Skills shortages threaten 1.5m new homes target as 76% of construction businesses struggle to hire
A critical shortage of skilled workers is jeopardising the government’s pledge to build 1.5 million new homes by 2029, according to a new report by skills development organisation City & Guilds.
The research, which surveyed employers, training providers, and employees, has found that 76% of construction firms are struggling to recruit the skilled people they need, with 84% agreeing that the industry is suffering from critical skills shortages.
This comes as the latest outlook from the Construction Industry Training Board (CITB) suggests the industry needs to recruit 239,300 by 2029 to be able to meet the projected demand for the 1.5 million homes target. 1
More than half (54%) of employers do not think that the sector has the workforce it needs to meet this target, with the same percentage also putting into doubt the sector’s ability to deliver net zero housing goals.
The report identifies multiple barriers to recruitment and retention. While the rising cost of doing business is identified by nearly half (46%) of businesses as one of the biggest overall challenges the industry is facing, over a quarter (27%) point to a lack of interest among younger people.
When it comes to hiring, local labour market shortages are flagged as the top recruitment issue by 41% of construction firms, followed by their demand for job-ready hires (36%), and a lack of broad industry appeal (31%). Stricter immigration laws, such as a higher Immigration Skills Charge and longer settlement periods, are also set to disproportionately impact construction – as 28% of businesses cite this as a barrier to recruiting the people they need.
Kirstie Donnelly MBE, chief executive officer of City & Guilds: “We can’t build 1.5 million homes without the people to deliver it. We urgently need to reset how we attract, train, and upskill talent across the construction sector, with flexible routes, smarter investment, and collaboration between industry, education and government.
“With the government signalling a clear intention to reduce reliance on overseas workers, investing in and nurturing skills isn’t optional – it’s critical.”
Funded training is widely recognised as essential to creating a home-grown skilled workforce: 85% of employees say training is important for career progression in the construction industry, and 59% say more training provision would help the industry to attract more workers.
While the government has promised investment, City & Guilds’ research highlights clear gaps in funding access – with 61% of employees saying it’s difficult to secure funded training in the construction sector. Making funded training such as the apprenticeship levy more flexible and available will be key to delivering on the Government’s investment in skills.
Kirstie Donnelly continued: “Recent government funding announcements for construction skills are extremely welcome, but this won’t move the needle without reform to the Apprenticeship Levy. As it stands, the Levy’s rigidity blocks firms from getting new talent job-ready and makes it hard for construction apprentices to move between projects while continuing their training. A small change to introduce greater flexibility could unlock thousands of opportunities and help build a new generation of skilled construction workers.”
Nick Maclean OBE RD FRICS, Acting RCIS president said: “The government’s ambitious targets become less and less achievable each year that there is continued underinvestment in encouraging people into pursuing, and staying in, careers in the built environment.
“Career returners and switchers hold untapped potential if funding models are set up to suit later stages of life, with RICS also advocating for investment in vocational options and apprenticeships alongside conventional education pathways.”
City & Guilds’ upcoming report, Foundations for the Future, outlines a three-pronged approach to tackle the construction skills gap:
- Attract fresh entrants to the workforce, whether young people or career changers, to overcome the deficit in workers by improving perceptions of the construction sector and embedding skills in education system, earlier.
- Support professionals joining from other industries by ensuring they can access training in both construction and durable skills that will provide them with stable, well-paying jobs both now and as the industry evolves.
- Upskill the existing workforce through the promotion of a culture of lifelong learning and continuous development opportunities that keep pace with changing market demand, and by ensuring equipment is adequate for teaching essential competencies, such as green technologies, alongside sustained investment in training opportunities for UK learners, funded by the Skills Immigration Charge.
[1] Construction Industry Training Board. (2025). Construction Workforce Outlook 2025–29.
You can read the full report here.