The construction skills gap in the UK has reached crisis point, with more than 206,000 extra construction workers needed by 2030 just to meet the current demand, let alone build more new homes.
This is a huge issue for the industry, putting Government housing targets out of reach unless decisive action is taken now.
We know demand for housing is higher than ever before, particularly social and affordable housing, but the industry is facing pressure from all angles. Planning hurdles and rising materials costs are exacerbating the problems caused by labour shortages and the ageing workforce means the number of boots on the ground are actually reducing.
Construction recruitment agency Strategic Resourcing released a paper last year warning the rate of workers retiring from the industry is far outpacing that of younger workers entering it. The paper described the ageing UK construction workforce as a “time bomb”, with 20% more workers aged 55 or over than workers under 25 in main contractor firms. We mustn’t simply accept and try and adapt to this decline but instead work to reverse the trend. Delivery is slowing and we need it to increase, quickly.
The current Government’s focus on housing is a welcome and significant opportunity for the country. Having committed to a £625m construction skills package and establishing the Construction Skills Mission Board, the question now is how industry can work with the Government, training providers and investors to turn that ambition into delivery. How do we attract and train the next generation of home-builders, support employers to bring new talent through and ensure the workforce is in place to deliver the homes the country needs?
NHBC recently held a roundtable discussion in central London to explore these important questions. BTR & Housebuilding: Tackling the Skills Gap was chaired by Alex Notay, CEO of The Housing Forum and brought together senior leaders from across the housing, Build to Rent, construction, investment and skills sectors.
What needs to be addressed?
Topics up for discussion at the roundtable covered a broad range of matters but focused on these core issues:
- Where is the skills gap hitting hardest?
- How do we attract and train the next generation of construction talent?
- How can investors, house-builders and policymakers collaborate?
- What does innovation look like and what are new delivery models to help solve the labour shortage?
All these questions are underpinned by a single factor – that careers in the home-building industry are seen as unattractive by many entering the workforce. The late 1990s saw a significant push towards encouraging young people to go to university and, as a result, other routes into work and vocational careers in particular have been presented as second best.
This seems counter-intuitive when you consider the rise of AI and the growing concerns in many professions that people will be replaced by computer algorithms. Many traditional careers that seemed rock solid choices suddenly look less stable – law, accountancy, data services and financial sectors are just a few at risk. Construction, along with other vocational pathways, is pretty AI-resilient – there may well be ways to make the planning or procurement or administration of building homes more efficient with AI, but computers aren’t going to be digging footings or laying bricks any time soon. Marketing the construction industry as future-proof could help us recruit, especially tech-savvy younger people who are growing up with AI as part of their daily life who can see how quickly it’s advancing.
Demand for skilled construction workers is brisk and that isn’t likely to change any time soon. Ambitious Government housing targets have shot housing way up the public and political agendas and the need for new homes has never been so high. A career in construction is a wise choice for those who want to ensure their skills are in steady demand.
Another related consideration is that of student debt – today’s students are leaving university with around £50,000 of debt, with many unlikely ever to repay it in full. That’s a huge millstone around the necks of graduates and one apprentices on the tools don’t have to worry about. On average, bricklayers in the UK earn £50,000 a year. What would most people prefer – a £50,000 debt or a £50,000 wage? These are some of the fundamental messages we as a wider industry must push.
In July this year, the Prime Minister announced fundamental changes to the education system, giving 14-year-olds the opportunity to access technical education, skills training, work experience and connections with employers. He said “Britain will value the hard hat as much as the graduation cap” – rousing words and definitely a move the home-building industry welcomes.
This commitment, while not the complete solution, is certainly a step forward. Construction offers a lucrative and stable career, with opportunities to progress. Young people learning this from an early age and being encouraged to explore all the industry has to offer could help us transform the workforce. One participant even countered that there’s no shortage of people wanting to join the sector. The challenge is actually how we incentivise smaller contractors and small and medium-sized enterprises (SMEs) to take on apprentices and those that are larger to take on more.
Many volume home-builders, which employ the bulk of residential construction workers, contract out to smaller local firms. This means we need to develop more pathways to get trainees into SMEs for them to thrive and to drive delivery. Many of these SMEs, despite being the backbone of the industry, simply don’t have the capacity to take on apprentices or trainees. The administrative burden, as well as the costs, can be prohibitive, even when there’s a willingness to develop new talent. If we’re serious about solving our alarming labour issues, then support for SMEs must be dramatically improved with red tape cut and better financial incentives provided.
What we identified
While our discussion was broad-ranging, covering many different aspects of the skills gap, its contributing factors and possible solutions, several key takeaways emerged. These were:
- System misalignment is the core issue. Skills, capital and projects exist, but lack coordination, visibility and consistency. A recurring theme was that the absence of a clear, forward pipeline is undermining confidence across investment, skills planning and delivery.
- The workforce challenge is both structural and urgent. While the construction sector employs ~2.1 million people, 25 to 36% of workers are aged over 50. Although approximately 100,000 individuals enter the pipeline each year, only around half secure employment. There was broad consensus that this represents a growing systemic risk.
