectors, such as offshore wind,

that offer employment growth. Much of the challenge is in topping up people’s existing

skills in order to make them relevant to new opportunities.

Energy generation is a regulated sector, and the promotion of renewable energy

(including offshore wind energy) is heavily reliant on government policy. Uncertainty, over

regulatory arrangements and pricing of electricity, produces uncertainty among investors

and operators, which inevitably affects individuals’ decisions on whether to plan to invest

or move to work in the offshore wind energy sector. It also affects the decisions of

education and training providers, as to the courses they develop and run and the

investments in buildings and equipment they need to make if they are to meet demand for

training. On the other hand, greater certainty around government regulation of the sector

would ease decisions on investments and make it easier for labour market policies and

activities to complement wider environmental and industrial policies.

During the period of this research, there was some uncertainty around regulation of the

electricity generation sector and there was also some uncertainty over the impact of

changes to arrangements for further and higher education and regional and local

economic development. As we find later in this report, uncertainty around regulation,

pricing and planning in particular was a key issue noted by consultees.


19

This level of uncertainty poses some challenges to the offshore wind energy sector (and

to the degree of confidence with which recommendations for action can be made).

Notwithstanding this, EU and UK-level policy and strategy documents point to a number

of steps that the offshore wind energy sector may wish to consider to which we return in

the final chapter of the report. These include:

• minimum professional standards that can be developed on a voluntary basis or

through formal licensing schemes;

• procurement, which can include contractual obligations, e.g. government contracts

that build in clauses on the provision of apprenticeships;

• training levies that may be voluntary or compulsory on employers in an industry;

• human capital reporting, e.g. as part of performance management or financial

reporting systems;

• employer networks to share information, arrange peer reviews of employment and

skills practice, or establish formal arrangements, such as joint investment schemes;

• tools to deliver a culture of ‘high performing workplaces’ and learning, including

Investors in People, Union Learn, time off work for learning;

• financial tools (including subsidies and loans to students and learners), pay back

clauses in employment contracts to recompense employers for lost investment in

training staff who subsequently leave, and tax incentives for employers to invest in

training;

• provision of better quality information, e.g. use of labour market information

(especially by employers and training providers), information campaigns (e.g. on

career paths and returns to qualifications), advice and guidance for employers and

individuals, and business brokerage (bringing together businesses, training providers

and learners more effectively);

• lifelong learning strategies – given the ‘topping-up skills’ required;

• promotion of employment opportunities to women, in what have been traditionally

male-dominated occupations;

• supportive tax and benefits systems that make work pay; and

• mobile labour, supported by language programmes, recognition of qualifications and

co-ordination of social security rights in order to ensure a more responsive labour

market across the EU.


20

These and other options will be reviewed in the final chapter of this report, based on a

review of evidence gathered during this research project specific to the UK’s offshore

wind energy sector. The next chapter looks in more detail at the evidence on the types

and nature of jobs required in the offshore wind energy sector to 2020.


21

3 Structure and scale of the offshore wind energy supply chain

Chapter Summary • The UK offshore wind energy sector is a nascent sector and a ‘follower’ in

international terms. The Crown Estate’s Round 3 licensing arrangements have brought a ‘step change’ in the sector’s development. There are different views of how the sector might develop over time: in terms of the pace and scale of its development and the structure that the sector may take.

• There are also different views with regard to the likely nature of employment and careers in the sector. Some anticipate ‘contract work’ to account for much of the sector’s employment, in line with the offshore oil and gas industry, and others anticipate a majority of permanent staff. This has consequences for potential career paths, and approaches to recruitment and training.

• A recent study of the sector sponsored by RenewableUK and Energy & Utility Skills estimated employment in the offshore wind energy sector had quadrupled between 2007 and 2010 to stand at around 3,100 full-time equivalent jobs.

• There are a number of studies forecasting employment needs for the sector and for each link in the supply chain. The forecasts depend on a number of assumptions, such as share of manufacturing carried out in the UK and the likely scale of exports. The most recent forecasts indicate that the lower end expectations are for the sector to directly employ around 12,000 jobs by 2020 and at the higher end the sector is expected to directly employ over 40,000 jobs. A series of recent announcements by major international players in the sector to locate manufacturing in the UK are encouraging.

• The sector is often studied in terms of the different phases of development: Planning and Development; Design and Manufacture; Construction and Installation; and Operation and Maintenance; plus associated Services, such as legal and financial expertise. Each phase has its own occupation and skill needs, which face different pressures in terms of competing demands for skills and the scale and timing of demand for labour. Therefore, it is important to remember that different elements of the supply chain will experience different pressures at different times and will respond in different ways.

• A number of Sector Skills Councils are relevant to offshore wind energy, reflecting the multifaceted nature of the sector, drawing as it does on manufacturing, mechanical, electrical, design, construction and maritime skills. This means that any public sector intervention or coordinated action needs to take account of interactions with a number of other sectors.


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3.1 Introduction

The previous chapter outlined some of the public policy issues that affect the

development of the offshore wind energy sector and the ability of the labour market to

respond to the sector’s needs. This chapter reviews evidence on the employment

opportunities and challenges facing the sector. It draws on a review of the literature; one-

to-one consultations with representatives of employers, education and training providers

and industry bodies; and workshops with policy makers and training providers. The

chapter has the following sections:

• Key features of the development of the offshore wind energy sector;

• Stages of development and associated occupations in the offshore wind energy

sector;

• Current scale of employment in the offshore wind energy sector;

• Factors limiting the growth of the offshore wind energy sector;

• Employment projections for the offshore wind energy sector, by stage of

development; and

• Conclusions.

3.2 Key features of the development of the offshore wind energy sector

3.2.1 Initial development

To put the sector’s development in context, the first offshore wind farm was built off the

coast of Denmark in 1991 and the first large offshore wind farm was built in 2002 also off

the Denmark coast. The UK was a relative latecomer to the offshore wind energy sector.

Its first offshore wind farm, in Blyth, was developed in 2000; and the first deep water site,

Beatrice, was built in 2007. Both were relatively small demonstration projects. The UK’s

late arrival to the sector led Boettcher et al. (2008) to characterise the UK’s wind energy

industry as ‘a follower with increasing momentum’.

To date the development of offshore wind farms in the UK has come from three rounds of

licensing by the Crown Estate, plus the licensing of rights by the Scottish Government.

Rounds 1 and 2 provided for around 8GW of generating capacity. In January 2010, the

Crown Estate (2010b) announced the successful bidders for each of nine Round 3

offshore wind zones within UK waters (Figure 3.1). Round 3 offered the potential for an

additional 32GW generating capacity. The new offshore wind farms were expected to

come on stream from around 2015.


23

Round 3, along with an additional 5.7GW in Scottish territorial waters and extensions to

Rounds 1 and 2 worth a further 2GW (often referred to as Round 2.5), represented a step

change in the UK sector’s likely scale. This increased scale meant the UK offshore wind

energy market was going to become a significant global player. Therefore, domestic

manufacturing capacity could be justified on the grounds that the domestic market

warranted its own manufacturing capacity. Subsequent announcements of intentions to

invest in the UK e.g. by Gamesa (Gamesa, 2011), General Electric (Carrington and

agencies, 2010), Mitsubishi (Scottish Government, 2010e) and Siemens (Siemens, 2011;

Locate in Leeds, 2011), indicated that the threshold for investment in UK-based

manufacturing had been passed. However, there were still questions as to the extent to

which the UK labour market could respond to the sector’s requirements, with potentially

limited supplies of high-skilled staff available in the UK needing to be supplemented by

workers from within the European Economic Area (EEA).8

Figure 3.1 Potential offshore wind farm developments

Source: The Crown Estate, 2010

8 Consultations indicated most skilled migrant works would be sourced from inside the EEA, and would not therefore be subject to immigration restrictions.


24

In 2009, what was then known as the British Wind Energy Association published UK

Offshore Wind: Charting the Right Course (Garrad Hassan, 2009), it summarised the

‘drivers’ of the sector’s development, which included capital requirements, commodity

prices, exchange rate volatility and competition from other energy generation sectors. It

also set out issues for the development for the sector’s supply chain, which included:

• wind turbine supply, where demand was outstripping supply, due to the limited

numbers of suppliers and the fact that the offshore wind energy sector in essence

‘piggy-backed’ on the onshore wind energy;

• the foundation supply market, which could meet modest growth of around 1 GW a

year by using ‘monopiles’ for foundations, but would need to develop responses to

new technical requirements associated with Round 3 developments that would be

further away from the shore and in deeper waters than Round 1 and Round 2

developments, and would also need to address the potential impact of exchange rate

and commodity price fluctuations that could have a major impact on costs;

• the electrical equipment supply market (e.g. sub-sea cables and transformers)

which primarily served other sectors, such as offshore oil and gas, with the offshore

wind energy sector facing supply constraints as a result of being a ‘secondary player’;

• the installation vessel market, where there was a limited supply of vessels and

investment in specialist vessels was seen to be risky, given lack of certainty of

demand; the offshore wind energy sector, therefore, faced ‘competition’ for vessels

from other users and price volatility in this element of the supply chain.

This section has provided a summary of where the offshore wind sector has come from

and some of the main factors affecting the pace of its development, over and above those

associated with the regulation and pricing of electricity, referred to in the preceding

chapter. The next section provides a breakdown in a little more detail of the different

stages of development and the skills associated with them.

3.3 Stages of development and associated occupations

For planning purposes, developments are usually split into four phases: Planning and

Development; Design and Manufacture; Construction and Installation; and Operation and

Maintenance. There are also a number of cross-cutting services, such as legal and

financial services, that support the sector’s development at different stages; these are

usually treated as a separate part of the supply chain. There is also a final stage of the

offshore wind energy ‘lifecycle’: decommissioning; this lies beyond the time horizon of this


25

study9. Table 3.1 draws on a number of different sources in order to provide a summary

of the occupations and skill levels associated with each phase of development and the

type of employer or firm associated with it.10

Consultees consistently pointed out the need to consider the different development paths

for employment for each stage of development, for example all other things remaining

equal, construction and installation would see growth followed by decline in employment;

while operation and maintenance would see a rise in employment and then a plateau.

Some consultees also said that the employment trajectories past 2020 depended on a

number of as yet unknown factors, such as whether there would be a Round 4 of offshore

wind energy development (linked to potential export of electricity to mainland Europe or

increased demand for electricity from the domestic market, for example by greater use of

electric cars).

Table 3.1 Occupation and skill level within each stage of the offshore wind farm supply chain

Type of firm in the supply chain

Phase of development and types of activity

Occupations NQF Level

Developers Planning and Development, including:

• Project development: finding land, grid connection, setting up an operating company, gaining planning consents

• Environmental Impact Assessments including: birds, landscape, ecology and biodiversity assessments and surveys.

Directors (including business development, finance, health safety and risk, procurement, sales and trading directors)

Development manager

Acoustic consultants

Archaeologists

Ecologists

Geologists

Geotechnical and geophysical engineers and surveyors

GIS engineers

Ornithologists

Planners

5

Manufacturers Design and Manufacturing, including:

• device research and development

• manufacture of components for the turbines

Engineers – aeronautical, civil, electrical, environmental, mechanical, structural, production, sub-sea structure design, high voltage electrical

Quality manager, systems control, systems design, control systems design, control systems,

Technicians – CAD, engineering craft technician, refrigeration and/or air conditioning technician

Welders

3-5

9 With a lifespan of 20 years, the first round of offshore wind farms will not require decommissioning until into the 2020s; this study is concerned with maximising employment and skills to 2020 because the existing evidence on employment trajectories goes to 2020 only, and because of the inherent uncertainties in forecasting beyond 2020. 10 It should also be noted that different Sector Skills Councils (SSCs) are involved in the different phases of development, along with Energy & Utility Skills (EU Skills) there are Cogent (which covers Chemical, Nuclear, Oil & Gas, and Petroleum & Polymers), Semta (covering Science, Engineering and Manufacturing Technologies) and the Engineering, Construction Industry Training Board (Ecitb).


26




System integration/ installation

Construction and Installation, including:

• civil engineering – piling and foundation, concrete and steel works, cable laying, dredging, and cable protection

• electrical engineering – generation, transformers, substations, wet connectors, distribution and transmission level cables

• mechanical engineering – turbine and gearbox manufacturing and suppliers

• port facilities – layout areas, rail links, cranes, storage

• vessels – anchor handlers, jack-up barges, cranes needed to transport and install devices

Construction project managers

Construction site managers

Installation engineers

5

Fabrication engineers

Installation technician

Control systems technician

Project controller

3

Cable jointer

Linesperson

Plant operator

Concrete operative

Site logistics operative

Welder

2 – 3

Servicing/ maintenance and owners/operators

Operation and Maintenance, including:

• general management

• technical and engineering works

• specialist work during unplanned and planned stoppages

Professional engineers

Business development managers

4 – 5

Buyer managers

Managers (including client company, deputy/regional, assistant project managers)

Procurement managers

Production supervisors

Project development engineers

Operations supervisors (client company)

Managers – risk, sales, senior, service

Supervisors, team leaders

Trading buyers

4

Levels 1 – 4 technician (wind operator company)

Manufacturing buyer

Production control engineer

Wind turbine technician (including seniors)

Deck crew

Boat skippers

3

Wind/renewables services

Technical, financial and legal Services

Accountants

Lawyers

Forecasting/taxation specialists

Health and safety specialists

HR professionals

4

Administration assistants

Craneage

Divers

3


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Specialist marine roles

IT specialists

Site wardens 2

Clerical and administrative staff 1 – 2

Source: PricewaterhouseCoopers (2010); EMB (2010); The Crown Estate et al. (2010)

3.4 Current scale of employment

In February 2010, the industry body RenewableUK and the Sector Skills Council Energy

& Utility Skills (EU Skills) published a study by Cambridge Econometrics, the Institute for

Employment Research and IFF Research, Working for a Green Britain: Employment and

Skills in the UK Wind & Marine Industries (Cambridge Econometrics et al., 2011a). The

report provided an overview of current employment in the renewable energy sector and

growth between 2007 and 2010. The report was based on a survey of 561 firms of which

253 (45 per cent) responded. It followed the approach of the earlier report by Boettcher et

al. (2008) by looking at five broad categories of activity, as set out in Table 3.1. The

report showed offshore wind energy accounted for 29 per cent of a total workforce in

marine and wind energy of around 10,800 full-time equivalent employees (FTEs); more

than marine energy at 8 per cent, but smaller than onshore wind.

The 2011 report estimated the number of FTEs working directly in UK offshore wind

energy sector at approximately 3,100. The breakdown by phase of development is set out

below:

• Planning and development accounted for around 15 per cent of FTEs in the sector.

• Design and manufacture accounted for less than one-tenth (seven per cent) of jobs in

the sector.

• Construction and installation was the largest single source of employment, it

accounted for just over two-fifths (41 per cent) of all employment in the sector.

• Operation and maintenance was estimated to have around 500 FTEs (17 per cent of

the total).

This ‘balance’ of employment within the sector reflects its current stage of development

and the relative position of the UK in the global value chain. This balance may not be a

good guide to the future scale and make-up of the sector in the coming decades, in

particular with regard to the growth of manufacturing jobs. To give an idea of how the

scale and pattern of employment is changing, the report noted that:


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• employment in offshore wind energy more than quadrupled in the period 2007 to

2010;

• total generating capacity more than doubled (from 304MW to 680MW) and operation

and maintenance jobs more than doubled in response;

• annual construction activity increased from 470MW a year to 1,470MW a year,

leading to a near quadrupling of construction related jobs; and

• nearly four times as many FTEs were reported in planning and development activities,

reflecting the release of Round 3 licenses covering 32GW, an additional 5.7GW in

Scottish territorial waters and extensions to Round 1 and 2 (Round 2.5) worth a

further 2 GW.

Stakeholder consultations carried out for this study found that with regard to

manufacturing, there was an expectation amongst some that this stage of the supply

chain will be based elsewhere in Europe for a number of years. There was also a view

that it was likely that in the initial stages of developing domestic manufacturing capacity,

the skills would be sourced from elsewhere in the EU. It should also be noted that

consultees highlighted the potential for ‘manufacturing’ to mean different things to

different people, for example it could mean only assembly or be of a type that requires

casting and forging activity.

3.4.1 Potential development paths

The offshore wind energy sector is a nascent sector; which makes forecasting likely rates

of growth and establishing public policy priorities for the sector more difficult and risky

than is the case of many established industries. Consultees thought that the sector’s

development may follow one of a number of different paths. There were different views

about:

• the likely pace of employment growth in the sector, there were particular concerns

about the ‘absorptive capacity’ of employers to take on and train the number of staff

indicated by some ‘top-down’ forecasts;

• the potential size of the sector in the UK; in particular the scale of the manufacturing

element of the supply chain, which in turn was said to be dependent upon the likely

size of the domestic market for turbines, which itself was linked to a potential fourth

round of licensing for offshore sites by the Crown Estate and the associated

possibility of exporting electricity generated from offshore wind farms in UK waters to

mainland Europe;


29

• industry structure, e.g. the extent to which the industry will be vertically integrated

(with a few large firms covering a number or all stages of development) or whether

the industry will be characterised by a relatively large supply chain (with many firms of

varying sizes serving different parts of the development process); some consultees

noted that the experience of many developments and deployments to date was that

different firms specialised in different stages of development and sold on their

interests at the end of each stage, but that this may alter in future with larger firms

seeking to ‘internalise’ the development and deployment process;

• the nature of employment in the sector, with some consultees predicting a

predominance of contract workers, along similar lines to arrangements in the offshore

oil and gas sector, and other consultees expecting a workforce that was broadly made

up of permanent employees who worked for specific employers.

