Construction Mega Projects Will Cause ‘Brutal’ Skills Shortage

THE UK’s construction industry is facing a skills shortage that will “make 2007’s War for Talent look like a water fight”.

That’s the warning from a construction and engineering recruiter, alerting that the industry will need to hire around half a million people to meet demand.

Simon Harris, MD at Randstad UK, says demand will come from mega construction projects already underway in the UK and new projects.

The projects yet to begin include water infrastructure developments ¾ Lower Thames Crossing, the expansion of the National Grid, and the Stonehenge Tunnel ¾ as well as the imminent resurgence of the housing building market.

Combined, these will intensify the current talent shortage and lead to “a brutal labour shortage”.

Harris says existing projects — which include HS2, the Thames Tideway, and Hinkley Point — are already stretching the workforce.

HS2 employs 30,000 people now and HS2 and its contractors are still actively recruiting for hundreds of new roles.

Construction of the Thames Tideway Tunnel is ongoing and won’t be complete until 2025. EDF has confirmed the new nuclear power station at Hinkley Point won’t be finished any time this decade. And Sizewell C, which is only at the enabling works stage, is already creating hundreds of job vacancies. The construction of Sizewell C is expected to commence in this year, with construction taking between 9 and 12 years. This, alone, will lead to the creation of thousands of jobs.

Brutal Skills Shortage

Simon Harris, the UK MD of construction, property and engineering recruitment at Randstad said: “HS2 alone employs a couple of percent of the UK’s entire construction workforce. Sizewell C is already hoovering up talent. Hinkley Point isn’t finished, and neither is the Thames Tideway Tunnel.

“The construction industry is already stretched thin. We have lost a lot of people from the house building side of the industry, in particular: the workforce has lost close to half a million people since 2008. There’s very little slack in the system.”

The UK’s construction sector is likely to start recovering after the general election expected later this year.

Travis Perkins has said its customers are seeking clarity on the future direction of interest rates and waiting to see if a potential new government announces a post-election stimulus package. There are signs that the slump in the construction market may be bottoming out.

Water Investment

The water sector is facing a regulatory period that is likely to put a heavier emphasis on investment. Indeed, the entire sector requires significant environmental capex. In December 2024, water regulator Ofwat will set prices charged for water and sewerage services in England and Wales, taking into account proposed capital investment schemes (such as building new wastewater treatment works).

Ofwat will want water companies to demonstrate they are developing and maintaining efficient water supply systems. That will mean construction. Water companies are starting projects to increase their capacity.

Amongst these, United Utilities is embarking on a £77 million project to increase the capacity of its wastewater treatment plant at Burnley.

Additionally, construction on the Lower Thames crossing scheme is set to begin in 20262. The crossing will involve building 23 km of new road in east London, including two 4.2 km long tunnels under the River Thames, downstream of the Dartford Crossing. The scheme will link Kent and Essex by connecting the M25 motorway and A13 north of the river to the M2 motorway south of the river.

Electricity

In March, National Grid Electricity System Operator (ESO) set out plans for a massive £58bn expansion of the UK’s high-voltage transmission network. The project is designed to make the UK’s power networks carbon neutral and will be the biggest investment in the electricity grid since the 1960s.

Housebuilding

And with most analysts saying interest rates have peaked, and will soon start to fall, house building is also set for a resurgence. The Bank of England will lower the base interest rate to 3% by the end of 2025, according to analysis by research firm Capital Economics — forecasting the first rate cut for June 2024.

Simon Harris adds: “At the moment, it’s hard, but not impossible, to recruit. But the combination of mega construction projects already underway and projects that are yet to begin will intensify the current talent shortage and lead to a brutal labour shortage.

“Soon interest rates will dip and housebuilders will put their foot on the gas.

“The perfect storm will hit in 2026, when the Lower Thames Crossing finally kicks off. Construction employers without a bullet-proof long-term workforce plan will find the going very hard indeed. It will make the 2007 War for Talent look like a water fight.

“And who knows what the sector does when we break ground on the 1¼ mile Stonehenge tunnel and start overhauling 8 miles of the A303.”

Construction Skills Shortage Challenge

The construction labour force was approximately 2.6m strong in 2008, before the sector began to haemorrhage talent. By the end of 2023, the sector was 465,000 workers smaller, employing 2.1m people.

Simon Harris ends: “If construction employers are to meet the challenge, they are going to have to hire approximately half a million people. Employers who want to navigate the next few years effectively are going to have to look at hiring people from different backgrounds and fishing in more diverse talent pools; pay more for skills; and grow more of their own talent.

“They need to focus on apprenticeships and training new hires as well as upskilling existing employees. They’re going to have to move to skills first recruitment, rather than looking for ‘experience’ above all else. Let’s not forget that experience doesn’t exist for some new roles like green skills or AI-based tech.

“Employers are also going to have to start moving faster to secure the best talent — protracted recruitment processes will prove utterly counter-productive.”

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