Severe labour and skills shortages in the construction industry could seriously affect the delivery of the UK’s national infrastructure pipeline, according to a new report published today by leading consultant, Currie & Brown.

The UK Construction market outlook report – which tracks construction activity from the start of 2023 to date – indicates that 225,000 extra construction workers will be needed by 2027 to meet demand. This shortfall is likely to have severe repercussions for infrastructure projects across key sectors. 

Skills shortage pushes up costs

Skills shortages have overtaken material costs as the primary challenge facing the construction sector. But while headline inflation is easing, an acute construction skills shortage is predicted to drive an 8.3% increase in labour costs over 2023. This could extend lead times by up to 50%, forcing contractors to re-scope projects.  

The report also highlights that the combination of labour-driven and material cost increases could add £900 million to the cost of the UK’s infrastructure pipeline in 2023. This is equivalent to the cost of a major new hospital.

Timing is a key factor 

Typically, major infrastructure projects are talent intensive, which means that demand will quickly outstrip supply. The report identifies that this situation will be exacerbated over the medium term as construction activity intensifies with new projects set to come online between 2025 and 2030.

To help address the issue, the report advises project teams to engage early with their contractors to ring-fence skilled labour and expand their pool of supply partners. It also suggests that part of the solution to the problem could be delivered through the use of advanced technologies, such as AI, which will provide benefits through design, cost and risk management, safety and off-site construction innovations.

Nick Gray, Chief Operating Officer UK and Europe at Currie & Brown, said: “The national infrastructure pipeline is crucial to both the economic health of the UK, and improving the entire population’s quality of living through increased access to key services. Therefore, the predicted skills shortage revealed in this report should be seen as a wake-up call for the construction industry. Avoiding a cliff-edge that threatens the delivery of key projects such as the Transpennine Route Upgrade Programme, works at the Port of Liverpool, and the National Hospitals Programme will demand a collaborative effort on training from players across the industry. It will also need robust project management and continuous, close control of cost and risk.”