Construction Skills Shortage Threatens Infrastructure Projects Amid Growing Pension Fund Interest

A dire shortage of construction skills and persistent planning delays pose significant threats to infrastructure projects, despite heightened interest from pension funds to invest in the sector.

Randstad’s analysis reveals a pressing need to recruit 500,000 individuals to fulfill demand for ongoing large-scale projects and upcoming schemes, including the Lower Thames Crossing, National Grid expansion, and Stonehenge Tunnel.

Simon Harris, Construction Head at the recruiting firm, underscores the industry’s stretched capacity, exacerbated by talent drain from housebuilding sectors. Since 2008, the construction labor force has dwindled by 465,000 workers, creating a stark labor shortage amidst escalating demand, particularly for green energy initiatives.

Harris warns of a looming “brutal labor shortage” as infrastructure demands surge, with projects like HS2 and Sizewell C competing for skilled workers.

Meanwhile, pension fund leaders signal intentions to boost investment in British infrastructure, with nearly two-thirds planning increased spending. GLIL Infrastructure’s survey highlights energy transition as a priority for 70% of respondents, citing investments in battery storage, hydrogen, and carbon capture.

Ted Frith, COO at GLIL, underscores the pivotal role of patient capital in financing infrastructure projects essential for the UK’s transition to a sustainable, net-zero economy. However, he flags concerns about the UK’s attractiveness for investment, citing prolonged planning delays hindering infrastructure upgrades.

While pension funds express readiness to allocate capital, Frith underscores the urgent need to address planning inefficiencies to facilitate smoother project delivery and bolster investor confidence in the UK infrastructure market.

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