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225,000 extra workers required to meet UK demand

Against a backdrop of economic challenge, rising materials and labour costs, new figures from the Construction Industry Training Board (CITB) reveal that almost 225,000 extra workers will be required to meet UK construction demand by 2027.

CITB’s annual Construction Skills Network (CSN) report shows that:

  • 224,900 extra workers (44,980 a year) will be needed to meet UK construction demand between now and 2027
  • Construction output is set to grow for all nations and regions, however, recession is expected in 2023 with slow growth returning in 2024
  • The major sectors for demand are:
    – private housing
    – infrastructure
    – repair and maintenance
  • If projected growth is met, by 2027 the number of people working in construction will be 2.67m

The report highlights that construction is expected to remain a sector where there is demand for workers despite the current economic uncertainty. As a result, recruitment, training, development and upskilling remain major priorities for the industry for 2023 and beyond.

CITB is responding by investing in apprenticeships, launching a range of targeted initiatives and working collaboratively with industry, to help the construction sector have a skilled, competent, and inclusive workforce.

Tim Balcon, CITB Chief Executive said: “The latest CSN report clearly shows that despite current economic uncertainty, recruiting and developing the workforce remains vital to ensure the industry can contribute to economic growth.

“We know the next 18 months won’t be easy, however, I remain inspired by the construction industry’s resilience shown in the pandemic and throughout 2022.

“In short, it makes clear that the need to recruit and retain talent in the sector has never been greater. Whether that’s for building the homes the country needs, constructing energy and transport infrastructure or retrofitting the built environment to help drive down energy bills and meet net zero targets.

“To bolster industry’s resilience, CITB will strive to attract and train a diverse range of recruits for industry, equipping them with modern skills for rewarding construction careers. I look forward to working with and supporting industry and stakeholders in the challenging times ahead and to emerging stronger when the recession ends.”

 

To help directly address these challenges and maximise the opportunities which will arise, CITB has invested almost £50m of Levy to support over 22,000 apprentices to help them join the industry; while grants have helped support over 16,000 learners to complete their qualifications.

Direct funding has provided grants over 269,000 training courses and in total £97m has been invested in grant funding by CITB, to make it as easy as possible for employers to recruit and retain their skilled workforce.

CITB continues to provide targeted support to SMEs through grant and funding and through support in accessing training and funding. Since April 2022, CITB’s engagement team has supported SMEs on 26,976 occasions, supporting them to continue to train during the current economic uncertainty.

CITB also offers funding aimed specifically at smaller companies such as the Skills and Training Fund. Companies with fewer than 250 PAYE employees can access up to £25,000 annually (depending on their size). By the end of quarter two 2022, £3.9m had been invested in companies via this fund.

CITB’s Scottish Academy for Construction Opportunities (SACO) commission has awarded £1.3m across the Highlands and Islands; while England Construction Opportunities (ECO) commission has awarded a total of just over £1.8m. This investment will directly help address the construction industry’s skills gap, increase employment retention, and provide vital support to new starters at the beginning of their construction careers, by promoting work experience for new entrants to the industry.

Experience Hubs across England and Wales are creating a talent pipeline to meet the needs of local construction employers and to support construction career opportunities for people from local communities.

Further CITB initiatives range from localised solutions for funding and training like our employer network pilot project, available to more than 3,800 levy-registered construction businesses across five locations in England, Scotland and Wales; to a £10.5m Leadership and Management commission which will provide funded courses for businesses of all sizes to equip supervisors and managers with a recognised Leadership and Management qualification.

Training remains a key focus, which is why CITB has invested in National Construction College (NCC) sites, to meet the industry’s specialist training needs. By focusing the curriculum on unmet demand, we are looking to build capacity for the industry, which has resulted in a 25% increase in the number of people trained to date. Our data shows that 96% of CITB apprentices have secured employment or progressed in education, with over 90% remaining in the sector.

