Our Building a Better Brexit campaign asked over 2,000 construction professionals what could make leaving the EU work for them. Here, as we launch the manifesto, Chloë McCulloch reports on what the industry wants from the government - and what it needs to offer in return
Building launched its Building a Better Brexit campaign back in January to draw attention to the particular needs of the construction industry under a Brexit deal, and its vital role in the post-Brexit economy. The possible economic consequences of Brexit were hinted at in last week’s Budget, when the chancellor was forced to downgrade his growth forecasts from 2018. According to the Office of Budget Responsibility the UK economy is now expected to grow at a slower rate than before the referendum, and this lower growth rate will continue through the withdrawal process and beyond.
In the week parliament passed the Brexit bill allowing the prime minister to trigger formal talks to leave the EU, this is worrying news for the construction industry, which is one of the first sectors to feel the effects of any economic slowdown. We know from our campaign’s reader survey, which questioned more than 2,000 readers, that the majority of professionals working in the construction industry have significant concerns about the impact of Brexit on costs, resources and the sector’s ability to deliver the housing and infrastructure the country needs.
In conjunction with the survey, we have carried out some qualitative research – talking to a range of professionals across the industry to gauge their mood. From these discussions it is clear that many in construction feel the industry cannot ask for government intervention without offering something in return. Many people pointed out that the job of ensuring Brexit works for construction is not just the responsibility of government – industry and government have to work together. This view is backed up by last month’s modern industrial strategy green paper, which stated that government would only work with those sectors that were willing to help themselves, describing the strategy as “an open call to business to organise behind strong leadership to address shared challenges and opportunities”.
The case for construction putting its own house in order was powerfully made by Mark Farmer’s report, Modernise or Die, last October. In it, he adopted the analogy of construction as an ailing patient with symptoms ranging from low productivity to a bad public image. He called for swift and far-reaching reform in order to address the skills crisis, pointing out that 700,000 new workers will be needed in five years to replace those retiring. His report was also scathing about the level of training in construction, highlighting that only agriculture has a lower proportion of employers engaged in training.
In short, the feedback from our campaign has been that industry and government need to work together to create the conditions under Brexit in which construction can continue to operate and even hope to thrive. And to this end, we are this week launching the next phase of our campaign: a manifesto of recommendations for government, based on the outcomes of our reader survey, and some key pledges that we are asking readers to commit to in return. Taken together, the measures are designed to help the industry – and the country – be successful during the transition period and well beyond our exit from the EU.
Construction is calling on government to implement the following:
- Re-classify the construction industry from a “low priority” to a “high priority” sector in the Brexit negotiations
Moving the construction industry up to “high priority” would give it the same status as the pharmaceuticals, car manufacturing and aerospace industries. The industry’s vital role in delivering the government’s target of 1 million new homes by 2020 and essential infrastructure such as Hinkley Point C, HS2 and the government-backed plans for expansion at Heathrow illustrate its importance to the country’s economy and its growth prospects.
- Ensure tariff-free and barrier-free access for all construction product imports and exports with the EU for a transitional period of up to five years
The frictionless movement of products would allow current “just-in-time” product delivery arrangements to continue, which is vital to productivity and current business models. Meanwhile, individual rules for products can be renegotiated with the EU and the rest of the world in a realistic timeframe.
- Work with the construction sector to put in place a clear, robust system for training future UK workers
The industry seeks an express assurance from the government, similar to that given to the agriculture sector, that it will work with industry to ensure it has “the right people with the right skills” after Brexit. The reason the industry needs such an assurance is underlined by the government-commissioned Farmer Review, which indicated that construction’s labour force could see a 25% decline over the next decade, even before taking into account the possible impact of Brexit.
- Confirm the rights of skilled construction tradespeople and professionals from the EU who are already legally working in the UK
Official estimates are that in London alone a quarter of the workforce, 100,000 construction workers, are from the EU. These workers make a huge contribution to the industry, and the country as a whole, and their status should be guaranteed as soon as possible by the UK government.
- Guarantee freedom of movement for key skilled tradespeople and professional architects and engineers at least for a transitional period, and for any new immigration system to allow as near frictionless movement for these key workers as possible
Around 12% of the UK’s 2.1 million construction workers are from abroad – the majority, from the EU – and constraints on labour flows would exacerbate skills shortages and put at risk projects being built on time and to budget. At the very least, the government needs to secure this arrangement for a transitional period while the UK addresses skills shortages. The issue particularly affects skilled workers because it will take longer to train them than the time available according to the government’s deadline for leaving the EU. However, a longer-term objective should be to maintain as near as possible frictionless movement of skilled workers /professionals across borders, because the alternative would weaken both the international competitiveness of the our industry and its capacity to deliver vital UK schemes.
- Retain mutual recognition of professional qualifications in the industry with EU countries
This would ensure EU professional qualifications continue to be recognised in the UK and that there are no barriers to UK professionals working in the EU. The government should remove barriers to enable UK professionals to seek opportunities in other markets, establishing mutual recognition with other trading partners.
