A shortage of skilled workers in the housebuilding industry, coupled with the current planning system, is hindering efforts to tackle the UK’s housing crisis according to new research.

The Building for Growth report*, from Lloyds Bank Commercial Banking, surveyed those within the housing supply chain, from SME contractors to major national developers and found real concern among these businesses on the effect of the sector’s skills shortage – not only on individual firms, but also on national housebuilding rates and the UK economy as a whole.

Almost a quarter (24%) of respondents believed a shortage of skilled workers was the biggest challenge to their business with more than a third (35%) citing a lack of suitable candidates to fill new and existing positions.

The shortage is said to be most acute among electricians and site managers (both 34%) with project managers (33%), quantity surveyors (31%) and architects (31%) closely behind, highlighting problems throughout the supply chain.

A shortage of skilled people has become the biggest concern and the industry is investing massively in training. 

In the broader economy, lack of supply continues to be a major problem in the UK market. Rightmove’s House Price Index saw the price of the average house hit a new national high in September. The increase of £2,550 (to £294,834) is the biggest September rise in 13 years and if prices continue to grow at the same rate over the next few months, a typical price of £302,484 can be expected by December.

When quizzed by Lloyds, respondents cited slow planning decisions (46%), public opposition to development (42%) and lack of skilled workers (25%) as the biggest obstacles to overcome in order to match supply to demand.

While existing government schemes including the reform of Stamp Duty and the Help to Buy equity scheme, were seen as positive (by 73% and 63% of respondents respectively), 23% thought local authorities could do more to promote and fund building projects and a similar number thought the government could also up its efforts. That said, measures announced in the summer budget – such as plans to grant automatic planning permission for building projects on disused industrial sites – were broadly welcomed.

In spite of the challenges most seemed confident about the future – rating their confidence in the UK housebuilding industry as a ‘7 out of 10’. 31% said they were prioritising investment in recruiting apprentices in a bid to attract talent into the industry and 87% planned to create more jobs in the next 12 months, which could equate to more than 100,000** new housebuilding roles.

Alasdair Gardner, head of housebuilders at Lloyds Bank Commercial Banking, said:

“Clearly, housebuilders are very concerned about the barriers preventing them from playing a role in alleviating the housing shortage.”

“Housebuilders told us that slow planning decisions are a challenge, something the commission [the Lloyds Banking Group Commission on Housing] reflected in its call for clearer targets for local authorities on planning process timeframe.

Stewart Baseley, executive chairman of the Home Builders Federation, commented:

“The outlook for housebuilders is more positive than it has been for some time, and the findings of this report reflect that. Output has increased significantly in response to the higher effective demand generated by a general improvement in the economy, and the Help to Buy equity loan scheme.

“A shortage of skilled people has become the biggest concern and the industry is investing massively in training.

“If a positive policy environment and a stable economy can be maintained, the industry will continue to grow to deliver the Government’s ambition to build more homes and tackle our entrenched housing crisis.”

The report calls for a progressively rising target for national house building to deliver 2 to 2.5million high quality yet affordable homes by 2025 and sets out a number of recommendations to achieve this. Among them, it suggests public sector bodies should review land holdings and assess the case for the disposal of surplus to spur the building of new homes and calls for greater clarity to aid Local Planning Authorities.

Download the full Lloyds Commercial Banking Building for Growth report (.pdf, 1.7Mb) download

The survey of 106 English, Scottish and Welsh businesses from across the housebuilding supply chain was conducted by Coleman Parkes Research in June and July 2015.
** Job creation calculation. Annual turnover between £1m and £25m £5m: 5,135 companies, mean average 11.2 jobs = 57,508. Turnover between £25m and £750m: 1,368 companies, mean average 27.1 jobs = 37,066. Turnover above £750m: 180 companies, mean average 31.6 jobs = 5,694. Total: 100,268

Related information

Lloyds Bank Commercial Banking – Building for Growth (.pdf, 1.7Mb) download
Rightmove House Price Index – September 2015 externallink