Surviving the Brexit meltdown

There is good news and there is bad news for the construction industry. The good news is that the chancellor is predicted to pledge lots of money for housing and infrastructure in his Budget later this month. The bad news is that there won’t be enough people to build it all.

Of course, if the chancellor was seriously intending to pay to deliver all the extra homes that need to be built on top of current output to reach the government’s manifesto commitment of 1 million homes by 2022, he would be putting up something like £15bn for each of the next five years, so we’re not exactly there yet. But still, you get the point: prime minister Theresa May is committed to a huge increase in the rate of housebuilding. And a long list of very large infrastructure and transport projects, too.

It’s a decade-long programme that requires the construction industry to increase its capacity by more than one-third over the period. And that doesn’t take into account that export-led post-Brexit boom we are told will take place, with its demand for new factories and warehouses. Jobs and profits for all – what’s not to like?

This brings us to the bad news. There will be nobody to build them. The government intends the UK to leave the EU in 16 months’ time. Maybe there will be a two-year transition period after that, which takes us to March 2021, with the next general election due in June 2022. So what does the government believe will be its unique selling point to the electorate then? Almost certainly not what good progress has been made on Hinkley Point, or on housing starts in London (that will all be Sadiq Khan’s fault, won’t it?). 

It will be government policy to have far fewer foreign workers on construction sites and in design offices. Not everyone in the industry has taken that on board

Rather it will be showing real evidence of “taking back control”. And right at the top of that is “reducing immigration to the tens of thousands”. It will be government policy to have far fewer foreign workers on UK construction sites and in design offices.

Not everyone in the industry has taken that on board. I’ve met senior managers who have told me that if we can’t get them from Poland, we can get them from India instead. And others say that it’s so obvious that migrant workers are vital that the restrictions just won’t happen. But a powerful driver of the Brexit vote was fear of immigration, and the Conservatives have every intention of responding to that and making it central to their 2022 election message. Neither replacing Polish workers with Indian workers nor just letting them slip in unnoticed is part of their plan.

Surely the government realises this disconnect between their policy on Brexit and on infrastructure investment? Well, maybe. It is true that Brexit secretary David Davis has told MPs that his department has completed no fewer than 58 impact assessments on various sectors of the UK economy. However good the one for construction turns out to be, his junior ministers admitted in a farcical appearance at the select committee last month that they hadn’t read them anyway.  

All we know for sure is that 12 months ago construction was in the third tier of importance for the UK negotiating team, with aerospace and financial services in the top tier. So far, there is no evidence that these priorities have changed.

However, if the government does understand there’s a problem, it may be thinking of a different solution entirely for the industry: improve productivity, develop skills, recruit more broadly within the UK, shake up its dysfunctional conflict-riven delivery model, and reboot its image. That is certainly exactly what any sensible decision maker in the industry should be aiming to do over the next two years. It is likely to be those who have done so who best survive the Brexit meltdown when labour shortages and cost inflation hit and your external cladding is stuck on a lorry in Calais.

Fortunately a great deal of serious thinking is taking place on these topics. From Mark Farmer’s report Modernise or Die (drafted before the Brexit vote) and its stark analysis of the construction industry’s endemic problems, through to the CITB’s overdue reshaping, there are clear signs of fresh thinking and determination. But the scale of change needed is huge, and the timescale far too short.

So what has to happen? We urgently need the many anxious voices in the industry to focus on some clear and deliverable asks of government, coupled with some coherent offers to the government of what the industry is ready to deliver.

The obvious asks are: 

• Immediate help (and money) for a much expanded skills training programme
• A long transition time before new visa restrictions start
• More certainty on the public sector investment profile from decade to decade. 

The obvious offers are:

• A real vision of our value to UK business – be visionaries, not victims
• Strong industry/trainer partnerships for massive expansion of skills development
• Positive recruitment of women in all roles
• New models of delivery – organisational reform and operational innovation.

The headlines are easy, the detail and the delivery much harder. But if we don’t get our act together, we shouldn’t be too surprised if the government doesn’t either.

Lord Stunell will be taking part in a panel on Brexit at the Building Live conference on 28 November. To book your place, go to www.building-live.co.uk