The skills shortage is biting hard. Tender prices have shot up, expansion plans are on hold and on sites across London, firms are fighting over a dwindling pool of skilled workers. Building reports from the sharp end.
It is nine o'clock on a bitterly cold Wednesday morning, but on a Copthorn housing development in north London, the temperature is the last thing on the assistant site manager's mind. Robert Cameron is more worried about finishing the 30 flats. His working day is a constant struggle to meet deadlines with agency labourers, many of whom have scant grasp of English – or for that matter, of the job they are supposed to be doing. Meanwhile, the good gangs of craftspeople are being tempted away from site by better offers coming through on their mobile phones.

So far, three different lots of plasterers have moved to higher paid work, despite day rates of up to £120. "We've had skilled workers just pack up and go because they've been offered better money," says Cameron. Tommy Butler, foreman bricklayer with Galostar on the same development, says even money cannot entice people to work there. "We have increased our day rates over the past few months from £100 to £120 but we are still struggling to get skilled labour. It's hard to keep them now, especially when the work is outdoors on big estates." He is not alone. Across north London, the picture is the same. A carpenter foreman with Brendan Flynn Construction who is working on the redevelopment of Hackney's Marquis Estate admits: "We are six chippies in all, but I reckon we need another four or five to do the job well." On the same site, Barry Knight, foreman decorator with Lawless, is complaining about the need to supervise the untrained workers, employed because there's nobody else to do the work: "Out of 80 decorators at Lawless, maybe half are qualified. This slows down work by at least 25% as we have to watch all the time over inexperienced workers," says Knight. On yet another site, one scaffolder and his friend admitted that they had itchy feet. "We're looking for more work right now. If something comes up tomorrow, we'll go." These scenes from north London building sites show what problems site managers and trades foremen are having just to keep a job running and keep up with the better offers. Bricklayers, carpenters, groundworkers, steelfixers, scaffolders and plasterers are calling the shots. And if they don't fancy working in the freezing cold building houses, they will take some work in the comfort of a pub fit-out.

All this anecdotal evidence is put into context by a survey of skills shortages across UK industry, published by Lloyds TSB last week. This reported that construction suffered the worst shortfall of any industry sector, with nearly two-thirds of companies unable to fill jobs. Skills shortages are rife in London, Cambridge, Leeds and Edinburgh, and the knock-on effect on business is enormous: tender prices have shot up, construction times are lengthening, and the result is more pressure on the industry's meagre profit margins. As Malcolm Clarke, managing director of Baxall Construction, says: "It doesn't take Einstein to work out that the formula of tight margins, rising costs and reducing skills levels isn't right." Trades in short supply are the labour-intensive ones such as bricklayers, carpenters, joiners and plasterers. One project manager on a local authority housing refurbishment in London described a situation where one site that needed eight plasterers but was managing with six had to lend two of them to a sister site that also needed eight but could only find three. "You get the idea there is one gang of plasterers and they are moving from job to job," says the managing director of one major contractor.

Where does it hurt?
The consequences have been particularly serious for housebuilders and medium-sized contractors specialising in housing refurbishment or building for housing associations. Firms are shocked when they come to employ plasterers on a job they priced a year ago to find the rates have gone up by £20 a day.

Tony Pidgley, chief executive of Berkeley Group, estimates that wages have increased 20% over the past two years, adding £10m to his labour bill. And Jim Briggs, commercial director of contractor Durkan says rising labour costs are pushing margins down by 2% or 3%. "It drives profit down in what is not a high-profit industry." As the cost of labour goes up, so do tender prices. London has been hardest hit by this trend, with Davis Langdon & Everest reporting that prices have gone up by nearly 30% over the past three years. Although some of these costs can be passed on, the danger is that companies that raise their prices to take account of increasing labour costs are undercut by companies that do not. "When that happens a lot of people go bust," says Baxall's Clarke.

However painful the rise in subcontractors' costs, this is being overtaken by the problem of finding them at all. The trades in demand – which are themselves struggling with labour shortages – have become choosy over which jobs they bid for, and estimators are finding it difficult to compile tender lists. Concrete specialists in particular are selective about which jobs they will accept. One estimator with a major contractor said persuading more than three concrete contractors to bid for a job was nigh-on impossible – choosing from two prices was the most common scenario these days. The dearth of labour is reflected in concrete prices; DL&E reports concrete costs at £95/m3, compared with £75/m3 last year.

The lack of good bricklayers has become so acute that it is forcing changes to specifications. A major contractor with a strong business in design-and-build schools has learned from past experience that it pays to cut out the brickwork subcontractors, even if that means adding 30% to the cost of the cladding package. "It is so severe we are having to think ahead and around the issue," said the estimator.

One inevitable result of the skills drought is longer build times. Companies can either join the queue to hire well-regarded specialists or use inexperienced labour, which works more slowly and needs more supervision.

Andrew Ogorzalek, director of Harrow-based architect PCKO, estimates that a scheme that should take one year is now likely to be completed in one-and-a-half. But he would rather queue for the best labour and increase quality than make do with inferior staff just to get a job done quickly. Ogorzalek would like to expand his £600 000 turnover but is inhibited by a shortage of designers and the lack of resources available to build projects.

