Supply Chain Pressures Facing the UK Construction Industry

Supply Chain Pressures Facing the UK Construction Industry

The UK construction industry is facing mounting pressure from the worst supply chain crisis in decades. Being driven by the fallout of coronavirus and Brexit, the industry is facing hiking prices, long lead times and limited availability of certain materials.

All of this is further impacted by the nationwide HGV driver shortage and the difficulty in obtaining imported items with global shipping capacity down 25% since the start of the pandemic.

Labour shortages are particularly acute for the construction sector, especially for skilled workers, with most trades needing to increase their rates to attract and retain key staff. Furthermore, many foreign workers have left the UK following Brexit and travel restrictions, with the South of England particularly affected.

There is much coverage of the issues across the media with well-known brands speaking out about the challenges and what they are doing in an attempt to ensure materials and equipment are allocated fairly across the sector. This will not only have a significant impact on availability, but the price increases expected as a result of supply and demand will put huge pressure on contractors, particularly those who have already agreed pricing with clients.

In September, Building Cost Information Service figures show that overall material and wages costs were 19.6% higher than 12 months earlier.

As covered by Construction Enquirer, contractors have been rocked by 15% hikes on concrete products. This increase, which came into force on 1 September 2021, left contractors reeling. In addition, as recently at 22 September 2021, the Construction Leadership Council (CLC) warned that bagged cement, concrete roof tiles and bricks are still in short supply across the UK.

Supply chain risk management

One important lesson that the current supply chain crisis has reminded us of, is that construction businesses do not operate alone. Contractors rely on suppliers, internal processes, transportation and national infrastructure, perhaps more so than most other industries. Having visibility of your external and internal supply chain can flag single points of failure, bottlenecks and where your biggest risks are to business continuity.

Supply chain pressure could lead to underinsurance

Whilst underinsurance is by no means a new concern for the insurance industry, the combined effects of Brexit and Covid-19 have served to shine a spotlight on this perennial issue, particularly in the construction sector.

The last year has seen businesses facing tough economic conditions, with many having been forced into ‘survival mode’; it is perhaps unsurprising that insurance needs may have been neglected.

Key areas to consider:

  • Stock values – are they up to date? Do they reflect maximum exposures?
  • Business interruption/increased cost of working – indemnity period – Basic materials taking 6-12 months, with some products taking even longer.
  • “Right size your insurance” – is the amount of cover you have sufficient considering the current landscape.

Business insurance from Towergate

At Towergate we don’t just offer traditional insurance broking: we believe that prevention is better than cure. That is why we have our own risk management consultancy focusing on pre-loss mitigation and business continuity, and have developed our own business interruption calculator.

We engage actively with insurers and our clients to obtain protection for businesses of all sizes. Our wide range of covers help protect your organisation should the worst happen.

See our range of specialist business insurance or contact your local office.

How Towergate can help you avoid underinsurance

Your business is too important to risk losing it. So, it’s vital to ensure you have the right levels of insurance to protect your business in the event of a claim.

Underinsurance remains a hot topic across the UK, indeed the Financial Conduct Authority (FCA) themselves have warned of ‘alarming levels of underinsurance’*. At Towergate we have always offered advice & support to mitigate the risks but in a fast-moving world with an ever changing geopolitical and legal environment, alongside several other economic, social & technological factors, the need for regular reviews has never been greater.

We are passionate about tackling the unprecedented levels of underinsurance in the UK: watch our video on how to avoid this for your business:

Mark Brannon Cert CII, commercial, sales, broking and client director


About the author

Mark Brannon Cert CII is a respected industry leader with over 17 years’ industry experience in a variety of roles within the business insurance sector. He works across a wide spectrum of insurance product and policy development, delivery and optimisation for clients, including claims, insurer relationships, marketing and communications, and risk management.

Read more business risk articles

For more information or for a full review of your insurance needs, please see our insurance specialisms, contact your usual Towergate Insurance Brokers adviser or email