In the Autumn Statement chancellor Philip Hammond said the government would take advantage of historically low borrowing costs and prioritise “high-value investment” projects, with a particular focus on infrastructure and innovation. These improvements will be delivered through a new £23 billion National Productivity Investment Fund that will help kickstart the economy at a time when the nation’s future economic growth is shrouded in uncertainty following the Brexit vote. The announcement followed close on the heels of the decision to let Heathrow airport build a third runway.
However, the government faces a major problem. At a time of unprecedented need for new housing there is already a marked shortage of skilled construction workers. And this is expected to get worse post-Brexit, given the sector’s over-reliance on foreign workers. So what are the chances of these key infrastructure projects being delivered – and what needs to be done to ensure they are?
At the moment there are conflicting reports as to how severe the UK construction skills problem is. According to the Construction Products Association’s 2016 Q3 Construction Trade Survey, 54% of main contractors are having difficulties recruiting bricklayers, 47% carpenters, and 43% plasterers. This is putting upward pressure on wage bills and pushing up the overall cost of projects.
But not everyone appears to be struggling. Only one in five employers recently surveyed by the Construction Industry Training Board (CITB) said skills shortages were an issue for them. A November CITB survey found that output over the next five years is projected to slow from the 2.5% forecast in January to 2%.
“We had thought that over the next five years we would need 232,000 new entrants or new recruits, whereas now we need 157,000,” says Gillian Econopouly, head of policy and research at the CITB. “That doesn’t mean there is not still a challenge, but it’s perhaps a bit less acute at the moment.”
That a skills shortage exists to some degree is not in doubt. “Over the last 30 years we’ve invested heavily in our service sector, but we haven’t invested as much in the manufacturing and construction sector and as a result we’ve seen a very slow and steady decline in those types of skills,” explains James Bryce, director of strategic workforce planning at consultancy Arcadis.
The other challenge is heavy reliance on the timing of the economic cycle. “We find that companies are willing to invest in and hire talent at the top of the market and taper down as it begins to turn,” says Merita Memisi, HRD at property developer HB Reavis UK. “Additionally, work done in construction is project-based, with experienced professionals looking to further their careers through exposure to larger and more diverse projects, leading to expensive professionals guaranteed work only for the length of a project. I don’t believe that HR typically takes a strategic view of addressing a skills crisis in the UK… But headcount planning and employee development needs to have a long-term view.”
The importance of taking a long-term view post-Brexit was underlined by recent Arcadis research. “The data shows that in either a soft or hard Brexit scenario the exit migration away from the UK is based on the rate of attrition. And if you assume a similar rate of attrition to that which already exists in the industry we could see an exit of 130,000 to 210,000 people, which is a significant proportion of the industry,” says Bryce.
He adds that the impact will be felt more severely in some geographic areas. For instance, in the North West and North East the migrant construction workforce might be as low as 2% to 3%, but in the South East it’s around 20%, and in London higher again.
In the New Year the CITB intends to run a wide-ranging survey of what roles migrant workers currently fulfil. It is likely to show that it’s not just construction workers that will be in short supply. “We know for definite we’ve got a shortage of engineers at all levels,” says John Evans, former chief executive at the National College for High Speed Rail. “We’ve also got a raw need for entry-level jobs, and by that I mean people like lorry drivers and excavation machine drivers. They’re not sexy jobs, but if we don’t develop that skillset in the UK we’re going to end up with a large need to bring in that talent, because projects like HS2 are going to need thousands of lorry drivers when it starts to shovel the muck to build the track.”
So what needs to be done by government and businesses? The CITB’s Econopouly says that for starters the industry needs to make itself a more attractive employment proposition and recruit more young people. “That’s absolutely clear,” she says. “We also have to make sure we’re upskilling existing workers… to help them do more than one trade or do their trade at a higher level.”
This is an issue that architecture practice HLM is already looking to address, according to its HRD Karen Mosley. “We launched the HLM Academy in 2014 to support and promote career progression to upskill our existing staff base and identify priority areas based on business needs,” she says. “We have forged great relationships and alliances with universities, colleges and academies to blend educational learning with practice-based experience… More apprenticeships will support this approach.”
Also taking a proactive approach is Balfour Beatty. Emerging talent manager Tony Ellender says the company employs more than 150 apprentices each year, in addition to the 320 currently under training in a diverse range of roles. “It is important that industry plays its part in addressing the skills shortage,” says Ellender. “We need innovative solutions and continued commitment from government as well as industry to address the skills gap. With the support of our customers we are [already] recruiting from a large and more diverse pool of talent.”
He cites the example of the company’s power, transmission and distribution division, which provides opportunities for ex-offenders. As a signatory of the Armed Forces Covenant it is also working towards being a more ‘forces-friendly’ employer.
But while such efforts are to be commended, it’s clear that more needs to be done. The construction skills shortage didn’t happen overnight. It’s taken decades to get to this stage and it will probably take decades to reverse. Which makes it all the more important that action is taken today to ensure the government’s ambitious plans can be delivered.