Construction mega-projects set to cause “brutal” UK skills shortage

A construction and engineering talent firm is warning that the UK’s construction industry is facing a skills shortage that will “make the 2007 War for Talent look like a water fight”. 

Simon Harris, the MD of construction, property and engineering recruitment at Randstad UK says a combination of mega construction projects already underway and projects that are yet to begin — such as water infrastructure developments, the construction of the Lower Thames Crossing, the expansion of the National Grid, and the Stonehenge Tunnel —  is set to 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 already employs 30,000 people now and HS2 and its contractors are still actively recruiting hundreds of new roles.  Construction of the Thames Tideway Tunnel is ongoing and won’t be complete until 2025.  It still needs to finish some above-ground structures and, crucially, test the system. While the heavy construction is complete, the project has by no means released all its manpower.  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 nine and 12 years; the project is set to create thousands of jobs.

Simon Harris, the managing director of construction, property and engineering recruitment at Randstad UK 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. The  workforce has lost close to half a million people since 2008 and is already stretched very thin. There’s very little slack in the system.”

The 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.

Furthermore, the water sector is facing a regulatory period that is likely to put a heavier emphasis on investment: 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: United Utilities is embarking on a £77 million project to increase the capacity of its wastewater treatment plant at Burnley.

Construction on the Lower Thames Crossing scheme is set to begin in 2026. 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. 

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.

Si Harris said: “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 are going to find the going very hard indeed. It will make 2007’s 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 overhaul eight miles of the A303.” 

The construction labour force was approximately 2.600,000 strong in 2008, before the sector began to haemorrhage talent. By the end of 2023, the sector was 465,000 workers smaller, employing 2,100,000 people. 

Si Harris said: “If construction employers are to meet the challenge, they are going to have to hire approximately half a million people. Employers are going to have to look at hiring people from different backgrounds and fishing in more diverse talent pools;  paying more for skills; and growing 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 change their practices and adopt skills first recruitment, rather than looking for ‘experienced’ 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.”