Tim Balcon concluded: “This coordinated and comprehensive approach to helping recruit, train, develop and upskill talent, whilst continuing to work collaboratively with industry and stakeholders means CITB will continue to play a central role in supporting an industry that is a key driver of the UK economy through these challenging times.”

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Housing delivery will be hampered by skills shortage, warns experts

Small house builders predict that skills shortages in the building industry will hamper housing delivery and will eventually overtake access to finance as a bigger barrier to building new homes, according to recent research conducted by industry experts, the Federation of Master Builders.

Key results from the FMB’s House Builders’ Survey, the only annual assessment of small and medium sized (SME) house builders in England, include:

  • A lack of available and viable land tops the list as the most commonly cited barrier (59%) to increasing housing delivery and almost two-thirds of SME house builders (62%) believe that the number of opportunities for small site development are actually decreasing (up from 54% in 2017)
  • The percentage of SME house builders saying that a shortage of skilled workers is a major barrier to their ability to build more new homes rose to 44% (up from 42% in 2017)
  • Nearly half of small house builders (46%) say access to finance is a major barrier to their ability to build more new homes
  • More than half (51%) of SME house builders view the planning system as a major constraint on their ability to grow and ‘inadequate resourcing of planning departments’ was again rated as the most significant cause of delay in the planning application process for the third year in a row
  • When asked to look ahead over the next three years, more firms cited skills shortages as a likely barrier to growth than access to finance

Brian Berry, Chief Executive of the FMB, said “Nearly half of builders believe the skills shortage is a major barrier to their ability to build new homes. The construction sector is heavily reliant on EU workers with just under one in ten workers in the sector born in the EU. Brexit, coupled with the end of free movement, threatens to further intensify the skills shortages we already face. Given that the UK will leave the EU in less than six months, house builders are understandably concerned that skills shortages could worsen and choke housing delivery. In order to combat this skills crisis, the construction industry needs to encourage more entrants into the industry and develop higher quality qualifications. It is critical therefore that the Government doesn’t pull the rug out from under the sector by introducing an inflexible and unresponsive immigration system.”

“Our research also shows that the Government must continue to address the issue of access to finance for SME house builders. Although concerns over access to finance have eased slightly in recent years, in part thanks to the Government’s funding schemes such as the Home Building Fund, there is more that can be done. Our research suggests that it is the low percentages of project cost that builders are able to borrow that remain the greatest financial barrier to increasing their levels of house building. This latest research suggests that if firms were able to borrow 80 per cent, rather than the current 60 to 65 per cent of project cost, SME builders would be able to bring forward on average 40 per cent more new homes. Given the ambitious house building targets the Government is working towards, we cannot afford to ignore such a chance to significantly increase housing delivery.”

“A lack of available and viable small sites tops the list of frustrations for SME house builders for the fourth year in a row. Worse still, nearly two-thirds of these small builders believe that the number of opportunities for small site development are decreasing. However, the recent reforms to the National Planning Policy Framework, which specify that 10 per cent of a local authority’s housing delivery must be on sites no larger than one hectare, will help to address this problem. This will help to speed up the delivery of homes and lead to a more diverse and resilient housing supply.”

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New skills needed to harness true potential of offsite construction

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Offsite construction could revolutionise the construction industry and provide a solution to the UK housing shortage, but only if the sector develops the right skills.

Faster, Smarter, More Efficient: Building Skills for Offsite Construction shows that 42% of construction industry employers with over 100 staff expect to use offsite methods in five years’ time.

When asked about the use of offsite-specific construction materials and products, 100% said they expected the use of precast concrete panels to increase; 91% anticipated the use of precast concrete frame to rise.

At present however, offsite construction accounts for just 10% of industry output.

The report – which follows the recommendations set out in industry expert Mark Farmer’s government-backed review of UK construction – also reveals that nearly 50% of construction industry clients expect the use of offsite construction to increase over the next five years.

Offsite processes save time and money and can improve quality through pre-fabrication of components – from panels to fully fitted rooms.

Mark Farmer said “The urgency for modernisation has never been greater, set against an insidious backdrop of an ageing workforce and increasing concerns about the impact of Brexit.

