IHBC CPD Boost via Designing Buildings WIKI: ‘What might Brexit mean for construction?’

Parliament website Brexit image 031117Designing Buildings WIKI, IHBC’s partner host for the Conservation Wiki – asks what the implications could be for the construction industry of Brexit, with particular concern about how it might affect the skills shortage, the import and export of materials, and regulations and standards. DBW banner

Designing Buildings WIKI writes:

The industry must come to terms with the reality of the UK’s departure from the EU. But what are possible implications?

The construction industry relies heavily on foreign migrant labour for skilled and non-skilled roles. It is feared that outside of the EU, which guarantees the right to free movement, the skills shortage could worsen. If immigration is limited, particularly for skilled workers, the UK could witness higher project costs where labour demand outstrips supply. This could have a knock-on effect on the capacity of housebuilders to meet the government’s housing targets, with cost increases possible for the housing market and construction companies. This further decline in housebuilding could deepen the housing crisis especially in London. Alternatively, if global investors start to take their money out of the UK property market, this could lead to a reduction in prices and free up investment properties that are currently sitting empty.

In October 2018, Mark Reynolds, chief executive of Mace, attacked Prime Minister Theresa May over the government’s plans to focus post-Brexit immigration on high-skilled workers with no priority for those in the EU. May said that the free movement of workers between the UK and EU would end ‘once and for all’. The most high-profile construction industry figure to express views on the issue, Reynolds accused the government of completely ignoring industry worries over access to ‘un-skilled’ labour after March 2019. Office of National Statistics (ONS) figures show that one-third of workers on construction sites in London were from overseas, with 28% coming from the EU. Reynolds said; ‘The future of the UK’s construction and engineering sectors relies on the availability of both highly skilled specialists and so-called ‘low skilled’ labour. I believe that the policy should be urgently reviewed and business consulted once again; as without access to the right mix of skills we will be unable to deliver sustainable construction growth after Brexit.’ Julia Evans, Chief Executive at BSRIA, said;’…members must be able to access skills and talent – at all levels – swiftly and easily when they can demonstrate that they haven’t been able to hire or train the staff they need here in the UK. This will halt more and more unnecessary and messy red tape and bureaucracy.’

As well as the free movement of people, membership allowed for the free movement of goods within the EU, eliminating duties and other restrictions. A 2010 study by the Department for Business Skills and Innovation estimated that 64% of building materials were imported from the EU. The same report estimated that 63% of building materials were exported to the EU. After Brexit, importers and exporters may face duties or limits on quantities, which could potentially lead to a shortage of construction materials or an increase in costs.

However, Brexit could also allow UK public procurement policy to stipulate the use of ‘UK firms and materials only’, supporting UK-based and enterprises. It is unclear whether Brexit might enable the UK government to impose tariffs on cheap steel imports from China that have led to the decline of the UK’s steel industry. Historically, UK governments have not been in favour of propping up industries in this way, and there is always the potential for retaliation from affected countries.

On the positive side, the UK may be able to negotiate and develop its own trade agreements with the EU and other large importing companies, such as China and the USA. The general perception is that Brexit could result in a removal of the extensive red tape mandated by the EU. However, it is important to note that Brexit will not result in the breaking of all ties between the UK and EU. Whatever model is adopted, it is almost certain that a condition of a trade agreement with the EU would be compliance with existing trading standards.

As a member of the EU, the UK has access to the European Investment Bank (EIB) and the European Investment Fund (EIF). Together these institutions invested €7.8 billion in major infrastructure projects, and lent €665.8 million to SMEs in 2015. Losing both these revenue streams could have a significant impact on the delivery of big infrastructure projects such as High-Speed 2 (HS2) as well as start-ups across the UK. Whist this may be replaced by some of the money saved from EU membership, it seems unlikely in the face of ongoing cuts to government spending that this would be invested in infrastructure.

In October 2018, the government published statutory instruments relating to environmental assessments and the planning regime, ensuring continuity of policy post Brexit. Developers will still be required to carry out environmental impact assessments (EIA) in certain circumstances to ensure environmental considerations are properly factored into the planning process. In addition, strategic environmental assessments will still be required to inform strategic plan-making, and hazardous substances regulations will still need to be adhered to.

The government confirmed it is ‘…committed to maintaining the highest environmental standards after we leave the EU, and will continue to uphold international obligations through multilateral environmental agreements’.

For more background see UKGov

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