Can we build it? Yes we can but it won’t be pretty…

The last month or so has seen a flurry of news headlines relating to housebuilding and infrastructure. On the one side, pronouncements from government about growing the economy, being the ‘builders not the blockers’ and cutting red tape to enable stuff to get done. On the other side, a level of growing cynicism as to whether commitments to 1.5 million new homes in the current Parliament are in any way realistic is at least partly down to the question of who will build them.

As a contributor to the latter debate about construction skills, it is probably right to share my views here, especially as my review of the Construction Industry Training Board (CITB) for the Department for Education, entitled Transforming the Construction Workforce, was published within 24 hours of the Chancellor supporting Heathrow expansion last month and welcoming a new era of infrastructure building.

The simple answer is that this is not a binary debate. There is no hard ceiling on the amount of work the construction industry will undertake, or at least attempt to undertake, and therein lies the problem. Many in the construction supply chain are currently hurting after over two years of economic turmoil and construction output contraction, especially in housebuilding. Some of the biggest cheerleaders for the government’s pro-growth agenda are the contractors and suppliers who stand to benefit from increased workloads and rightly so.

However, what belies that enthusiasm for more pipeline is that the gear up phase to deliver it looks increasingly problematic. Having haemorrhaged 20% of the workforce since 2019, the capacity base of the industry has been hollowed out. The trajectory of new entrants versus numbers of retirees, especially in site trades, points to even more challenges in maintaining workforce size before even thinking about growing it. Just to be clear, there is no utopian mass recruitment campaign solution that will step-change matters here either, we all need to work in the real world.

In the last economic cycle, post global financial crisis through to Covid, the industry’s employment numbers re-inflated steadily but at a flatter rate than ever before and for the first time in modern history, failed to increase beyond peak employment of the previous cycle – this was despite the country’s population having grown by 10% in the same period.

Construction is simply taking less and less of the total workforce, and that is before considering there is a growing gap between the total theoretical workforce and the actual economically active one, as evidenced by recent figures showing nearly one million people not in employment, education or training.

The pre-Covid peak value of construction output was higher than the previous peak in 2008 but was delivered with fewer people employed. Some might say that automatically means we must have improved productivity but the hard reality is that the opposite is the case and the industry was simply ‘over-trading’. Core characteristics of this include rampant wage inflation and poorly delivered, often late and over budget projects.

So what does this mean for the construction work we now need to be doing to grow the economy? It means we will once again be over-stressing the workforce during the next growth period. It means a return to labour scarcity, wages will rise more sharply, competency will be diluted, mistakes will be made in everything from design to project planning to physical on site execution. Quality will suffer, value for money will deteriorate and everyone will continue to bemoan the state of the construction industry.

The only way to break out of this vicious cycle is to enable the industry to invest better in its future, in more training and upskilling, in more direct employment and more innovation. None of these are possible without a stable pipeline, even then it might not be possible due to entrenched attitudes to risk and doing things differently. The biggest challenge the Government therefore has is not in creating the boom in construction everyone hopes for, but in ensuring it sets the conditions which avoid the seemingly inevitable bust period that follows.

Mark Farmer is founder of Cast Consultancy and author of the Independent Department for Education review on construction skills