26/09/2018

No deal? No way

With Brexit Day on the 29 March fast approaching, Matt Carrington-Moore, Chief Marketing Officer takes a look at the outlook for the construction industry.

Discussions on the UK’s position post-Brexit have reached a crescendo in recent weeks, and a continued lack of clarity on the country’s future is the underlying theme

As an industry, we are heavily reliant on the single market, both in terms of trade and workforce. The Migration Advisory Council published their final EEA migration in the UK report last week, which sets out recommendations for the UK’s post-Brexit work migration system. It is widely recognised that the construction industry is one of the sectors most reliant on self-employed European Economic Area (EEA) migrants, according to the 2017 Annual Population Survey 40% of self-employed EEA migrants work in construction.

Low-skilled jobs

Construction site trades are officially classified as low-skilled jobs, and under current policy it is not possible for non-EEA workers to obtain a work permit for low-skilled employment. 

To date, this has not been an issue for the sector, as the UK has had access to a constant flow of talent from the EU. With the tap imminently looking like it could be turned off, we could face an unprecedented skills deficit and an inability to deliver essential infrastructure projects, deliver the new homes needed across the country and at a strategic level, provide the built environment that supports the growth of UK Plc. The classification of construction workers as low skilled is fundamentally short-sighted. The construction trades require specific and detailed knowledge and it is a classification that is as arbitrary as it is unhelpful and is hugely damaging to addressing the skills gap in the UK. 

The solution is still unclear and whilst industry-wide efforts are being made to excite the next generation about a career in construction, including The Considerate Constructors Scheme’s recently launched ‘Spotlight on…the next generation’ campaign, the emphasis on nurturing home grown talent is perhaps  too little too late to address the impact of a shrunken talent pool. 

Materials shortage

The second issue relates to availability of construction materials. In 2017, 60% of our construction material came from the EU and we traded 61% of our construction goods with the EU. Of the top five import markets, comprising 48% of total imported construction material, four of these are in the EU.

A trade deal with our European neighbours is essential. Even short-term disruption to accessing materials will have a huge long-term effect on the cost-effective and timely delivery of projects.

Matt Carrington-Moore, Chief Marketing Officer, Scape Group

We have already seen the implication of currency fluctuations on the cost of materials, a 4.9% increase in the 12 months to September 2018.  Without a deal in place we could experience delays at customs and the impact of these should not be underestimated. A recent industry survey by EURIS has found that 79% of respondents forecast a significant or major cost to their business as a result of unpredictable border delays.

The terms of our exit from the EU are still unknown, and whilst in recent months we have seen a modest increase in construction activity, uncertainty is never welcome. Tariffs, import costs and exchange rates all impact on our ability to be competitive on the global stage.

But make no mistake, a no-deal scenario will be utterly devastating to the construction industry. 

The double hit of materials and skills shortages will leave us in a situation where building simply stops in certain corners of the UK, and that is a potential outcome absolutely no one voted for.

Written by:

Matt Carrington-Moore

Chief Strategy Officer

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