With the government admitting that their target of 1.5 million new homes will likely be missed, industry experts have shared their insights into the challenges of building in the UK, and what can be changed
Following the comments from Angela Rayner that the government’s target for 1.5 million new homes before the next election is looking unrealistic1, an often-repeated question is once again raised. Why is it so hard, and so expensive to build in Britain?
From slow progress against housebuilding targets, averaging less than 44,000 completed dwellings per quarter since the start of 20243, to spiralling infrastructure costs for major projects like HS2, it’s clear that there are key issues in the UK that impact how it builds. These issues lead to slipping completion dates, steadily rising costs, and missed ambitions in terms of the number or scale of developments that are planned.
To explain the key problems behind the UK’s construction predicament, and what can be done to fix it, two industry experts, Patricia Gardiner, trades expert at Trade Direct Insurance and Paul McFadyen, metal and materials expert at metals4U, have shared their thoughts.
Worker shortages
Patricia explains: “For all the ambitious targets set by the government, the key variable that was overlooked is the ability of the workforce to deliver on the planned scale. It’s a well established fact that the construction and trades sector is facing a severe shortage of skilled workers. Regardless of cash investment and political ambition, it will take time to change this.
“In the meantime, the lack of skilled labour means that there simply aren’t enough workers to deliver homes in the number required. Combined with other factors, such as borrowing costs, this is leading some developers to exit housebuilding altogether, with recent news that both Kier and Harworth2 are exiting the housebuilding sector.
“For the workers themselves, the high demand placed on them is challenging, and many find themselves overworked and exhausted, which drives many trained builders to leave the housebuilding sector, or quit the trades entirely. Workforce numbers are a major bottleneck that must be overcome to improve the efficiency of housebuilding in the UK, both for the good of the workers themselves, and the health of the industry as a whole.”
A worsening skills gap
Patricia shares: “In addition to overall worker shortages, the worsening skills gap is another workforce issue contributing to inefficient development.
“Years of underinvestment in technical training and inefficient apprenticeship schemes have led to a significant ‘missing middle’ of skilled workers who can train the next generation, as well as carrying the responsibility of efficiently and effectively delivering construction projects. The workers that remain find themselves overstretched as there are fewer of them to supervise and assist apprentice training, whilst also completing their own tasks and site work.
“Additionally, due to developers scaling back project ambitions, there are fewer openings for apprentices and trainees to enter the industry and secure meaningful and quality training opportunities. This risks making the problem even worse in the future as experienced workers either retire or leave the commercial construction industry without adequate replacement.”
Material costs
Paul comments: “There’s no doubt about it, material costs are soaring, and have been rising consistently for several years now. A combination of global trade disruption, conflict, and instability, has led to high energy prices and import costs for essential materials used in construction, such as steel, copper, and aluminium.
“This causes the overall cost of development to rise, and when combined with other financial pressures, such as the rising cost of borrowing, means that construction project budgets have soared. Developers are also more wary of large-scale investments, especially in areas such as housebuilding where profit margins are reducing due to a depressed housing market. For many, more lucrative sectors, such as data centre infrastructure, are far more appealing.”
Stifling red tape
Paul outlines: “While the government has taken steps to reduce red tape around important construction projects, this is still a significant issue that potential developers need to overcome. Legal challenges, planning hurdles, environmental regulation and local opposition can all cause delays that will have to be accounted for in the budget.
“HS2 and Hinkley Point are prominent examples of this, with multi-year delays and billions of additional pounds being spent, but these same issues are felt on a more modest scale for many local and regional projects as well.”
What can be changed?
Patricia comments: “For workforce issues, there needs to be an urgent and immediate change to talent acquisition and development . The problem will only get worse over time, and increased investment in technical education, routes to employment, and opportunities for people to reskill and learn a trade later in life should all be prioritised to allow for improved workforce growth in the coming years.
“Positive steps have already been taken, and the government’s announcement that technical education will be boosted in schools is very important, but urgent action to implement these changes as soon as possible is needed to address the issue before it gets worse.”
Paul adds: “There are some problems that cannot be solved by a single national government. Material prices are going to remain high for the foreseeable future, so it’s important that we consider how we can help to mitigate those costs.
“Cutting business rates and subsidising energy costs for key material producers, such as the steel industry, will help to reduce the cost burden for manufacturers and allow them to pass on some savings to material merchants, contractors, and builders, as well as creating a sustainable domestic industry that is less exposed to international crises.
“Going further to reduce red tape and make property investments genuinely appealing for developers is another important step. By no means should we completely abandon caution, but where regulations and potential barriers to development are particularly restrictive, every effort should be made to streamline the process.”
https://www.tradedirectinsurance.co.uk/
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