Workers Are Missing From Starmer’s Plan to Spur UK Housebuilding

Article Content

(Bloomberg) — Prime Minister Keir Starmer’s promise to “build Britain back again” will quickly face a shortage of skilled workers in the very industries he hopes will drive the transformation.

The UK is facing a supply crisis for builders, solar installers and engineers, raising questions about who will carry out Starmer’s mandate to radically expand clean energy and build 1.5 million homes over the next five years. While Labour has pledged to expand training in key sectors, the scale of the shortage suggests it will slow early efforts to ramp up activity in those sectors.

Article Content

The UK needs about 400,000 workers to meet its net-zero emissions targets, 30% more than the number of oil and gas workers available to fill those jobs, according to an analysis by PricewaterhouseCoopers. Meanwhile, the UK’s construction workforce has fallen by about 14% in the past five years.

Green jobs cover a wide range of sectors linked to industries that will help shift the economy away from fossil fuels. These include wind and solar installations, heat pumps, carbon capture and storage, and battery technologies. In a broader definition, they can also include project developers and people who manage planning permissions.

UK firms in these sectors are warning they are already struggling to find staff as they have been hit particularly hard by a combination of Brexit, high inactivity rates and a lack of training opportunities. Vacancies per job are still above pre-Covid levels in key policy areas such as construction, electricity and gas and education. The fear is that Labour’s plans will boost demand and fuel a talent war, pushing up wages without a corresponding increase in output.

“We welcome the government’s focus on making the UK a clean energy superpower, but the lack of green skills in the UK workforce is putting this mission at risk,” said Charlotte Eaton, head of HR at Ovo Energy, which employs around 5,000 people across the UK. “The government must urgently map the regional workforce and identify skills shortages so it can invest where they are needed most.”

Article Content

Article Content

In the run-up to Labour’s landslide election victory, the party repeatedly cited the skills shortage as evidence of what it called the Conservatives’ economic mismanagement during their 14 years in power. Starmer has appointed Jacqui Smith, the former home secretary, as skills and higher education secretary. Labour plans to link immigration to training policies and introduce apprenticeships in sectors such as health and social care and construction.

Bank of England policymaker Jonathan Haskel has warned that the UK labour market has become worse at matching job seekers with vacancies, meaning shortages are set to persist even as unemployment rises. While the UK unemployment rate is at a two-and-a-half-year high, strong wage growth remains a concern for the BoE ahead of its August meeting, when it will decide whether to cut interest rates from a 16-year high.

The UK labour market has been shrinking since the pandemic hit. The number of people in work has fallen since 2019 after around 800,000 workers dropped out of the workforce due to long-term illness. Only a small fraction of those have returned. Nearly a quarter of the UK’s working-age population is economically inactive – unemployed and not looking for work. This is the highest level since 2015.

Article Content

Green Skills

Labour has set a target for the country to produce zero fossil fuel-fired electricity by 2030. It has announced a series of plans to achieve this, from reforming planning rules to speed up the build of clean energy infrastructure to a public company that will invest alongside the private sector in wind and solar projects, as well as hydrogen and carbon capture and storage.

The Labour government says this would create 650,000 jobs, but energy sector leaders fear the UK does not have enough skilled workers to fill them.

Axel Thiemann, CEO of renewable energy producer Sonidex, is building a solar power plant in Durham that is set to create about 100 green jobs when it’s completed next year. He’s struggling to recruit a wide range of professionals, from construction workers to power grid technicians and people who can manage building permit applications.

“The same people who used to have one project on the desk now see at least three or four projects,” Thiemann said. That delays activity, increases costs and tightens competition for staff, he added.

Article Content

Such concerns are widespread among energy companies, whose appetite for green jobs is growing faster than the supply of talent. Analysis by PwC estimates that the UK needs 400,000 workers to meet its net-zero emissions targets, yet it only has around 270,000 employees in the oil and gas sector who can fill those roles. About a third of them are due to retire by 2030, leaving the UK with a gap of 200,000 workers.

The main barrier to installing heat pumps in homes is a lack of engineers with the skills to do the job, according to innovation charity Nesta.

Figures from LinkedIn show that only one in eight workers in the UK have green skills, yet recruitment for such roles is growing 30% faster than the overall rate. An even smaller proportion of the youngest workers, who will make up around a third of the workforce by 2030, are entering the job market with green skills.

Sue Duke, LinkedIn’s global head of public policy, said the government needs to start offering large-scale training programmes immediately, while companies need to upskill new hires and retrain existing workers.

“Workers are coming out of education without any green skills, and they are not being exposed to green skills in those early jobs in their careers,” Duke said. “There is a huge gap in awareness when it comes to getting those skills – only one in five know where to go to get those green skills, and then there is also the challenge of training availability.”

Article Content

More builders needed

Housing is another area where Labour has high ambitions and is suffering from a shortage of workers.

The government has pledged to fix Britain’s housing crisis by building 300,000 homes a year during the next parliament. This is a target that no government has met in the past 14 years. At most, builders have delivered 250,000 homes a year recently.

Even at these low levels, the industry is still struggling to get enough construction companies.

“They are already the group experiencing the fourth-largest tightening in employment conditions despite the fact that demand for advertised jobs has not been particularly strong,” said Jack Kennedy, an economist at Indeed, who warned of looming wage pressures. “If that demand starts to pick up, it’s clear that this pressure will only get worse.”

The UK construction workforce has fallen by about 14% over the past five years to about 2.1 million in the first quarter of 2024. EU workers have left after Brexit, while the number of domestic construction companies, which make up the bulk of the workforce, has fallen by about 300,000 over the past five years as many older workers retire early. The sector has also lost its appeal to younger workers who tend to leave generally low-paid apprenticeships, according to Noble Francis, economics director at the Construction Products Association.

Article Content

“There will need to be new investment in skills and capacity to get them back to where they were two or three years ago, before the government even thinks about building 300,000 net additional homes a year or more,” Francis said.

The government’s net-zero emissions target is only exacerbating the shortfall. In addition to providing 1.5 million homes, more builders are needed to make existing homes more energy efficient, build infrastructure and decarbonise the energy grid.

“Most sectors are struggling to get labour, but this will be particularly pronounced in the construction sector because of competing demands from housing and the development of other technologies,” said Peter Wassell, technical director at Sedgwick, which handles insurance claims on behalf of other companies.

-With the assistance of Iman Aqil Farhat.

Article Content