Each of these trajectories has implications in terms of firms’ approaches to recruitment

and retention, arrangements for training, and individuals’ career progression. It also has

implications for the development of ‘high performing workplaces’, where learning is an

integral part of the business and which have been identified by UK Commission as an

important factor in increasing productivity.

3.5 Factors limiting the growth

While the prospects for growth in the offshore wind energy sector appeared to have

improved, some factors may limit its growth or the pace of its growth. In addition to the

supply of suitably qualified, skilled and experienced staff, is discussed in chapter 4, the

research identified a number of factors that affect the likely pace and scale of growth in

the offshore wind energy sector. Each of these technical and financial challenges

requires specialist staff if they are to be overcome in a technically robust and financially

viable manner, in other words the constraints are not independent from skills issues.

Therefore, in order for the sector to maximise its productivity and economic potential, it is

important to monitor these issues and seek solutions to problems as they arise.

Furthermore, these skills will be demanded by other sectors. The factors are as follows:

• Planning – the timescales involved in gaining planning consent for offshore wind

farms can be lengthy. The 2010 RenewableUK Manifesto (RenewableUK, 2010a),

noted an average wait of 17 months for a planning decision with only a 25 per cent

approval rate. The elapsed time from planning application to commissioning has been

estimated at eight years in Scotland (Offshore Wind Industry Group and Scotland’s

Offshore Energy Programme Board, 2010). Consultations indicated that shortages of

appropriate staff were one cause of these delays, e.g. a shortage of ornithologists to


30

assist the production of impact studies. But on a wider level, the delays in the

planning system were said to add to uncertainties associated with investments in

offshore wind energy with knock-on consequences for the complementary training

services that the sector requires.

• Grid connections – the Carbon Trust (2008) estimated the costs of necessary

infrastructure investment in excess of £8 billion. The need for this level of

infrastructure development was highlighted by consultees as a potential source of

‘competition’ for electrical and mechanical engineers; while at the same time being an

important enabling factor for the sector’s growth. The Carbon Trust report also

pointed to a ‘Catch-22’ situation that was hindering progress and potentially skewing

investment decisions, i.e. no grid connection without a wind farm (due to an ‘invest

then connect’ approach) and no wind farm without connection (meaning development

where connection was easiest rather than in the best locations from the point of view

of generating electricity). The report also noted these problems potentially could be

overcome by a ‘connect and manage’ approach; shared grid capacity; the auctioning

of transmission rights (or secondary trading in them); and connections to mainland

Europe.

• Infrastructure – in particular ports development was reported as vital for the growth

of employment in the sector in coming years. BVG Associates (2009b) argued that, in

order to hit the 2020 targets for generation of electricity via renewable sources, at

least six locations would be needed by 201411. To illustrate the scale of the kinds of

developments required, Scottish Enterprise and Highlands and Islands Enterprise

(2010) outlined the typical requirements for a construction base with the capacity to

handle 100 turbines a year12

• Technical difficulties of working far offshore and in deep waters – the Carbon

Trust (2008) discussed the technological development challenges facing the industry,

including issues to do with:

.

o the design and manufacture of offshore wind turbines – in the long term

there may be a move away from the three-blade turbine, with moves to the

production of larger and lighter turbines (to ease pressure on foundations), and

to improved efficiency and reliability of generators and gears;

11 The fact that UK ports are in private ownership means it is inherently more difficult to plan ports development at the national level; in part as developments are a private business decision, where the needs of the offshore wind energy sector are not necessarily paramount, and in part because state activity related to ports is subject to EU competition and State Aid rules, which do not affect state owned ports in mainland Europe. 12 This includes: at least 80,000 sqm suitable for lay-down and pre-assembly of product; 200m to 300m length of quayside with a high load bearing capacity and adjacent access; water access to accommodate vessels up to 140m long, 45m beam and 6m draft with no tidal or other access restrictions; overhead clearance to sea of at least 100m (to allow vertical shipment of towers).


31

o foundations – as wind farms are located further offshore and in deeper waters

new approaches to foundations (with moves away from monopiles, perhaps to

jackets, similar to those used for oil and gas rigs, or floating arrays);

o installation – as depths increase new methods and equipment, including

vessels, will be required, for example, ‘jack-up vessels’ can operate to depths

of 35m but Round 3 offshore wind farms will be located in waters of a greater

depth and will therefore require specialist floating installation vessels;

o electrical connection – to date offshore wind farms have applied High Voltage

Alternating Current (HVAC) sub-sea cables and connections; over time a shift

to High Voltage Direct Current (HVDC) transmission is expected (increasing

the possible distances from shore that arrays may be located by reducing

transmission losses);

o Operation and Maintenance – the main objective for operation and

maintenance is to minimise unscheduled repairs and downtime; this could be

achieved by an increase in the reliability of the equipment, and effective

monitoring (e.g. using remote monitoring of turbines) that enable maintenance

cycles to be scheduled in order to avoid working in the winter months.This may

also lead to the development of a mobile workforce, as winter closedowns free-

up workers to move to other locations.

• Rising costs – the offshore wind energy sector needs to ensure it controls costs, in

order for it to be able to generate a return on investment, given expected levels of

electricity prices. The Carbon Trust (2008) estimated the breakdown of a

development’s costs to be: wind turbine 59 per cent; foundations 17 per cent; grid

connection 11 per cent; installation eight per cent; and operation and maintenance

five per cent. As the sector grows there is potential for costs to come down in each of

these stages, e.g. as economies of scale are exploited. However, as noted above,

there are elements of risk and uncertainty in the different stages of development as

arrays move further offshore and into deeper waters. Furthermore, the sector does

not operate in a vacuum and therefore other factors may affect the sector’s costs. For

example, continuing rises in the prices of commodities and materials will increase the

costs of production, while a relatively weak pound sterling will mean relatively high

costs for imported materials.

• Finance – consultations indicated that some in the industry have concerns that the

financial sector lacks the data and the models, rather than the skills, required to

estimate and price the risks associated with the offshore wind sector and that this

may limit the sector’s growth. Others pointed to the planned Green Investment Bank

as one way to overcome this problem.


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3.6 Employment projections by stage of development

There have been a number of reports estimating likely ranges for the number of jobs

required at each stage of the sector’s supply chain. The forecasts are inherently difficult

to make and depend on assumptions about what will happen to manufacturing and

exports and imports, but they have tended to produce estimates that cluster around

certain ranges. PricewaterhouseCoopers (2010) outlined the potential number of jobs

needed for each aspect of the offshore wind supply chain and the types of occupations

and skill levels which will typically be required. It showed a need for high level

engineering skills (i.e. levels 4 and 5) and technicians at levels 2 – 4 (Table 3.2). For the

most part these ‘top-down’ forecasts do not address the location of these jobs. This issue

is reviewed in Chapter 5 of this report.

Oxford Economics (2010) highlighted the importance of technicians for the operation and

maintenance of offshore turbines. It estimated that 40 per cent of all people employed in

the operation and maintenance of offshore wind were technicians. The report stated that

technicians “…require an almost unique set of skills. In addition to possessing a technical

background, technicians must be multi-disciplined and flexible, be able to work in extreme

conditions and outside normal office hours and environments…” (Oxford Economics,

2010, p.19). The report estimated that, assuming 14GW of generating capacity by 2020,

the offshore wind energy sector would support 4,600 jobs in Operation and Maintenance

with a further 1,100 jobs in the supply chain, and an additional 1,000 jobs from the

spending of those employed directly in Operation and Maintenance. If the full generating

capacity of all three rounds of offshore wind farms (47.5GW) was realised, Oxford

Economics estimated 11,700 Operation and Maintenance jobs (slightly above the

PricewaterhouseCoopers (2010) estimated upper limit), with an additional 3,900 in the

supply chain and a further 4,500 in the wider economy.

The most recent forecasts have been provided by a piece of work commissioned by

RenewableUK and EU Skills (Cambridge Econometrics et al., 2011b). These forecasts

are based on three different scenarios:

• Strong and steady growth, with 30.7GW operating by 2020 and UK based suppliers

taking a large share of European exports in the Design and Manufacturing stage (high

scenario).

• Healthy growth, with 23GW operating by 2020 and UK based suppliers taking a

relatively good share of European exports (medium scenario).

• A stalling industry, with 13GW operating by 2020 and limited exports (low scenario).


33

Overall employment forecasts for these scenarios range from 12,000 FTE jobs in 2020

under the low scenario to over 40,000 under the high scenario. The breakdown by stage

of development is shown in Table 3.3. This sets out a slightly different pattern of forecast

growth to 2020 from the PricewaterhouseCoopers (2010) forecasts, with Design and

Manufacturing potentially a much more important stage in employment terms, and

Construction and Installation relatively less important. This is likely to partly reflect the

assumptions in the RenewableUK/EU Skills commissioned work on the opportunities for

export in Design and Manufacturing, and also the ‘learning rate’ associated with

Construction and Installation (which reduces employment requirements over time).

Table 3.2 Demand for skills in offshore wind in 2020

Stage of Development

Scenarios of number of jobs

(UK)

Occupations NQF level

Planning and Development

1,800 – 4,600 Specialist consultants/scientists – marine, economy, geology, ornithology, environmental, archaeology Specialist engineers – GIS, building services Director, project managers, planners

5+

Design and Manufacturing

2,700 – 8,200 Engineers – aeronautical, civil, electrical, environmental, mechanical, mechanical design, structural, production, sub-sea structures design, quality manager, systems control, systems design

5+

Technicians – CAD, engineering craft technician, refrigeration and/or air conditioning technician

3+

Construction and Installation

4,800 –12,400 Engineers – including control system, environmental, building services 5+

Construction project manager/engineer, construction site manager 4 – 5

Installation technician, control systems technician, fabrication engineers, project controller

3

Cable joiner, linesperson, plant operator, concrete operative, site logistics operative, welder

2 – 3

Operation and Maintenance

4,200 –10,900 Professional engineers, strategic facilities manager 5

Business development managers, managers, supervisors, project development engineers, estate manager/project manager

4 – 5

Maintenance technician (elec, mech), facilities manager, production control engineer, manufacturing buyer

3 – 4

Cable jointer, linesperson 2 -3

Technical, financial and legal Services

1,500 – 3,900 Lawyer, accountants, forecasting/taxation specialists, health and safety specialists, HR professionals

4 – 5

Craneage, divers, construction diving operative, specialist marine roles

2 – 3

Clerical and admin staff, administrative assistants, IT specialists 1 – 3

TOTAL 15,000 - 40,000 - -

Source: PricewaterhouseCoopers (2010), drawing on Table 6 on p.36 and Table 24 on p.143


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Table 3.3 Demand for skills in offshore wind in 2020

Stage of Development UK jobs in 2020: low scenario

UK jobs in 2020: medium scenario

UK jobs in 2020: high scenario

Planning and Development 605 957 1,326

Design and Manufacturing 2,119 15,495 23,730

Construction and Installation 3,448 3,723 5,155

Operation and Maintenance 4,913 8,170 10,434

Specialist support Services (including transport)

970 2,016 2,388

TOTAL 12,056 30,362 43,033

Source: Cambridge Econometrics et al. (2011b)

3.7 Conclusions

This chapter reviewed the brief history of offshore wind energy generation in the UK. It

noted that the UK was a ‘follower’ in the development of the offshore wind energy sector,

but that Round 3 of the Crown Estate’s licensing arrangements brought a step change to

the industry, making its scale of global significance. It set out a breakdown of the sector’s

supply chain listing the types of employers, the skills they required and the level of those

skills. It also reviewed recent research sponsored by RenewableUK and EU Skills that

showed employment in the sector quadrupled between 2007 and 2010 and recent

projections of the likely scale of jobs directly employed in all stages of development

ranging from around 12,000 jobs by 2020 to a maximum of around 40,000 (with indirect

jobs included, the range is around 19,000 to nearly 70,000 jobs).

Furthermore, the chapter noted a series of announcements have been made by global

players indicating the intention to locate manufacturing facilities in the UK, which should

increase the UK’s relative share of employment and value associated with the

development of offshore wind energy. However, the chapter noted that the sector faces a

number of significant risks and uncertainties. Some of these were associated with

regulation and pricing and some were linked specifically to the development of the supply

chain, such as the technological challenges associated with Round 3 developments,

access to finance, the relative demand for skilled workers from other sectors, and the

different pressures for vessels and materials required for the expansion of the sector.

Some of the technical and financial challenges are linked to skills development, and

maximising the productivity and potential of the sector will require the use of skills and

knowledge to seek solutions to these challenges. The next chapter looks in more detail at

the specific skills and training issues facing the sector.


35

4 Issues on skills, labour and training

Chapter Summary • Round 2 wind farms were not associated with significant skills issues except for some

specialist roles. Skills issues were anticipated by employers as part of Round 3

development and deployment, including: planners, Environmental Impact Assessment

specialists, engineers, cable jointers, wind turbine technicians and project managers.

• A concern in relation to general ‘skills in the offshore context’ was identified, such as

health and safety and survival skills.

• The lack of ‘sector attractiveness’ (shared with engineering and manufacturing),

competition with other sectors for similar skills and difficulties coordinating skills and

training needs across the supply chain were cited as potential causes of concern.

• Shortages of labour for some roles in the supply chain were reported, in particular

those relating to the Planning and Development stage. ‘Pinch points’ were identified

as likely when the sector starts to scale up activity further from 2013 onwards, when

other sectors, for example nuclear, are also expected to grow. Furthermore, there

were significant concerns from employers over the capacity of the sector to cope with

the high absorption rates implied by the scale of growth that is anticipated.

• In the short term, the supply of labour to meet future demand is likely to come from

other sectors, including offshore oil and gas, automotive and aerospace and the

military; although there are challenges in attracting experienced workers, for example

higher wages and benefits in other sectors. Alternatively labour may be sourced

internationally. In the medium-term apprenticeships were cited as a key source of

skilled labour.

• The research reviewed the responses to skills issues of training providers and firms in

the sector’s supply chain. It found examples of firm-level initiatives, and industry and

education provider collaboration to meet skill needs. These mostly arose as a result of

direct interaction between employers and providers, often building on existing

relationships. There was evidence of difficulties in planning and investing in training

initiatives given the embryonic nature of the sector and its fragmented supply chain.

• There was reluctance amongst some consultees to ask for further public intervention

on skills issues, arguing that what was most required from the state was greater

certainty for the industry’s regulatory framework. However, others expressed a desire

for some central coordination of the industry’s activity with regard to employment and

skills and thought governments were best placed to provide the necessary leadership.


36

4.1 Introduction

The previous chapter identified a number of non-skills related issues constraining the

sector’s development and adversely affecting the ability of education and training

providers to plan effectively to meet the sectors needs. This chapter focuses on the

skills, labour market and training issues affecting the offshore wind sector, with a focus on

the short-term issues facing the sector. In doing this, it draws out evidence affecting the

sector overall, as well as specific issues relevant to the individual stages of development

introduced in the previous chapter. This chapter also builds on the forecasts for growth in

employment in the sector by identifying possible pinch-points in terms of when there will

be demand for labour and whether there may be competition with other sectors. The

chapter has the following four sections:

• Skills shortages and skills gaps – looking at current issues, and the implications of

Round 3 developments;

• Importance of timing – in particular setting possible time paths for employment

growth;

• Supply of labour – including where short-term and longer-term sources of labour may

come from, and where there may be competition or complementarities with other

sectors; and

• Provision of education and training to the offshore wind energy sector – in particular

examples of current provision, including where there has been engagement between

providers and employers or coordination within the supply chain.

4.2 Skills shortages and skills gaps

4.2.1 Current evidence on skills shortages and skills gaps

Cambridge Econometrics et al. (2011a) assessed current skills shortages in the offshore

wind energy sector. It reported 26 per cent of employers as having had one or more hard-

to-fill vacancy in the previous 12 months. The survey’s findings suggested that hard-to-fill

vacancies were affecting small firms (with 10-49 employees) as much as they were

affecting medium or large ones (with 50 or more employees). Consultations for this study,

however, suggested that it was large employers in the sector that were principally

experiencing problems in meeting their skill needs.


37

The survey found an average of almost three hard-to-fill vacancies in those employers

reporting recruitment difficulties. It showed 141 hard-to-fill vacancies in the previous 12

months. Given the survey found the sector’s employment had grown by 2,400 over four

years (implying an average of 600 additional jobs a year) and assuming a stable level of

hard-to-fill vacancies, this implies around 1 in 5 vacancies in the sector is likely to be

hard-to-fill at any given time. Skills, rather than wages or conditions, was the dominant

reason for reporting hard-to-fill vacancies: for 88 per cent of those reporting hard-to-fill

vacancies, qualifications, skills or experience was the main reason.

The areas where recruitment was reported to be particularly difficult were:

• managerial, professional and associated professional jobs; and

• job roles relating to project managers (degree level); engineers (electrical and wind

power); technical sales people/commercial managers; people to carry out offshore

Environmental Impact Assessments (EIA), ornithologists and ecologists.

The qualitative evidence from the supply chain case studies for Round 2 developments

(at Thanet and Robin Rigg) indicated that as far as consultees were concerned there

were relatively few skills problems, including no reported problems in having sufficient

engineering skills. Some shortages were identified with respect to specialist boat crew

and mariners, due to the specialist training and the survival qualifications required. A

number of the companies consulted did identify some current issues and a range of

issues in the future, as the sector scales up. In particular, consultees in the supply chain

case studies highlighted current difficulties in finding:

• project managers with the required skills given the large number of stakeholders and

partners involved and the associated legal compliance load (for the Construction and

Installation stage);

• electrical engineers, in particular in relation to cable laying; and

• people with sufficient skills in taxonomy, a particular element of the EIA requirements

(for the Planning and Development stage).

