Trades_Skills_Index_Blog

Britain’s economic recovery will be blighted by a construction and trade skills crisis, without Government action

A chronic shortage of key trades like plumbers, electricians and carpenters will hamper Britain’s economic growth over the next ten years and threatens to stoke home repair bills and house prices, a new report reveals.

The UK must urgently expand its apprenticeship schemes, with 305,000 new construction trades apprentices needed to fill the void left behind by an ageing workforce, COVID-hit skills shortage and a drain of European skilled labour

Britain’s economic recovery post-COVID is being threatened by a looming construction and trades skills crisis, a detailed new study shows.

Without plugging a 1.25million recruitment need for construction and trades workers – and a projected 305,000 shortfall in construction trades sector apprenticeship numbers – over the next decade, Brits can expect to see home repair bills and house prices rocket, as demand for home improvements looks set to significantly outstrip capacity.

Within the construction sector, the report reveals a need to recruit 228,000 key trades apprentices. Just under two thirds (61 per cent) of those are plumbers, electricians and joiners.

Critically, without an action plan to tackle the projected chronic lack of trade skill apprenticeships, the shortfall could “seriously hamper” Government house building targets and threaten its ambitious ten point plan for a new ‘green industrial revolution’.

It has been described by the HomeServe Foundation, which commissioned the independent new ‘UK Domestic Trade Skills Index’ from Capital Economics, as a “perfect storm”.

Helen Booth, Director of the HomeServe Foundation, said: “Through this new index of trades skills we can clearly see the industry faces a perfect storm. 

“We have an ageing workforce; a chronic trades skills shortage made worse by the impacts of COVID; and a European skilled labour drain which will, if unchecked, deplete the UK’s trades skills base to crisis levels and seriously hamper our nation’s economic recovery.

“If this is not tackled now – by making it simpler for trade businesses to grow and by scaling up the training and recruitment of apprentices in time – the consequences will be bleak, not just for the industry but for the Government’s plan to kick-start the economy and reach its Net Zero milestones over the next decade.”

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In order to meet increased demand for construction work (27 per cent higher) and home repairs (37 per cent higher) by 2030, the UK will need 305,000 more construction apprentices, and 68,000 in the home repairs sector alone, which includes boiler installation engineers, electricians and painters and decorators.

The target means the UK will need to increase its current annual output of construction and trades skill apprenticeships by around 44 per cent. 

Call for industry backing 

The HomeServe Foundation, the not-for-profit arm of FTSE 250-listed HomeServe PLC, is now calling on the construction and trade industry to back its call for the Government to do more – and quickly – to help the industry tackle this challenge.

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The new ‘UK Domestic Trade Skills Index’, which will report quarterly on the nation’s progress on tackling the issue, makes it clear that failure to address the trades skills gap could lead to the UK lagging dramatically behind on Government targets for new homes, domestic decarbonisation, installation of new power sources for electric vehicles and key infrastructure projects – all vital elements of the Government’s plan to kick-start the economy.

According to the report, which explores 11 construction trades including carpenters, plumbers and electricians, the volume of work in the trade sector is expected to double in 2030 compared to 2019. 

The Index suggests the trades skills gap is compounded by the slump in construction output of around 12 per cent during 2020, which has accelerated an already-high expected rate of retirements, staff turnover and the permanent return home of overseas workers in the short term. It also suggests a new skilled occupation visa scheme will exclude many EU construction workers such as scaffolders and labourers. Red tape could also hamper the efforts of smaller firms to sponsor EU workers to come into the country to fill skills gaps and support growth.

A fifth of construction workers are aged 55 or over and will retire before 2030, an estimated 20,000-plus EU construction workers left Britain in 2020 and the report predicts another 22 per cent drop by 2030. The industry has seen a consistent and historic lack of training which has contributed to wage inflation and skills shortages, even during the pandemic.

Left unchecked, the report calculates the skills shortage would impact the cost of hiring skilled workers leading directly to an increase in house prices or cost of home repairs and improvements.

Industry growth in the next decade

Government investment to achieve Net Zero targets accounts for half of the forecasted rise in home improvement and repairs demand, as homes are made more energy efficient through measures including installing insulation, replacing fossil fuel-based heating systems with alternatives such as heat pumps, and the installation of domestic electric vehicle chargers.

