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10 March 2021updated 08 Sep 2021 8:33am

Why the construction skills crisis threatens UK climate targets

The building sector is key to achieving net zero, but skills shortages and an ageing workforce put the government's ambitions at risk.    

By Oscar Watkins

The UK’s construction workforce is ageing. The proportion of construction workers aged over 50 now stands at a staggering 35 per cent of the total workforce, compared to just 20 per cent who are aged under 30. But this workforce crisis is not new. In 2016, the government-commissioned Farmer Review found that the industry has been ageing since at least the 1980s. 

The trend towards an ageing workforce may soon deepen further, with Brexit forcing younger, skilled workers to leave the country, and industry failing to attract young, talented people to construction careers. Now this construction skills crisis is threatening the UK’s ambitions to reduce carbon emissions and restore nature.

The government has set out a target to achieve net zero carbon emissions by 2050. The construction sector will need to participate in every part of this effort, from insulating homes to building clean transport and energy infrastructure. Yet, analysis by the think tank the Institute for Public Policy Research (IPPR) shows that up to 750,000 UK construction workers will retire or be on the verge of retirement in the next 15 years. This threatens to undermine the government’s plans.

The independent Climate Change Committee has set out the projects that would be required to achieve net zero, including the massive task of reducing household emissions through improving insulation in homes and installing electric heating. They estimate that improving household emissions alone will create 200,000 new jobs, and this is before you take account of new transport and energy generator projects. This should be good news for a government eager to keep unemployment low, but is it and the sector doing what is needed to ensure there are enough skills in the pipeline to seize this opportunity?

The government has not yet set out its stall clearly on what projects it would bring forward in pursuit of net zero. This is a problem. Employers, small and large, do not have the certainty they need to invest in recruiting and training new staff. 

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A longer-standing issue is the lack of co-ordination across industry, government and the further education sector. For decades the construction industry has failed to act together in response to the construction skills crisis. This has been heightened by a lack of leadership from government, whose policies have disincentivised businesses from working together towards national priorities. 

The result of this is a race to the bottom when pricing new construction projects. Investment in training and employing new staff is value-engineered out of the budgets for construction projects, in favour of lower risks and more immediate rewards. A fundamental question remains: who pays to fix the construction skills crisis? Is it taxpayers, or is it businesses?

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IPPR’s research has also found that action is needed from government on funding and working conditions, but much more still needs to be done by the construction industry itself. 

On funding, the impetus is on government to come forward with a clear pipeline of net zero investments. This would offer industry the certainty it needs to invest in recruiting and training new staff. It also needs to increase funding for the further education sector, reversing decades of underinvestment in post-16 education. 

Shoring up confidence in the industry will require the government to show it has a plan for investment, and that it is serious about regulating the actions of industry through meaningful legislation and procurement of publicly funded infrastructure projects.

The Treasury and Cabinet Office have published new guidance for civil servants on how to procure construction projects sustainably, which is a positive step. However, these good intentions were not matched with a realistic funding plan for net zero infrastructure in the Budget last week.

The construction sector is also not currently an attractive place to work for many people. Small and large businesses alike have said that insecurity of employment and issues with pay are putting people off from joining the industry. The government needs to urgently establish a commission on bogus self-employment in the construction workforce, alongside unions and businesses, to address this. This is vital if we are to end the desperate cycle of “false self-employment” practices that characterise parts of the industry.

If this persistent skills gap can be overcome, the construction sector can play a leading part in “building back better” from the Covid-19 pandemic. But we can’t build back better without the builders. 

Oscar Watkins is construction lead at the Institute for Public Policy Research and a senior account manager at the London Progression Collaboration, an apprenticeships initiative.