Data centre boom deepens UK electrical skills shortage

The rapid growth of AI infrastructure is intensifying the UK’s shortage of skilled electrical and mechanical workers, with data centres now among the country’s busiest construction sectors.

Turner & Townsend’s latest global construction market intelligence report found that 100% of its UK respondents were experiencing shortages of qualified mechanical, electrical and plumbing workers. These specialist trades are particularly important for data centres, where complex power, cooling and other building systems account for a significant proportion of the project.

The findings raise further questions over whether the construction workforce can expand quickly enough to support the wave of data centre development promised across the UK. While the growth of AI could create new jobs, those opportunities will only materialise if enough people can be recruited and trained to deliver the projects.

Globally, data centres remained the most in-demand construction sector in Turner & Townsend’s survey, which collected data from 112 markets across 44 countries. More than 70% of those markets reported that contractor capacity for data centre projects was either tightening or already overstretched.

Competition for skilled workers

The shortage is not limited to data centres. Around 78% of global markets reported labour shortages or severe labour shortages, with the greatest pressure increasingly concentrated in specialist trades linked to electrical systems, digital infrastructure and mechanical engineering.

In the UK, data centres were identified as the second-best-performing construction sector, behind defence and ahead of industrial and logistics projects. However, all of those sectors are drawing from many of the same engineering and construction skills.

That creates a risk that projects will increasingly compete for a limited pool of electricians, engineers and specialist contractors. It could also make it harder for less profitable sectors, including residential and commercial development, to secure the workers and supply chain capacity they need.

Turner & Townsend found that contractors and suppliers were increasingly focusing on higher-margin technology-led projects. That may be good news for those working on data centres, but it could create a two-speed construction market where other developments are left struggling for resources.

The shortage is also contributing to higher costs. Labour availability has overtaken broad material inflation as the primary driver of construction cost increases, with shortages leading to longer recruitment periods, higher wages and reduced appetite among subcontractors to bid for work.

UK construction costs set to rise

Construction cost inflation across the UK is forecast to reach 3.7% in 2026 before rising to 4.2% in 2027. London remains the most expensive UK market in which to build and ranks fifth globally, with an average construction cost of $6,032 (£4,485) per square metre.

That’s not exactly new information, with a report from AECOM finding similar constraints to Turner & Townsend. That report noted that demand for specialist mechanical, electrical and public health (MEP) subcontractors was outstripping supply.

However, cost pressure is increasingly spreading beyond the capital. Major investments in data centres, battery factories and other advanced industries are increasing competition for labour in regional markets, narrowing the historic cost gap between London and other parts of the country.

That could make the availability of skilled workers just as important as land, planning permission and power when developers assess where to locate new data centre projects.

Stephanie Marshall, Managing Director, Real Estate Cost Management at Turner & Townsend, commented, “The global construction market is shifting and new dynamics are reshaping the key drivers of cost performance. Demand is increasingly uneven and concentrated on AI-driven sectors like data centres, while broader labour constraints, supply chain volatility and geopolitical risk are becoming more pronounced.

“There’s a very real risk that growth in the pool of skilled labour needed to build data centres won’t keep up with demand. In construction, AI has the potential to be a force for good in terms of job creation, but only if the right resources are put in place to support it. Additionally, the impact on energy prices of the conflict in the Middle East will be indirect and uneven, varying by geography and sector depending on supply chain structure and energy dependence.

“Clients with global portfolios must use this opportunity to review international programmes to ensure the right projects are prioritised depending on local conditions. It is not only a question of the relative cost, but also factors such as interest rates, labour availability and digital maturity in the supply chain.”

While increased demand should create new opportunities across the electrical industry, the findings suggest that job creation alone will not resolve the problem. Without more investment in apprenticeships, technical training and routes into specialist electrical and mechanical roles, the skills shortage could become another major constraint on the UK’s AI ambitions.

That’s why Andy Burnham’s recent announcement that the UK Government will try and place technical and academic education on an equal footing and encourage schools to expand vocational routes into employment could be key. It could see young people who would previously be encouraged to go to university consider a career in construction or electrical engineering instead. 

National Grid has already backed the Government’s plans, announcing a £5 million employability fund that will support 5,000 young people who are not currently in employment, education or training.