A chronic shortage of skilled workers is putting the UK government’s pledge to build 1.5 million new homes by 2029 at serious risk, according to new research by skills development body City & Guilds.
The report reveals that 76% of construction businesses are struggling to hire the skilled labour they need, with 84% citing a “critical skills shortage” across the industry. More than half (54%) of business leaders surveyed said they lack confidence in the sector’s ability to meet government housing targets — or to deliver on the UK’s net zero housing ambitions.
These findings come amid data from the Construction Industry Training Board (CITB), which estimates the sector must recruit an additional 239,300 workers by 2029 to meet demand. However, a combination of rising business costs, limited training access, and declining interest from young people is hampering recruitment.
The report also highlights the impact of stricter immigration policies. Almost one-third (28%) of firms said changes to immigration rules — such as increased Immigration Skills Charges and longer settlement times — are exacerbating their hiring challenges.
Kirstie Donnelly MBE, CEO of City & Guilds, said the skills gap must be urgently addressed to avoid derailing government housing plans: “We can’t build 1.5 million homes without the people to deliver them. We need to reset how we attract and train talent, with flexible routes, smarter investment, and greater collaboration between industry, education and Government.”
Among employers, 41% said local labour shortages were their biggest hiring barrier, while 36% said they struggled to find job-ready applicants. Nearly one-third (31%) cited the industry’s lack of broad appeal.
Employees are also calling for better training options. While 85% say training is crucial for career progression, 61% report difficulties accessing funded training. Donnelly added that while recent government funding is welcome, rigid apprenticeship levy rules are stifling progress: “Small reforms to the levy could unlock thousands of new opportunities and make a meaningful impact on skills development.”
The report also explores the importance of making the sector more appealing to younger people and career switchers. Almost half of construction firms say a lack of interest among young people is a core recruitment issue.
Nick Maclean, acting president of the Royal Institution of Chartered Surveyors, warned that unless more is done to encourage new entrants, the housing target will become increasingly unachievable: “Career returners and switchers offer untapped potential — but funding and training need to reflect that.”
City & Guilds’ Foundations for the Future report outlines a three-part strategy to close the skills gap: attract fresh talent, support career changers, and upskill existing workers — all while embedding green technologies and lifelong learning.
With construction playing a key role in the UK’s economic recovery and climate goals, the industry and government face mounting pressure to invest in people as much as in bricks and mortar.
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Skills crisis threatens 1.5 million homes target as construction sector struggles to recruit