UK construction levels are stuck in the 1990s, warns industry body
A major new report by Oxford Economics for the Construction Plant-hire Association (CPA) warns that Britain’s £530 billion construction and infrastructure pipeline is “starting to crack”, with skills shortages, falling investment, and delivery delays threatening to derail government growth plans.
The report warns that Britain’s construction engine is stalling under the combined strain of skills shortages, weak investment, and chronic delivery delays – leaving flagship projects, from new hospitals and homes to airport expansions, at risk of grinding to a halt.
However, it also highlights the opportunity for government and industry to work together to unlock investment and close the productivity gap – a step that could generate up to £315 billion in long-term economic growth, helping fund national priorities without adding to public debt.
The analysis warns that while ministers talk of “getting Britain building”, much of the pipeline “lacks the workforce, certainty or funding to move beyond announcements.”
Businesses that provide the machinery and skilled operators underpinning construction say they cannot plan or invest without predictable workloads, leaving delivery capacity “dangerously thin”.
Key findings from the report include:
- The UK needs 250,000 additional construction workers to deliver planned projects – yet nearly half a million are due to retire in the next 15 years.
- 44% of firms report labour shortages restricting activity – the worst figure of any major UK sector.
- Apprenticeship completion has slumped to 53%, while pay for young workers in construction has fallen below wage rates in the retail sector.
- Construction productivity has declined 0.1% a year since 1997, leaving output per worker below 1990s levels.
- Only 14% of major government projects are rated on track, and less than half the National Infrastructure Pipeline has confirmed costs or funding.
- Funding certainty plunges from 68% this year to just 33% by 2030, creating what Oxford Economics calls “a crisis of confidence” for investors and contractors.
- The report identifies Britain’s productivity problem as primarily a capital problem. Decades of under-investment in machinery, technology and infrastructure have left the UK falling behind its competitors. Whereas manufacturing productivity has risen by 3.5% a year since the late 1990s, construction has gone backwards.
“This report is a call to action for ministers. Britain’s construction pipeline is cracking under the strain of unrealistic targets, uncertain funding and a shrinking workforce,” said Steven Mulholland, CEO of the Construction Plant-hire Association.
Unless the Government restores confidence and fixes the fundamentals, the next decade will be defined by half-built promises and rising costs, he said.
“The plant-hire sector is one of the most capital-intensive in the economy, with our members shouldering much of the investment risk needed to keep Britain building. With stable policy and predictable pipelines, we can channel private capital into public infrastructure without adding to national debt.
“If ministers match our willingness to invest with clarity and confidence, we can turn ambition into action and build the growth, jobs and prosperity Britain needs.”
The report warns that “announcements are outpacing delivery capacity”, with too few projects fully costed or shovel-ready. It highlights that construction productivity has fallen consistently because investment in capital equipment and infrastructure has lagged behind peer economies. In contrast, countries such as Germany and France, which have maintained stable capital pipelines, have seen sustained productivity growth despite similar demographic pressures.
A new plan is needed
Oxford Economics notes that while government capital spending is set to rise by 3.6% annually to 2029-30, much of this increase is already absorbed by energy transition costs and existing liabilities – leaving transport, housing and local infrastructure underfunded.
To break that cycle, the CPA has submitted a package of policy proposals to the Treasury ahead of the Autumn Budget to stabilise delivery and restore business confidence across the construction supply chain.
The plan includes:
- Fix the pipeline – publish a fully costed update of the National Infrastructure Pipeline with secured funding beyond 2028.
- Reverse the rise in employer National Insurance, easing labour-cost pressures across construction supply chains.
- Extend full expensing to leased assets, allowing hire firms to reinvest £1.3 billion a year in new capital equipment.
- Maintain the current Fuel Duty rate, protecting SMEs hit by the loss of red-diesel relief.
- Retain Business Property Relief, preventing succession-related closures of family-run firms.
- Reform the Growth and Skills Levy to give employers full flexibility and fund all SME apprenticeships.
The CPA argues that the Government can still harness the strength of the construction sector to deliver its growth ambitions – with every £1 spent generating £3 in wider economic value. By working hand in glove with industry, Britain can build the world-class infrastructure needed to drive growth and prosperity.