The consultations identified other skills shortages and skills gaps, in line with the existing

literature on the sector. These included the following observations:

• Those consulted emphasised that “skills in the offshore context” were an important

issue. Two particular areas were identified by consultees here, the first being health

and safety, including survival and working at heights, the second being the

complexities of project management in the offshore context. Boettcher et al. (2008)

also highlighted project managers as the largest area of skills shortages.


38

• Specific skills shortages were identified by consultees in relation to cable jointers and

grid skills. Similarly electrical engineers were identified as skills shortages by

Boettcher et al. (2008). In addition, divers, welders, planners (for consent) and EIA

specialists were also identified by consultees.

• Turbine technicians were also identified by Boettcher et al. (2008) as an area of skills

shortages, with engineers generally highlighted by Blanco and Kjaer (2009) in relation

to manufacturing.

• In terms of specific knowledge gaps, consultees noted the specialist knowledge

required in relation to composite materials (from a sales perspective and from the

point of view of handling). Similarly, Blanco and Kjaer (2009) noted sales managers

were sometimes hard to find.

• The consultation process provided evidence that poaching of staff by competitors

does occur as a way of dealing with skills shortages. Whilst some firms sought to

address this issue by including repayment clauses for the costs of staff development if

staff leave, the study found at least one example of a firm offering to cover such costs

as part of its recruitment offer. On the positive side, the evidence from the supply

chain case studies indicated a perception of high retention rates for those firms which

invested significantly in staff development. This serves to highlight that investments

in staff can pay off through retention.

4.2.2 Causes of skills issues

Some of the reasons behind the skills shortages were found to be shared with other

engineering-related sectors, for example a shortage of graduates specialising in electrical

and mechanical engineering and design, as well as shortages in project management

skills and skills in the marine environment (Scottish Government, 2010a). Sector

attractiveness, both in terms of tough working conditions and the low esteem in which

construction, manufacturing and engineering jobs are held in the UK was cited as one

factor in the shortage of skilled workers (Douglas Westwood, 2008). Two further points

identified through consultations were:

• a lack of young people entering the sector; a common theme from the supply chain

case studies was the lack of young recruits with appropriate engineering skills, and a

more specific point that young people’s knowledge was too imbalanced in favour of

theory over practice; and

• competition with other sectors, e.g. oil and gas, nuclear, electricity transmission, for

similar skills.


39

The case study on Thanet highlighted a lack of coordination within the supply chain may

exacerbate skills shortages. Two points to note from the case study:

• the importance of understanding the timing of activities in order to enable effective

planning; and

• a perception that firms in the offshore wind energy sector were less interested in

developing long term relationships with other firms in the supply chain than firms in

the offshore oil and gas sector, which was seen as a barrier to supply chain

coordination and partly reflected the immaturity of the sector.

It was suggested that the reintroduction of a body such as the Offshore Suppliers Office

(OSO), which was originally established by the UK Government in the 1970s to try to

ensure that British industry obtained a large share of the opportunities generated by

North Sea oil and gas developments, could assist with the offshore wind energy sector. A

similar body to the OSO could be introduced to the offshore wind sector to ensure that

UK-based firms had access to, and were a part of, the growing opportunities. This could

facilitate some coordination of the supply chain on labour market issues as well.

4.2.3 Future developments exacerbating skills issues

One consistent piece of evidence to arise in the supply chain case studies, as well as

other consultations, was that skill shortages to date have been relatively modest.

However, the initial stage of projects, the Planning and Development stage, is facing

skills shortages now, in particular around Environmental Impact Assessments and

obtaining planning consent. The research found an expectation among key stakeholders

that once the sector scaled up its activity (stakeholders expected this scaling up to take

place from around 2015, whilst employment forecasts suggest this may be as early as

from 2013), severe skills shortages were possible in the subsequent stages of

development, i.e. Design and Manufacturing, Construction and Installation, and Operation

and Maintenance.

Consultees observed that the bespoke nature of each offshore development meant that

specialist offshore engineers with skills relating to specific offshore design codes and

software packages were required. In addition, offshore designs were said to be

significantly more detailed than onshore wind designs and had to consider a wider range

of design issues, such as transportation conditions and offshore operation and

maintenance. According to consultees, there was likely be a lack of capacity to address

a significant scaling up of activity, especially if other sectors, such as oil and gas, required

the same expertise and offered higher fees than the offshore wind sector. The main

impacts of skills shortages for the sector are likely to be threefold:


40

• delays in the speed at which development and deployment is able to occur, with

shortages in one stage of the project development process having knock-on effects

through delays in subsequent stages, e.g. shortages in labour required to gain

consent may cause delays in the subsequent construction and installation of projects;

• higher labour costs (as employers increase wages to attract the staff required) and/or

the introduction of labour from elsewhere in the EU, resulting in the loss of

employment opportunities (and the related capability development and learning that

may yield productivity benefits); and

• where shortages occur in tradable products and services, the import of more

goods/export of fewer goods than would otherwise have been the case, with the

medium scenario for forecasts of employment growth in design and manufacturing to

around 15,500 by 2020 (reported in Table 3.3) requiring that the UK-based sector

takes a significant share of the domestic market (resulting in around 8,000

manufacturing jobs) and of the international market (resulting in around 7,500

manufacturing jobs) (Cambridge Econometrics et al., 2011b).

4.3 Importance of timing

Chapter 3 contained forecasts of employment growth. Research carried out as part of

this study highlighted that the shape of the growth path between now and 2020 is

important both in terms of planning for recruitment by employers and in terms of planning

of provision by training providers. Research commissioned by RenewableUK and EU

Skills on scenarios of growth in the marine and wind sectors identified possible growth

paths under three scenarios for the offshore wind sector and its supply chain (Cambridge

Econometrics et al., 2011b). These are set out for different stages of development in

Figures 4.1 (low scenario of growth), 4.2 (medium scenario) and 4.3 (high scenario).

These show that employment demand in Design and Manufacture is likely to pick up in

particular from 2013/14-2014/15 and then again from 2016/17 onwards under both the

medium and high scenarios. Employment demand in Operation and Maintenance is

expected to increase in particular from around 2014/15 for both the medium and high

scenarios. Contrary to our own feedback from the workshops, which suggested that

employment in Construction and Installation would peak towards the end of the 2010-20

period under a high growth scenario (and perhaps later under more modest growth),

Cambridge Econometrics’s forecasts indicate that employment in this stage of

development will peak in 2015/16 and then plateau or slightly decline (under medium and

high scenarios). This is because it is assumed that installation rates plateau from 2015,

and that learning rates in the installation process improve the productivity of workers

(thereby reducing employment demand slightly).


41

Figure 4.1: Employment growth under low scenario

Offshore wind employment projections: low scenario

0

5000

10000

15000

20000

25000

30000

35000

40000

45000

50000

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Specialist Support Services (incltransport)Operations and Maintenance





Figure 4.2: Employment growth under medium scenario

Offshore wind employment projections: medium scenario

0

5000

10000

15000

20000

25000

30000

35000

40000

45000

50000

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020







42

Figure 4.3: Employment growth under high scenario

Offshore wind employment projections: high scenario

0

5000

10000

15000

20000

25000

30000

35000

40000

45000

50000

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020






Possible time-paths for employment growth to 2020 were tested with workshop

participants in relation to the three largest (in employment terms) stages of development,

namely Design and Manufacture, Construction and Installation, and Operation and

Maintenance. These were stylised accounts of possible growth paths, used in order to

stimulate discussion (the scenarios commissioned by RenewableUK and EU Skills were

unavailable at the time of the workshops). These discussions raised a number of issues:

• In practice, employment growth is likely to be ‘lumpy’, because it is linked to specific

developments.

• The expectation in the Scottish context is for there to be a short-term peak as wind

farms in the Scottish Territorial Waters are installed, followed by Round 3 wind farms

later.

• Any delays to installation are likely to push back employment growth. This could have

the potential to create very large ‘hikes’ in labour demand towards the end of the

period, which may be difficult to meet using UK sources alone. Uncertainty in the

sector (e.g. around Electricity Market Reform) could contribute to these delays.


43

• There is a risk that peaks of activity create a gap for employers in terms of under-

utilised labour immediately following the peaks whilst there is a wait for subsequent

projects to come on stream. This was highlighted as an issue following Round 2 wind

farms, and could be an issue following the development and deployment in the

Scottish Territorial Waters, and then again at the end of Round 3. However, there

may be an export market to tap into as Round 3 wind farms are completed.

• High and medium growth scenarios require very significant absorption of new staff

into the sector. This issue was raised as a concern in consultations and workshops.

The ease with which the industry can absorb new staff is a potential constraint on growth.

In particular, employers’ representatives on RenewableUK’s Skills and Education

Strategy Group highlighted this as a significant problem, partly because of the time taken

to train and induct staff, both in terms of elapsed time for a particular recruit before they

were fully productive and the dedicated time of mentors and/or trainers. In the supply

chain case study of Robin Rigg, it was noted that recruits spent six months in training

before they were job-ready. It is useful to examine the impact of different absorption

rates, based on bottom-up expectations, recent growth trends, and the available

forecasts of employment growth:

• The medium and high scenarios in Figures 4.2 and 4.3 require particularly high

absorption rates. For Construction and Installation, employment would need to

increase from 2012 to 2013 by 55 per cent under the medium scenario and 91 per

cent under the high scenario. For Operation and Maintenance, employment would

need to increase by over 25 per cent per annum under the medium and high

scenarios for 2013-14, 2014-15 and 2015-16. For Design and Manufacture,

employment growth is expected to be over 200 per cent for 2013-14 in both the

medium and high scenarios, remaining high for 2014-15; a further high growth in

employment is then forecast for 2016-17 (69 per cent for the medium scenario and 59

per cent for the high scenario).

• If the sector could absorb new staff at a rate of 20 per cent per annum, a figure based

on consultation evidence, then this would mean that employment in Operation and

Maintenance could grow from 500 in 2010 (based on Cambridge Econometrics et al.,

2011a) to just over 3,000 in 2020. This is well short of the lower end of the growth

forecast by Cambridge Econometrics et al. (2011b) of nearly 5,000 for this stage of

development. Though this obviously assumes no new employers enter the sector.


44

• The sector itself quadrupled in size between 2007 and 2010, however. If the

employment in Operation and Maintenance were to triple between 2010 and 2013,

then increase by 2.5 in the subsequent three years, and double in the three years

afterwards, the employment in Operation and Maintenance would be just under 8,000

in 2019. This is only just short of the upper end of the Cambridge Econometrics et al.

(2011b) projections of just over 9,000 in 2019 for this stage of development.

The implications of this analysis suggest that the top-down forecasts are not out of line

with the most recent employment growth trends achieved by the sector. However, it does

seem from the analysis that there are likely to be ‘pinch points’ from as early as 2013

(and lasting for a few years) when relatively significant increases in labour are required

and, as noted above, this is also around the time when other parts of the economy are

expected to increase their demand for staff (e.g. nuclear build, grid infrastructure, but also

more generally as the economy recovers from recession), thereby placing increased

pressure on the sector.

4.4 Supply of labour

With such a significant and fast increase in jobs forecast, the sector will need to identify

sources of labour. The sector will draw from a mix of sources, including existing

engineers and professionals, new apprentices, as well as looking to the future for

attracting young people. The workshops and consultations suggested that in the

foreseeable future, the balance between recruitment for technical roles between the

existing workforce and new entrants to the labour market (especially via apprenticeships)

is anticipated to be around 90:10 in favour of the existing workforce13

Consultations for this study showed that for many in the sector employment and skills

issues fell into three categories:

.

• short-term issues, linked to procurement of the necessary skills for planned

developments, which was often reliant on transfers of members of the current

workforce from one sector to the offshore wind energy sector. Likely prospects for

workers making a transition to the sector were identified as automotive, civil

engineering, construction, project management and the armed forces;

• medium-term issues, linked to attracting new entrants, in particular through

apprenticeship programmes; however, this source is expected to meet only a limited

portion of future demand for labour; and

13 This figure was cited in one of the workshops following the presentation of consultation findings.


45

• long-term issues, linked to the flow of children taking STEM subjects at secondary

school, the supply of STEM graduates and post-graduates, and the relative

attractiveness of the sector to STEM graduates. Responses to these issues were

cited, including Engineering UK’s ‘Big Bang’ schools campaign.

As noted earlier, this study focused on short-term and medium-term issues, with other

studies already addressing the issue of STEM teaching in schools and the relative

attractiveness of manufacturing and engineering careers.14

4.4.1 Short-term solutions: Experienced staff from other sectors

However, where relevant this

report includes comments received on the longer term issues.

A number of sectors have been highlighted as potential sources of labour, including

offshore oil and gas, aerospace, automotive and the military. Bird (2009), in a report for

IPPR, provided two relevant examples of how offshore oil and gas and aerospace

technicians could retrain for the offshore wind energy sector (Table 4.1).

Table 4.1: Top up training for offshore wind

Current job Core training requirement Additional low carbon skill requirement

New low carbon job

Offshore oil & gas maintenance technician

Apprenticeship, BTEC or NVQ/SVQ

Offshore wind technology Offshore wind technician

Aerospace technician Apprenticeship, BTEC or NVQ/SVQ

Technology –specific knowledge

Wind turbine technician

Source: Based on Bird (2009)

An often-cited source of employees for the offshore wind sector is the offshore oil and

gas industry. For instance, the Carbon Trust (2008) stated that 15 per cent of oil and gas

jobs related to mechanical, electrical and marine engineering and construction, and

represented a potentially available workforce of around 40,000. The argument has been

made that as North Sea oil and gas production decreases, these employees could

transfer their skills to offshore wind construction and installation and operation and

maintenance. The supply chain case study on Robin Rigg particularly highlighted the role

of former oil and gas workers. For example, Natural Power reported that it had attracted

people from the sector for a variety of reasons, including: the environmentally friendly

aspect of the industry; and the long-term (20+ years) viability of a career given the

anticipation of a reduction in oil and gas activity. Oil and Gas UK (2011) also reported the

fact that people were becoming more attracted to renewables (in preference to oil and

gas) due to the environmental credentials of the sector, with oil and gas needing to fight

14 For example, http://royalsociety.org/State-of-the-Nation-Science-and-Mathematics-Education-5-14/ and http://www.hestem.ac.uk/

http://royalsociety.org/State-of-the-Nation-Science-and-Mathematics-Education-5-14/�

http://www.hestem.ac.uk/�


46

back. However, consultees indicated that the offshore wind energy sector cannot rely on

the offshore oil and gas sector to supply its workforce for a number of reasons, including:

• Wages and benefits: Although Cambridge Econometrics et al. (2011a) did not

identify wages and benefits as the principal cause of hard-to-fill vacancies,

consultations indicated that the offshore wind sector often struggles to compete with

offshore oil and gas on wages and benefits, although some occupations can match

the pay and conditions. Crossley (2009) highlighted the fact that offshore oil and gas

are likely to remain more profitable than renewable energy, with the result that the

higher salaries and better benefits will continue to attract experienced engineers.

• Ageing workforce: The offshore oil and gas workforce is ageing, which limits the

possible labour pool available for transfer to the offshore wind energy sector. It also

means that many of those in the sector are likely to remain on current contracts,

which are linked to attractive pensions and that far from shedding labour to other

sectors the offshore oil and gas sector will need to attract new employees in order to

replace those who retire. According to Cogent (2010), the oil and gas sector will

require an additional 7,000 employees by 2017, mainly to cover replacement demand.

• Decommissioning activity in oil and gas: As well as replacement demand, there

will be demand for recruits in offshore oil and gas for decommissioning activity.

RenewableUK (2010) reported that there were 1.6 million tonnes-worth of oil and gas

facilities to be removed between 2010 and 2025, which means that the oil and gas

sector will still need substantial numbers of employees in the foreseeable future.

In practice, companies in the supply chain for offshore oil and gas could operate in

offshore wind given the transferable skills, competences and services. Therefore, there

will be some overlap of workforce, meeting some of the employment requirements.

However, again this is not straightforward. Consultations indicated that where firms

served both offshore oil and gas and offshore wind energy they were likely to favour the

sector that offered the greatest returns, often expected to be offshore oil and gas. It was

also seen as unlikely that firms would voluntary concentrate limited skills on one market,

especially one which was unpredictable, when they could serve more than one market

and balance out their risks. In other words, the research did not identify a means by

which the offshore wind energy sector could establish its own exclusive supply chain,

notwithstanding increased levels of vertical integration based around some of the large

players. This may not matter, and could be an advantage if there is a breadth of possible

suppliers to the sector. That said, the research did indicate some examples of firms

prioritising work in competing activities, because of the higher rewards available.


47

Other power and engineering construction sectors were also expected to be competing

for similar engineering skills to those required by the sector in the same period as the

development and installation of Round 3 wind farms. This was seen to have the potential

to exacerbate labour shortfalls. Grid upgrade was one of these areas, which is itself an

essential element of ensuring the viability of offshore wind farms (as identified earlier).

