New figures from the Royal Institute of Chartered Surveyors (RICS) reveal that the UK construction industry could lose almost 200,000 EU workers post-Brexit should Britain lose access to the single market, putting some of the country’s biggest infrastructure and construction projects under threat.
RICS has cautioned that for Brexit to succeed, it is essential to secure continued access to the EU Single Market or to put alternative plans in place to safeguard the future of the property and construction sectors in the UK.
Latest RICS figures show that 8% of the UK’s construction workers are EU nationals, accounting for some 176,500 people. 30% of construction professionals surveyed revealed that hiring non-UK workers was important to the success of their businesses.
The UK is already in the grip of a construction skills crisis. While some overseas professionals, such as ballet dancers, are regarded as critical by the UK Government, and are therefore prioritised during the visa application process, construction professions have not yet been added to the ‘UK Shortage Occupations List’. RICS is warning that this could already be placing the UK’s predicted £500 billion infrastructure pipeline under threat and must be addressed as a priority.
When asked about the effectiveness of current plans to address the UK’s long-term skills shortages, 20% of respondents felt that apprenticeship schemes were not effective at all.
Jeremy Blackburn, RICS Head of UK Policy said “These figures reveal that the UK construction industry is currently dependent on thousands of EU workers. It is in all our interests that we make a success of Brexit, but a loss of access to the single market, has the potential to slowly bring the UK’s £500 billion infrastructure pipeline to a standstill. That means that unless access to the single market is secured or alternative plans are put in place, we won’t be able to create the infrastructure needed to enable our cities to compete on a global stage. We have said before that this is a potential stumbling block for the Government, which is working to deliver both its Housing White Paper and Industrial Strategy.
“A simple first step would be to ensure that construction professions, such as quantity surveyors, feature on the ‘UK Shortage Occupations List’. Ballet dancers won’t improve our infrastructure or solve the housing crisis, yet their skills are currently viewed as essential, whereas construction professionals are not.
“Of course, we must also address the need to deliver a construction and property industry that is resilient to future change and can withstand the impact of any future political or economic shocks — key to that will be growing the domestic skills base. As the industry’s professional body, we are working with Government and industry to develop that skills base, building vital initiatives, such as degree apprenticeships, in our sector to drive the talent pipeline forward. This survey reveals that more work needs to be done to promote the indisputable benefits of these schemes to industry — RICS intends to take this forward as a priority.”
76% of people surveyed think country of manufacture is an important factor when it comes to purchasing. A survey, carried out by Giacomini UK, explored attitudes toward manufacturing and revealed some interesting post-Brexit insights.
When asked if the country of origin was checked before purchasing building and HVAC supplies, just 19% said that they never check which demonstrates the importance of a products’ origin when making decisions about purchasing.
83.5% of respondents said they prefer to buy products from a European manufacturer with just 8% saying that they would not ever buy a product if they knew it was made in Europe.
The survey also focused on more specific issues within the HVAC industry and asked respondents if heat interface units have made converting offices to residential properties more achievable. An overwhelming 84% agreed, which reinforces the noticeable growth that Giacomini UK has seen since regulations surrounding planning permission were altered, meaning that Class B1 offices could be converted to Class C3 residential dwellings without the need for specific planning and development permission.
Giacomini UK is the UK division of the Italian company, Giacomini, one of Europe’s largest producers of plumbing brassware and radiator valves and prides itself on its products being made to the highest specification at the company’s sophisticated manufacturing facilities in San Maurizio d’Opaglio, Italy.
Matt Lowe, managing director of Giacomini UK, commented: “Post-Brexit attitudes towards all the EU were always going to be interesting and our survey gave us some fascinating insight into mindsets and purchasing decision making factors. It would appear that people are now more conscious of where products come from but that EU are products still thought to be the best – despite the outcome of the referendum!”
For more information about Giacomini please visit www.giacomini.co.uk.
When Theresa May became Prime Minister, she announced that the UK government would develop an ‘industrial strategy’ to deliver a modern, innovative and competitive economy. Leading international infrastructure group Balfour Beatty are warning the government that projects such as HS2 run the risk of losing valued foreign workers post-Brexit unless tackling the skills shortage is made high priority within the strategy.
In Balfour Beatty’s latest publication entitled “Industrial Strategy: A Vision for Growth,” they highlighted that that around 2.2 million EU nationals working within the UK have helped make up a skilled workforce that the UK would be unable to source alone, should the free movement of labour be compromised.
The paper suggests that the heightened uncertainty surrounding EU labour in a post-referendum Britain risks causing severe recruitment and staffing difficulties. This in turn could lead to increased costs where demand for labour outstrips supply, resulting in long delays – especially on big projects such as HS2 and Hinkley Point.
The report says “An early and integrated policy response to both retain the skills of those who have migrated here and to ensure that the UK remains an attractive place for talented people to reside should be a key element of Government’s industrial strategy.”
Balfour Beatty has also stressed the importance of attracting and retaining new talent from inside the UK if we are to successfully thrive in a UK outside of the EU.
“The Government’s industrial strategy should also seek to address the skills shortage in the UK directly, by continuing to support the upskilling of our own workforce. If we want a successful industrial strategy then we must invest in the people who will deliver it, so skills, the investment in human capital, must be a priority in the industrial strategy. In this vein, we welcome Government’s plans to increase the number of apprentices by 3 million and introduce the Apprenticeship Levy.”
