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 05-07 March 2019 / ExCeL, London

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01 Nov 2018

Does progress on the Brexit process match construction's priorities?

Andrew Stunell

Two years ago I chaired a series of construction industry roundtables to identify the top priorities for the sector as the Brexit process started. Now, with less than five months left, how does progress match those priorities?

Back then, top of the list was making sure there would be enough workers to deliver the extra homes, hospitals, schools and infrastructure that the government was calling for. That needed two things to be done urgently. First, we saw a pressing need to give reassurances to the many workers from EU27 nations employed in the UK construction sector that they would continue to have a valued place in UK industry. 

Everything points to an acute and worsening labour shortage, which will have a big impact on the delivery pipeline

Second, there had to be a dramatic rise in the number of the UK’s young people taking up apprenticeships and skills training – not least to replace the 70,000 or so senior workers who retire from construction each year. Doubling the number in training would provide a replacement level, but tripling the number was needed if Brexit meant migrant workers had to leave.

In the two years since, there has been constant Brexit noise, mostly from inside the Cabinet Room, but still nobody knows what kind of deal, if any, is going to be reached by 29 March next year

Next came the importance of getting “frictionless trade” across the Channel to keep the supply of materials and components (in both directions) flowing smoothly, with no extra paperwork or tariffs to pay. Close behind that came mutual recognition of standards and qualifications. Since as many as 40% of architects working in London are from the EU, and £2bn of trade in construction services with the EU is at stake, these are key risks.

In the two years since, there has been constant Brexit noise, mostly from inside the Cabinet Room, but still nobody knows what kind of deal, if any, is going to be reached by 29 March next year. Meanwhile, there have been some heavy blows in the construction industry – not least the Grenfell Tower fire and the collapse of Carillion – but there have been some positive steps too.

For a start, the critical issue of how the industry’s traditional and damaging stop-start investment pipeline can be straightened out has been addressed. The government’s National Infrastructure Delivery Plan is beginning the task of building confidence in long-term planning and investment. But we remain very far short of having an industry equipped to deliver the plan’s required increase in output over the next 10 years. 

Perhaps the launch of the construction sector deal, which was unexpectedly tagged with some real money, and saying most of the right words, can deliver that? Although it was entrusted by the government to the Construction Leadership Council a year ago, they’ve only just put up the Portaloo on site, so to speak, so what the finished project will look like remains guesswork. Perhaps the (eventual) reform of the CITB has built the right platform to deliver the necessary tripling of construction apprentices? But that’s another wait and see. 

The government has spoken warm ministerial words about preserving existing EU27 workers’ rights to remain. But a hostile public discourse (and a lower exchange rate) has meant many have voted with their feet already. The number of EU27 workers in construction has already fallen, to 165,000 now. The announcement that in future their route back to the UK will only be via the costly and slow-moving Tier 2 visa system – which is dependent on a high pay threshold, job-specific, and without any personal security – isn’t attractive to employers or workers. Nobody knows how the Tier 2 system will cope with the necessary increase in visa applications either, nor how long the backlog for approvals will be. A wise project bidder would be writing such people out of their script when they tender for 2020 jobs.

Meanwhile the recruitment of UK residents to construction apprenticeships has fallen steeply –  70,000 retirees from the industry each year are being replaced by fewer than half that number of new recruits. Dozens, if not scores, of training courses are stuck in the bureaucratic in-tray, waiting for clearance before training schemes can start, so firms are struggling to find ways to spend their construction levy refunds. PR catastrophes, such as redundancy notices for about 400 Carillion apprentices, hardly make a compelling case for parents to urge their children to take up a career in construction.

Everything points to an acute and worsening labour shortage, which will have a big impact on the delivery pipeline. Even where there are enough people to do the job, it will be at a price that means the money won’t stretch so far. Clients, already spooked by Brexit uncertainty, will get less for their money, and contractors’ glib talk of  “widening margins” will fade as their risks on labour and materials supply rise and their chances of surfing a boom fall.

Whatever the rights and wrongs of Brexit (and I think it is folly), it does force the construction sector to face up to some hard facts: the current model doesn’t deliver well – for the industry, its clients or the country. 

Unblocking the apprenticeship system, investing in training, diversifying the entry points, and badgering Whitehall to recognise the special needs of the industry for help with migrant labour while UK skills develop over the next five years should now be the absolute priority for the construction sector’s movers and shakers. 

Andrew Stunell is a member of the House of Lords, the Liberal Democrat construction spokesperson, and a former minister with responsibility for building regulations

Article & Image Source: Building

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