The second sector highlighted as a potential source of competing demand was nuclear

power with a build programme expected to increase demand for labour from 2014/15

onwards (based on ECITB Manpower Forecasts, 1st March 2011), the same time as the

expected increase in demand for Construction and Installation recruits for offshore wind

(Figure 4.2). Other sectors cited as offering transferable skills for the offshore wind

sector:

• Manufacturing sectors, such as aerospace and automotive: These two

manufacturing sectors in particular were highlighted in the consultation process,

mainly because of the parallels in the manufacturing processes and in supply chain

management. Some of the Tier 1 manufacturing companies15

• Military: According to consultees and workshop participants, ex-armed services

personnel possessed many of the appropriate technical skills and/or project

management experience that can be utilised in the offshore wind sector. They were

also used to working in difficult conditions and with unsociable shift patterns. There

was useful corroborating evidence from the supply chain case studies, which

especially highlighted the character and experience of ex-services personnel.

operate in these two

sectors.

More generally, a potential source of new entrants to the offshore wind sector could come

from sectors affected by the recession. This new pool of labour has been actively

targeted as a source of employees who can fulfil the demand from the offshore wind

sector. For example, one of the priorities of the Scottish Government’s Renewables

Action Plan (2009) was to “encourage recession hit employees to consider career in

renewables”. However, the literature on the impact of the recession suggested that those

jobs lost in the recession may not be an ideal fit with occupations needed by the offshore

wind sector. For example, Levy and Hopkins (2010), in a report for the Work Foundation,

found that “the vast majority of jobs that were lost were in manual, unskilled and

elementary occupations” (Levy and Hopkins, 2010, pp.26-27). Nevertheless, there was

evidence from the consultation work that redundant workers were identifying the offshore

wind sector as a possible move (see section below ‘Opportunities and challenges in

attracting experienced workers’).

15 Tier 1 companies are those responsible for the delivery of the finished assembly.


48

The employment of ex-military staff could contribute to the public-to-private rebalancing,

with the armed forces expecting to reduce its personnel by 11,000 (Morris and Sherwin,

2011). However, it is less easy to identify other job roles that are applicable to public-to-

private rebalancing, with the possible exceptions of planners, those contributing to EIAs

and some office functions. This is simply a function of the nature of the roles in the

offshore wind sector.

4.4.1.1 Opportunities and challenges in attracting experienced workers

The evidence on whether experienced workers can be attracted to the offshore wind

energy sector in absence of intervention is not straightforward. There are two particular

issues to consider: first, whether there is sufficient information on the opportunities in the

offshore wind energy sector; and second, whether any help or incentive is required to

encourage people to make the transition.

Consultations and workshops indicated that there is a perception of a gap in information

on available vacancies in the offshore wind sector. However, there is evidence that this is

being addressed by the market (e.g. specialist recruitment agencies) and initiatives such

as Think Power (through National Skills Academy for Power) and The Crown Estate et

al.’s (2010) work to explain career opportunities in the sector.

Moreover, there is clear evidence from the consultation work and the case studies that

experienced workers (including those recently made redundant) are identifying the

offshore wind sector (and perhaps renewables more generally) as a growth sector and a

possible source of employment. This may reflect the visibility of the ‘green agenda’. Two

examples from this research are pertinent:

• One college in the North East had entrants to its Level 2 and 3 courses on

Sustainable Energies (specialising in Wind) from the automotive sector, health and

safety specialists and an engineering graduate who was unable to find work. The

feedback suggested that individuals were paying the course fees (of £3,000)

themselves, as they saw it as a route into gainful employment.

• The supply chain case study on Robin Rigg highlighted that Mostyn Port had received

very high numbers of speculative applications from people who want to work in the

industry. Many of the applicants did not have a background in offshore work but saw

it as a growth area. The feedback also indicated that people were getting all of the

necessary certification in advance of applying for a job, often funded through

government subsidies for those who have been made redundant, such as the Welsh

Assembly Government’s ReAct Scheme.


49

The two examples above suggest that some information on the employment opportunities

and the sector’s requirements is available. They also highlight potentially differing

standpoints on the second issue, that is, whether any incentives or help are required to

encourage people to make the transition. The North East example suggests that some

people are prepared to make the investment in course fees themselves. The example

from Wales indicates that people will take advantage of government subsidies; though

this may incur ‘deadweight’, i.e. cover the costs of people who would have paid for

themselves.

A further issue on help to individuals raised by consultees was to ensure that employers

and applicants ‘speak the same language’ on skills and experience. This point was made

specifically with respect to brokering between employers and ex-services personnel. This

barrier was partly addressed by specialist recruitment agencies, which have emerged, in

particular in Scotland and by small-scale initiative by the National Skills Academy for

Power to broker links between ex-services personnel and employers, although one

consultee did express the concern that the sector may not offer a significant enough

number of jobs for the military to highlight it as a career option to those leaving the armed

forces, with around 11,000 members of the armed forces due to leave during this

spending review period the sector may need to scale up its efforts to attract relevant

workers.

4.4.2 Short-term solution: International labour

International labour was also cited as a means to address demand for skills in the future.

The supply chain case studies highlighted the role that international labour has already

played in fulfilling recruitment requirements. Consultations highlighted that a number of

opportunities in the sector will be met by international, especially European, businesses

using their own labour, and that European labour may well address UK shortfalls.

International labour is a useful back-stop for businesses, but this does mean that the UK

is failing to maximise employment and skills opportunities in a growing sector and that

some form of action may be required if use of the international labour market is not to

limit employment opportunities in the sector for UK nationals/residents.

4.4.3 Medium-term solution: Apprentices

In the medium-term, new entrants via apprenticeship programmes were seen as an

important source of skilled labour. EU Skills and RenewableUK have developed a

bespoke Modern Apprenticeship in Wind Turbine Operation and Maintenance to provide

a structure for up-skilling and re-skilling those wanting to work in the wind energy sector.

The first cohort of 20-30 was small relative to the expected demand for technicians in the


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sector as a whole, but it was seen as a part of the long term build-up in the sector, and

should the first cohort prove successful there is scope to expand the offer.

A significant issue highlighted with respect to apprenticeship programmes related to the

lead-times required for people to become fully trained, estimated at 4-5 years, with some

of this time spent on classroom-based training, and some time on-site, with supervision,

(which limits current productivity). This means employers need to be able to plan for

recruitment needs several years ahead, which is difficult in a sector facing uncertainties.

It is especially difficult for some small firms to be able to take on such risk. Some

consultees reflected on previous experience where large engineering firms took on more

apprentices than they would need and on completion of the programme would release

those they did not require to other parts of the supply chain. This practice no longer

happens.

Potential solutions for the current situation were raised by consultees:

• a ‘piggy back model’ – where small firms (with capacity for only one or two

apprentices) place apprentices with a large employer, as they cannot provide the

critical mass required by a training provider, and may not be able to provide all the

contextual or practical experience required for the apprenticeship in their workplace;

• a ‘shared apprentices model’ – where a group of (probably small to medium sized)

employers work with a training provider in order to give the hands-on experience

required to apprentices, and contribute to the costs of the programme; this model may

also be flexible enough to allow firms to avoid an early commitment to employing

someone full-time until they completed the course; and

• a ‘training provider as employer model’ – similar to the above, but with the training

provider covering all of the costs of the apprentices and recouping their costs once

people find an employer.

It was also argued that the apprenticeship programme should contain a core element that

would allow apprentices a) to specialise after 18 months or so; and b) build up

transferable skills that would only require limited ‘top up’ when moving between sectors,

e.g. offshore oil and gas to offshore wind.


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4.5 Education and training provision

This section looks at the interaction between the offshore wind energy sector and

providers of education and training. It draws on a review of the literature, stakeholder

consultations, workshops that included policy makers and education and training

providers, and two case studies based on the Thanet and Robin Rigg offshore wind farm

developments.

As noted above, consultees thought it was unlikely that Round 3 offshore wind farm

developments would produce a significant increase in employment until around 2015.

Furthermore, and as raised in stakeholder consultations, an increase in demand for

Operation and Maintenance staff was expected to be some time after this. Thus,

consultees suggested that from both a learner’s and a training provider’s perspective, it

was important to understand the likely flow (or pipeline) of developments, in order to

avoid an over supply of certain skills, as well as avoid the risk of under supply.

4.5.1 How have training providers been responding to the sector’s needs?

There was a limited amount of literature on the education and training sector’s capacity to

respond to the training needs of the offshore wind energy sector; given the relative

immaturity of the sector this was not surprising. Stakeholder consultations found steps to

respond to the sector’s needs were being taken by providers of further and higher

education (See Boxes 4A, 4B and 4C), sometimes in collaboration or in conjunction with

employers.

A common underlying theme in consultations was the embryonic nature of the sector,

which made it difficult for training providers to plan and invest, as demand was

unpredictable and not easily coordinated. The use of formal labour market information by

education and training providers was rarely cited, which is unsurprising given the

embryonic nature of the sector. Responses appeared to have been driven by direct

interaction between employers and providers of education and training (often lecturers

and trainers themselves), and the building on existing strengths within providers (e.g. in

engineering). Providers were identifying possible opportunities to fill courses that played

to their strengths, and were seeking to capitalise on them.

The difficulties of predicting demand (scale) and needs (content) appeared to be

especially difficult due to the multifaceted nature of the sector’s supply (value) chain and

the inherent uncertainties on likely locations of employment opportunities, for example in

likely centres for manufacturing turbines, as well as the timing and scale of

developments, which affected plans for training those with operation and maintenance


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skills. There was some evidence that colleges advertised courses in prospectuses as a

cost effective means of assessing demand.

Consultations highlighted a ‘lack of consistency in the market place’ both in terms of the

skills required by different employers and in terms of the standards amongst training

providers. One consultee from a training organisation observed: “Big companies are

inconsistent with the demands they have of their staff – some want ABC, whilst others

expect XYZ”. The consultee went on to say, “minimum standards were slowly developing”

but argued that a baseline set of standards “needed to be established soon”.

More than one education provider noted the need for employers and industry bodies to

develop “a minimum set of standards for what offshore training is required”, because

there was not enough agreement or uniformity of requirement. This meant some

employees repeated elements of programmes when they changed employers, essentially

wasting resources through duplication. It also increased the costs of provision as content

varied between courses run for different employers.

Consultations also flagged up the need for training providers to develop better working

relationships with industry (by which they meant employers and employer bodies like

RenewableUK), in order to ensure that they were developing training courses that were

relevant and useful to employers. It was thought that this would probably need to be an

“iterative process”, in order for all parties to “get it right”. In the short-term it was noted

that training providers needed to offer short top-up or conversion courses for more

experienced workers to move into the sector. In order for this process of engagement to

work, it was argued that employers needed to engage in open dialogue with training

providers, and be “prepared to pay for training”, including investments in providing the

“proper equipment” for students.

A particular concern among some training providers was the lack of access to turbines for

training purposes as manufacturers sought to protect information on their designs in order

to protect their commercial interests. It was argued that if firms wished to increase the

flow of workers while avoiding the opportunity cost of training staff in-house they would

have to open up access to turbines and other equipment. A contrasting view was also

provided by one consultee who argued that every college did not need a turbine and/or a

training tower. In their view, most training could be done in the classroom, with specialist

facilities only required on a couple of campuses.


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Providers of education and training remarked that there appeared to be two schools of

thought amongst employers. Some employers said they wanted people with good general

engineering degrees and that they would provide the ‘renewable context’ around a core

engineering base; but others said they wanted people with specific renewable energy

skills gained as part of their tertiary education.

One consultee argued that universities’ responses to the sector’s needs had been

“patchy”, as some institutions simply provided “bolt-on options” to existing courses. The

consultee emphasised the need for courses to be “properly contextualised”, i.e. applied to

the offshore wind energy sector’s needs. However, other consultees expressed the view

that in many cases the technical skills required by the offshore wind energy sector were

similar to other sectors, which meant that training providers were producing people who

could work in a mix of sectors, thereby managing their own risks in terms of demand and

allowing individuals the flexibility to choose sectors.

As well as the recruitment, retention and skill requirements of the offshore wind energy

sector, some consultees in the education sector referred to their own difficulties recruiting

and retaining staff in an internationally competitive market. Thus, poaching of staff and

pinch points in supply were highlighted as issues for education and training providers, as

well as for firms in the industry. The need for institutions to collaborate in order to provide

integrated offers to undergraduates and postgraduates alike was also highlighted.

Finally, it should be noted that some consultees (from industry as well as the education

sector) expressed concerns over the potential impact of changes in the funding

arrangements for students on the flow of new entrants to the sector. It was also

suggested that the lack of public funding for non-apprenticeship courses in England could

be a barrier to re-training for those wishing to make the transfer to the sector. Other

consultees expressed the view that employers could and would pay for the training that

they thought necessary. Examples were cited of some large employers in the sector

using offers to pay off student loans as part of recruitment packages and others offering

employment to prospective students. Some employers have negotiated bespoke courses

with universities for their staff.


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Box 4A Examples of initiatives undertaken by individual education and training providers in

response to the sector’s needs

• Carnegie College, in Fife, has a long history of educating and training engineers. As

a result of this background, and a significant donation ($1million) from a Canada-

based entrepreneur, the College has developed the Whitlock Centre in partnership

with Scottish & Southern Energy, Siemens, and EU Skills as part of its commitment to

energy. It developed the first bespoke range of Modern Apprenticeship technician

programmes for on- and off-shore wind energy with these partners (the first cohort

had started at the time of the research). Health and safety and project management

also forms part of the offer.

• Lowestoft College is a leader in the provision of maritime and offshore training. It is a

Centre of Vocational Excellence (CoVE) in offshore technology. In response to

employer demand, it has increased the number of marine safety courses on offer and

worked with partners (employers and other training providers) in order to develop a

broad package of training options. Its offer includes a 6-days-long offshore wind

safety programme. It also runs a year-long Energy Skills Foundation Programme to

prepare young people for work in the energy sector; alumni can get a 6 months-long

trial at one of eight employers who support the programme. The college has also

developed the Energy Skills Foundation Programme for 16-19 year olds.

• South West College (SWC), in Northern Ireland has a longstanding interest in

renewables generally. It runs City & Guild courses and a Foundation degree. Whilst

not focussing on offshore wind energy as such, it has increased provision, informed

by discussions with industry, including with the Global Wind Alliance,16

16 The Global Wind Alliance brings together over 1,000 experienced service engineers from the wind industry and beyond to help contribute to the successful operation and maintenance of wind farms across the world.

which focuses

on operation and maintenance. The option to run short courses, at the request of

employers, was being considered at the time fieldwork was carried out. The college

has experienced demand from students from varied background, from aged 17 to

aged 50, men and women and people with disabilities. The cost of developing

courses has been borne by the college; and students see it as accessible with course

subsidies coming from the Department for Employment and Learning and fees around

£1,000 a year part-time and £1,350 a year full-time; with an option to move on to a full

degree (at University of Ulster).


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Box 4B Examples of individual University responses to offshore wind energy’s skill needs

• Newcastle University runs two specific MScs. First, Renewable Energy Flexible

Training Programme (REFLEX) which has operated for six to seven years, and

targets engineers. Initially the take up came from those working in industry who

studied on a part-time basis. The balance was reported to have shifted to those with

under five years of experience, who study for the MSc full-time. Second is the MSc in

Renewable Energy, Enterprise & Management (REEM), which has operated for three

years, and targets those with non-engineering backgrounds. It focuses on ‘the

enterprise dimension’ of renewable energy. Take-up of the course was reported to

have increased very quickly, with 35 on the course in 2011. Both REEM and REFLEX

are modular, so modules can be taken as part of Continuing Professional

Development (CPD). This option was reported to have increased in popularity.

Partner and employer engagement seem to have been behind the decisions to

develop these specialist MScs. The University has followed the regional economic

strategy, led by One North East, in deciding to develop energy research and training;

the Energy Leadership Council for the North East was also cited as important.

Employer engagement comes particularly through the University Council.

• Strathclyde University is home to the UK Wind Energy Research Centre. It has

funding for 10 students to begin a four yr PhD each year for five years (50 students in

total). The first students started in 2009. Much of the PhD is based around research

for industry, with projects agreed with firms. It is aimed at the top end of research and

development and demand for places was reported to be ‘overwhelming’.


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Box 4C Examples of collaborative responses to offshore wind energy’s skill needs

• Thanet College is part of a new consortium of employers and training providers

formed in response to the opportunities associated with the London Array (a large

proposed wind farm located in the outer Thames Estuary and owned by Dong Energy,

E-ON and Masdar). The consortium builds on previous partnership working between

Thanet College and offshore wind farm owners, which included a local employment

information day and a two-week programme providing offshore training for 24

unemployed individuals with previous engineering qualifications or experience.

• In the wider EU context, consultees noted that some universities on mainland Europe

had collaborated so that each of them specialised in a specific element of a

renewables engineering requirement, with students able to move between institutions

(using the Leonardo programme). This was seen as a pragmatic solution to the

insufficient demand for a standalone offshore wind energy course in a given country.

• In the UK context, the Marine Technology Education Consortium (involving Newcastle

University, University College London, University of Southampton, University of

Strathclyde, Heriot Watt University and Rolls-Royce) was cited as an example of

collaboration between higher education institutions to provide a flexible response to

education and training needs. For 2011, the Crown Estate offered bursaries worth

£3,600 to support postgraduate study. Twenty-six modules are offered covering topics

such as design, engineering, regulation. The modules may be taken as part of CPD,

leading to a post graduate certificate, diploma or full MSc.

4.5.2 How has the sector responded so far?

Consultations highlighted a number of employer-led initiatives at both industry-level and

at the level of individual firms (Box 4D); however, it should be noted that they often

pointed to the fact that staff recruitment for Round 3 had been limited to the initial stages

of development, in particular planning and design.