“Any strategic shift towards pre-manufacturing and offsite construction creates an immediate requirement to define our future skills needs through collaboration between industry, educators, training providers and government.

“This is crucial to ensuring we can transition to a higher productivity, digitally enabled industry which inherently attracts more of the young talent we so desperately need. It should also set out clear opportunities for the existing construction workforce and indeed workers from other industries to reskill through a new family of career pathways.”

Steve Radley, Director of Policy at CITB, said “There is massive potential for offsite construction. The Government recently announced an additional £1.4bn of funding for affordable homes, with an increase in offsite construction set as an objective, representing a clear opportunity for growth in this area.

“The greatest potential currently lies within the housing and commercial sectors, where mass customisation can create the buildings we need more quickly and to higher standards. There are also opportunities to bring the benefits of offsite to large-scale infrastructure projects – some high profile examples include HS2 and Hinkley Point, which are already using offsite techniques.”

The report outlines six key skills areas related to offsite construction:

  1. digital design
  2. estimating/commercial
  3. offsite manufacturing
  4. logistics
  5. site management and integration
  6. onsite placement and assembly

Increasingly, workers will need the skills to move between offsite and onsite environments and so the training for these six areas must evolve to meet the changing demand.

Currently, significant barriers exist which prevent the delivery of training and skills to meet the needs of these crucial areas. These include:

  • Existing training does not include the required offsite content
  • Lack of awareness and suitability of available training and qualifications – companies are delivering their own ‘in-house’ training, which leads to non-standard approaches
  • A shortage of qualified training providers and assessors

Steve Radley concluded “Successful offsite management hinges on the effective integration of both onsite and offsite functions – and this requires a comprehensive understanding of both aspects.”

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Construction industry needs 1.5m new recruits by 2021

In a report, Consultancy firm Arcadis suggest that around 400,000+ new workers will be needed each year up until 2021, in order to keep up with ambitious plans within the construction sector – that’s the equivalent of one new person every 77 seconds!

Housebuilding

Plans outlined in the recent Housing Whitepaper are extremely positive for house builders, who will have government support and reduced restrictions to help them deliver the sheer volume of housing needed in Britain today. However, could the lack of skilled people in the sector prove to be a hindrance if left unaddressed?

The report says “When it comes to the much maligned ‘housing crisis’, there is no doubt that the sheer lack of people to physically build the homes we need is evident.

“Between now and 2026 the UK needs to build an additional 110,000 homes per annum on top of those currently projected in order to keep pace with our growing and ageing population.

“Housebuilding is a particularly labour intensive industry and although new technologies and increased off-site production are being implemented to reduce costs and increase productivity, the supply of labour is still one of the binding constrictions on output.

“Existing evidence suggests that the relationship between labour and number of houses that can be built is close to being linear. Therefore, in order to increase the number of homes being built the labour force employed in housebuilding needs to increase by the same share.”

Infrastructure

The report also touches on infrastructure. Britain currently has one of the most ambitious national infrastructure programmes in Europe. With HS2 and Crossrail underway and much more planned, companies in the industry will draw heavily on the common talent pool.

“Despite the uncertain outlook for the UK economy following Brexit, the government under Theresa May seems committed to drive the largest projects forward.

“Moreover, it is expected that the government will set aside more money for road and rail works in order to support the UK economy over the coming years.

“According to figures from the Construction Products Association, the infrastructure sector is projected to grow only by 1.2 percent in 2016. However, for the years from 2017 to 2020 it predicts a pick-up in infrastructure output of 30 percent. Increased demand for people in the infrastructure industry is calculated by assuming that the workforce has to expand in line with this growth.”

To read the full report, click here.
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Construction apprenticeship starts reaches record high

Construction apprenticeship starts in Great Britain are at a record high, according to figures released by the Construction Industry Training Board.

