The people factor: The impact of skills and labour shortages on public sector estates

The UK’s public sector is facing growing skills shortages, putting critical services, infrastructure, and sustainability goals at risk. We explore the challenges behind the workforce crisis - and the solutions needed to bridge the gap.

The government estate is the biggest and most diverse property portfolio in the UK, comprising thousands of assets that serve as the backbone of essential public services. But this foundation is under strain. According to a report by the National Audit Office (NAO) a £49bn maintenance backlog is compromising safety, efficiency and functionality across the public sector. Between 2019-2020 and 2023-2024, failing infrastructure led to 5,400 NHS clinical service incidents annually, impacting service delivery and patient care. Poor building conditions are also reducing civil service productivity, worsening staff retention, and hindering the government’s ability to meet its environmental targets.

Compounding these issues is a critical workforce shortage. In local government alone, nearly 25% of planners left the sector between 2013 and 2020, while 91% of councils struggle to recruit top talent. Widespread gaps in planning, construction, and facilities management are directly affecting service provision, compliance, and the upkeep of public assets.

Without a skilled workforce to modernise and maintain these spaces, the challenges will only escalate. To create safer, more sustainable and efficient public places, investment in people needs to be prioritised.

Optimising estates through workforce investment

In 2022-2023, the government estate covered 159.2 million m2 of floor space across 141,600 built assets, valued at £187.1bn. These properties, ranging from schools and hospitals to military bases and courts, have the potential to drive economic growth and build resilient, thriving communities. However, strategic investment is essential to maximise their impact. Key priorities include:

• Building safety: Tragedies such as the fire at Grenfell Tower has placed compliance firmly in the public eye. It is essential that all building structures meet stringent safety standards – such as those in the Building Safety Act 2022 – to protect lives and property and maintain public trust in government-managed properties.
• Estate optimisation: The strategic management of public sector properties can lead to significant financial savings, better resource management and enhanced service delivery. This aligns with the Government Property Strategy 2022 -2030, which aims to create sustainable public estates, improve planning processes and achieve better value for money.  
• Planning and regeneration: The government’s Building Back Britain initiative aims to drive economic growth, sustainability and community development through investments in renewable energy, housing and infrastructure. This includes an ambitious target of building 1.5 million homes over the next parliamentary term, with a focus on affordable housing and brownfield developments.
• Net zero: Achieving net zero emissions by 2050 is a well-publicised government goal, driven by initiatives such as the Net Zero Strategy and the Powering Up Britain: Net Zero Growth Plan. Decarbonisation of energy production, the reduction of greenhouse gas emissions, improved energy efficiency and investment in sustainable technologies are all crucial for mitigating climate change and ensuring a sustainable future for generations to come.

However, none of these initiatives can succeed without a well-trained workforce. Addressing the public sector skills shortage is not just an option, it’s a necessity for ensuring long-term resilience.

The talent gap: Why skills shortages are holding back progress

The public sector faces a shortfall of 2.5 million highly skilled workers. According to The Open University, the UK’s skills gap is costing £6.6bn annually in recruitment fees, salary inflation, and temporary hires.

• The digital sector is particularly affected, with only one qualified candidate available for every seven vacancies.
• 71% of property firms have reported difficulties in recruiting skilled professionals.
• Local authorities have lost over 500,000 employees since 2012, worsening workforce capacity issues.

Without urgent intervention, workforce shortages will continue to threaten infrastructure projects, delay public service delivery, and weaken the government’s ability to meet its long-term goals.

Why the public sector struggles to attract and retain talent

Attracting and retaining skilled professionals remains a major challenge for the public sector, with workforce shortages driven by an ageing workforce, evolving career expectations and ongoing budget constraints. As the demand for specialised skills grows, organisations must find ways to adapt and evolve to build a sustainable talent pipeline. Key challenges include:

• Budget constraints: Reduced budgets for recruitment and retention limits the ability to offer competitive salaries and benefits.
• Ageing workforce: As of 2025, it’s estimated that over 30% of the UK’s workforce will be 50 or older, leading to a higher rate of retirements and a growing loss of experienced professionals with specialised public sector knowledge.
• Gen Z’s expectations: Now making up 27% of the workforce this generation prioritises flexibility, purpose-driven work, and career growth, requiring the public sector to adapt to attract and retain talent.
• Uncertainty over funding: Questions around budget cuts and future funding affects job security, making public sector roles less attractive.

Closing the gap: Strategies for building a future-ready public sector

Harnessing AI and technology to improve recruitment and efficiency

The public sector is missing out on £45bn in potential productivity savings annually due to ‘archaic’ technology. AI and data-driven solutions can streamline operations, improve efficiency, and support recruitment.

• The Digital Planning programme has already cut planning application times by 36%, reducing bureaucracy and freeing up specialists for higher-value work.
• AI-powered recruitment tools streamline hiring by automating screening and matching candidates for faster, more effective placements.
• Smart building technologies, including sensor networks and predictive analytics, can improve maintenance, cut costs and extending asset lifecycles.

By integrating automation and AI, the public sector can reduce workload pressures, improve service delivery, and create a more engaging work environment.

Collaboration: Public-private partnerships

The private sector offers valuable expertise, technology, and innovation that can help close the skills gap.  Outsourcing specialist projects can provide immediate relief in areas facing acute shortages, while joint training programmes help upskill employees and establish a pipeline of skilled professionals.

Investment in innovation hubs can also foster new solutions in areas like urban planning, renewable energy, and digital transformation. Meanwhile, partnerships with universities and vocational schools can create tailored training programmes that align with public sector requirements, ensuring a steady flow of qualified candidates for critical roles.

Building skills from within

As hiring challenges persist, many organisations are turning to internal training and development to build their workforce. According to the CIPD, 56% of organisations have increased in-house training over the past year. By investing in workshops, courses, and online learning, public sector employers can strengthen existing teams, reduce reliance on external hires, and develop a future-ready workforce equipped to meet evolving demands.

The way forward

The public sector’s workforce shortages are not just a recruitment issue - they are a fundamental barrier to delivering essential services, maintaining infrastructure, and achieving long-term goals like net zero and economic regeneration. Addressing this challenge requires a dual focus on attracting new talent and upskilling existing employees. By investing in skills development, modernising hiring practices, and fostering stronger public-private collaboration, the sector can build a resilient, future-ready workforce capable of meeting the demands of an evolving public estate.

At Capita, we help organisations bridge workforce gaps, upskill teams, and future-proof essential services. Contact us today to find out how we can support your talent needs.