Round 3 developers were reported to be undertaking relatively limited recruitment of

apprentice engineers, for example. In part this reflected the development cycle and in

part, some thought it reflected, the consortium nature of the Round 3 bids, where different

consortium members could meet the technical skills required without the need for

additional recruitment, e.g. by moving staff from onshore to offshore wind projects.

Consultees also noted only limited investment in workforce development, linked mainly to

health and safety issues.


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Some training providers thought that the larger firms in the sector were active in

promoting staff training, as evidenced by an increase in the number of enquiries their

college received. However smaller firms were thought to be “a few steps behind the

larger firms” in their thinking on future skills needs.

Examples of effective business engagement with training providers were provided by

consultees, including Mainstream’s co-investment with the outgoing regional

development agency One North East in a training facility at NaREC, where

Northumberland College runs the course, which is open to other employers; and

Shepherd Offshore’s involvement (alongside other employers) in the development of a

Foundation Degree in Renewable Energy at Newcastle College. Although, just as training

providers observed that employers were not coordinated, some employers noted there

was “no one place where all the required training is provided” and that “it might be useful

to see more coordinated provision”. The involvement of Scottish & Southern Electric,

Babcock and BiFab in the Whitlock Centre at Carnegie College, and the development of

the apprenticeships programme was cited as a positive example of an industry response.

However, the observation was made that those in the wind turbine sector appeared to be

maintaining “a watching brief” with expectations that demand for postgraduate training

might grow in “a year or so”.

As noted in the discussion of training providers above, there has been talk of the need for

‘shared standards’ on a number of issues, but consultees thought businesses currently

did not want to or at least did not find it easy to share commercially sensitive information

e.g. about product capabilities. Some consultees thought the UK should take a lead in

setting EU standards (e.g. health and safety) as a route to establishing a competitive

advantage, e.g. in the export of services to other parts of the EU. The National Skills

Academy for Power’s work on a competency accord (an employer agreement on skills

requirements) on transmission and distribution, and its hopes to roll-out the process to

other areas was cited in this regard. It was also noted that there had been some firm-

based collaboration on specific projects, e.g. the joint venture between Mainstream

Renewable Power and Siemens on SMart Wind (Hornsea Wind Farm). Notwithstanding

this type of initiative, there were concerns that employers’ fears over the potential

poaching of staff, as well as loss of commercially sensitive information, could limit the

extent and scope of industry collaboration.


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Box 4D Examples of industry and firm-level responses to the skills challenge

• Atkins the global engineering and design consultancy has developed an in-house

capacity to train its staff, the Atkins Training Academy. This is primarily aimed at

oil, gas and nuclear sector but provides a base for the offshore wind energy sector.

Along with other global firms, it has the capacity to transfer staff between

disciplines, e.g. to develop staff with general engineering expertise to meet the

requirements of the offshore wind sector.

• Marine Ecological Surveys (MES) a provider of environmental consultancy services

was concerned about the shortfall in the number of taxonomists. Demand for their

skills will grow as Round 3 developments are so much larger than earlier rounds

and will require many more samples to be taken than in Rounds 1 and 2; plus other

sectors, such as marine aggregates and port developers require similar skills. MES

has invested in increased capacity and has launched the School of Marine

Taxonomy in a joint venture with the Marine Biological Association of the UK. MES

took this route as it was disappointed by the response of universities to its idea of

setting up an MSc. MES can now offer short courses for practising professionals,

and summer schools for undergraduates, and work placements for MSc students

enrolled on marine biology MSc programmes.

• Vattenfall has provision for training and development opportunities in Sweden, and

recently undertook activities to support training in offshore wind in the UK, as part

of the development of the London Array, involving Thanet College, cited above.

• The National Skills Academy for Power (NSAP) covers all forms of power except

Nuclear, which has its own Academy. It is majority-funded by private sector

employers (an exception amongst National Skills Academies) and has a board led

by the private sector. It works with the main asset owners in the power sector and

performs a coordination role between employers and individuals and education

providers. NSAP has developed the Think Power hub, which provides case

studies and details of vacancies in the power sector. It has also developed a small

initiative, a Career Transition Partnership, which focuses on ex-forces personnel. It

addresses how ex-forces personnel market their skills to potential employers

through assistance with CVs and job-seeking.

A number of business consultees remarked that further state intervention was not

required in order to address the sector’s skill needs echoing the views of some education

and training providers who believed that firms could and would finance training needs

when the time came. The main role for the state was cited as the need to give certainty to

the sector on pricing and regulatory issues.


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4.6 How has the supply chain overall responded to the skills challenge?

One consultee made the observation that the offshore wind energy sector was

fragmented: development teams work on a project for between three and seven years,

after the development phase the project was often then sold on for construction, and may

then subsequently be sold to operators. This fragmented process placed limits on the

extent to which employers were considering or could consider workforce development

across the supply chain. Another consultee, who was part of the supply chain, contrasted

the sector’s approach with that of offshore oil and gas, which was said to be much more

interested in developing and maintaining a relationship over time with suppliers. The role

of venture capital in maintaining a more ‘transaction-based’ relationship was offered as

one explanation of the difference between offshore oil and gas and offshore wind energy,

a situation which may change as the offshore wind energy sector matures.

A similar point was made by some consultees in a slightly different way. They argued that

the large turbine manufacturers needed to take a greater role in coordinating the supply

chain, including skill needs, so that firms from manufacturers to vessel owners and cable

layers could build up a better picture of what was required; while at the same time

recognising that often turbine manufacturers were not appointed until some way in to a

development, and therefore were unable to perform a coordinating role.

4.7 Conclusions

This Chapter has looked at the main skills, labour market and training issues affecting the

offshore wind sector. The evidence indicates that there are a number of specialist roles

where hard-to-fill vacancies, in particular as a result of skills issues, are starting to bite.

In addition, the supply chain case studies identified that these challenges will increase in

future as the sector starts to scale up. Particular areas identified include:

• planners and Environmental Impact Assessment specialists (including taxonomists,

ecologists and ornithologists) for the Planning and Development stage;

• electrical engineers, high voltage electrical engineers and specialist offshore

engineering skills for the Design and Manufacturing stage;

• project managers, electrical engineers, cable jointers and specialist crew for

construction vessels for the Construction and Installation stage;

• wind turbine technicians and sales managers for the Operation and Maintenance

stage;

• divers, boat crew and other marine specialists for the Services stage; and


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• a general area in relation to “skills in the offshore context”, covering in particular

health and safety and survival.

The lack of sector attractiveness (in particular in relation to the engineering and

manufacturing roles), competition with other sectors and the difficulties in coordinating

within the supply chain were all cited as causes of skills shortages. Although the sector

did have a positive recruitment offer for those seeking to make sure their work had a

beneficial impact on the environment.

Whilst there are specific issues being experienced now with respect to specialist roles in

Planning and Development, the timing of likely increases in the demand for labour

highlights that there are likely to be ‘pinch points’ as the sector scales up from as early as

2013 (according to the most recent forecasting work). The absorption rates of new staff

will be particularly high and therefore challenging at this time.

The supply of labour will need to come from a variety of sources, mainly from other

sectors where there are relevant skills, but also new entrants through apprenticeship

programmes, and where domestic sources are not forthcoming from migrant workers. A

range of other sectors have been identified as possible recruitment sources, including oil

and gas, manufacturing sectors such as automotive and aerospace and the military.

There are some challenges here, notably competition on wages and benefits from the

offshore oil and gas sector, and how best to attract people from engineering and logistical

backgrounds. However, some actions are already underway, including responses driven

by the market. Apprentices are likely to make up a small portion of the workforce going

forward. There are potential barriers to the contribution apprenticeships can make, as a

result of the long lead-times for training linked to the uncertainty that currently affects the

sector.

In the longer-term, there are issues around sector attractiveness to young people, as they

make subject and career choices. Again, some initiatives already exist in this space,

though there may be a gap that is specifically related to renewables.

More generally, there does seem to be an inevitable focus in current actions on the

engineering and technical roles, given that this is the mainstay of the roles in the sector.

There is a danger that some of the more marginal, but nevertheless critical, roles are not

picked up in actions. Whilst NSAP is looking at the labour required for Environmental

Impact Assessment, other gaps that may need further attention are likely in planning,

project managers and the range of offshore roles such as vessel and boat crew and

divers.


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The chapter also reviewed the responses of training providers and firms in the sector’s

supply chain. It cited examples of firm-level initiatives, industry and education provider

collaboration and issues that may need to be addressed if the scale of short-term training

requirements is to be achieved. It also noted some reluctance among a number of

consultees (but by no means all) for further public intervention on skills; instead what was

said to be required was greater certainty on the regulatory framework in which the sector

operates. There are no systematic reasons why responses have been developed by

firms and training providers. In some cases, in particular with respect to training

providers, it seems that they identified market potential (in some cases following direct

engagement with employers). In relation to firm-level initiatives, these reflect responses

to market and organisational factors; many of the companies in the sector are well-

established (and have been operating in other sectors for many years), rather than newly

established businesses and have internal capacity to train and redeploy staff between

functions and countries.


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5 Mapping employment and skills opportunities linked to offshore wind energy generation

Chapter Summary • Proximity to Round 3 zones may well contribute to some local employment

opportunities, but alone it is unlikely to lead to substantial local employment growth. A

supportive environment is vital for the exploitation of opportunities. A supportive

environment may include investment in appropriate physical infrastructure (such as

port and other facilities), availability of existing skills in the workforce, access to

research and technological expertise and an existing relevant business base.

• The working patterns and arrangements for Round 3 wind farms, which will be a long

way from the coast, may limit the potential for local employment as operation and

maintenance staff are located on offshore rigs.

• A number of locations likely to see employment growth associated with the offshore

wind energy sector in the UK have been identified using quantitative mapping work,

based on existing concentrations of activity within the supply chain or within related

sectors/sub-sectors. The areas include: the east coast of Scotland, the Glasgow-

Edinburgh belt, the North of England (notably around Leeds, Sheffield, Manchester,

Hull and Humber, Cumbria and parts of the North East), the Midlands (especially

around Birmingham) and the South West and South Wales (in particular around

Bristol). There are also other pockets of activity, such as, in East Anglia and the

South of England, for example, associated with wind farms such as the London Array.

• This suggests that there may be some clustering of activity, but one or two locations

are unlikely to come to dominate employment in the sector’s supply chain as it relies

on existing patterns of business location. The locations identified through the

mapping work align with policy objectives to rebalance the economy spatially as many

concentrations of activity are outside the South East.

• In order to support the sector’s development (and spatial rebalancing), there are

potential implications from the analysis for national and sub-national policy-making,

local economic development and training provision. In particular, there may be

arguments for creating or developing physical and soft infrastructure that can support

employment growth in key clusters. This may include port facilities, and supply chain

initiatives that lie beyond the scope of this study.


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5.1 Introduction

Previous chapters have, for the most part, been spatially blind. This chapter looks at the

geography of opportunities in the offshore wind sector. It looks at:

• the factors affecting the location of employment opportunities;

• quantitative evidence on where current employment in sub-sectors with the potential

to supply the offshore wind sector is based in the UK; and

• the issues for policy makers, local economic development, businesses and training

providers.

The chapter draws on evidence from the existing literature and perceptions amongst

those consulted for the study. In addition, some indicative mapping using standard

statistical sources has been undertaken to locate the key sub-sectors that do, and have

the potential to, supply the offshore wind sector; and further mapping evidence has been

drawn from work undertaken by Envirolink Northwest.

5.2 Factors affecting the location of employment

5.2.1 Location of wind farms

It is often assumed that employment associated with the offshore wind energy supply

chain will be located near to the sites of wind farms, and that this could be an important

factor for local economic development and local employment. Indeed, consultations for

this study suggested employment was likely to be concentrated down the east coast of

England and Scotland (and also potentially in Wales, the North West and the south coast

of England), due to the location of sites for the development of wind farms and in part to

the location of existing expertise. Given the proposed size of wind turbines for Round 3,

it makes sense to assemble them close to proposed development sites. However,

location depends on other factors than proximity to sites, such as costs and the scope for

development in nearby ports.

Worldwatch Institute and Cornell University Global Labor Institute (2008) emphasised that

employment in manufacturing wind turbines and their components was not necessarily

tied to the location of the development sites but may well occur in those countries where

there was continued support for wind technology development.


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Operation and Maintenance jobs have tended to be located close to offshore wind farms

in the past. However, in the future this pattern may not be repeated, as offshore wind

farms are located far from the coast and may be serviced from rigs similar to

arrangements in the offshore oil and gas sector, where staff’s places of residence are not

necessarily on the nearest coast.

5.2.2 Port locations

Port facilities with the necessary facilities and commercial land for offshore wind could

provide a hub for wind turbine manufacturers and their supply chain, as well as providing

sites for construction and assembly. Therefore, ports are an important ‘driver’ of

employment locations.

BVG Associates (2009b) identified a perceived lack of UK port availability and capacity

amongst wind turbine manufacturers and also offshore wind developers. Nevertheless,

the report identified 20 port locations in the UK with potential in relation to Round 3

developments (Table 5.1). The east coast of Scotland with five possible port locations,

and the east coast of England with six were obvious likely focal points of employment.

Table 5.1: Port locations with potential for Round 3 and beyond

Broad UK location Ports South coast of England (x3) Portland, Southampton, Newhaven East coast of England - Kent and East

Anglia (x3) Ramsgate, Medway, Yarmouth

East coast of England – Midlands and North (x3) Humber, Hartlepool and Tees, Tyneside

West coast of England / North coast of Wales (x2) Barrow-in-Furness, Mostyn

South coast of Wales (x2) Milford Haven, Swansea/Port Talbot

East coast of Scotland (x5) Methil (Fife Energy Park), Dundee, Montrose,

Peterhead Bay, Cromarty Firth (Nigg Bay and Highland Deephaven)

West coast of Scotland / Northern Ireland (x2) Hunterston, Belfast

Source: BVG Associates (2009b)

Some of these ports were used for Rounds 1 and 2 offshore wind farms, e.g. Mostyn,

Belfast and Cromarty Firth. However, the requirements for Round 3 are more extensive,

given the larger scale of Round 3 wind farms. Moreover, port owners’ decisions on how

best to develop their ports (and their access to finance) will determine the potential for

employment generation from offshore wind. Thus, a risk that potential ‘UK jobs’ might be

lost to competing facilities on the continent was identified by consultees. BVG Associates

(2009b) identified the following as possible competition for employment related to North

Sea wind farms: Esbjerg (Denmark); Bremerhaven, Emden and Cuxhaven (Germany);


65

Ijmuiden and Vlissingen (Netherlands); and Dunkerque (France). A point made in the

consultations was the need to attract inward investors, notably European-based

manufacturers, to ensure that jobs were created in the UK, and the role that infrastructure

would play in this process was highlighted. The government’s £60m fund to support the

development of docks in England, with funds for the devolved territories, was seen to go

some way to addressing this issue.

Furthermore, Scottish Enterprise (2010) set out a route map for the development of port

infrastructure in Scotland. It identified that an investment of £223m could create a set of

clustered port sites supporting in the region of 5,180 jobs in the offshore wind energy

sector. The report identified two clusters for initial investment, which were Forth/Tay

(comprising Leith, Dundee and Methil) and Moray Firth (comprising Nigg and Ardersier).

5.2.3 Transport costs

One of the key issues for manufacturers will be minimising costs, including production

and transport costs. If UK manufacturers can produce components and parts

competitively and to high quality, then there is scope for manufacturing to grow in the UK.

One of the advantages for UK manufacturers might be the proximity to assembly, as

transport costs may be significant for the larger parts required for such large pieces of kit.

To some extent, therefore, there may be some clustering of activity around port locations

where assembly is more likely to exist. This would also facilitate minimisation of transport

costs when serving the export markets of continental Europe, which are expected to grow

in the future. The view of Scottish stakeholders in the workshop held in Edinburgh was

that clustering around key ports where there is to be public investment was expected.

However, this may not be consistent with the location of existing pools of expertise in the

overall supply chain.

5.2.4 Existing expertise

Some consultees suggested that existing expertise and the ‘traditional footprints’ of

manufacturing (and legal and financial capacity) may be a significant factor in determining

where new employment was located rather than the location of the Round 3 sites. This

may be consistent with some of the port sites identified in Scotland, which are in areas

with an industrial heritage; but it might also imply that locations such as South Yorkshire

and the West Midlands could be key locations for employment growth.


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5.3 Quantitative evidence on current employment

Standard Industrial Classification (SIC) codes do not lend themselves to an easy or neat

definition of the offshore wind sector. Douglas-Westwood (2009) identified sub-sectors

(using four-digit SIC codes) that may be relevant to the offshore wind sector. This section

draws on this work to map employment in sub-sectors of relevance to the following

stages of the offshore wind energy supply chain:

• Design and Manufacture;

• Construction and Installation;

• Operation and Maintenance; and

• Planning and Development and Services17

The list of sub-sectors used is detailed in Annex A. This mapping exercise is not a

comprehensive assessment of those sub-sectors that are currently or have the potential

to supply the offshore wind sector. Rather, the analysis provides an indicative

assessment of where relevant current employment is based and where it may grow, as a

means for informing sub-national and Local Enterprise Partnership activity.

.

The resulting maps are set out in Figures 5.1 to 5.4. These include identification of the

top 10 districts by existing numbers of employee jobs. There are a number of messages

from the analysis:

• There are a number of geographies that consistently have high numbers of

employees in relevant activities, in particular the east coast of Scotland, the Glasgow-

Edinburgh belt, the North of England (notably around Leeds, Sheffield, Manchester

and parts of the North East), the Midlands (especially around Birmingham), and the

South West and South Wales (in particular around Bristol and in Cornwall).

