NAO says £625 million construction skills package only partially addresses workforce expansion needs

The government’s £625 million construction skills package will address only part of the additional workforce needed to meet its housebuilding and infrastructure ambitions, according to a new report from the National Audit Office (NAO)⁽¹⁾.

Assessing progress since the package was launched in March 2025, the NAO found it was not designed to resolve all construction labour shortages. The report also said government departments have a limited understanding of how the skills system may need to adapt to meet future demand or the mix of skills the sector will require.

According to the NAO, this is because departments have not yet modelled different workforce scenarios or assessed how many workers with different skills are likely to enter the sector through different training and recruitment routes.

The NAO added that the success of the package remains uncertain and depends on how potential workers, providers and employers respond to the demand for construction skills. Between the launch of the package last year and April 2026, the report revealed just 74 young people had started foundation apprenticeships, against an assumption of 1,000 in the 2025/26 financial year.

Dr David Crosthwaite, chief economist at BCIS, said the assessment highlights the scale of the challenge facing the government as it seeks to recruit 60,000 additional construction workers by the end of this Parliament.

‘Attracting new talent can be particularly challenging in construction,’ he said. ‘The industry is highly fragmented, with thousands of small contractors and specialist subcontractors. Recruitment decisions are closely linked to workload, confidence and the visibility of future projects.

‘At present, demand remains subdued and economic uncertainty persists, while inflation continues to affect materials and fuel costs. Employers are also facing higher employment costs under current tax arrangements. Together, these factors are likely to weigh on recruitment decisions.

‘This is one of the biggest challenges facing the government’s long-term employment ambitions. Even if demand strengthens, recruitment will depend on what makes commercial and strategic sense for individual businesses.

‘As the NAO’s findings suggest, government departments need a much clearer understanding of the workforce and skills required to deliver planned construction activity. Alongside that, there needs to be a more practical approach to improving the business environment. Creating more routes into the industry will have limited impact if employers are not in a position to take on new recruits or apprentices.’

According to the report, HM Treasury recognises closing the construction skills gap will depend on more than training alone. Improved productivity, competitive pay and action across the industry will also be needed.

The NAO warned that if workforce gaps are not addressed and priorities remain unclear, competition for skilled workers could increase costs and put delivery of government commitments at risk.

The NAO also highlighted positive progress. It said the government has allocated £100 million to skills bootcamps and £75 million to the free courses for jobs initiative, which are expected to provide an additional 15,900 and 2,700 construction workers respectively. The Construction Industry Training Board (CITB) is also expanding its employer support team, an initiative the NAO said has been effective so far and is expected to bring a further 1,400 workers into the sector.

Key recommendations from the NAO to the government include⁽²⁾:

• Improving collaboration between government departments to strengthen estimates of future construction workforce demand
• Continuing to review the construction skills package, using performance data to identify issues early and publish regular progress updates on the target to recruit 60,000 additional construction workers
• Considering adapting the construction skills package where initiatives are not delivering the expected outcomes

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^{(1) National Audit Office – Increasing construction skills  - here}

^{(2) National Audit Office – Employer confidence is critical to construction skills package success, NAO says  - here}