People

It was once mused that "Rome wasn't built in a day, but they were laying bricks every hour." In this week's blog, we examine the issues surrounding the people power it will take to deliver on the UK's noble housebuilding endeavour, and attempt to extrapolate facts from the story, evading what is both an emotionally and politically charged issue. As a non-partisan entity, we don't fall on either side of the argument, but to get a higher-level understanding of the issue, the story needs to be led by the numbers.

This is where the story slides into estimation, given the limited specific data for the UK, still, there is enough, even in the approximations, to highlight the issues that must be addressed. As of 2021, migrant workers constituted approximately 9.8% of the UK construction workforce, a decline from 14.5% in 2016–2017. This reduction is attributed to Brexit, the pandemic, and sweeping changes in immigration policies. In London, the reliance on migrant Labour is notably higher. Older data from 2017-2020 indicates that over half of the home building workforce in London comprised overseas workers, with significant contributions from EU nationals.

Historically, between 1997 and 2018, about 46–48% of migrant construction workers held degree-level qualifications or equivalents. This proportion increased to approximately 67% for migrants entering the UK construction sector between 2019 and 2021. Assuming a current migrant construction workforce of around 9.8% of the total construction workforce, and applying the 67% degree-holding rate, we can estimate the number of migrant workers with degrees.

The UK's construction industry encompasses various sub-sectors, including infrastructure, commercial, and residential (house building). While specific data for the house building sector is limited, we can estimate based on the available data. Assuming the total UK construction workforce is approximately 2.2 million (based on 2011 Census data), 9.8% of that 2.2 million would equate to about 215,600 migrant workers. Of these migrant workers, 67% hold degree-level qualifications, totalling approximately 144,452 individuals. If we conservatively estimate that 30% of these degree-holding migrant workers are employed in the housebuilding sector, this would amount to roughly 43,336 individuals.

Moving away from the helpful ONS data and back into some less dry and perhaps more engaging commentary, what can we glean from this? Suppose we were taking this data in isolation. In that case, it's possible to see that the available workforce has stabilised since the Brexit roll-back, so production at its current rate, like in any market-driven economy, has found its feet. However, the most crucial factor here is that the exercise aims to increase output exponentially, and any further action to decrease the size of the available labour force can only have an adverse effect, as sure as one plus one equals two, unless the problems are appropriately mitigated well in advance of legislation.

Our sector, and our peer group across all facets of the industry, are concerned about anything that may hamper the SME development industry's ability to grow their businesses successfully, and the UK points based system that construction businesses are heavily reliant on to access labour from the EU market has a cost attached to it, coupled with high skilled worker salary thresholds, there is a danger that it will push businesses out. The balance between protectionist policies and growth will forever be a tug of war played out for all eternity, but the way that balance is found is by debating the issues, and it starts with an awareness of the facts.

So, how can our sector help with this? SME businesses are becoming more liquid through directing private sector capital, allowing change to be implemented through the upskilling of local labour through apprenticeships and local-level recruitment. Since SMEs are more agile and locally embedded, they are well-positioned to build at the community level, where housing is most needed and where large developers may not reach. Moreover, our sector's funding introduces, arguably, a broader societal participation in solving the housing crisis. Investors can directly support developments while earning returns, fostering a more inclusive economic model. This type of SME lending is not just financial innovation—it is a strategic tool to mobilise dormant capital, strengthening the construction workforce, and accelerating house building.

Supporting this ecosystem will be pivotal in meeting the UK's housing targets, and supporting the workforce we have, as well as increasing the opportunity for positive skilled net migration. It may sound incredibly naive to suggest that the answer to all problems is capital when you are in the capital provision business, it's a little bit like a green grocer advocating the health benefits of Apples, both equal parts obvious and conflicted; however, the sheer scale of the opportunity here perhaps, warrants the cynicism.

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