• Several districts appear in the top 10 for relevant employment levels in all four

categories. These are Aberdeen, Birmingham, Leeds and Westminster. The fact that

Westminster appears consistently in the top 10 may be due to the location of head

offices, to which employment is attributed.

• The traditional manufacturing footprints around the West Midlands, West Yorkshire

and South Yorkshire have high employment levels for Design and Manufacture.

17 These two were combined given the relatively low number of sub-sectors included here. It must be noted that this category excludes a range of activities that are generic to a large number of sectors and so in no way specific to offshore wind. These include the following activities identified by Douglas-Westwood (2009): local authority, land/premises, legal, freight transport, marketing, market research, media, medical, personnel, networking/events.


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• There are other locations for which the concentrations of activities in individual

categories are high, e.g. Derby for Design and Manufacture; Norwich, Great

Yarmouth and parts of Cambridgeshire for Operation and Maintenance; and Suffolk

for Coastal for Planning, and Development and other services.

• The current centre for offshore oil and gas, that is Aberdeen and the north of

Scotland, is a key employment base.

• Cities are important employment centres for Planning and Development and Services.

The mapping excluded some activities such as legal services, marketing and

land/premises activities, so as not to skew the analysis too much, and because

finance and legal clusters are already well known.

These maps give a general picture across Great Britain18

• as indicated in Figures 5.1-5.4, there are high employment densities in Leeds, South

Yorkshire and around Manchester; and

to identify potential locations of

employment growth in the offshore wind energy supply chain, assuming there is capacity

within the UK’s labour markets to meet demand (as opposed to foreign locations and

labour meeting demand). In order to provide a more fine grained analysis hands-on

business engagement is required. Envirolink Northwest has undertaken such activity, as

part of the work supported by The Northern Way, and has produced detailed mapping

information at individual firm-level across the North of England. Envirolink Northwest

used its own data on known and potential offshore wind supply chain companies to

produce the map shown in Figure 5.5. This highlights that:

• in addition, Tyneside and Teesside in the North East, Barrow and other parts of

Cumbria, Liverpool and Hull and northern Lincolnshire have high employment

densities.

The research and mapping undertaken by Envirolink Northwest indicated potential

employment growth around certain ports, e.g. around the Humber, and Tyneside.

The evidence portrayed in the mapping highlights existing concentrations of activity on

which the offshore wind sector might build in terms of employment and supply chains. It

also suggests that there might be a spatial rebalancing opportunity through growth of the

offshore wind sector.

18 The mapping used Annual Business Inquiry data, which is available for districts in England, Scotland and Wales – as a result Northern Ireland is excluded from the analysis.


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Figure 5.1: Number of employees working in Design and Manufacture sectors in UK district authorities in 2008

Source: SQW based on 2008 data from Annual Business Inquiry employee analysis SIC 2007 dataset.


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Figure 5.2: Number of employees working in Construction and Installation sectors in UK district authorities in 2008



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Figure 5.3: Number of employees working in Operation and Maintenance sectors in UK district authorities in 2008



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Figure 5.4: Number of employees working in Planning, Development and Other Services sectors in UK district authorities in 2008



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Figure 5.5: Densities of businesses supplying or with the potential to supply the offshore wind sector in the North of England

Source: Envirolink Northwest (2011)


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5.4 Key issues to draw out for policy makers, local economic development and training provision

The Crown Estate (2010a) noted that “a single region cannot deliver the requirements to

support the scale of development alone” (Crown Estate, 2010a, p.2). There are a

number of geographies that can contribute and benefit from employment opportunities

based on existing sector footprints and expertise, port locations and proximity to Round 3

sites. Therefore, whilst there may well be clustering around key locations, one or two are

unlikely to dominate. This chapter noted that there are competing locations in continental

Europe, in particular to service offshore wind farms located in the North Sea, highlighting

the risk to realising employment growth forecasts.

There are a number of implications that may flow from this for different audiences:

• Policy makers may wish to consider what infrastructure is required in particular

geographies to create the conditions or build enablers to contribute to employment

growth, i.e. as part of a holistic approach to developing the sector19

• Local economic development partners (including Local Enterprise Partnerships in

England) ought to consider the potential for their geographies to benefit from

employment opportunities, what actions are required to address gaps or barriers, and

what local assets could be built on. This might include considering issues around the

workforce (including the existence of applicable skills in declining sectors and/or the

need to attract new entrants into the sector); physical infrastructure including sites,

premises and ports; and local employer engagement. Given the spread of the sector

and its supply chain, LEPs may also want to consider joint-working across territories

(e.g. the North of England) or nationally.

. This could

include port infrastructure and other facilities (that are locally-specific) and softer

infrastructure such as supply chain initiatives (that would operate at wider

geographies). As in Scotland, some of the decisions on investment, e.g. in port

infrastructure, may be need to be taken strategically, and be based on potential and

existing market interest.

• In relation to training provision, the assessment in this Chapter does highlight a

number of key geographies. This starts to bring together an evidence base that could

be used to identify where it may be appropriate to concentrate training provision

and/or establish geographically-based centres of excellence.

19 Pringle et al. (2011) identified that holistic approaches were likely to be important in effective policies towards rebalancing.


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6 Findings and implications for action This final chapter summarises the study’s main findings and the implications for possible

actions by individual firms, the sector overall, training providers, individual learners and

employees, and government with regard to skills and training. It is important to note that

the sector faces other challenges which many see as more important than the skills

challenge. That said, as skills are ultimately a derived demand, addressing these

challenges in order to maximise the potential of the sector, will ultimately lead to greater

demand for employment and skills to enable the sector to grow. In addition, some of the

challenges identified relate to technical issues such as building viable financial models to

inform investment decisions that have links to the availability of skills and the ability to

innovate.

Consultees had different views on the need for (and merits of) further state intervention to

address the sector’s skills issues. Some consultees were strongly in favour of ‘the sector’

and ‘the market’ being left to find solutions to skills issues; others thought government

had an important role to play in addressing gaps in information; difficulties in coordinating

the activity of employers and providers of training; and in subsidising the costs of

education and training that had wider public benefits, e.g. mitigation of manmade climate

change.

The chapter concludes by looking at links to rebalancing objectives, implications for other

emerging sectors and implications for further research.

6.1 Non-skills issues facing the sector and potential responses

The literature reviews identified a number of non-skills related barriers to realising the

potential of the offshore wind energy sector, in particular in relation to:

• regulation and pricing – where the process of electricity market reform introduced

some uncertainty into the energy sector, affecting short and long term planning;

• access to finance – where the lack of data on the sector due to its relative immaturity

and the uncertainty over the regulatory environment in which it operates makes the

pricing of risk and therefore access to finance that much more difficult;

• connectivity to the grid – in particular the costs of connecting to the grid affect

investment decisions and the sequencing of development;

• lack of the necessary infrastructure required by the sector – especially port

infrastructure;


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• delays in the planning process – some but not all of which are related to an

insufficient supply of the necessary skills; and

• increasing commodity prices raising the costs of development.

These issues contributed to a reported fall in the level of private investment in renewable

energy in the UK, down from the equivalent of $11billion in 2009 to £3.3 billion in 2010

(Stacey and Hook, 2011). However, the UK index on offshore wind in the Ernst and

Young (2011) country attractiveness indices for renewables has held up well, remaining

number one in the world in February 2011.

In broad terms, many of those consulted as part of the study were calling for greater

certainty for the sector, as a lack of certainty can constrain decisions made by businesses

in particular, but also training providers and individuals interested in working in the sector.

It was felt that the UK government could provide more certainty for the sector through its

response on electricity market reform. In addition, government could also signal its

commitment to offshore wind more specifically through other means, e.g. investment in

infrastructure to support the sector, notably port infrastructure and initiatives to support

supply chain development. Attracting inward investment, which infrastructure investment

in ports would facilitate, was also noted as being important for the development of

offshore wind as a growth sector.

An important point to emphasise is that some of the technical and financial challenges

have skills inherent within them. Addressing the challenges in a viable way, and so

maximising the potential of the sector, will require investment and deployment of skills

and knowledge.

As well as the need for action at the national level, the study identified areas where sub-

national activity may assist the sector’s development. The study identified a number of

geographical clusters where the offshore wind energy sector was located and/or may

grow, in particular in parts of Scotland, the North of England and North Wales, the

Midlands and the South West of England and South Wales. In addition, there are further

pockets of clustering and/or opportunity in East Anglia and the South of England (e.g.

associated with wind farms such as the London Array). Relevant authorities and

partnerships in these areas need to consider the potential within their geographical

footprints for growth in the sector and what, if any, steps they should take in order to

maximise employment creation.


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In England, established sub-national arrangements were in a state of flux at the time the

research was undertaken. Previously, the Crown Estate has worked with Regional

Development Agencies in England, in particular on supply chain events to ensure firms

located in the UK are aware of the opportunities in the sector and the requirements of

doing business with the sector. New sub-national arrangements, e.g. Local Enterprise

Partnerships, may need to consider what role they should or could play in future. For

example, they might develop joint-working arrangements in support of offshore wind

energy (or renewables more generally) to develop the supply chain. These arrangements

may take place within certain territories, e.g. the North of England or the South West of

England, or more broadly, e.g. across the whole of England. A number of LEPs are likely

to be relevant to such arrangements, including: North Eastern; Tees Valley; Leeds City

Region; Sheffield City Region; Greater Manchester; Liverpool City Region; Cumbria;

Cheshire and Warrington; Black Country; Birmingham and Solihull with East

Staffordshire, Lichfield and Tamworth; West of England; New Anglia; and Essex, Kent

and East Sussex (and the prospective LEP for Hull and the Humber). The governments in

Scotland, Wales and Northern Ireland already have taken steps to develop a coordinated

policy response to the opportunities, which means they may be better placed to grasp the

opportunities than areas in England.

6.2 Issues affecting skills and labour supply

6.2.1 Occupations and skills where shortages are expected

This study identified a number of labour and skills-related issues which the sector must

overcome if it is to grow at the rates that have been forecast. Skills shortages are now

being experienced with respect to the Planning and Development stage and were

expected by consultees to increase as the sector scales up its activity from as early as

2013 (and beyond). The shortages were identified in a number of engineering/technician

and non-engineering roles, in particular:

• electrical engineers, high voltage electrical engineers, specialist offshore engineering

skills, cable jointers and wind turbine technicians;

• planners and Environmental Impact Assessment specialists (including taxonomists,

ecologists and ornithologists);

• project managers;

• specialist crew for construction vessels, divers and boat crew; and

• a general area in relation to “skills in the offshore context”, covering in particular

health and safety and survival.


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The main impacts of skills shortages for the sector are likely to be threefold:

• delays in the speed at which development and deployment is able to occur, with

shortages in one stage of the project development process having knock-on effects

through delays in subsequent stages;

• higher labour costs (as employers increase wages to attract the staff required) and/or

the introduction of labour from elsewhere in the EU, resulting in the loss of

employment opportunities and the related capability development and learning that

may yield productivity benefits; and

• where shortages occur in tradable products and services, the import of more

goods/export of fewer goods than would otherwise have been the case.

6.2.2 Factors affecting the supply of skills to the sector

Several factors affecting the supply of skills to the sector were identified in the research.

Manufacturing and engineering were reported to suffer from a perception, especially

among young people, that they offered unattractive career options. This perception was

exacerbated for the offshore wind energy sector by the remoteness of some of the

employment opportunities, and the dangerous working conditions sometimes faced.

There was also a sense that despite the work of the Crown Estate and RenewableUK,

and some limited evidence of individuals using their own initiative to gain skills prior to

seeking employment in the sector, people often lacked the information required to assess

the employment and career opportunities the sector had to offer, both with regard to

short-term opportunities that could be taken up by people currently working in other

sectors, and in relation to long-term career opportunities for young people who were

choosing their specialisms in school.

Strong competition for recruits, especially from more established sectors, such as

offshore oil and gas, and from non-engineering sectors, such as financial services, was

identified as an issue that might restrict the sector’s growth. In some cases, engineers

and non-engineers may be responding rationally to the attraction of greater rewards in,

for instance, offshore oil and gas and financial services. In this case there would be no

labour market reason for the state to intervene in the sector, as the price mechanism was

simply performing its function; although there may be wider environmental reasons for

intervention i.e. it could be argued that in order to respond to manmade climate change

the renewables sector requires state support to attract workers; perhaps as part of

broader strategies to move from a carbon intensive to a low-carbon economy. There

could also be strategic or policy reasons associated with sectoral rebalancing and

improving the long-term competitiveness and productivity of the industry in the UK.


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Other contributory factors to skills shortages included the requirement for recruits to have

relevant experience and/or prior accreditations to be able to work on projects. Plus, there

were difficulties coordinating the activities and employment strategies of the different

elements of the supply chain, which meant not only were education and training providers

unable to fully understand training needs, but that sometimes firms had to ‘poach’ or

recruit short term, contract staff in order to meet deadlines. The lead-in times to train

apprentices and the uncertainties around the numbers of apprentices likely to be required

were further contributory factors leading to skills shortages.

Currently, businesses and individuals from abroad are capitalising on the growth of the

sector in the UK: the supply chain case studies particularly demonstrated the use of

foreign firms and labour.

6.2.3 Bottlenecks on workforce planning and training

The anticipated growth in employment in the sector from around 2015 implies relatively

high ‘absorption rates’ (the percentage of new employees relative to the size of the

current workforce). The absorption rate is potentially a bottleneck due to the training

needs associated with induction and health and safety and the opportunity cost to firms of

releasing staff and resources to train new entrants, when those staff could be employed

in the delivery of developments.

A number of additional training issues were raised in the research, in particular:

• absence of good information on the sector and its growth, feeding into cautious

decisions and investments by firms and training providers (information and

coordination failures);

• lack of minimum or shared standards, e.g. on health and safety, which increased

costs and a lack of clarity on training (information and coordination failures);

• linked to the points above, the costs to training providers of developing courses and

training facilities, exacerbated by competitive pressures in the sector restricting the

sharing of equipment and joint commissioning (coordination failure); and

• lack of flexibility in the operation of apprenticeships, with the need for a core

programme for the first 18 to 24 months and the development of options for

subsequent specialisation, e.g. nuclear or offshore wind.


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6.3 Options for action on skills, the workforce and training

The evidence highlighted a number of concerns about the future supply of appropriately

skilled labour in the offshore wind sector which could restrict the ability of the sector, and

firms and individuals within it, to maximise growth and productivity. The research

identified a number of potential actions that might address the employment and skills

issues raised in the research. Workshops with training providers and policy makers

provided a testing ground for some potential responses. Table 6.1 sets out the options for

action that were discussed by consultees, the issue that each action could address, the

actors that would be involved, and a summary of the evidence for and against further the

action being taken by the public sector.

Conclusions as to next steps were based on tests of:

• Is there a case for government spending or intervention e.g. due to a ‘market failure’?

• Is there a role for non-government actors and local or sub-national bodies, e.g. in

undertaking activity to meet national or sub-national labour market needs?

• Is there potential for government support to encourage or enhance market and

voluntary activity, e.g. links between employers and training providers, which would

become sustainable once the approach had been tested?

The tests were informed by the spending and policy priorities of the UK government and

devolved administrations, and the institutional capacity at national and sub-national levels

to lead employment and skills initiatives and promote sector development. In particular,

the study team sought to take into account changes in the institutional arrangements for

sub-regional economic development in England (where the transition from RDAs to LEPs

meant there was a period of turbulence and instability, coupled with a significant

reduction in resources available for sector development); and the shift from top-down

initiatives from central government, in favour of bottom-up activity often led by employers

or non-public bodies with local knowledge. While noting that arrangements in the

devolved administrations were different from (and likely to be more stable than) those in

England.

Based on this approach, a number of actions were identified for the state (in this context

defined as ‘UK national and local governments’ and ‘national government agencies’);

employers and training providers; and, over time, sub-regional partnerships, such as

LEPs, which are summarised in the subsequent sections.


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6.3.1 Potential actions for government

The government has regulatory, tax and spending powers that are of direct relevance to

the development of the offshore wind energy sector and its ability to meet its employment

and skills needs. A number of potential financial actions, in addition to those already

taking place were identified as potentially useful, such as incentivising people to work in

the sector using the tax system (e.g. graduate engineers). However, these were not

favoured in the workshop discussions due, in part, to their cost and, in part, to the

practical difficulties associated with targeting support to the offshore wind energy sector,

as opposed to other sectors that require similar skills.

Two actions were highlighted for government, and a third where it could enhance the

actions of others:

• First, there was broad consensus on the need for state action to create certainty for the sector in relation to regulation, pricing and planning arrangements (potentially including support for physical infrastructure), which would facilitate skills

and workforce planning in the sector.

• The second specific action for the state highlighted by consultees was to enable flexibilities in the funding for apprenticeships, for example flexibility to allow small

firms in the supply chain to ‘share’ apprentices (apprentices would not have a named

employer at the start of the scheme, as normally required). This could potentially

increase the absorptive capacity of the sector by working with small firms, rather than

relying mainly on large employers.

• There was also some evidence to suggest that, given uncertainties over the sector’s

growth path (due in part to uncertainty over industry regulation and the planning

system), there may be a case for government support to scale-up industry-led skills development initiatives. This would signal government support for the sector

in the long term and assist in addressing barriers to employment and skills growth in

the short term. In practice, the most cost effective means of providing such short-term

support are contestable ‘challenge funds’ (e.g. Growth and Innovation Fund), where

employers and training providers have to demonstrate the additional impact

government support could provide, relative to what they would achieve on their own.

