Karl Horton, Chief Data Officer at the Building Cost Information Service (BCIS), considers what needs to be done to address the skills shortage within the UK construction sector following continuing concerns over stalling national infrastructure projects.
In November 2023, the Department for Levelling Up, Housing & Communities published a policy paper under the title, Getting Great Britain building again: Speeding up infrastructure delivery.
One of the paper's key findings was: "Since 2020, there has been a 40% increase in the number of major infrastructure projects going through the NSIP system, compared to the number between 2016-2019.
And major infrastructure projects are now not moving at the speed we need to meet the challenges we face.
From inception to completion, delivering projects takes too long.
The number of projects in the pipeline means that we need a system that delivers decisions with speed and consistency, offers certainty for investors and developers, and incentivises delivery.
As it stands, our system is not performing well enough on these measures."
Fast-forward to June 2024, and it remains clear concerns over 'projects taking too long' still prevail.
Indeed, this is a widespread issue that we can see clearly in the data.
In 1Q2024, the UK construction workforce was 90% of the size it was in 4Q2019, though there are many factors at play beyond the pandemic.
Ultimately, fewer workers place upward pressure on wages and labour costs.
Annual inflation in the BCIS Labour Cost Index was 8.3% in 1Q2024, the highest level for more than 20 years.
The Hays/BCIS Site Wage Cost Indices, which track movement in the market for agency labour, showed an overall annual increase of 7% in 1Q2024.
In comparison with the previous quarter, increases were seen primarily in skilled roles.
The current shortages and rising costs are set against subdued market demand, largely due to prolonged high borrowing costs.
Recently, output in construction has been contracting while the wider economy has returned to growth.
With increased demand, the shortages will be felt even more acutely and we’re nowhere near hitting the levels of labour needed to deliver the infrastructure improvements or meet the housing requirements that have been targeted.
The next government faces a monumental task in supporting construction back to growth.
This needs to include a long-term strategy, not subject to political cycles, to expand the industry’s workforce.
Investment in training the next generation of workers is also imperative - as is to be patient with any such new initiatives, as the issue will not be resolved overnight.