Since 2012 the figure of those joining a construction apprenticeship has continued to rise steadily each year from 17,528 in 2012 to 26,195 in 2017, a rise of 49%. This is the highest figure since the present way of recording apprenticeships began in 2003.

Recent figures for England show apprenticeship starts have dropped by a quarter across the whole economy during August to November 2017, from 155,600 to 114,380. Construction apprenticeships saw a marginal decline of just 150 starts, from 10,900 to 10,750.

The figures suggest that construction has bucked the overall trend in apprenticeships following the introduction of the Apprenticeship Levy.

Up to £10,250 of CITB grant funding is available to employers for every apprentice they employ. And with CITB research released last month predicting that over 158,000 new workers are needed in the next five years, there is no better time to encourage people to join the industry.

Mark Noonan, Industry Relations Director at CITB, said “Construction has faced a challenging time with Carillion’s unfortunate liquidation, but the industry response has shown how committed employers are to helping to develop young talent.

“While the overall picture for apprenticeship starts looks good at the moment, there is no room for complacency. We now need more employers to step forward to offer apprentices places so that they can start a rewarding career in construction and help build a better Britain.”

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Construction apprentices will earn more than uni students

Construction apprentices will go on to earn thousands of pounds more, every year, than many of their university-educated counterparts, according to the latest research by the Federation of Master Builders (FMB).

Small building firms across the UK were asked what they pay their tradespeople and the average annual salaries were as follows:

  1. Site managers earn £51,266
  2. Plumbers earn £48,675
  3. Supervisors earn £48,407
  4. Electricians earn £47,265
  5. Civil engineering operatives earn £44,253
  6. Steel fixers earn £44,174
  7. Roofers earn £42,303
  8. Bricklayers earn £42,034
  9. Carpenters and joiners earn £41,413
  10. Plasterers earn £41,045
  11. Scaffolders earn £40,942
  12. Floorers earn £39,131
  13. Plant operatives earn £38,409
  14. Painters and decorators earn £34,587
  15. General construction operatives earn £32,392

The highest reported annual salary for bricklayers in London was £90,000 a year. However, the UK’s university graduates earn the following average annual salaries:

  • Pharmacists earn £42,252
  • Dental practitioners earn £40,268
  • Architects earn £38,228
  • Teachers earn £37,805
  • Chartered and certified accountants earn £37,748
  • Midwives earn £36,188
  • Veterinarians earn £36,446
  • Physiotherapists earn £32,065
  • Nurses earn £31,867

Brian Berry, Chief Executive of the FMB, said “Money talks and when it comes to annual salaries, a career in construction trumps many university graduate roles. The average university graduate in England earns £32,000 a year whereas our latest research shows that your average bricky or roofer is earning £42,000 a year across the UK. In London, a bricklayer is commanding wages of up to £90,000 a year. Pursuing a career in construction is therefore becoming an increasingly savvy move. University students in England will graduate with an average £50,800 of debt, according to The Institute for Fiscal Studies, while apprentices pass the finish line completely debt-free. Not only that, apprentices earn while they learn, taking home around £17,000 a year. We are therefore calling on all parents, teachers and young people, who too-often favour academic education, to give a career in construction serious consideration.”

“The construction industry is in the midst of an acute skills crisis and we are in dire need of more young people, including women and ethnic minorities, to join us. Our latest research shows that more than two-thirds of construction SMEs are struggling to hire bricklayers and 63 per cent are having problems hiring carpenters. This is a stark reminder of how the Government’s housing targets could be scuppered by a lack of skilled workers. The FMB is committed to working with the Government to improve the quality and quantity of apprenticeships because the only way we will build a sustainable skills base is by training more young people, and to a high standard.”

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Two-thirds of construction bosses can’t find a bricky or chippy

Two-thirds of those running small and medium-sized (SME) construction firms are struggling to hire bricklayers and carpenters as construction skills shortages hit a ‘record high’, according to the Federation of Master Builders (FMB).

