With over 2.3 million jobs in construction, it is critical firms are still able to attract the skills, and trade in vital goods, that enable growth and encourage investment
Unfortunately, most of the survey results aren’t a surprise. The government’s priority in the Brexit negotiations are sectors in which there is an international supply chain in terms of goods with parts that across the channel several times in production such as automotive and aerospace. Construction comes relatively low in their priorities compared with other sectors.
The key issues for construction in terms of Brexit are clearly in terms of labour/skills, given the reliance on EU labour particularly in London, as well as the ability to import products.
The government’s Brexit White Paper in July 2018 is a step forward in giving us an idea as to what government is looking for from a deal with the EU but this came out over two years after the EU referendum. It is uncertain whether the EU would accept it and the lack of detail in the Brexit White Paper remains a concern. We still won’t find out what the regime will be post-Brexit for attracting in labour from abroad until the Migration Advisory Committee (MAC) publishes its report in the Autumn so we continue to have uncertainty on the biggest issue.
The workforce that is already here may stay but getting in new people after Brexit and the implementation period is likely to be difficult. The greatest labour issues may potentially be in house building in London, where 56% of labour is from outside the UK and 49% of labour is from the EU. 86% of employment in construction is in small and medium size enterprises (SMEs) and whatever regime there is likely to be after Brexit is likely to have a financial and admin cost, which SMEs are the least able to cope with.
Leaving the EU in March 2019 with no deal would be bad for the construction industry. It is essential that we have a deal that, firstly, allows the implementation period to kick in so firms have till the end of 2020 to change business models but the survey suggests, realistically businesses need longer to make investment decisions, plan for extra capacity and training.
As Brexit negotiations have progressed without much apparent progress, there are still a number of critical outstanding issues for the construction supply chain. Our sector already has a skills shortage, and recruitment of skilled labour is likely to get harder as we anticipate restrictions on access to migrant workers. It is important for the construction industry and the UK economy that the Government and the EU agree on a deal that continues to ensure business conditions, effectively as is, during the implementation period.
With over 2.3 million jobs in construction, it is critical firms are still able to attract the skills, and trade in vital goods, that enable growth and encourage investment.
Prof. Noble Francis is economics director at the CPA and visiting professor at the University of Westminster