A reliance on inexperienced staff has a knock-on effect on health and safety standards. Half-trained staff left unsupervised are a hazard. A site worker in north London described how an unskilled worker put his foot through the ceiling when lagging loft pipes. UCATT general-secretary George Brumwell says the use of less-skilled operatives lowers the image of the industry and so makes it more difficult to recruit good quality staff. "The lack of a disciplined, skilled workforce is the root cause of poor site conditions and poor health and safety," he says.

Ultimately, the years of underinvestment in recruitment and training is stunting the growth of construction firms. Baxall's Clarke has reduced his turnover from £12m to £10m in the past six months. Clarke's paradoxical strategy is to batten down the hatches in the boom and expand in a downturn. The resources are not out there for Clarke to supply clients with the quality they expect, so he is concentrating on negotiated work and cherrypicking the competitively tendered work. That way he maintains his margin.

The fightback
Bad though the situation is, the industry is starting to come up with some organised resistance. The key is to attract teenagers, to which end the Construction Industry Training Board launched an advertising campaign this year that suggested a scaffolder may well be called on to erect the Manic Street Preachers' stage set. Berkeley's Pidgley has put his money where his mouth is and offered £1m to invest in training apprentices with his subcontractors. There is also a small but potentially important pilot project run by Lambeth council intended to give recently qualified craftswomen site experience (right).

Finally, companies have begun to realise that it makes sense to maintain the apprentice system. Miller Construction Scotland, for example, takes on trainee bricklayers and plasterers and John Doyle has embarked on a training campaign to get concrete operatives trained up to NVQ2 in general construction operations, formworking and steelfixing.

G&J Seddons has long been taking on apprentices. The firm, which has a turnover of £45m, offers site experience to about 30 to 40 school leavers a year. It also takes on 12 trainee carpenters and bricklayers. But what needles Roy Cavanagh, the firm's labour and training manager, is that not enough other companies are contributing to the workforce. "It is galling when rivals go on about this skills shortage. They should get off their bums and employ." He adds that it would be "interesting" if clients looked at a firm's training policy before awarding work. And this is exactly the policy that Cambridge University has begun to undertake when inviting tenders for projects. So perhaps the crisis is beginning to force the kind of changes in the industry that Sir John Egan called for in Rethinking Construction. Contractors are beginning to develop long-term relationships with subcontractors because this is often the only way to get the work done at the right price.

Over the last few years there has been such a lack of labour that London tradesmen can charge more and choose to work in nice warm offices

Neil Campbell, foreman plumber

The young generation has an attitude problem. They expect to be mollycoddled and are always using excuses for not working – either it’s too cold or too wet

Charles Barden, projects manager, Countryside Properties

I’m not surprised that there’s a skills shortage. Most people working with us leave after a month

Nick Fletcher, scaffolder

For this job, we have had to employ improvers and apprentices to make up shortfalls

Tommy Butler, foreman bricklayer

Since starting at Copthorn two and a half months ago, I have had three different offers of work

Jim Coker, carpenter

We’ve had skilled workers offered better money and then just pack up and go there and then. This might happen four times throughout a job

Robert Cameron, assistant site manager

It’s very hard to find the right people. We tend to look through the Evening Standard ads. Unemployment offices are hopeless

Darren Munns, drylining subcontractor

So why can’t she find a job?

There may be a severe skills shortage but Danine Mowatt (above) would not have realised it, judging by the results of her search for a job. Since July, the 20-year-old NVQ3-qualified painter and decorator has picked up London’s Evening Standard every Wednesday and scoured it for vacancies in her chosen profession. There are plenty of openings for painters and decorators but nobody is interested in her. One phone conversation with a potential employer ended with the man telling her that if she was not enquiring on behalf of her boyfriend or husband then “I’m sorry love we can’t help you”, and he put the phone down. “I’ve spent three years at college,” says Mowatt. “And I feel like I’m wasting my time.” But things are looking up. She is about to start 11 weeks work experience with contractor Durkan’s painting and decorating subcontractor on a refurbishment in London. The work experience is part of a pilot project run jointly by Lambeth Women’s Workshop, Women’s Education in Building, Women and Manual Trades, Change the Face of Construction and Durkan. Firms like Durkan and Higgins have greeted the scheme, Building Work for Women, with enthusiasm. “Some firms have called up and asked how many women they can have,” says Sandi Rhys Jones, project leader of pressure group Change the Face of Construction. Each trainee is assigned to a female mentor, all of whom have extensive experience on site. Jackie Mollison, a carpenter, and Bim Balogun, a plumber, building surveyor and construction manager, will be on hand to give advice as varied as coping with teasing to finding another job. Jim Briggs, Durkan’s commercial director, regards women as a vast untapped labour source – if the men on site will keep their machismo under control. Briggs helps them do this by holding site meetings to explain who the women are and why they are working there. He believes if the men on site are prepared in advance they are more likely to buy into the scheme. Balogun and Mollison believe the more women you get on site, the better the health and safety record. Balogun recalls several instances of going to a site to find the scaffolding she is expected to use to climb to the roof is unsafe. When she refused, the foreman shrugged his shoulders and said all the lads did it. As a visiting official, Balogun was able to put her foot down. The Building Work for Women scheme is still looking for trainees and there are hopes that if the pilot is successful, the project will be extended. Mowatt, meanwhile, started work last Tuesday and hopes that soon she won’t have to scan the classifieds every Wednesday.