Key results from the FMB’s latest State of Trade Survey, which is the only quarterly assessment of the UK-wide SME construction sector, include:

  • More than two-thirds (68%) of construction SMEs are struggling to hire bricklayers and 63% are struggling to hire carpenters and joiners – the highest figures since records began in 2008;
  • The number of firms reporting difficulties hiring plumbers and electricians (48%), plasterers (46%) and floorers (30%) also reached record highs;
  • Construction SME workloads grew at a slightly slower rate than in Q3 2017, but new enquiries and expected workloads slowed more sharply; expected workloads among those firms building new homes showed a negative net balance for the first time since 2013;
  • Fewer construction SMEs predict rising workloads in the coming three months, down from 41% in the previous quarter to 38% in Q4 2017;
  • 87% of builders believe that material prices will rise in the next six months, up from 82% in the previous quarter;
  • Nearly two-thirds (61%) of construction SMEs expect salaries and wages to increase in the next six months.

Brian Berry, Chief Executive of the FMB, said “Skills shortages are sky rocketing and it begs the question, who will build the new homes and infrastructure projects the Government is crying out for. The Government has set itself an ambitious target to build 300,000 homes every year in England alone. More than two-thirds of construction SMEs are struggling to hire bricklayers which is one of the key trades in the building industry. This has increased by nearly 10% in just three months which points to a rapid worsening of an already dire situation. What’s more, nearly as many are facing difficulties hiring carpenters and joiners. These figures are the highest we’ve noted since records began a decade ago. As a result, the wages for these increasingly scarce skilled tradespeople continue to rise sharply; that’s a simple consequence of supply and demand. This, coupled with the fact that small construction firms continue to face significant material price increases, will inevitably squeeze their margins and put a brake on growth.”

“The Government must take account of the worsening construction skills shortage with Brexit looming large on the horizon. The Prime Minister must ensure that the immigration system that replaces the free movement of people can take account of the particular needs of key sectors such as construction and house building. Without skilled labour from the EU, the skills shortages we face would be considerably worse, and it is not in anyone’s best interest to pull the rug out from under the sector by introducing an inflexible and unresponsive immigration system. On the domestic front and in the longer term, to ensure we have an ample supply of skilled workers in the future, the Government must continue to work with industry to set the right framework in terms of T-Levels and apprenticeships.”

“The silver lining to current skills shortages among construction SMEs is that the numerous tradespeople and professionals, who may find themselves out of work following the collapse of Carillion, have a ready supply of alternative employers. The FMB is working with the Department for Work and Pensions and the Construction Industry Training Board to match-make ex-Carillion workers with small construction employers in need of skilled workers. We’re also working hard as an industry to re-home the 1,200 Carillion apprentices who are the innocent victims of the major contractor’s demise. It’s in everyone’s interests to ensure that these young people continue on their path to a rewarding career in construction.”

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Skills shortages biting construction sector once more

Workloads in UK Construction and Infrastructure continued to rise in Q3 2017, according to the latest RICS UK Construction and Infrastructure Market Survey, with 22% more respondents seeing a rise in workloads of the quarter, with a steady pace of growth.

However, while activity remains steady, comments left by respondents continue to highlight Brexit-related uncertainties as weighing on investment decisions and the lack of sufficiently skilled workers also remains an obstacle for many businesses.

Shortage of skilled workers

Having eased throughout 2016, the intensification of labour shortages is biting once more in the quarter with 62% of contributors citing this as an impediment to growth. This contrasts with an average of 40% when data collection first began in 2012. Within this, respondents to our survey are still seeing a lack of quantity surveyors (64%) as well as other professionals (52%). 44% are also seeing a shortage of workers within specific trades.

Despite government efforts to bolster the workforce and the prominence of apprentices, through an apprenticeship levy introduced earlier this spring, only 42% of respondents feel that government-funded programmes are moderately effective, with one-third unsure. The quality of the talent pipeline is insufficient as well – less than half (45%) of employers who currently hire apprentices view them as a long-term solution to their hiring needs.

