THE Labour government has been warned that its tax rises and soaring costs are pushing Scottish construction firms “to the brink” with hundreds of jobs on the line.
The leading trade association for the construction industry has warned that unless the UK Government drastically changes its policies, it risks leaving the country without a skilled workforce needed to deliver homes amid a national housing crisis.
Construction Plant-hire Association (CPA) said that almost half, 49%, of construction plant-hire firms expect to cut entry-level roles in the next 12 months, according to its recent industry survey and first reported by The Herald.
The report added that 46% of firms have already reduced hiring, with more than a quarter, 26%, imposing a recruitment freeze.
Apprentice roles are among the most affected, with a further 43% of firms saying they plan to recruit fewer people for the positions.
Steven Mulholland, chief executive of the CPA, blamed the Labour government’s higher employer National Insurance contributions and inheritance tax reforms among the reasons why construction businesses are hiring fewer people.
He said: “Across Scotland and the rest of the UK, our members want to create more opportunities for young people. But rising energy costs, National Insurance increases and inheritance tax reforms are pushing firms to the brink at exactly the moment we need to be investing in the next generation.
“When budgets are squeezed, it is entry-level roles and apprenticeships that go first - and that has consequences far beyond the balance sheet.”
Mulholland added: “These young people are the future of the sector. Without them coming through now, we risk losing capacity that will take years to rebuild - and we simply won’t have the skilled workforce needed to deliver the homes and infrastructure the country is depending on.
“Government says it wants growth and it wants jobs. But unless it makes it easier and more affordable for businesses to hire, backing employer-led apprenticeships and reducing the cost burden on SMEs, those ambitions will run well ahead of the workforce available to deliver them.”
The Construction Industry Training Board has predicted the construction industry will need an average of 41,200 additional workers a year between 2026 and 2030 to meet the UK Government’s housing targets.
The CPA said that almost half a million existing construction workers in the UK are expected to retire in the next 15 years, leading to pressure to train a new generation of skilled workers to replace them.
The CPA warned that due to rising employment costs, the pathway of apprenticeships are at risk of being closed off and could lead to a shortage of workers in the industry.
The survey by the association found that two-thirds of respondents, 66%, identified energy bills as a significant pressure on hiring decisions, while 54% cited wage increases and 48% pointed to higher National Insurance contributions.
Employer National Insurance increased from 13.8% to 15% in April 2025, while the annual salary threshold at which employers begin paying it was cut from £9100 to £5000.
In May alone, 17 Scottish construction firms became insolvent, representing 17% of all company insolvencies recorded in the country during the month.
The CPA has called on ministers to reduce the cost burden on employers, while also launching support for employer-led apprenticeships and have urged Labour to reconsider tax policies, arguing they are restricting recruitment at family-run businesses.
A Scottish Government Spokesperson said: “We recognise that the UK Government’s introduction of higher employer National Insurance contributions has made it much more expensive to employ people. That is why we are reviewing apprenticeship contribution rates, to try to help businesses, and we will also carefully consider what more can be done to ensure that more employers can recruit more apprentices and realise their benefits.
“Over 39,000 Modern Apprentices are in workplace training thanks to the willingness of Scotland’s employers to take on apprentices, backed by £198 million Scottish Government investment.
“That funding also supports 25,500 new modern apprenticeships, 5,000 new foundation apprenticeships and more than 1,200 new graduate apprenticeships. We are committed to increasing the number of apprenticeships to 150,000 over the parliamentary session.
“To support this further, the Scottish Government has introduced a skills planning model that will help the post-school education and skills system to become more responsive to employment needs.”
