By Damian Walters, CEO, BiKBBI
It’s been two weeks since we held the British Institute of Kitchen, Bedroom and Bathroom Installation’s annual conference, which united business leaders from across the KBB installation, retail and manufacture sectors. At the event, I issued a stark warning to the whole industry on the topic of the skills gap crisis.
Hosted at The QEII Centre, Westminster on 7 February, more than 150 delegates came together to discuss the challenges that the industry continues to face, and the opportunities to overcome the impending issues and drive positive change for the wider KBB sector.
We were fortunate to secure the Deputy Editor of The Times Enterprise Network, Hannah Prevett, as host for the event, and keynote speeches were delivered by BiKBBI’s Patron Stephen Metcalfe MP, Fergus Harradence, Deputy Director of the Department for Business, Energy & Industrial Strategy and Mark Farmer, author of the Farmer Review.
Farmer revisited his 2016 government-sanctioned report, The Farmer Review: Modernise or Die, revealing the stark realities for the UK construction labour market. His presentation addressed the impact of the unprecedent accumulation of circumstances we have experienced in the last 12-18 months, namely the post pandemic recovery, the biggest conflict in Europe for 70 years, political dramas closer to home and the geopolitics of Brexit, which combined are going to test the UK and global construction markets like never before.
He went on to explain how, historically, the construction market has been resilient, a cyclical process that tracks against economic peaks and troughs, but peak employment in the UK construction labour market from the 2008 global financial crisis to pre-Covid did not increase, which it has done in every other cycle – the first sign of a major structural issue in our workforce. More worrying was ONS data that Farmer presented which showed that employment in UK construction fell by 11% in the last three years.
Farmer referred to further research, this time by CITB, with statistics showing that, in order to meet demand, an additional 225,000 construction workers will need to come into the UK construction sector by 2027 – with growth expected in all nine regions of England plus Scotland, Wales and Northern Ireland from 2024 onwards, following a short decline in 2023.
Fergus Harradence addressed the delegation to share insight from the government in terms of the current situation for UK construction and the outlook for 2023 and beyond. Following a short but significant dip in March 2020, because of Covid 19, the UK construction industry continued to perform strongly from April 2020, with the sector taking just 11 months to recover the lost output from the initial impact caused by the pandemic. This was largely because of the industry’s ability to adapt rapidly and effectively in order to continue to serve the country’s needs.
He reported that construction activity from November 2022 to February 2023 has remained broadly static, with slight decreases and increases month on month. Material price inflation, which reached a record high of 25.5% in July 2022, currently sits at circa +15.5%, and this, couple with the ongoing increases in energy prices, continues to have a dampening effect on activity within the sector. Despite the lack of growth in recent months, the level of construction vacancies continues to sit a record high of 45,000 compared to an historic average of circa 23,000.
Harradence outlined the government’s predictions for 2023-24, forecasting it will be the most challenging time for the UK construction sector since the global economic crisis of 2008. The government predicts that construction will contract by 1.7% in 2023, but this is from a record high for the sector. However, the Construction Products Association (CPA) forecasts a decline of 4.7% in 2023 (which would have a much bigger impact on the industry), with a slow recovery in 2024.
The CPA predicts that the contraction of activity in 2023 for the UK construction sector will most likely fall on domestic RMI (-9%), commercial new build and the new house building sector (-11%), driven by wider concerns on inflation and the cost of living, demonstrated by the GfK Consumer Confidence Index falling to 45% in January 2023 – a record low.
The outlook for 2023 is bleak – there is certainly no hiding that, the facts speak for themselves. Last week’s conference was about delivering knowledge, expertise and insight to the KBB sector, on the topics that will not only help our members and stakeholders to navigate the choppy waters that 2023 will bring, but also to highlight the significant challenges that face our sector in the medium to long term, and the dire impact they will have if we don’t work to solve them now.
The next twelve months will be tough on us all, but all the data shows that 2024 will see us back on the road to recovery in terms of economic confidence and consumer demand – great news for everyone right? In part, yes, however, both of those factors will only serve to add further stress to the skills gap crisis we are facing, and failure to act now is a failure to protect the future of our industry.
EDUCATION | STANDARDS | SUSTAINABILITY | COMPLIANCE |