A severe shortage of skilled workers and problems caused by the current planning system are hindering efforts to tackle the UK’s housing crisis, according to new research.
The Lloyds Bank Commercial banking report Building for Growth surveyed the housing supply chain from SME contractors to larger developers to provide a comprehensive overview of the issues facing the house-building industry, as well as its outlook for the months and years to come.
It found that businesses of all sizes are concerned about the house-building sector’s skills shortages. Around a quarter of respondents (24%) said the skills shortage is the biggest challenge currently facing their business. This figure rises to 31% amongst SMEs, reflecting the struggles of small businesses in funding recruitment and attracting top talent against competition from larger firms.
Overall, more than a third (35%) claimed there is a lack of suitable candidates to fill existing and new jobs. This is particularly worrying as the report estimates that 100,268 new roles will be created within the house-building industry before the end of 2016.
The need to increase workforces to cope with rising workloads has been acknowledged by many within the survey group, with 87% of house-builders planning to increase the size of their workforce in the next 12 months. Two thirds of SMEs see additional staff as an investment priority, most likely to cope with almost half of the new roles expected by 2016, which will be with these smaller companies.
In addition, 31% of those surveyed indicate that the recruitment of apprentices will be a main focus of investment going forward. The Building for Growth report estimates 3,700 apprentices, 400 graduates and 500 other trainees were utilised by the house-building sector in 2014, and indicates that this number is likely to increase.
As well as skills shortages, the report also found that 46% of respondents cite ‘the slow planning system’ as a factor contributing to the housing shortage. Other factors found to be a concern for respondents to the survey were opposition to construction projects (46%), lack of previous investment (42%) and lack of suitable land (38%).
When asked what one change could be made to alleviate the housing shortage, extra support for local authorities to support and fund building projects, and additional Government support for affordable housing projects were found to be the most popular.
Alasdair Gardner, head of house-builders, Lloyds Bank Commercial Banking, said: “This report sheds light on the key areas of support that firms in the sector need to ensure the long-term success and sustainability of the industry. Clearly, house-builders are very concerned about the barriers preventing them from playing a role in alleviating the housing shortage.
Despite these challenges, optimism in the sector remains high, with respondents rating their confidence in the future success of the industry at seven out of ten. This confidence is most evident among the biggest firms, with those in the largest turnover category predicting turnover growth of 30% in the next five years.
This high level of optimism was also reflected among mid-sized firms, with respondents in this band forecasting growth of 25 per cent before 2020, while small firms forecast a more modest 16% increase in turnover.
Stewart Baseley, executive chairman of the Home Builders Federation, said: “The outlook for house-builders 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.”