Sector workloads

Breaking the rise in workloads and activity down to a sector level, growth is strongest in the private housing sector, while remaining broadly stable elsewhere. Meanwhile, the public non-housing sector continues to underperform all others. In infrastructure, 21% more contributors reported a rise rather than a fall in workloads. Nationally, respondents expect the rail and energy sub-sectors to post the most significant increases in construction output over the coming 12 months.

Despite uncertainties, a net balance of 45% of respondents expect headline activity to continue to rise rather than fall over the year ahead. Nevertheless, this is down from the four quarters immediately preceding the EU referendum, which averaged 62%, reflecting a somewhat less optimistic outlook. Meanwhile, 30% more contributors expect employment to rise rather than fall (broadly unchanged from Q2).

Other impediments on construction growth

While a shortage of workers is hampering activity and profit margins, financial constraints are still reported to pose the most significant challenge, although the share of contributors expressing this view has come down to 69% (from 79% in Q2). Access to bank finance and credit remains by far the most frequently cited issue, followed by cash flow and liquidity. This likely reflects a more cautious stance by banks given cyclical market conditions and Brexit considerations.

Higher input costs and a shortage of labour continue to restrict growth in profit margins, with a net balance of only +12% of respondents expecting a rise in margins over the coming year. This is likely to have impacted tender pricing as well, with 62% and 56% more respondents in the building and civil engineering areas, respectively, envisaging greater price pressures.

Jeffrey Matsu, RICS Senior Economist said “While activity in the sector has moderated, growth and growth expectations remain in positive territory. Uncertainties due to Brexit continue to weigh on companies’ investment and hiring decisions, and banks appear to be adopting a more cautious stance to providing finance. Meanwhile, challenges related to an inadequate supply of skilled labour are as pronounced as ever.”

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RIBA calls for progressive UK immigration policy post-Brexit

The Royal Institute of British Architects (RIBA) has published a new policy paper recommending the creation of a post-Brexit immigration system that ensures the UK job market remains open to skilled professionals from around the world.

RIBA’s Global by Design report (February 2017) highlighted that of their members identified access of skilled talent from across the world as vital to the future success of UK architecture. 40% of non-UK EU respondents said that they had ‘considered leaving the UK with earnest intent’ following the EU referendum result.

The RIBA Building a post-Brexit immigration system that works for UK architecture paper includes eight key post-Brexit recommendations to Government:

  1. Come to an agreement with the EU over the rights of EU citizens currently living in the UK, and UK citizens living in Europe, that includes continued recognition of professional qualifications, at the earliest opportunity
  2. Review the minimum appropriate salary requirements for Tier 2 visas and reduce these requirements for recent graduates or those working for small businesses
  3. Reduce the cost and administration burden on businesses seeking to become a visa sponsor for employees
  4. Re-introduce post-study work visas to allow international architecture students to develop their professional experience between Part 1 and Part 2 study
  5. Secure a transitional relationship with the EU that extends the freedom to study and work in the UK beyond the UK’s exit from the EU in 2019
  6. Include work visa quotas in new trade agreements
  7. Extend mutual recognition of professional qualifications via new trade agreements with priority countries including the USA, Australia and Canada
  8. Implement a system of priority access for business travellers to support architectural practices to do business in overseas markets

RIBA President Ben Derbyshire said “Our members are clear that Britain’s exit from the EU must not imperil our pre-eminent position as a magnet for the very finest talent from around the world. UK architecture has benefitted enormously from the contribution of European and non-European colleagues, who have enriched architectural practice in this country.

“The RIBA’s proposed immigration system aims to ensure that the UK can continue to embrace and attract people to live and work in the country. We are pressing the Government particularly on the urgent need for certainty for our European colleagues currently living in country. Many of our valued colleagues are drifting away, and there will be an exodus, no doubt, if we impose unreasonable burdens on those who are fully aware of the positive contribution they have been making to our pre-eminent position.

“The RIBA will continue to make the case for a Brexit that works for our profession and our built environment, from securing access to the talent and investment we need to survive to opening up the new trade opportunities that will support architects to thrive.”

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