- Commit to greater spending on construction of public projects in housing, infrastructure, schools, hospitals and other public projects, through both capital funding and PF2, to counteract market volatility, giving the sector a clear pipeline of work that will benefit the UK economy
The autumn Budget is the next opportunity for the government to commit to increased spending, in particular: an increased school building and renewal programme, using both central government capital funding and private finance; releasing local authority borrowing constraints to allow investment in housing development to meet the government target for England of 1 million homes by 2020; accelerating the roll-out of new nuclear build and renewable energy programmes; implementing investments to improve digital/broadband capacity and investment in 5G to lead the way in take-up of autonomous vehicles. In addition, the government should maintain road and rail spending at least at current settlement levels.
- Work with private sector clients to establish best procurement practices in order to develop more efficient bidding processes for public sector contracts
Leaving the EU will involve the government looking at options to replace the OJEU procurement rules. This is an opportunity to simplify and make procurement less resource intensive, which in turn would make the UK construction industry more efficient, enabling faster delivery of key public projects. At the same time, increasing the flexibility available to procurers to award on a best value basis should encourage and reward innovation and whole-life thinking.
And in return the construction industry pledges to improve its performance in the following areas:
- The construction industry will work to ensure it funds and creates appropriate levels of training and apprenticeship opportunities
This will involve not only reforming the CITB to make it more efficient in delivering training, but also working with the government to make sure its new apprenticeship levy, launching in April, achieves results. Construction employers need to get involved in setting and maintaining high standards of training. Moreover, main contractors will need to help the supply chain access the new funding – this is a real challenge for an industry where more than 50% of the directly employed workforce works for businesses with fewer than 50 people.
- The construction industry will make a concerted effort to improve its image as a sector to work in
The stereotype of muddy boots on site is hindering the industry’s ability to attract young people to the industry, especially women, who make up just 12% of the workforce. Construction needs to increase its appeal to a much more diverse group of recruits in order to attract talent to the sector. There are many firms working hard in this area, but to gain traction there needs to be a centralised campaign. Individual firms should also seek to work with local authorities in the areas surrounding their developments on CSR programmes that help tackle issues related to diversity, which would have a social benefit and at the same time present construction firms in a positive light to diverse groups of people.
- Construction companies will co-operate and share ideas around off-site technology and other innovations
Twinned with this need to invest in people and recruitment, is the necessity to invest in innovation, specifically in modern methods of construction. At the moment the industry only spends 1% on research and development, but if off-site construction is to become the norm not the exception then companies are going to need to co-operate and share ideas to create capacity and scale. The Construction Leadership Council has proposed an “innovation centre” in response to the prime minister’s industrial strategy, which could be the opportunity the construction industry needs to pool resources and make real progress. Other areas where collaboration delivers benefits, such as BIM, also need to be promoted by the sector.
The more supporters we have, the greater influence we can wield with the government.
Why we’re supporting Building’s Better Brexit manifesto
The launch of Building’s manifesto has already received backing from construction heavyweights, including KPMG, Mace, Arcadis, Gleeds Worldwide, as well as Mark Farmer, author of the industry report, Modernise or Die, and Jack Pringle, managing director EMEA at Perkins+Will. To add your name to our list of supporters, see the box, below left.
“The government has said that they want to prioritise construction through their apparent investment in infrastructure but do not appear to support constructors in terms of recognising their influence as a key touchstone sector during Brexit negotiations. The Building Brexit manifesto is a shopping list which has all the key elements to safeguard our future as an effective and vital part of the economy. They ignore it at their peril.”
Richard Steer, chairman, Gleeds Worldwide
“I very much welcome the initiative taken by Building to identify a path to the success of our industry in a post-Brexit world. The clamour of voices around government will grow ever louder. Only by being clear and consistent about what we need from government, and sincere in what we offer in return, can we hope for our industry to have the influence it deserves.”
Richard Threlfall, partner, UK head, infrastructure, building and construction, KPMG
“Brexit is our defining economic event of this decade and beyond. The government has to grasp the importance of the construction industry to the UK’s future and prioritise protecting its interests.”
Jack Pringle, managing director EMEA, Perkins+Will
“Brexit will undoubtedly bring some major challenges to construction that can only be dealt with by working together as an industry and with government. If we together grasp the opportunity to change the industry as a result of Brexit, then there could be some very positive outcomes for construction. However, if we do nothing, then there are real risks to the future capability of the industry.”
Simon Rawlinson, head of strategic research and insight, Arcadis UK
“The Building a Better Brexit campaign is an important part of making sure that the construction industry’s voice is heard loud and clear in the upcoming negotiations. Brexit could have a profound and disruptive effect on the capacity and performance of the industry throughout the UK, but especially in London. “An intelligent deal needs to protect against the immediate risk of Brexit-related resource erosion while allowing the industry to concentrate on addressing its ultimate challenges of structural modernisation and productivity improvement which should progressively reduce reliance on migrant labour. This compromise should also form the backbone of construction’s industrial strategy ‘sector response’ to government.”
Mark Farmer, founding director and chief executive, Cast
“Construction is absolutely critical to the future of the UK economy. It should be at the forefront of the government’s mind during the upcoming Brexit negotiations and while further developing its industrial strategy. Construction is one of the country’s largest employers and can play an important role in boosting productivity.”
Mark Reynolds, chief executive, Mace