Reeves pledges £600m to tackle construction skills shortage

Last year the London Homes Coalition – a partnership of housing associations, contractors and specialist suppliers in the capital – identified a potential shortfall of around 2,600 skilled people over the next five years to deliver their maintenance and building plans.

According to the Treasury, employers report that more than half of vacancies cannot be filled due to a lack of required skills. Demand is expected to increase further as the government seeks to build 1.5 million new homes and extra infrastructure.

Ms Reeves said the government is “determined to get Britain building again” to hit its target of 1.5 million new homes this parliament. 

She added: “But none of this is possible without the engineers, brickies, sparkies and chippies to actually get the work done, which we are facing a massive shortage of. 

“We’ve overhauled the planning system that is holding this country back, now we are gripping the lack of skilled construction workers, delivering on our Plan for Change to boost jobs and growth for working people.”

Ms Reeves’ construction funding package comprises £100m of new investment to fund 10 new technical excellence colleges and £165m of new funding to help colleges deliver more construction courses.

Skills bootcamps in the construction sector will also be expanded, with £100m to help new entrants, returners or those looking to upskill within the industry to do so.

Areas with a local skills improvement plan will receive a share of £20m to form partnerships between colleges and construction companies and boost the number of teachers with construction experience in colleges.

Construction will also benefit from new foundation apprenticeships backed by an additional £40m, which will be launching this August.

As part of the offer, employers will be provided with £2,000 for every foundation apprentice they take on and retain in the construction industry, on top of fully funding the training costs through the new growth and skills levy.

A further £100m of government funding, alongside a £32m contribution from the Construction Industry Training Board (CITB), will fund 40,000 industry placements each year for all Level 2 and Level 3 learners, and those studying NVQs, BTECs, T-levels and advanced apprenticeships.

The CITB will also double the size of its new entrant support team programme to support small and medium businesses to recruit, engage and retain apprentices.

An additional £80m capital fund will support employers to deliver “bespoke training based on their needs”, the Treasury added.

The government will also sponsor a new construction skills mission board. Co-chaired by the government and Mark Reynolds, executive chair of Mace, the board will develop and deliver a construction skills action plan and provide strategic leadership to the construction sector.

Last year the government announced construction skills hubs, funded by industry, to speed up the training of construction workers and support its housebuilding drive.

Gavin Smart, chief executive of the Chartered Institute of Housing, welcomed the announcement.

He said: “Addressing skills shortages is critical to tackling the housing crisis – we need to create a strong and sustainable pipeline of skilled workers so that we can meet housing demand both now and in the future.”

Roger Morton, director of business change at the National House Building Council, said the government’s investment of £600m is “a pivotal moment for the housebuilding industry”.

He said: “With government, training providers and the industry working together, we have a powerful and unique opportunity to equip thousands of people with the skills urgently needed to build the quality homes of tomorrow.

“By strengthening the construction workforce, we can boost productivity and grow a more skilled, inclusive and sustainable workforce and industry.”

Steven Boyes, deputy chief executive at house builder Barratt Redrow, said: “Construction faces a long-standing skills shortage at a time when we are challenging ourselves to build even more much-needed new homes across the country. 

“I started out as a trainee on a Barratt Homes construction site 47 years ago, and so welcome this significant, long-term investment in skills, which will create real opportunities for people of all backgrounds to build a successful career in homebuilding.”

Tom Arey, director of PfP Thrive, a training organisation owned by Places for People, said: “We are keen to learn more about how the £600m in skills funding will be distributed and hope it presents opportunities for partnerships with organisations like ours to help train the skilled workers we need.

“The focus on skills boot camps is promising, particularly as it aligns with our own goals of reskilling the workforce to adopt new construction techniques and materials.

“Additionally, the emphasis on foundation apprenticeships is encouraging, as we are already collaborating with organisations across the sector to help them utilise the apprenticeship levy to address the skills gap.

“However, challenges remain - particularly the upcoming national insurance increase, which could dampen the appetite for apprenticeships. We hope this announcement signals a broader commitment to addressing such barriers, ensuring we are in a strong position by 2029.”

Clare Miller, chief executive of Clarion Housing Group, said: “We welcome the announcement of additional funding to train up the next generation of construction workers, helping to tackle the skills gap that has been holding us back for so long.

“Deployed in the right way and delivered in partnership with housing associations and key construction industry stakeholders, this will help us unlock some of the homes in our development pipeline and provide opportunities for our residents.”