97% of contractors rejected tenders in Q2 2025. That’s 97 out of every 100 projects that walked away before they started.
The government wants 1.5 million new homes. Your industry has lost 280,855 workers since the pandemic. Construction employment sits at its lowest level in almost 25 years.
This is a structural collapse playing out in real time. Your targets pile up faster than your capacity to deliver them—and no policy announcement can fix it.
The Workforce That Isn’t There
Your industry needs 47,860 extra workers every year through 2029—239,300 workers total.
The government’s plan? Train 60,000 specialist construction workers by 2029.
That’s less than 25% of what you need. The gap between your ambitions and your capacity widens every month.
35% of your workforce is over 50. Only 20% is under 30. You’re losing experienced workers faster than you can replace them.
The UK shed 250,000 construction jobs since COVID—10% of the workforce. Over 200,000 EU workers left after Brexit. Training investment collapsed from 67% of employers providing workforce development pre-pandemic to 42% in 2021.
Your shortage extends beyond workers to the capacity to create workers. Which means every year you wait, the problem gets exponentially harder to solve.
When 97% Say No
But the workforce crisis is only one pressure point. Risk aversion has reached levels that fundamentally change how your projects move forward.
97% of contractors declined tenders in Q2 2025, up from 75% in Q1. Concerns over proposed conditions and risk profile drove rejections.
When 97 out of 100 contractors look at your tender and walk away, you’re not dealing with isolated concerns. Your market has repriced what acceptable risk looks like—and most projects no longer qualify.
Construction has the highest insolvency rate of any sector. 4,111 business failures in the 12 months to March 2025. A quarter of survey respondents reported projects affected by insolvency in Q2 2025.
Financial distress drives risk aversion. Risk aversion reduces project flow. Reduced flow weakens contractor balance sheets. The cycle reinforces itself—and you’re caught in it whether you recognize it or not.
The Two-Stage Response
You’re adapting. But the adaptation itself reveals how deep the problem runs.
Clients are shifting toward two-stage procurement for greater cost certainty. More feasibility work. More early-stage cost planning. Less competitive tendering.
This is a survival strategy when 97% of your contractors reject traditional approaches.
Two-stage tendering offers reduced information asymmetry and shared risk. But it signals failure: your old procurement models don’t work when your entire supply side operates in defensive posture.
You’re not choosing collaboration because it’s optimal. You’re choosing it because your contractors accept nothing else. The power dynamic has flipped.
The 1.5 Million Home Question
Between July 2024 and November 2025, the UK added 275,600 homes—just 18.4% of the 1.5 million target.
At your current building rate, the target requires nearly six more years. The government wants it done in five.
Housing economist Professor Paul Cheshire stated there was “absolutely no way” the government could meet its pledge. The UK last hit the 300,000 annual homes target in 1969.
Around 1.4 million homes have planning permission but haven’t been constructed. Your bottleneck is execution capacity, not planning approval.
Without workers, materials, and contractors willing to take on the risk, your approved projects remain unbuilt. Planning reform won’t fix this.
The Wage-Cost Spiral
And while you scramble for capacity, costs spiral upward. Average weekly earnings in your sector increased by 6.9% in the year to November 2024. The National Living Wage rose to £12.21 per hour in April 2025.
Your pay rises remain above the UK average despite workforce shrinkage.
Labor scarcity drives wage inflation independent of demand conditions. Every wage increase makes projects less viable. Every cancelled project shrinks your capacity to develop a new workforce. The spiral tightens with each turn.
You cannot optimize quality, speed, and cost simultaneously when your workforce shrinks, and wages rise. Choose two. You won’t get all three.
The Decarbonization Disconnect
Meanwhile, the decarbonization clock keeps ticking—and it doesn’t care about your capacity constraints. The built environment is directly responsible for 25% of UK carbon emissions. COP30 exposed the limits of voluntary approaches.
Solutions exist: passive cooling, low-carbon materials, and proven technologies.
What’s missing: regulatory mandates, aligned policies, and financing for deployment.
Industry experts emphasize that you no longer lack solutions. You lack the “regulatory mandates, aligned policies, and financing for deployment” to achieve net zero by 2050.
Policy sets ambitious targets without implementation pathways. The gap between aspiration and execution creates a trust deficit—which is why you’ve stopped planning around these targets. You can’t deliver decarbonization at scale when you can’t deliver housing at scale. The constraints are the same.
The Compounding Effect
Your business confidence reflects this reality. UK construction business confidence has remained in contraction territory for ten consecutive months—the longest stretch since the global financial crisis.
Output growth over the summer of 2025 was lackluster. Regulatory bottlenecks, skill shortages, reduced contractor availability, and stretched government finances weigh on your sector.
This is not a cyclical downturn that recovers when sentiment shifts. These are structural constraints that compound quarterly.
Your workforce ages out. Training investment has collapsed. Risk aversion is near-universal. Insolvency rates remain elevated. Targets grow while your delivery capacity shrinks.
The government wants 370,408 new homes in England annually. Only 38,780 homes were completed in Q1 2025—roughly half the required pace.
The Choice You Don’t Have
You can’t build 1.5 million homes with a workforce of 280,000 workers, smaller than three years ago. You can’t meet decarbonization targets with voluntary approaches while operating in survival mode. You can’t overcome risk aversion with policy announcements when 97% of your contractors decline tenders.
Policy ambition and operational reality diverge further each quarter.
You’re adapting through two-stage procurement, defensive positioning, and conservative bidding. But adaptation for survival is not the capacity for delivery.
Which means your strategic planning needs to start from a different premise: the targets are fiction. The housing numbers will be missed by margins too large to explain away. The decarbonization timelines will slip beyond recovery. The workforce crisis will deepen until it forces a fundamental reset of what construction can deliver in the UK.
The only question left is whether you position for the targets everyone pretends are achievable, or for the reality that’s already here. Most of your competitors are still optimizing for the former.
Reality is winning. Your advantage lies in accepting that before the market forces everyone else to.