The IPPR called the construction skills system “dysfunctional” and warned that the government’s combined immigration and house building goals were “not possible”.
It also highlighted that apprenticeship changes could disincentivise apprentices and challenged government to make Britain a world leader in Modern Methods of Construction (MMCs).
Fears have already been raised for the construction sector’s future should freedom of movement be severely restricted after Brexit, but these figures add fresh light to the scale of the problem.
The progressive policy think tank warned that the industry has become increasingly reliant on EU migrants to meet skills and labour shortages and was “exceptionally vulnerable”.
“If the migration system for non-EU migrants was replicated, just 7% of current EU-born employees in construction would have been eligible to come here for work,” the IPPR said.
And even in the least-restrictive scenario modelled by IPPR two in three current EU-born employees working in the UK would have been ineligible.
According to the report, growing skills shortages are already constraining the UK’s ability to build. Construction has the joint highest level of skills shortage vacancies of any industry and two thirds of chartered surveyors say labour shortages are limiting building activity.
Despite the skills gap, employers in construction have failed to train enough workers; the proportion of employers in construction providing training is second lowest of any industry.
The construction skills system is dysfunctional, and recent reforms to the apprenticeship system may lead to a decline in construction apprenticeships at a time when we need to see a huge increase.
Productivity has been stagnant in construction; growing at just a fifth the rate of the rest of the economy over the last 20 years.
The industry has failed to embrace modern technology which could boost productivity, it said, and the industry accounts for just 0.4% of research and development investment.
The IPPR made several recommendations for government including a migration policy that works for construction with an immediate guarantee of the rights of existing EU nationals and a five-year transition period for the industry to allow it to adapt and boost training and productivity. It also called for a new sectoral institution to drive a collective commitment to skills and productivity in the industry.
As part of the construction sector deal, government should set out a national mission to become a world leader in Modern Methods of Construction, with an ambitious target of at least 50% of homes built by 2022 to have at least 50% of their value from off-site manufacturing, the IPPR added.
IPPR senior research fellow Joe Dromey said: “Brexit threatens to turn the growing skills challenge in the construction industry into an existential crisis, with significant negative consequences for our economy and for the housing supply situation.
“The government wants to double house building, and cut net migration by more than half. To do either would be difficult. But to do both together – when our construction industry has become increasingly reliant on EU-born workers – is simply not possible.
“If we are to build the homes, the commercial property and the infrastructure that our country needs after Brexit, then government needs to wake up, recognise the scale of the threat, and work with the industry to limit the impact.”