In advance of the Scottish Government publishing their sectoral just transition plan for the built environment and construction, the Commission held a series of workshops and engagements in Glasgow and the West on the 27th and 28th June 2023.

The aim of the sessions was to agree advice for the Scottish Government on critical questions that will require addressing in the upcoming plan for the built environment and construction sector.  The focus of the engagement activity was to investigate how a new workforce can be delivered to retrofit existing buildings as part of the just transition.

A critical challenge in reaching net zero is how Scotland develops the competent workforce, supported by robust fair work provisions, at the scale needed to deliver the retrofit of existing buildings urgently required. Neither business as usual nor piecemeal efforts, however well intentioned, will suffice, especially given the well-documented, serious and persistent problems experienced by those already working in our construction industry in terms of pay, safety, security, terms and conditions, and systemic inequalities in the demographic of the workforce. A system change is required if we are to grasp the clear and obvious economic opportunities net zero offers up for this sector and achieve an equitable sharing of the costs and benefits of transition. What are the key strategic decisions that need to be made to deliver a new retrofit workforce for Scotland in a fair way? 

1. We wont get the new workforce we need without making construction a fair work industry.

The challenge goes beyond skills and training. Achieving fair work is a key lever for decarbonising Scotland’s built environment, not a distant end goal. For the sector to attract and retain a workforce that is representative of our society, and which can in turn be better equipped to understand and deliver on the needs of our society, critical actions including those set out by the Fair Work Convention’s inquiry must be taken, including regulations by the Scottish Government and full use of procurement mechanisms, to address low pay and widespread bad practices such as bogus self-employment, precarious short term contracts, informal recruitment practices and funding arrangements that have made the industry more an employer of last resort than of choice. 

2. Public sector procurement based on whole life value is the most likely short term catalyst for change at scale.

Procurement for a just transition means whole life costing and value-based procurement mechanisms that provide the stimulatory incentives to unlock the ecosystem paralysis. Coupled with effective legislative and regulatory frameworks, there is the potential for the public sector investment to create the scale of demand which enables market forces to emerge and build positive momentum. This must ensure that with the right support, capacity and co-ordination, direct labour organisations play a central role in driving the delivery of retrofit at the quality and scale required, embedding social value via fair work, as well as the use of sustainable materials from local supply chains, taking account of positive macroeconomic effects of supporting high quality, secure jobs in manufacturing, as well as requiring meaningful engagement with communities. Paradoxically, we can no longer afford a “cheapest wins” approach, and clear mechanisms are required to move beyond this if we are to support the new workforce required.

3. The Scottish Government must provide transformative leadership.

We have heard a consistent message from businesses and workers across the sector: it is now time for the Scottish Government to step up and take key decisions. Strong progress has been made via the Construction Accord to establish a shared vision for transforming the sector. The Scottish Government must now proceed to set the policy objectives and ensure the required legislation and regulations (both carrots and sticks) are in place to effect the systemic change required, establishing clear training requirements and invest in competency development to ensure the necessary competency supply is there in advance of demand, and recognising where subsidies or other mechanisms are required to support the required scale of necessary work that is currently commercially unprofitable. A step-change is needed if current efforts to decarbonise our built environment fairly, typically admirable but small-scale and piecemeal, are to scale up to the level required. Further delay to decisive leadership poses a clear just transition risk. Don’t back track, cut corners or water down ambitious changes. The market will not drive the change required for this sector in the context of the climate crisis.

4. Education will be key.

The competency required to decarbonise our built environment should be developed as a national utility, and this should be reflected in our education system, including early years and primary learning. Further education institutions require particular support from the Scottish Government in terms of clear signals on precisely what competencies are required from future workers and greater flexibility in how they develop and deliver educational interventions in relation to Scottish Funding Council funding criteria. It is critical Scotland develops a more robust competency profiling of the workforce as a precursor towards recognising and investing in competence as a national utility. Failing to develop competence in line with emerging demand is most likely to lead to the marginalisation of local labour and the importing of skilled labour, increasingly drawn from developing nations outside of the EU. Part of the ambition of a just transition is to ‘do no harm’, and the risk here, in terms of installers/contractors and the manufacturing base is that we will pull skilled labour from developing nations, exacerbating systemic inequalities and undermining just transition capabilities within those nations.

5. The difficult conversation about who pays for the decarbonisation of our built environment needs to start now.

In the absence of a viable financing model that enjoys public support, there is a clear risk that costs will be distributed inequitably across those in social, private rental and mortgaged housing, and that those who can afford to pay for the work required will be highly resistant to doing so. Recognising the complexity and scale of the challenge, and the work being carried forward by the Heat in Buildings: Green Finance Taskforce, it is nonetheless clear that a frank and sustained public conversation is now required in order to establish practical options for financing retrofit at scale and clear just transition principles that will be widely understood as ensuring this is achieved in the fairest way possible, with costs and benefits shared equitably and local value locked in for communities and workers. This will require bold and innovative thinking, since the tools currently available present a major obvious shortfall.