Fears over UK construction skills shortage

Construction firms say a skills shortage threatens to delay major building projects, after official figures showed the sector contracted sharply in August.

Output in the industry fell by 4.3% on the previous month, surprising City economists, who had expected a 1% rise.

Some analysts blamed the August downturn on the wet weather, but the steep monthly fall followed a weakening trend in recent months that pushed the construction sector to its first annual fall in output since summer 2013.

A breakdown of the industry showed that all construction types reported a fall for the first time since December 2010. Housebuilding was down 3% month-on-month.

The figures follow a string of speeches by senior political figures calling for a resurgence in infrastructure spending and housebuilding. Several projects are planned, including HS2, a second Crossrail tunnel in London, railway upgrades to spur the “northern powerhouse” and the Thames Water super-sewer.

George Osborne told the Conservative party conference in Manchester that nimbyism was a key factor holding back infrastructure spending, even in his Tatton constituency in Cheshire. The chancellor said: “Where would Britain be if we had never built railways or runways, power stations or new homes?”

The Labour leader, Jeremy Corbyn, has also promised to increased infrastructure spending and housebuilding, though with less reliance on private sector funding.

Owen Goodhead, managing director of the Randstad CPE recruitment firm, said the underlying problem restricting output was a skills shortage “putting our homes, infrastructure and economy on the line”.

“Construction in the UK could be expanding instead of retreating if the right people were in the right jobs. But training, skills and flexibility need to accelerate hugely for construction jobs to keep up with demand,” he said. “Without it, all the chancellor’s talk of investment in infrastructure will come to nothing.”

Mark Robinson, chief executive of the consultants Scape Group, said: The skills shortage in construction is still a problem that needs a lot of work. The [government’s] spending review in November will likely give us a longer-term view with regards to planned infrastructure and housing growth over the next five years, so we wait with bated breath to see the outcome.”

Howard Archer, chief UK economist at IHS Global Insight, said the 4.3% month-on-month drop in output “was a particularly poor performance, especially as it followed a drop of 1.0% in July”.

He said: “This means it is now highly likely that construction output contracted appreciably in the third quarter and was a drag on GDP. Indeed, construction output will need to have grown 8.2% month-on-month in September to have just been flat quarter-on-quarter in the third quarter.”

Paul Hollingsworth, UK economist at Capital Economics, said the soggy August might produce a bounce-back in the sunnier September. “But even if the fall was entirely reversed in September, this would still leave construction output down 1.2% in Q3, following Q2’s 1.4% rise. Accordingly, the latest figures add to other evidence suggesting that the recovery slowed in the third quarter,” he said.