The extent to which governments may decide to intervene is likely to vary between the

four nations. The Scottish Government, for instance, is particularly committed to

renewable energy as a sector of economic growth, and has earmarked funds to be

invested in physical infrastructure (such as ports) and may be keen to enhance the

actions of industry-led initiatives working with development agencies (e.g. Scottish

Enterprise, Highlands and Islands Enterprise and Skills Development Scotland).


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6.3.2 Potential actions for employers and training providers

The consultations and workshops also raised key areas for action by employers,

employer bodies, and education and training providers, sometimes in partnership. In

some cases, these built on existing initiatives or examples of good practice that could be

shared and disseminated. Key actions for this group include:

• the development of employer networks to share information, and/or operate ‘peer

reviews’ of employment and skills practices to generate a culture of learning and

investment in workforce development in the sector that may contribute to the

development of ‘high performance workplaces’;

• greater coordination between employers and external training providers to address a

range of key issues, including providing timely labour market information to facilitate

the development of course packages (sector bodies are also likely to have a key role

here, in providing labour market information), the use of external training providers to

ease issues over absorptive capacity and lack of capacity to deliver in-house training,

and the investment in shared training facilities;

• coordination between education and training providers in order to enable them to

specialise in certain aspects of a learning programme and therefore share the costs of

provision;

• minimum professional standards developed on a voluntary basis through employers

and employer bodies or through formal licensing schemes that mean providers keep

down course development costs and individual members of staff avoid repeating

similar courses; and

• continuation (and scaling up as required) of existing initiatives on sector

attractiveness, both generally and that target particular groups (e.g. ex-forces

personnel).


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6.3.3 Potential actions for sub-regional partnerships

Finally, the role of sub-regional partnerships, such as LEPs in England, was raised during

the course of the study. The responsibilities, resources and capacity of each LEP will

vary from partnership to partnership, and those LEPs where the offshore wind energy

sector is prevalent could help to establish bottom-up, local initiatives to help maximise

employment and skills in their areas. The actions may be in relation to: promoting the

sector as a source of employment; encouraging supply chain development (possibly in

conjunction with other LEPs); attracting inward investment (e.g. through enterprise

zones), and making the case to central government for funding for infrastructure and/or

employer-led initiatives (e.g. via the Regional Growth Fund in England).


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Table 6.1 Summary of skills issues, potential responses and evidence need for and support for action

Issue Potential response Who would be involved? Evidence of need for or support for action

Lack of awareness/costs of

finding information about

career opportunities in the

sector

Provision of an increased quantity and better

quality information on careers in the sector,

e.g. information on career paths and returns

to qualifications

Advice and guidance on opportunities in the

sector targeted at those leaving the armed

forces as part of the effort to rebalance the

economy

Promotion of employment opportunities to

women, in what have been traditionally

male-dominated occupations, to increase

overall supply

Promotion of lifelong learning to individuals

given the ‘topping-up skills’ required by a

move into the sector

Lead: Sector bodies, such

as RenewableUK; National

Academy Skills for Power;

Sector Skills Councils;

Careers Service

Support: Businesses/

employers; Crown Estate;

Private sector recruitment

agencies; Education and

training providers; sub-

national arrangements, such

as Local Enterprise

Partnerships

RenewableUK and the Crown Estate are

aware of this issue and have responded to it

with online and ‘hard copy’ material. This

material will need to be refreshed and

actively promoted and disseminated.

Furthermore, private sector recruitment

agencies promote high level opportunities in

the sector to people working outside the

sector and are incentivised to do so. It is not

clear that state intervention is required to

‘enhance’ or alter this market-driven process.

The new all-age careers service, due to

come on stream autumn 2011, could be

used to promote opportunities in the sector

to those already in work as well as 13-19

year-olds.

The opportunities in the sector may appear


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relatively small to those giving career advice

to those leaving the armed forces, greater

effort to raise awareness of the opportunities

in the sector for ex-forces personnel may be

required. This would require state

intervention in the sense that the state is the

employer managing the exit of personnel

from its employment.

Lack of sector attractiveness

linked to a perceived relative

unattractiveness of

engineering and

manufacturing careers in

general

Promotion of STEM subjects in schools, as a

long term response to increase the supply of

engineers

Promotion of STEM subjects by universities

Promotion of manufacturing as a career

option in careers advice – and as part of

efforts to rebalance the UK economy

Promotion of the attractiveness of the

offshore wind sector in particular and the

renewables sector in general as a sector

Lead: Careers Service;

Sector bodies, such as

RenewableUK; National

Academy Skills for Power;

Sector Skills Councils


employers; Crown Estate;

Private sector recruitment

agencies; Education and

training providers

This is a sub-set of wider issues related to

the study of science, technology,

engineering and maths (STEM subjects) and

perceptions of relative unattractiveness of

jobs in manufacturing in the UK. The

offshore wind energy sector contributes to

wider efforts to address this issue, which

involve government, educators and voluntary

activity already, e.g. infrastructure and utility

companies’ work in schools to promote

understanding of the role of STEM in


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making a positive contribution to the

environment as well as the economy

Incentives to those who choose STEM

subjects and go on to work in manufacturing,

e.g. assistance with paying off student loans

proposed developments in an area. Firms in

the sector also carry out local activities,

linked to developments, where the

employment opportunities are tangible and

where firms foresee a need for a supply of

staff in the long term. It is not clear that

additional government intervention is

required to address specific concerns of the

sector, and there is evidence presented in

this report of interest amongst individuals in

applying for careers in the sector.

Competition for workers with

similar skills from other

sectors and relatively lower

fees and/or wages offered by

the sector relative to offshore

oil and gas

Use of mobile labour, potentially supported

by EU programmes to ensure a more

responsive EU labour market, to increase

short term supply and mitigate wage

pressure

Limit development activity to only the most

profitable developments that can afford to

pay higher fees and salaries

Lead: Businesses/

employers in the supply

chain

This response may be one that UK policy

makers wish to avoid in its efforts to

rebalance the economy but it is clear that it

remains an option for employers and one

that is likely to be used in the short-term, if

the supply of the necessary skills in the UK

proves to be relatively inelastic


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Uncertainty over the sector’s

growth path leading to under-

investment in staff training in

the supply chain

Provision of greater certainty over the

regulation of electricity

generation to assist decision-making on

investments in employment and skills, as

well as capital in the offshore wind energy

sector

Coordination of policy by policy makers

working on industry regulation, economic

and spatial development, and the

employment and skills system; in order to

ensure complementary policies are

developed in the different policy domains

Lead: Businesses/

employers, UK Government

on regulatory certainty

Support: Education and

training providers; Sector

bodies, such as

RenewableUK if

coordination/brokering of

employer groups is required;

Crown Estate as supply

chain lead; UK Government

and devolved

administrations and other

sub-national arrangements,

such as Local Enterprise

Partnerships

The main role for the state in addressing this

issue is not related to skills and training, but

the need for regulatory certainty for the

industry and enabling infrastructure. This is

important but beyond the scope of this study

Although there were differences of opinion,

the balance of consultees argued that the

sector would be able to address its own skills

issues, provided certainty on regulation,

pricing and planning arrangements was

forthcoming

Insufficient absorptive

capacity in employers to

Greater use by employers of external

training providers in order to ease the

Lead: Businesses/

employers in the supply

The balance of consultees thought that,

notwithstanding some of the issues listed


87


recruit, induct and train the

numbers envisaged in many

‘top-down’ forecasts of

employment growth in the

sector to 2020

pressure on businesses adversely affected

by the opportunity cost of in-house training

Employers working more collaboratively in

the supply chain or in groups of SMEs in a

shared location to share training burdens

(e.g. train a pool of apprentices) in order to

‘scale up’ absorptive capacity within the

sector as a whole

chain; Education and training

providers

below, state intervention was not required to

address this issue, as educators and training

providers would respond to employers’

demands

Individual firms’ fears of

increasing their relative costs

of production and/or

poaching of skilled staff once

they qualified leading to

under-investment in staff

training in the supply chain

Use procurement processes to address the

issue, e.g. by including contractual

obligations on suppliers to support

apprenticeships

Use employer networks to promote good

practice in establishing ‘learning

organisations’ and raise awareness of the

benefit this can have on retention and

performance to raise employer ambition

within the sector

Lead: Businesses/

employers; Sector bodies,

such as RenewableUK

Support: Government

where tax incentives may

apply

There were concerns that increasing the

costs of UK suppliers by stipulating training

requirements in contracts may adversely

affect their position relative to overseas

suppliers

There were also concerns that a levy was

impractical for the offshore wind energy

sector as it was too diffuse. Plus some parts

of the supply chain already had a levy, e.g.

ECITB


88


Introduce voluntary or compulsory training

‘levies’ for the sector

Pay back clauses in employment contracts

to recompense employers for losses

incurred by training staff who subsequently

leave

Tax incentives for employers to invest in

training

Payback clauses for those poached by rival

firms on the completion of training were seen

as an ineffective remedy, in that experience

to date showed such clauses did not stop

poaching, it merely increased the costs of

poaching

Despite evidence of poaching, there was

also evidence of good employee retention,

linked to employers’ commitments to invest

in training staff which could be promoted

through sector bodies or employer networks

as cited above

The provision of tax incentives to employers

to encourage them to invest in training, in a

similar manner to incentives to invest in

physical capital equipment, was not

supported by policy makers. In part due to a

reluctance to open up the tax system to such

complications and in part due to similar


89


difficulties associated with a training levy, i.e.

the sector is too diffuse for it to be targeted

effectively

Small firms’ difficulties in

participating in

apprenticeship programmes,

e.g. they can’t release staff

for training and/or can’t offer

all the experience required

leading to under-investment

in training staff in the supply

chain.

Drawing on the models cited at section 4.4.3

(‘piggy back model’’, ‘shared apprentices

model’, ‘training provider as employer

model’) establish formal arrangements, e.g.

joint-commissioning schemes, where firms

agree to support apprentices who move from

employer to employer in order to gain a

range of experience; apprentices would be

guaranteed job interviews by participating

firms, that would avoid having to commit to

the costs of a full-time apprentice at the start

of the programme at a time (3-4 years prior

to qualification) when future requirements

are not known

Lead: Businesses/

employers; Government –

via its criteria for funding

apprenticeships; Education

and training providers;

Sector Skills Councils and

other intermediary, sector-

led bodies

The main enabling action for government

here is around the funding requirements for

apprenticeships as there may need to be

some flexibility to allow small firms in the

supply chain to ‘share’ apprentices, i.e.

apprentices would not have a named

employer, as normally required

Under-investment by

individuals in the skills

Firms employing students and sponsoring Lead: Businesses/

employers; Individual

Many consultees expressed concerns about

the potential impact of changes in fees and


90


required by the sector, due to

the increased costs of under

graduate and post graduate

education

them through their studies

Firms offering to pay off the student debts of

those with the skills they require –as part of

their recruitment strategies

Subsidies to learners to reduce the costs of

learning to them, in recognition that they are

entering a sector that will deliver a public

good (i.e. assisting the move to a low carbon

economy)

students/staff incurring some

of the costs of learning

Support: Government or

other agency, e.g. Crown

Estate – by providing some

form of subsidy, e.g.

bursaries

loan arrangements for students entering

higher and further education. However,

others noted that some employers had

already responded to changes by sponsoring

students and offering assistance to pay off

student debts, as means of recruiting and

retaining staff.

The idea of making specific state subsidies

for those entering the sector, or the

renewables sector in general, was not

considered practical by policy makers for

similar reasons to opposition to a training

levy and tax incentives

The Crown Estate has provided bursaries for

those undertaking post graduate studies, if

the scheme is considered successful it and

other interested parties may continue with

the approach


91


Costs of training and re-

training staff due to an

absence of agreed minimum

standards, e.g. on health and

safety

Minimum professional standards developed

by the sector on a voluntary basis or through

formal licensing schemes that mean

providers keep down course development

costs and staff avoid repeating similar

courses

Lead: Businesses/

employers; Sector bodies,

such as RenewableUK;

Education and training

providers

Support: Government and

European Commission;

Sector Skills Councils

There was broad support for this action

among consultees both on cost grounds and

in terms of the need to generate a more

responsive workforce

Some consultees saw ‘standardisation’ as a

potential source of competitive advantage to

the UK, as it could act as the EU leader on

issues such as health and safety

Impediments to progress appeared to be

firms’ reluctance to share potentially

sensitive information and (an unstated)

reluctance to develop shared minimum

standards that would make it easier for

employees to change employers and thereby

disrupt firms’ plans and increase recruitment

and retention costs

Cooperation between firms working in

partnership with EU Skills on the


92


development of the apprenticeship was cited

of evidence that the sector could undertake

such activity without state intervention. At

this stage, therefore, it is not clear that action

by the state, as opposed to the sector, is

necessary although could be supported by

challenge funds such as the Growth and

Innovation Fund.

Ensuring staff have the

necessary skills to support

exports as the domestic

manufacturing sector grows

Promotion of language programmes, and

mutual recognition of qualifications and

certificates across the EU

Lead: Businesses/

employers; Education and

training providers

This was highlighted in the literature review

but was not raised by consultees, therefore

there is no compelling case for state action

Lack of coordination between

providers of education and

training to ensure: a) legibility

for employers and learners;

and b) an appropriate

balance of supply of courses

and modules to meet

Use of labour market information to indicate

trends in demand and training needs

Employer and training provider engagement

to discuss needs

Steps to ensure employers, training

Lead: Education and training

providers


employers; recruitment and

employment agencies;

sector bodies in gathering

There is inevitably some rivalry between

providers of education and training and to a

degree this is healthy. However, employers

did express a desire for a ‘one-stop-shop’

and some providers were seeking to develop

consortia to achieve that end.


93


demand at the right time and

in the right place

providers and recruitment and employment

agencies ‘speak the same language’, to

enable effective mapping of experience and

matching of people to courses/opportunities

and disseminating relevant

labour market information The National Skills Academy for Power is an

industry-public sector partnership that could

address the issue of coordination. It is not

clear that further state intervention is

required at this stage

The Scottish Government is already working

with providers to develop a coherent training

offer in Scotland, e.g. Skills Development

Scotland’s Skills Investment Plan for the

Energy Sector

Lack of equipment and

materials among education

and training providers, in part

due to capital costs and in

part to commercial concerns

of manufacturers who do not

wish to share their

technology/commercially

Coordination of education and training

providers in order to enable them to

specialise in certain aspects of a learning

programme and therefore share the costs of

provision

Coordination of commissioning by

employers to enable institutions to assess

the costs and benefits of investments in

Lead: Education and training

providers; Manufacturers

Support: UK Government if

funding required to pump-

prime

There is some evidence of coordination as

identified in the previous row. No compelling

case for further state intervention in this

area, if access to equipment becomes a

major barrier to training the right number of

staff, firms in the sector may be best placed

to address the problem, not government;

although employers/training providers may

wish to seek some government funding to


94


sensitive information equipment

Investment in shared training facilities

available to the sector or a specific alliance

of firms that have pooled their investments

Increased provision of in-house training to

meet individual employers’ needs

contribute to the costs of facilities and

reviews of activity in order to identify and

share good practice

Shortage of sufficiently

experienced trainers in

education and training

providers

Training of trainers programme with firms in

the sector to ensure trainers have necessary

expertise

Joint training programmes between

providers and employers to tap in to

practitioners’ expertise for off-site training

Lead: Training providers

Support: Business/

employers

This issue is for colleges to address based

on their own judgements about local

employment priorities, rather than central

government intervention. Employers may

need to identify how best they can assist

colleges develop trainers, so they have up-

to-date knowledge, e.g. release some of

their staff to work with college staff.


95

6.4 Contribution to rebalancing the economy

The research showed that the offshore wind energy sector has the potential to contribute,

albeit in a small way, to the UK government’s objectives to rebalance the economy

because of the characteristics of the sector. Sectorally, the nature of the activities in

offshore wind energy speak for themselves, as they are predominantly in manufacturing,

and also offer the potential for import substitution and increasing exports with growth in

offshore wind energy expected in international markets. Spatially, a number of places

outside London and the South East should see employment growth as a result of the

sector’s development, e.g. potential port locations; areas with existing expertise in the

manufacturing supply chain; areas near potential wind farm developments; and education

and training and research facilities (e.g. NaREC). In terms of rebalancing employment

from public to private sectors, the sector offered some limited opportunities, e.g. for ex-

forces personnel who were reported as having technical and generic skills required by the

sector, plus they were accustomed to working in hostile conditions and unsocial able

hours. However, it must be noted that the offshore wind energy sector’s contribution to

rebalancing over the next decade will be modest in scale. As identified in chapter 3, the

upper end of forecast growth for the sector is from just over 3,000 in 2010 to just over

40,000 in 2020 (with indirect jobs taking this to nearly 70,000).

Thus, there is evidence that the offshore wind energy sector, working with the public

sector, can help to rebalance R&D spending and the location of new employment

opportunities to lagging areas. However, regional and local capacity to carry out such

interventions is not as great now as it was in earlier years, due to reductions in public

sector spending. In England at least, with the abolition of RDAs (referred to in chapter 2),

the capacity for intervention is more limited due to the re-organisation of arrangements for

local and regional economic development. LEPs may be able to facilitate some sub-

regional activity, though the extent of their capacity was unclear at the time of writing.

