The skills shortage is already crippling construction yet the government seems comatose in the face of the impact a no-deal Brexit will have on recruitment
Increasingly, the prospect of a no-deal Brexit has been weaponised by both Jeremy Hunt and Boris Johnson to leverage support among the Conservative Party’s membership base – the group that is going to decide the country’s future. Surveys show that more than 70% of these voters – likely to be men no longer working, given that their average age is 57 but four in 10 are over 65 – would welcome a no-deal Brexit on 31 October.
I and the majority of us working in the built environment have made our views clear on how catastrophic a no-deal Brexit would be for construction. I have personally told Greg Clark the secretary state for business and have spoken frankly to the chairman of the Conservative Party, Brandon Lewis. I even mentioned it to Johnson’s father Stanley when I bumped into him at a private business dinner.
The construction sector has been hit by its biggest fall in output in a decade, with business activity and new work orders tumbling at the fastest rate since the last recession
Our concerns about the effects of Brexit certainly appear to be borne out by the latest survey from IHS Markit/CIPS, which says the construction sector has been hit by its biggest fall in output in a decade, with business activity and new work orders tumbling at the fastest rate since the last recession. The latest numbers indicate the steepest reduction in overall construction output since the recession bit back in April 2009, and means the sector has contracted for four out of the past five months. This has mainly been put down to a lack of confidence in the market due to Brexit.
Not much of an answer
So against this background, I was keen to see the answer to a question posed in the House of Lords last week. It asked what recent assessment the government has made of the impact that leaving the EU without a deal would have on the ability of the construction industry to recruit skilled workers from the EU. Lord Henley’s response, on behalf of the Department for Business, Energy and Industrial Strategy, did not fill me with confidence.
He acknowledged that the CITB’s Construction Skills Network forecasts that the construction industry could need to fill 410,000 jobs by 2030. To achieve this, the government is apparently “committed to engaging with the industry on the immigration white paper over the coming year to shape any new immigration policy” and “introducing measures to increase skills and apprenticeships through the construction sector deal”. So lots of meetings then?
Lord Henley also mentioned in his written answer the intention to increase the number of construction apprenticeship starts to 25,000 per year by 2020 – this seems increasingly unlikely given that numbers have plummeted by almost half, according to the Federation of Master Builders. In March 2019, there were in fact only 694 construction, planning and the built environment apprenticeship starts compared with 1,247 in March 2018. Not a move in the right direction if we are hoping to plug the skills gap with home-grown talent.
He said government will focus on “high skills” in its new immigration policy, to prioritise he migrant workers perceived to bring the most benefit to the UK. This will include the 7% of EU nationals working in UK construction, he assures us.
The government apparently intends to rely on the adoption of much-vaunted new technology by those working in the built environment to solve our skills crisis and will prioritise highly-skilled EU nationals, although it is not clear how that term is to be defined. I welcome advancements in new tech that improves our industry but absorption rates are slow and we need people now.
Workers charge more
The skills shortage is already crippling the construction industry. Fewer people means wage inflation as those that still want to work in the UK realise they are in short supply – Henley does not address this fact. To give one example, a recent Randstad survey of 6,800 permanent construction jobs shows salaries across the sector jumped 9% to an average of £45,900 in the 12 months to the end of May. We are told that the average pay for project managers rose 8% to £64,200, senior project managers are earning £80,800 and assistant site managers are now earning an average of £37,600 per year. Rising wages have been blamed on a shrinking pool of talent, which some say has been caused by a Brexodus of European builders, a phenomenon that will only worsen if the UK leaves the EU with no deal.
The government’s response to the question abrogates any responsibility on its part for exacerbating a skills crisis in a sector in which output is already dropping through the floor, thanks to uncertainty. It is either deliberately ignoring advice from industry experts, or is remarkably naive in not understanding the dramatically negative impact a no-deal scenario would have on a sector so reliant on skilled labour. Perhaps Johnson really doesn’t give a fig about business.
However, we are talking about an industry which at its peak represents 8% of GDP and has a dramatic impact on the overall success of the economy. This abject failure to acknowledge the potentially huge damage that would be caused by leaving the EU without a deal is, quite frankly, staggering.
Richard Steer is chairman of Gleeds Worldwide