Small trades businesses need to recruit

Sixty per cent of the home improvement and repairs sector’s output is from firms with nine or fewer workers, therefore, the bulk of the responsibility for recruiting additional, skilled workers to cope with the increased demands will fall on smaller firms, recruiting apprentices from the existing UK population.

“We need to make it simple for smaller construction and trade firms to grow and provide better advice, support and incentives,” added Helen. “And we need the vision, commitment and backing of Government to realise the possibilities here. We’re doing all we can to do this through the HomeServe Foundation and through collaboration with industry partners, but we also need the sector to rally with us and champion this effort.”

Small firms are the largest providers of the estimated 21,000 construction trades sector apprenticeships completed annually in recent years, but this has not been sufficient to keep up with demand since 2014, according to the Index. 

This figure will need to rise to at least 30,500 annually over the next ten years to keep up. 

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The home repairs and improvements sector alone will need to employ at least 525,000 people by 2030 compared to 428,000 in 2019, and this will need to include 68,000 new apprentices and allow for higher than average levels of retirement in the sector.

Around 45 per cent of home improvement and repairs employment in 2020 was in firms with four or fewer employees.

Last year the HomeServe Foundation warned that the Government’s current incremental incentives (£3,000 for 16 to 18-year-olds, £2,000 for 19 to 24-year-olds and £1,500 for over 25s until April 2021) to take on apprentices do not go far enough to make taking on a young trainee an affordable option for the vast majority of small firms operating in the trades sector. 

“Apprenticeships are the most common route of entry into the trades sector; the majority tend to be younger,” Helen added. “We hear a lot about incentives to install boilers using renewable energy and decarbonising our homes, but the workforce isn’t there to do it – or service and repair it further down the line.

“Investment now in skills for young people must be a priority, even despite pandemic spending restraints.”

According to the Government’s own statistics, in England in 2019-20, 48 per cent of ‘construction, building and the built environment’ apprenticeships were started by those aged under 19, 35 per cent by those aged 19 to 24, and 16 per cent by people aged 25 or more. 

Grant Colquhoun, head of consultancy at Capital Economics, said: “This report finds there is a clear need for a greater number of construction trades apprenticeships to deliver the new homes the country requires, transform how our homes and buildings are heated and our vehicles powered, and develop the infrastructure and buildings necessary to support economic growth.”

The report calculated that the necessary Government investment required to plug the gap (based on current spending levels), would eventually pay off, netting a cumulative £1.5bn for the Exchequer through taxes paid and benefits saved and lower Government borrowing. This was calculated under the assumption that the increase in apprenticeship recruitment begins in 2021/22.

For more information on the new UK Domestic Trade Skills Index, or to view a summary of the full report, please visit the HomeServe Foundation at https://homeservefoundation.com/uk-domestic-trade-skills-index-feb21/.

Editor’s notes:

Images:

  • Pictured: Helen Booth, Director of the new HomeServe Foundation
  • Infographic: A snapshot of the key findings from this quarter’s UK Domestic Trade Skills Index report
  • Pictured: Apprentices currently being trained at HomeServe’s world-class Apprenticeship Academy in Nottingham

Insight:

  • The UK Domestic Trade Skills Index was commissioned from independent macro-economic research company Capital Economics by the HomeServe Foundation. It was conducted between December 2020 and January 26, 2021 with the aim of understanding the future demand for trades apprenticeships and their impact on the economy.

About the HomeServe Foundation:

  • The HomeServe Foundation is the not-for-profit arm of leading home repairs company HomeServe Plc, established with a clear vision to dramatically increase the number of apprentices in the UK.

    Launched in September 2020, the HomeServe Foundation’s mission is “Making homes better, building better communities”. The organisation’s initial focus is to support the growth of the UK’s skills, capacity and experience by encouraging and helping hard-working employers to take on apprentices in the construction, home improvements and repairs sectors.

    Working in partnership with the National Apprenticeship Service, it has built a platform to give employers all the guidance, tools and support they need to make employing apprentices the best and most efficient choice for their business. 

    Based on a market-leading and industry-approved Training Academy in Nottingham, the foundation’s goal is to increase the number of apprenticeships in the UK by 25,000 over the next three years.

    For more information visit https://homeservefoundation.com/

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