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Shrinking Construction Workforce Could Cause Infrastructure Delays

A new runway at Heathrow will put even more pressure on a declining construction workforce, a construction advisor has warned.

Mark Farmer, chief executive at Cast, a consultancy and the author of a government review into construction, has said that without radical steps to address its skills shortage, Britain's construction sector will struggle to redevelop Heathrow alongside the existing pressures of increased housing delivery and other demands likely to be placed on it such as HS2 and Hinkley Point.

Best-case scenarios have put the third runway a decade away - by which time Britain could have lost 20-25% of the workforce through retirement and a lack of new entrants. All of these factors are likely to be made worse by Brexit. Farmer believes serious reforms are needed in order to deliver large infrastructure projects.

The report, titled 'Modernise or Die: time to decide the industry's future', highlights construction's dysfunctional training model, its lack of innovation and collaboration as well as its non-existent research and development (R&D) culture. Low productivity continues
to hamper the sector, while recent high levels of cost inflation, driven by a shortage of workers, has stalled numerous housing and infrastructure schemes as they have become too expensive to build. #S

With more people leaving the industry each year than joining, the construction workforce is shrinking, placing increasingly severe constraints on its capacity to build housing and infrastructure. Reliance on a fractured supply chain and self-employment also means there is little incentive for contractors to invest in long term training for the labour force.

Crucially, the sector hasn't raised its productivity in decades so urgently needs to explore ways to make the work less labour intensive, such as through offsite construction. This, in turn, could make a career in the sector more attractive for young people by moving the work from building sites to digitally enabled working in factories.

Farmer said: "If you buy a new car, you expect it to have been built in a factory to exacting standards, to be delivered on time, to an agreed price and to a predetermined quality. This needs to happen more in construction, so that the investors, developers or building owners hiring construction firms increasingly dictate the use of modern methods of delivery and invest appropriately in the skills agenda to grow this part of the industry. There are more similarities between manufacturing and construction than many people are led to believe and this perception needs to change, starting in the housing market."

One recommendation set out for the medium term is a 'carrier bag charge' style behavioural deterrent scheme. This would levy a tax on businesses who buy construction work in a way that doesn't support industry innovation or skills development. Clients could face paying a suggested levy equal to 0.5% of a scheme's construction cost but would have the ability to avoid paying this tax completely by commissioning construction in a more responsible way.

Farmer added: "Major infrastructure projects like the third runway are crucial for economic growth and this is great news for long term construction demand in what is a very cyclical industry. However, major government infrastructure commitments like this alongside their significant housebuilding ambitions mean more than ever that we need to take affirmative action in addressing the critical issues facing construction's productivity, resource base and delivery models."

Commissioned by the Department for Communities and Local Government and Department for Business, Energy and Industrial

Strategy, Farmer has made 10 recommendations which include:
- Using the residential development sector as a pilot programme to drive forward
the large scale use of pre-manufactured construction, for example, through off-site built or modular housing.
- A wholesale reform of the current Construction Industry Training Board (CITB) and its related levy system, including a new mandate to properly fund and drive forward both appropriate skills development and innovation to suit a modern progressive industry.
- Government to use its education, fiscal, housing and planning policy measures to initiate change and create the right conditions that will support the construction sector's modernisation.

The situation is exacerbated by the fact that many school leavers and graduates don't view construction as an attractive career choice. A YouGov poll earlier this year found that two-thirds of Britons wouldn't consider a career in construction. If Brexit results in reduced migrant labour, the situation could be made even worse.

Farmer concluded: "The construction industry is in dire need of change. What is clear to me following the nine months spent conducting this review is that carrying on as we are is simply not an option. With digital technology advancements pushing ahead in almost every other industry and with the construction labour pool coming under serious pressure, the time has come for action.

"Unless we find some way of promoting innovation in construction and making the work less labour intensive and more attractive to new entrants, there's a very real danger of the construction sector going into an inexorable decline over the next few years."

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