The recent surge in industry activity gives cause for both optimism and caution.
An increasingly positive economic outlook is driving ever higher levels of demand for new housing, commercial building and infrastructure. The industry is responding by bringing in more capacity daily. This capacity, however, is finite.
Firms, both trade and professional, are feeling the strain of an ever-increasing pipeline of work.
Our organisations deal on a daily basis with businesses at the forefront of construction, who are increasingly concerned by the impact that skills shortages have on the cost and deliverability of projects.
Skills to Build presented us with a unique opportunity to provide evidence for the first time of the worrying skills shortage in London and the South-east.
Training drive essential
In our view, the industry will struggle to meet rising demand if it does not invest in attracting new talent into the sector and spend more on training the existing labour force.
Our analysis indicates that by as early as the middle of 2015 the shortfall in labour could be as much as 20 per cent. A 51 per cent increase in training provision would be required to meet demand for skilled labour between 2014 and 2017 to plug a gap of nearly 15,000 people.
With 255,000 workers needed on site to deliver the 2015 pipeline of housing and 400,000 of the workforce expected to retire in the next five to 10 years, change to the industry has never been more urgent.
Unless the supply of labour is increased, housebuilding targets alone will not be met and the delivery of large infrastructure projects will be jeopardised.
At a time when London and the South-east are already suffering an acute and widely acknowledged housing shortage, potential delays to projects are a major concern, both to individuals struggling to find affordable housing and to the economy of the region as a whole.
Population surge poses threat
With the capital’s population set to grow by the equivalent of the population of Birmingham over the next 10 years, this situation is destined to become even graver.
A growing population puts pressure not just on housing, but on infrastructure and utilities, which are vital to sustaining economic performance.
Our report puts the value of the 2014-17 pipeline for London and the South-east at £96bn.
This figure is based on projects currently within the planning system and with a high degree of certainty attached to their delivery.
It is this level of certainty in project pipelines that instils both the private and public sectors with the assurance to invest in providing the necessary skills.
Creating a climate of confidence will enable not just the industry itself, but major clients, policy-makers and training providers to act to address the skills shortage.
From the top down
Government and major clients need to embed training requirements within procurement contracts so that training is no longer a ‘nice to have’, but becomes an operational requisite for successful construction businesses, just as we have seen with health and safety rules on site.
More needs to be done to encourage young people into construction, but not all training providers are training people with the modern skills required by a rapidly changing industry.
Tackling this requires measuring and rewarding schools and colleges based on students’ progression into training and work.
The findings of this report may give justifiable cause for concern, but there is also room for optimism.
Firms are being buoyed by increasingly full order books.
A number of companies are already taking measures to address the skills shortage within their own trade or profession, setting up apprenticeship schemes and investing in training for existing staff.
If we work together and if we project the image of the industry as a great place to work, then the future for construction is bright.
We will see an industry transformed by technology, with new recruits bringing innovation and ambition into the sector.
We will see the delivery of a pipeline of vital and ambitious projects, unhampered by a lack of skills. It is time to act and create the skills to build.
Richard Threlfall is UK head of infrastructure, building and construction at KPMG and Colin Stanbridge is chief executive of London Chamber of Commerce and Industry