Is The UK Construction Skills Shortage Stifling Innovation?
As demand for skilled construction workers outstrips supply, pressure is pushing up wages and raising project costs across the UK, hindering innovation.
The construction industry is rooted in innovation, and the contributions that innovative spirit makes are growing every year. From incorporating automation and digitisation at every stage of a project to developing kinetic surfaces capable of harvesting energy from road traffic and footfall, construction is putting its best ideas to work every day. In fact, innovation is so much a part of “business as usual” in the sector that we often lose sight of it, preventing so many businesses from realising its full benefits.
The R&D Tax Credits Scheme is open to businesses of all sizes, allowing them to claim tax credits on qualifying activities and projects. It’s a potentially huge boost to firms with innovative ideas – but that crucial innovation is currently being squeezed by the brutal mathematics of an ageing workforce and declining skills base. Right now, over 20% of UK tradespeople are over 50 years old. About 1 in 6 of those are 60 or older. The lifeblood of the construction industry is bleeding out, with more workers leaving the sector than coming in. 10% of UK construction workers are expected to retire or quit the industry in the next decade. At the same time, the ongoing uncertainty surrounding the UK’s departure from the EU is putting about a third of London’s building construction workforce under threat.
With demand for skilled workers outstripping supply, the mounting pressure is pushing up wages and raising project costs across the UK. Margins are being squeezed down and anxious investors are starting to shy away from the building trade. Construction businesses, fighting to attract the labour they need, are struggling to find a competitive edge and being forced away from more innovative projects, which are so often seen as riskier propositions.
There’s obviously no single measure that will solve all of construction’s problems overnight. However, as automation and other high-tech developments pull the focus away from manual labour, we’re starting to see a much broader redefinition of what it means to work in construction. The construction industry of the next few decades will be leaning ever harder into these technologies, seeking to draw in people with transferrable skills from other sectors, while upskilling those it already has and working with educators to train future generations. For example, in September 2020, the new T-levels are coming in to help bridge the skills gap. Students will be offered a blend of classes and real-world experience with an eye to throwing open the doors to a construction career with genuine prospects.
Innovation brings opportunity, but businesses are becoming too focused on day-to-day survival to take risks on their most forward-thinking ideas. The innovation landscape is littered with minor obstacles and pitfalls but, as the largest reward and incentive scheme of its kind, the R&D Tax Credits system is purpose-built to smooth that path. Even if a qualifying project never really bears fruit, it can still form the basis of a valuable claim. The building trade is very poorly represented in R&D Tax Credits claims, with businesses either claiming far less than they’re entitled to or assuming the scheme doesn’t even apply to them. Making innovation pay is the key to reducing risk, maximising benefits and attacking the skills shortage crisis – and R&D Tax Credits are a critical link in that chain.
Sarah Collins, Head of RIFT R&D adds:
“Innovation is one of the key principles that underlie the UK construction industry. Through being able to innovate, you should be able to get more from your projects than you would otherwise be able to. With the cost of construction rising around the UK and knowledge leaving the industry through an ageing workforce, the construction sector must find a way to put innovation at its heart again if it’s going to thrive.”
Get credit for your business innovation with research and development tax credits claim assistance from RIFT. Find out more about R&D tax credits for the construction industry, deep dive into the world of business innovation with our insights, or contact RIFT R&D today to find out how we can maximise your benefits.