Building  1.5m homes with a skills shortage: strategies to alleviate labour demand

The Skills Shortage

As outlined in ‘A Plan to Boost Skills in the Construction Industry’, an additional 251,500 workers will be needed to meet UK construction output targets by 2028. However, the Construction Industry Training Board (CITB) reports that more workers are leaving the industry than joining it, according to the ‘Skills Construction Needs Labour Market Intelligence Report 2024-2028’.

Even with proposed training reforms, it will take several years for apprentices to become qualified and gain the necessary experience. To reduce reliance on the Immigration Skills List for labour, the government must adopt strategies that lessen the demand for skilled workers within its nationwide mass homebuilding programme.

Reducing Labour Demand with Modern Methods of Construction

Benefits of Modern Methods of Construction (MMC)

Modern methods of construction (MMC) prioritise off-site techniques, such as mass production and factory assembly, offering an alternative to traditional on-site building. This approach is especially effective for large-scale residential projects, reducing the need for skilled on-site labour.

Key MMC technologies include:

• Modular construction: Factory-made units or components (e.g., kitchens, bathrooms).
• Flat panel construction: Precast reinforced concrete panels produced off-site.
• Timber frame construction: Timber components assembled or partially constructed off-site.
• Double wall construction: Factory-made panels used to contain on-site concrete pours.
• Sub-assembly components: Specific components, such as dormer windows, made off-site.

MMC methods require fewer highly skilled trades than traditional methods, making them effective at reducing labour demand. While specific figures may vary, MMC can cut on-site labour by up to 70%, reduce construction costs by 20-40%, and shorten build times by 20-60%, according to ‘The Benefits of Modern Methods of Construction in Housing – Performance Data and Case Studies by Construction Excellence Report’.

Strategy for Advancing the MMC Sector

• Enhance UK capacity: Strengthen existing MMC providers or create new ones to serve local authorities, social housing providers, and development corporations. Establish alternative procurement strategies before starting projects.
• Collaboration for design development: Partner with MMC providers to create prototypes for asset types such as low-rise apartments and schools. Ensure designs are cost-effective, transportable, and widely available. Manufacturing facilities should be in urban centres for easy access to labour and transportation but spread across the country to reduce inefficiencies.
• Promote local production: Support local production using domestic materials. This “local content” approach stimulates the economy by creating jobs and supporting the broader manufacturing chain.
• Ensure steady demand: The stop-start nature of past homebuilding projects has hindered the MMC sector. The government could address this by mandating MMC in a nationwide mass homebuilding programme, ensuring consistent production.
• Government incentives: Provide financial support or incentives for collaborations between industry bodies, academia, and private developers to prototype and refine MMC designs, ensuring only high-quality products are mass-produced.

Despite government efforts several Category 1 MMC companies collapsed in 2022 and 2023 and significant barriers remain in the sector, including risk aversion from warranty providers, insurance companies, and unclear building regulations.

In 2021, Homes England launched a multi-year research project to assess MMC’s impact on the housing sector. The government should publish an interim report to share lessons learned and propose actionable strategies.

Key Initiatives could include:

• Capacity review: Strengthen MMC providers to support local authorities and housing providers. Develop alternative procurement strategies before projects begin.
• Prototype collaboration: Work with providers to develop cost-effective, transportable prototypes for assets like apartments and schools. Encourage partnerships to ensure high-quality designs.
• Local production: Support domestic manufacturing to stimulate the economy and create jobs.
• Steady demand: Mandate MMC in government-backed mass housing projects to ensure consistent demand and supply.

Additional Strategies to Reducing Labour Demand

Other Strategies should also be explored that could reduce Labour demand such as:

Self Build or Custom Build Homes

Self-building allows individuals to construct their own homes, often with the help of small contractors and minimal skilled labour, especially when using kit or modular homes. This off-site prefabrication, a form of MMC, offers the same labour-saving advantages.

The government can support self-builders by requiring all local authorities and development corporations to offer serviced building plots for sale. Additionally, reviewing UK manufacturers and implementing initiatives could boost supply, design variety, local content, and lower costs, helping increase the current estimated 7-10% of self-built homes annually.

Utilising the Private Consultancy Sector

Engaging the UK’s leading international construction consultancies to take on a larger role can leverage their global staff to support UK projects, either through back-office operations abroad or by assigning staff to the UK.

This would enable government bodies, such as development corporations, to operate more efficiently by focusing on core competencies while outsourcing other functions to consultancies. Additionally, private consultancies bring national and international expertise, innovation, and best practices, contributing to a more dynamic involvement in projects.

Simplifying Planning

Planning reform began with the release of the revised NPPF in 2024, but supplementary policies and guidance are needed to simplify the planning system for all users.

For instance, implementing zoning and design guides could provide greater certainty for proposed developments, reducing the assessment workload on planning departments if developments comply with these standards.

Another example would be granting planning powers for new town developments to the development corporations managing them. These corporations could establish simplified planning rules, particularly if developments within the master plan require minimal local consultation or integration with the existing built environment. This would allow smaller planning teams to handle a larger volume of submissions.