Labour shortages and rising materials costs are continuing to affect the construction industry and are putting development projects in jeopardy.

 

Material costs surge

Prices for copper, steel, concrete and asphalt have all increased throughout the course of 2021. Furthermore, British Steel has made seven price increases throughout 2021 for structural steel prices due to a surge in demand. Whilst prices increases are a significant issue at the moment experts believe that they will begin to settle within the next year as the economy settles.

 

Skill labour shortage causing issues in the construction sector

According to a survey in the Gleeds’ market report, 80% of contractors have said that they experienced issues with labour shortages in the last quarter. In addition, 70% expect those shortages to continue in the future.

86% of respondents believe that the full impact of the UK leaving the EU is yet to be seen as labour shortages are predicted to get worse.

Group executive director of Gleeds, Douglas McCormick has said that their survey has demonstrated the extent of the labour shortage which needs to be addressed by the Government.

 

The skilled labour shortage is a more concerning issue

Whilst we can see the light at the end of the tunnel in regards to material costs, the labour shortage is a much deeper issue. Not only is the labour issue predicted to get worse before it gets better, wage inflation means that workers can now demand higher pay which will continue to impact project costs for the foreseeable.

 

Summary

To summarise the prices for many common construction materials have surged throughout 2021. However, prices are forecast to settle throughout this year. The skilled labour shortage is currently a more concerning issue for contractors as 70% expect shortages to continue. The industry is calling for the Government to address the situation.

 

What next?

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How can we help?

Hawsons has a dedicated team of specialist property and construction accountants in Sheffield, Doncaster and Northampton.

Having an accountant who understands the challenges of this dynamic sector and is able to help you plan for the future is an advantage in a competitive environment. At Hawsons we have a great deal of experience in advising and helping businesses in property and construction and we can assist you as your business grows.

Our in-house tax team have advised in many aspects of taxation specific to the property investor including in the areas of VAT, Capital Allowances, Income, Corporation Tax and Capital Taxes.

Free initial meeting

Stephen Charles

Tax Partner, Sheffield

0114 266 7141

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