- Purpose, pathways and perception matter. The sector must take greater ownership of its public profile, improving how we communicate the value, diversity and career progression opportunities available. Raising awareness of earning potential, highlighting the practical, AI-resilient skills developed through apprenticeships and actively promoting positive industry stories will be critical to attracting the next generation of talent.
- Viability pressures such as high debt costs, low yields and policy uncertainty are constraining delivery across the entire value chain.
- Capital is available, but fragmented delivery, lack of scale and structural complexity are limiting deployment. A clear gap remains between policy ambition and the practical realities of funding, skills and delivery models.
- SMEs remain critical but constrained, facing complications in terms of the administrative burden and costs of bringing new apprentices on board.
- Industrialisation and new delivery approaches will be required to meet housing need at scale, though confidence and consistency in these models must improve.
Turning individual activity into collective impact
The UK construction industry is fortunate to have many motivated and effective agencies, bodies and companies, all keen to see the skills gap closed. The public and private sectors alike have recognised the crisis we face, with the Home Builders Federation (HBF), Homes England, The Housing Forum, the Construction Industry Training Board and NHBC, to name a few, taking action, but we must work together to maximise impact.
From our roundtable discussion, we concluded there are four priority areas where we can act collectively as an industry to drive real change. These are:
- Develop a clearer national housing and skills pipeline to align projects, workforce demand and investment.
- Shift towards a more demand-led skills system that connects training directly to employment opportunities.
- Unlock SME capacity through targeted support, including apprenticeships, funding and planning simplification.
- Increase confidence in industrialisation and standardisation to deliver at scale, through stronger institutional backing and greater collaboration across the sector.
From discussion to action
NHBC will continue to work with partners to ensure Build to Rent perspectives are reflected in wider industry efforts to address the skills gap. Many of the right initiatives are already underway, so the priority now is to strengthen collaboration, avoid duplication and build on what is working. We will continue to support this by convening partners, sharing insight from the Build to Rent sector and helping align activity around the areas where it can have the greatest impact.
An initiative that was widely praised by attendees of the roundtable is NHBC’s £100m investment in multi-skills hubs, designed to provide faster, more flexible and practical training that supports industry in building the skilled workforce needed to deliver more high-quality homes. But training new entrants is only part of the answer. The sector must retain skilled people by creating clear career pathways, investing in workforce development and improving access to ongoing training and progression opportunities.
By increasing collaboration between employers, training providers and industry partners, there is an opportunity not only to attract and develop the next generation of talent, but also to retain valuable skills and experience within the industry. By working together and building on the strong foundations already in place, we can help strengthen and accelerate progress towards our shared objective of delivering more high-quality homes.
Moving from diagnosis to delivery
The discussion highlighted the value of bringing together perspectives from across home building, Build to Rent, finance, construction and government to better understand both shared challenges and sector-specific opportunities. It was a privilege to explore these issues with so many of the industry's leading figures. NHBC remains committed to supporting industry-wide efforts to deliver more high-quality homes and looks forward to continuing these conversations with partners across the sector.
Many of the foundations for success are already in place across the industry. The challenge now is to share learning and accelerate the adoption of approaches that are already delivering impact. If your organisation is interested in supporting training hubs, expanding apprenticeship opportunities, strengthening talent attraction and retention or contributing to wider industry skills initiatives, NHBC would welcome the opportunity to discuss how we can work together to support these shared goals and help build the workforce needed to deliver the homes of the future.
Roundtable participants
NHBC would like to thank Alex Notay for chairing and all those who participated in the discussion:
- Clint Bartman – Chief Operating Officer, Leaf Living
- Jason Berry – Regional Managing Director, Sigma Capital
- Andy George – Director of Industry Attraction and Skills, HBF
- Leigh Johnson – Managing Director, Barking Riverside
- Oscar Kingsbury – Executive Director and Portfolio Manager, PGIM
- Sarah Pickard – Group Funding and Delivery Partner Director, Keepmoat
- Helen Randerson – Partnerships Director, Gleeson
- John Reid – Executive Director for Technical Capacity and Coordination, Homes England
- Mark Reynolds – Executive Chairman, Mace Construct; Chairman, Mace Consult; and Co-Chair, Construction Skills Mission Board
- Stephanie Smith – Head of Residential, Muse
- Ann Xu – Director and Portfolio Manager, CBRE UK Affordable Housing Fund
- Chris Yau – Director, Housing & Sustainability and Regional Head of North West – Client Solutions Group, Lloyds Corporate & Institutional Banking
From NHBC:
- Niki Kyriacou – Sector Lead for BTR
- Alex Lancaster – Head of Government & External Affairs
- Roger Morton – Director of Business Change
- Tim Reid – Customer Relationship Director
NHBC’s contribution to a stronger home-building sector
As an established and trusted industry partner, NHBC provides unrivalled insight and horizon scanning throughout the build journey. A direct insurer underwriting its own policies, NHBC has a vested interest in the prevention of structural defects and in successful, long-term asset protection for owners, operators and residents. We’re proud to work with leading developers to help them get it right first time.
To find out more, contact me at nkyriacou@nhbc.co.uk or 07543 300352.
Originally published in BTR News.
