KPMG: UK is facing major skills shortage in construction

11 November 2014

The UK construction industry in London and the South East is facing a major skills shortage, according to KPMG and LCCI. For the period 2014-2017, an increase of 20% in required workforce compared to 2010-2013 is expected, while at the same time the current training level is falling behind. For 2015 a deficit of 51% of skilled workers is expected with the current training rate. This deficit needs to be addressed to prevent endangering the house building and large infrastructure projects in the region.

Professional services firm KPMG, together with business organisation London Chamber of Commerce and Industry (LCCI), recently launched a new report titled ‘Skills to build’. This report analyses the skills gap and training shortage in relation to the construction pipeline in London and the South East for the period 2014 to 2017.

The overall conclusion of the report: the UK construction sector is facing a major shortage in skills, which will endanger the infrastructure ambitions of the UK. “For the first time in many generations, the UK has a strong pipeline of construction and infrastructure projects to reinvigorate the economy and drive our future competitiveness. But delivery of that pipeline is now in jeopardy - not for lack of political will or funding – but for lack of a sufficiently large and trained workforce,” says Richard Threlfall, UK Head of Infrastructure, Building and Construction at KPMG.

Pipeline value 2014-2017For the period 2014-2017, almost £96 billion worth of construction projects are planned. Of this £95.7 billion, £51.7 billion worth of projects have already been contracted and £15 billion have been granted detailed approval. According to the researchers, new construction projects are coming into the pipeline on a continuous basis. As a result, the expected output of projects for 2016 and 2017 is likely to either reach or surpass the 2015 value. The UK Construction Industry Training Board (CITB) expects a growth in construction of 2% for London and 2.9% for the South East region on an annual basis for the period 2014-2018, which will come down to an additional forecasted £26.7 in 2016 and 2017.

Total labour requirements 2014-2017

With more projects being planned for 2016 and 2017, the labour required for this period is also expected to reach or surpass the 2015 level. The CITB expects an annual increase of 1.4% in London and 1.6% in the South Ease for the period 2014-2018. The total expected labour demand in the two regions for 2014 is 430,706 and 585,863 in 2015. The expected total labour required for 2016 is 594,645, of which 391,149 for projects in the pipeline and 203,496 for forecasted projects. For 2017 the expected required labour force is 603,567, of which 297,480 for planned and 306,087 for forecasted projects. The research shows that the median average demand for workers in the period of 2014-2017 is 410,928, which is a 20% increase from the 341,638 workers in the period 2010-2013.

2015 labour and training requirements

This 20% increase in labour demand needs to be addressed to divert a major skills crisis in the construction industry. The industry, which has had difficulties in recruiting enough skilled workers, needs to find and train new employees to keep up with the pace of the expected new projects. KPMG and LCCI show that with the current training a deficit of 14,807 labour skills will occur as early as 2015, when 29,293 skilled employees are needed. This represents a gap of 51% in competency-based training, a gap that needs to be closed for the house-building and large infrastructure projects not to be jeopardised.

“Unless action is taken now, our housing targets will be missed, and infrastructure projects delayed. This report calls on the industry itself to wake up and take responsibility to increase levels of training dramatically,” concludes Threlfall. “It also calls on Government and training providers to recognise that the industry is changing, with ever greater application of technology and a trend towards offsite manufacturing - the skills required in the industry tomorrow will be very different from the skills required today. And above all it calls on all in the industry to take steps to boost the image of the construction sector as an attractive career path for the next generation in our schools and colleges.”