As part of our Birmingham office's #GrowthThroughChange campaign, which comprises a series of events and content to help businesses and organisations navigate a changing landscape and embrace opportunities, Paul Scott, the head of Trowers and Hamlins' construction disputes practice in Birmingham, explores if there is a skills shortage in the construction industry.
In common with the wider economy, the UK construction industry has been hit by several unprecedented challenges in recent years, including Brexit, Covid-19, the war in Ukraine, spiralling inflation and material cost increases.
As we look ahead, to what extent will scar tissue from these challenges mean that the ability of the sector to drive growth is hampered by a widening skills gap and a dwindling conveyor belt of incoming talent?
HS2- A case study
In the West Midlands, where the construction industry accounts for 12% of all businesses, large-scale infrastructure projects have been championed as drivers of growth and investment in the region.
However, as has been widely publicised, the HS2 project has been beset by delay and soaring costs (the project is currently estimated to cost £90m per km of track), which has ultimately led to a government decision to cancel the Birmingham to Manchester leg. One of the factors speculated to have caused the soaring costs is a lack of skilled labour throughout the supply chain.
While there are a number of competing opinions on this issue, the chairman of HS2, Sir David Higgins, in evidence to the House of Lords, opined that the high cost of HS2 can be partly attributed to a short-sightedness of the UK industry. Sir David suggested that in the UK, the cost of a project is sometimes prioritised over quality, and there may not be enough investment in skills or collaboration. Sir David added that, unlike other European countries such as Spain and Germany, in his view the UK industry is fragmented and lacks multi-disciplinary contractor companies that can invest in R&D and skills for the future.
While Birmingham has been loudly trumpeted as the 'youngest city in Europe' based on the percentage of the population agreed under 25, in general the UK construction industry has an ageing workforce, with a high percentage of workforce in their late 40s and 50s. This, combined with the mass-departure of skilled EU workers in the 25-44 age category after Brexit, means that the workforce may soon be unable to shoulder demand. Unless the industry can attract, train, and retain UK-born workers, this issue may get bleaker as the ageing workforce begin to retire in the next decade or so. It is estimated by the Construction Skills Network that 25,350 additional workers will be needed by 2027 to meet the forecasted demand.
Potential solutions
So, what is the solution, and how can the UK construction industry drive growth through change?
Further investment into apprentices could help attract and retain talent early. Whilst the government introduced the Apprenticeship Levy in 2017, could more be done to encourage employers to capitalise on the potential of apprentices, including educating employers of the benefits of employing apprentices and expanding funding and courses available?
Could the government also encourage or incentivise employers to invest more in the development and upskilling of their staff? If it is correct that the industry is currently fragmented and reliant on a large percentage of smaller business in the supply chain, does this place a disproportionate burden for training and development on companies who may lack the size and scale to do so?
Could further efforts be made to ensure that the construction industry is fully capitalising on its potential talent pool? Government, schools, and employers each have a responsibility to encourage continued study of STEM subjects and to publicise the opportunities that a career in construction can offer.
The scale of the challenge is clear, but organisations that recognise this will be best equipped to deal with the challenge and even benefit from the opportunities that the challenge will present.
Beth Bundonis, Regional Managing Director for Lovell Partnerships East Midlands, points to the approach they are adopting to overcome the skills gap.
She said: "As a responsible business, one of Lovell's five guiding principles is 'Developing People'. We offer industry leading development opportunities to our people to make good on that principle, but we also see this as an obvious way to help us attract and retain the talent that we will need to allow us to deliver on our growth strategy and make the most of opportunities that arise".
Paul Scott is a specialist construction dispute resolution lawyer, who heads up Trowers and Hamlins' construction disputes practice in Birmingham. Get in touch with Paul at pscott@trowers.com to discuss any views that you may have on how possible skill gaps might impact the construction and engineering sectors, or for any advice or assistance that you may require in relation to your construction or engineering project issues.