With regard to the interaction of the public and private sector, these changes may result

in a combination of a greater emphasis on direct relationships between the industry and

central government departments to address particular concerns and, at the same time, a

greater number of smaller, local responses to industry concerns. The risks of such an

approach are that:

• local responses could be patchy, based as much on places’ capacity to promote

employment in offshore wind energy, as on the location or scale of opportunities;

• there may be no mechanism to co-ordinate employers and relevant public sector

bodies, in order to maximise local employment generation, for example by linking the

planning system to the provision of skills training; and


96

• areas may compete with each other for the same employment opportunities, i.e.

expending resources chasing the same opportunities to no additional national benefit

to the UK.

Pringle et al. (2011) identified three broad types of government action to help support

rebalancing, which have been linked to the offshore wind sector:

• Setting the ground rules and direction, and promoting the efficient operation of

markets: In the case of offshore wind this type of activity applies particularly to reform

of the electricity market and the role of regulation;

• Building ‘enablers’ and ‘conditions for growth’: In the case of offshore wind this is

illustrated by investment in port infrastructure to enable manufacturing, construction

and installation to be based in the UK; business support through supply chain

initiatives and meet the buyer events; and provision of a coordinated, affordable and

timely training offer that enables firms to employ UK, rather than overseas workers

and suppliers;

• ‘Tilting the playing field’, providing particular incentives to firms to locate or stay in

particular parts of the UK, through such interventions as Enterprise Zones, and tax

breaks on capital investment, which may be relevant to incentivising firms in the

offshore wind supply chain.

6.5 Implications for other emerging sectors

There are a number of points that have been raised in the course of the study that are

relevant to other emerging sectors. The extent to which these will be issues in other

sectors does depend on the nature, structure and background of other emerging sectors.

In the case of the offshore wind energy sector, for instance, there are well-established

companies involved, through major power companies, but also major manufacturers and

engineering companies that already operate in other sectors’ supply chains. This may

well be partly behind the fact that some employer-led responses to labour and skills

issues have already been implemented, whether the result of direct employer action or

coordinated responses managed through employer-led bodies.

Nevertheless, the following issues may be of relevance to other emerging sectors, for

instance other renewable energy sectors, other manufacturing-led sectors, or more

widely:

• Initially skills may not necessarily be seen as a primary issue as the sector develops;

though they could be inherent in other challenges (especially technical ones or delays

in the planning system).


97

• The absence of good information (or information communicated in a common

language between employers and training providers) on the requirements of emerging

sectors could cause cautious decisions and investments by firms and training

providers.

• Lack of minimum and shared standards due to embryonic nature of the sector can

increase costs of training and result in a lack of clarity on needs among training

providers and smaller employers in the supply chain. If developed these could offer a

competitive advantage for the UK.

• Lack of collaboration and building of supply chain relationships in an immature sector,

where different stages of development are owned and run by different firms. This

results in a lack of coordination across the supply chain and a lack of long-term vision

across the sector, preventing early planning, including for appropriate workforce

development.

• Linked to previous points, competitive pressures restrict the opportunities for

employers and training providers to share equipment and undertake joint

commissioning of provision, as the need to protect commercially sensitive information

‘trumps’ the need to cooperate on training provision.

• Growth in emerging sectors may require building on existing supply chains that

support other sectors, rather than developing new supply chains in their own right,

which in some ways is a problem as the needs of the emerging sector are not

prioritised, but is useful in other ways as the sector can ‘piggy back’ on the existing

arrangements in other sectors with similar needs.

6.6 Further research implications

In terms of future research, there are three points to make specifically with respect to the

offshore wind energy sector:

• The extent of recruitment of ex-services personnel and potential for further

recruitment could be explored in more detail, as part of initiatives designed to

facilitate transition of ex-forces personnel to employment in civilian sectors.

• The mapping in this report could be updated in the future (with reference to indicative

geographical patterns), and/or extended to other parts of the UK to enhance relevant

supply chain initiatives and inform the investment and development plans of training

providers.


98

• The capacity of the sector to expand given that other sectors require similar skills in

similar timescales may require analysis of whether and how there can be coordination

of activities between as well as within sectors.

More broadly, there are further research implications for other emerging, or growing

sectors. The approach used in this study could be adopted for other growth sectors as

part of government objectives to rebalance the economy spatially and sectorally, though it

should be noted that it is likely that for other manufacturing-related sectors, there will be

similarly limited scope for public-to-private sector rebalancing. The issues cited in this

research may warrant further exploration in other emerging sectors, so as to maximise

employment and skills in those sectors specifically, and economic growth more generally.

A specific point for further consideration is the extent to which carefully targeted research

could help to fill the information gaps that hinder the investment decisions of firms and

training providers.


99

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Appendix A: Research and methodological issues This appendix sets out:

• research issues;

• research questions; and

• research methods.

Research issues

Defining the offshore wind sector

One of the basic issues to be addressed in the study was one of definition. There is a

general problem of defining the ‘environmental goods and services sector’, given different

elements of the supply chain serve more than the energy sector or even the more broadly

defined environmental sector. The problems of defining what constitutes the offshore

wind sector and its supply chain are a sub-set of this wider definitional issue. The Office

for National Statistics (ONS) is in the process of reviewing statistics on the environmental

goods and services sector. It has published an initial paper, which sets out the issues.20

The environmental goods and services sectors is not a sector in the traditional sense. It is not enough to identify a specific type of institution or a distinct set of industries and sum their activity. The production of environmental goods and services cuts across the whole economy and will often only represent a fraction of an organisation’s output, being a secondary or ancillary activity...

The paper states:

…pinpointing industries, based on the Standard Industrial Classification System 2007 (SIC2007) for which total activity falls within the sector, is only possible in a limited way…

… identifying the environmental goods and services based on product classifications does not provide an exhaustive solution…

…experience suggests that the use of these classification systems will have to be supplemented by comprehensive research to identify the sector…

(Livesey, 2010, p. 52)

These warnings and caveats are pertinent to estimates of current employment in

environmental, energy and offshore wind and to forecasts of future employment.

Nevertheless, the Employment Committee of the EU highlighted a need to ‘explore

quantitative modelling tools that allow for better analysis of the labour market impacts’ of

a ‘greening’ of the labour market in the EU.

20 ONS proposes to publish a second paper with more concrete proposals in summer 2011.


106

In 2009, the then Department for Business, Enterprise and Regulatory Reform published

a report by Innovas (Innovas, 2009) that looked at the value of production and scale of

employment in the low carbon and environmental goods and services supply chain. The

approach looked at specialist firms and those firms in other sectors, e.g. engineering, that

supplied the sector. The study took “an inclusive approach…with a view to capturing as

much of the supply chain activity as possible”. The ‘supply chain firms’ included those

that only served low carbon and environmental goods and services (LCEGS), that is firms

that provide environmental impact assessments as part of a planning process; firms for

which 100 per cent of their business is providing components to LCEGS firms; and

companies that serve components or input into a number of sectors, but for which at least

20 per cent of their turnover was accounted for by work in LCEGS, and then only the

relevant proportion of sales activity was reported.

The study broke down the data into environmental sectors, renewable energy sectors and

low carbon sectors. The renewable energy sector was broken down in terms of hydro,

wave and tidal, biomass, wind, geothermal and solar photovoltaics. The wind sector was

not broken down into onshore and offshore wind energy sectors.

Offshore wind energy itself has been defined as “the conversion of kinetic energy present

in wind motion to mechanical energy for driving electric power generators though offshore

infrastructure” (Douglas-Westwood, 2009, p. 14). The catalogue of industry classifications

from which this definition is drawn provides a list of roles (consultant, design, engineering,

installation, manufacture/supply, operator, research and development, service, support

organisation and training and education) and classifications (e.g. from accommodation

modules to workshops and hand tools) (Douglas-Westwood, 2009). Chapter 3 uses an

edited version of this list.

In Chapter 5, some indicative mapping of sub-sectors that do or have the potential to

supply the offshore wind sector is undertaken. The definitions used were partly based on

Douglas-Westwood (2009). However, they were edited with the express purpose of

identifying any strong geographical presence in the existing employment base. Some

sub-sectors in the Douglas-Westwood (2009) definitions were excluded because they are

generic activities that are not specific to offshore wind. These included the following

activities: local authority, land/premises, legal, freight transport, marketing, market

research, media, medical, personnel, networking/events. The four categories used in

Chapter 5 are defined as follows.


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Table A.1 Definitions used for mapping

SIC Sub-sector SIC Sub-sector Design and Manufacture Operation and Maintenance

20.30 Manufacture of paints, varnishes and similar coatings, mastics and sealants 26.51

Manufacture of instruments and appliances for measuring, testing etc

24.10 Manufacture of basic iron and steel and of fero alloys 33.11

Repair of fabricated metal products

24.20 Manufacture of tubes, pipes, hollow profiles and relating fittings, of steel 35.11 Production of electricity

24.5 Casting of metals 35.14 Trade of electricity

25.11 Manufacture of metal structures and parts of structures 71.12

Engineering activities and related technical consultancy

25.50 Forging, pressing, stamping and roll-forming of metal 71.20

Technical testing and analysis

25.61 Treatment and coating of metals 81.10 Combined facilities support activities

25.62 Machining 25.73 Manufacture of tools

25.93 Manufacture of wire products, chain and springs

25.94 Manufacture of fasteners, screw machine products, chain and springs

26.11 Manufacture of electronic components

27.12 Manufacture of electricity distribution and control apparatus

27.20 Manufacture of batteries and accumulators 27.32 Manufacture of insulated wire and cable 27.33 Manufacture of wiring devices 27.90 Manufacture of other electrical equipment

28.11 Manufacture of engines and turbines (ex aircraft, vehicles and cycles)

28.14 Manufacture of other taps and valves

28.15 Manufacture of bearings, gears, gearing and driving elements

28.29 Manufacture of other general purpose machinery nec

28.41 Manufacture of metal forming machinery 28.91 Manufacture of machinery for metallurgy

28.99 Manufacture of other special-purpose machinery

29.32 Manufacture of other parts and accessories for motor vehicles

30.30 Manufacture of air and spacecraft and related machinery

46.12 Agents involved in the sale of fuels, ores, metals and industrial chemicals

46.72 Wholesale of metals and metal ores

71.12 Engineering activities and related technical consultancy

74.10 Specialised design activities Construction and Installation Planning, Development and Services 22.19 Manufacture of other rubber products 14.12 Manufacture of workwear

25.11 Manufacture of metal structures and parts of structures 46.69

Wholesale of other machinery for use in industry, trade and navigation


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28.22 Manufacture of lifting and handling equipment 50.20

Supporting water transport activities

28.9 Manufacture of other special-purpose machinery 52.22

Service activities incidental to water transportation

30.11 Building of ships and floating structures 52.24 Cargo handling

33.15 Repair and maintenance of ships and boats 70.22 Management consultancy activities

33.20 Installation of industrial machinery and equipment 71.12

Engineering activities and related technical consultancy

35.11 Building and repairing of ships 74.90 Environmental consulting activities

35.12 Transmission of electricity 85.59 Other education nec 35.13 Distribution of electricity

42.22 Construction of utility projects for electricity and telecommunications

42.91 Construction of water projects

42.99 Construction of other civil engineering projects

43.21 Installation of electrical wiring and fittings 43.29 Other construction installation 43.99 Specialised construction activities

71.12 Engineering activities and related technical consultancy

77.32 Renting and leasing of construction and civil engineering machinery and equipment

77.39 Renting of other machinery and equipment nec

Source: SQW using Douglas-Westwood (2009)

Research questions

• What are the employment and skill needs of the offshore wind energy sector and its

supply chain for the period 2010 to 2020?

• Can relevant lessons be learned from previous experience of new industries and or

major infrastructure projects?

• Where is the demand for skills linked to offshore wind and its supply chain likely to be

located?

• How are education and training providers engaging employers in order to respond to

their needs?

• What are (and where are) the potential sources of domestic labour to meet the skill

needs of the sector and its supply chain, including those displaced from delivery of

public sector infrastructure contracts?

• To what extent can the employment and skill needs of the sector and its supply chain

be met using international labour markets (from within the EU or outside it)?

• What areas of further research are required, in order to give calibrated policy

guidance to UK Government and devolved administrations?


109

• What is/are the rationale/s for state intervention?

• What policy interventions might be required?

Research Methods

The research process employed a mixed methods approach, with the following the key

components:

• Literature reviews of employment forecasts in the sector, learning from offshore oil

and gas and construction and national policy.

• 20 bilateral consultations with key representatives from business, industry bodies,

policy makers, and providers of education and training using a semi-structured topic

guide, with each consultation lasting for around one hour.

• Two workshops with national, regional and local policy makers and providers of

education and training, one held in Edinburgh and one in London. These lasted for

around half a day. Interim findings were presented in the workshops for calibration

and further refinement, and a series of potential actions for government and other

stakeholders were discussed. A further group discussion was held with

RenewableUK’s Skills and Education Steering Group (which particularly comprises

employers and training providers) for around 45 minutes in order to get employer

feedback on the study’s interim findings.

• Two supply chain case studies were undertaken of existing offshore wind farms in the

UK (Robin Rigg and Thanet). These involved in-depth interviews with organisations

in the different stages of the development of the offshore wind farms. A separate set

of appendices is available providing the findings of these case studies.


110

Appendix B: List of consultees The following were consulted as part of bilateral consultations to inform the study.

Table B.1 Consultees

Name Organisation Jim Brown Carnegie College Adrian Fox Crown Estate Ian Bryan Crown Estate Mike Major Energy Industries Council Rob Moore EU Skills Douglas Yule Global Energy Group Ian Pease Lowestoft College Steve Clarke Mainstream Renewable Power Bob Granger National Skills Academy for Power Prof Dermot Roddy Newcastle University Fruzsina Kemenes RenewableUK Joss Blamire Scottish Renewables Reg D'Souza SEMTA Andy Williamson Shepherd Offshore Mark McGuigan South West College Tom Hopkinson Taylor Hopkinson Prof Nicholas Jenkins University of Cardiff David Infield University of Strathclyde David Rodger Vattenfall Wind Power

Table B.2 lists those who took part in the two policy maker and training provider

workshops. A separate session was undertaken with RenewableUK’s Skills and

Education Strategy Group, comprising employers and training providers.

Table B.2 Workshop participants

Name Organisation Heidi Bridger Department for Business, Innovation and Skills Rakhee Gadhia ECITB Jacob Searle ECITB Rob Moore EU Skills Rob Murphy EU Skills Dean Williams Forth Valley College Ian Fisher Northumberland College Fruzsina Kemenes RenewableUK Nikki Keddie Scottish Enterprise Debbie McCall Scottish Government David Stevenson Scottish Government Darah Zahran Skills Development Scotland


111

List of previous publications Executive summaries and full versions of all these reports are available from www.ukces.org.uk Evidence Report 1 Skills for the Workplace: Employer Perspectives Evidence Report 2 Working Futures 2007-2017 Evidence Report 3 Employee Demand for Skills: A Review of Evidence & Policy Evidence Report 4 High Performance Working: A Synthesis of Key Literature Evidence Report 5 High Performance Working: Developing a Survey Tool Evidence Report 6 Review of Employer Collective Measures: A Conceptual Review from a Public Policy Perspective Evidence Report 7 Review of Employer Collective Measures: Empirical Review Evidence Report 8 Review of Employer Collective Measures: Policy Review Evidence Report 9 Review of Employer Collective Measures: Policy Prioritisation Evidence Report 10 Review of Employer Collective Measures: Final Report Evidence Report 11 The Economic Value of Intermediate Vocational Education and Qualifications Evidence Report 12 UK Employment and Skills Almanac 2009 Evidence Report 13 National Employer Skills Survey 2009: Key Findings Evidence Report 14 Strategic Skills Needs in the Biomedical Sector: A Report for the National Strategic Skills Audit for England, 2010 Evidence Report 15 Strategic Skills Needs in the Financial Services Sector: A Report for the National Strategic Skills Audit for England, 2010 Evidence Report 16 Strategic Skills Needs in the Low carbon Energy generation Sector: A Report for the National Strategic Skills Audit for England, 2010

http://www.ukces.org.uk/�


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Evidence Report 17 Horizon Scanning and Scenario Building: Scenarios for Skills 2020 Evidence Report 18 High Performance Working: A Policy Review Evidence Report 19 High Performance Working: Employer Case Studies Evidence Report 20 A Theoretical Review of Skill Shortages and Skill Needs Evidence Report 21 High Performance Working: Case Studies Analytical Report Evidence Report 22 The Value of Skills: An Evidence Review Evidence Report 23 National Employer Skills Survey for England 2009: Main Report Evidence Report 24 Perspectives and Performance of Investors in People: A Literature Review Evidence Report 25 UK Employer Perspectives Survey 2010 Evidence Report 26 UK Employment and Skills Almanac 2010 Evidence Report 27 Exploring Employer Behaviour in relation to Investors in People Evidence Report 28 Investors in People - Research on the New Choices Approach Evidence Report 29 Defining and Measuring Training Activity Evidence Report 30 Product strategies, skills shortages and skill updating needs in England: New evidence from the National Employer Skills Survey, 2009 Evidence Report 31 Skills for Self-Employment Evidence Report 32 The Impact of Student and Migrant Employment on Opportunities for Low Skilled People Evidence Report 33 Rebalancing the Economy Sectorally and Spatially: An Evidence Review

the UK Commission for Employment and Skills. The reports contribute to the accumulation of knowledge and intelligence on skills and employment issues through the review of existing evidence or through primary research. All of the outputs of the UK Commission can be accessed on our website at www.ukces.org.uk

Produced by SQW for the UK Commission for Employment and Skills.

UKCES

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