“However, we do not believe that the apprenticeship levy alone will be enough to meet the shortfall in skilled workers the infrastructure industry needs. To effectively resolve these skilling issues, we believe it’s necessary that for a collegiate approach to agree a clearly defined programme, designed through close interaction and genuine dialogue between government, industry and representative bodies, such as the Construction Leadership Council. Most importantly, the strategy should be adhered to over the long-term as we see in other countries such as Germany.”
Read the full report here.
Multinational facilities management and construction services company Carillion have released a half-year trading statement which suggests that Brexit will not affect them in the short term, although the long term changes are yet to be seen.
The statement highlighted that despite the economic uncertainty prior to the referendum and the subsequent fallout afterward, their support services have experienced revenue and margin growth and their work winning, order book and pipeline of contract opportunities are still strong.
Overall, the Group remains on track to make further progress in 2016.
The statement said “We continue to expect our full-year performance to be led by revenue and margin growth in support services, with Public Private Partnership projects, Middle East construction services and construction services excluding the Middle East also performing in line with expectations. Therefore, with revenue visibility for the full year of 97 per cent and a strong pipeline of further contract opportunities, the Group remains on track to make further progress in 2016.
“The referendum vote in favour of the UK leaving the European Union has obviously created uncertainty for the UK economy as a whole and therefore for businesses generally, including Carillion, and it is clearly too early to predict the extent to which businesses will be impacted by this result. However, Carillion has no significant operations in Mainland Europe and prior to the referendum we undertook extensive work to assess the possible impact on our business of a vote to leave and we have put in place robust plans to manage this outcome.”
After last week’s shock decision for the UK to leave the EU, BSRIA says it is ‘business as usual’ for its members and that the construction industry should remain confident and optimistic about the opportunities out there for existing and new industry projects.
BSRIA have stated that they are committed to giving ‘extra service to members’ throughout this uncertain time.
Julia Evans, Chief Executive, BSRIA, said: “Now that the dust has settled a week on from the Brexit decision – for BSRIA it is definitely business as usual – we are where we are. There are opportunities out there for our members to garner new work and deals – we all just need to find them.
“Against a backdrop of political and ‘economic spaghetti’ BSRIA can lead and support its members into a bright new future. It is a brave new world. We appreciate there is certainly political turmoil, noise and volatility in Westminster – but BSRIA needs to join in this debate.
“As an industry – we must now start to shape future policy. Indeed it is a chance to revise industry regulations and to renegotiate the framework for the future and find new trade rules.
“We need to protect what has already been invested in and make the most of our assets – especially – investments and buildings. And ensure that investors have confidence in our industry.
“I was especially encouraged to learn that government ministers have begun efforts to reassure industry leaders that housing and infrastructure spending will not drop and in fact both will become ‘more important, not less’ after Brexit. The Mayor of London has also announced to boost housing.”
Industry cannot afford any period of parliamentary inaction and uncertainty on non-EU related issues, whether two years or more in length, and BSRIA seeks urgent reassurance from government that this will not be the case.
BSRIA is a non-profit distributing, member-based association, providing specialist services in construction and building services. More information at www.bsria.co.uk.
The result of last week’s referendum on whether we remain or leave the EU came as a massive shock to everybody – the construction industry being no exception. We have been plunged into the unknown and understandably concern and fear has arisen. However, it isn’t all doom and gloom for the construction industry, and regardless of your opinion on the result it is everybody’s responsibility to roll up their sleeves and help make this work.
Strength in unity
Following 52% of UK voters deciding to leave the European Union, organisers of the UK’s largest construction event have called for a united front in the industry to face the challenges and opportunities ahead.
Nathan Garnett, Event Director for UK Construction Week, commented: “A new dawn for UK construction begins here. It is inevitable that our industry will experience a period of uncertainty and adjustment, but the construction sector has proved time and time again to be incredibly resilient. Now the result of the referendum is clear, we, as an industry, must move forward together with confidence. Leaving the EU will likely mean UK construction firms will be looking to invest in British products and services like never before.
“The UK boasts many long-term infrastructure projects and the Bank of England have made sound contingency plans for leaving the EU. The UK also has the foundations for a boom in house building, and the industry must and will be committed to meeting the national need for housing. Leaving the EU will inevitably attract new investors to our shores offering new opportunities, and that will happen sooner rather than later. The last few weeks and months have been uncertain for the UK construction industry, but now is the time to embrace the change and these new opportunities.”
“The reports of my death are greatly exaggerated.”
As social media reverberates rumours that the bottom has fallen out of the industry and the wider economy overall, many are actually quietly reporting that both the overall uncertainty and the subsequent result of the referendum have actually had little to no impact on their business activity.
In a year-end trading statement released this morning by Redrow housebuilders, Chairman Steve Morgan has indicated that annual profits were expected to be at the upper level of city expectations of £240m. “Although it is too early to tell whether Brexit will have any effect on future sales, initial feedback is that sites remain busy, reservations continue to be taken.
“Indeed, we witnessed long queues and strong reservations at new sites launched last weekend.”
David Orr, Chief Executive at the National Housing Federation has highlighted the importance of a strong stance as an industry. Speaking on behalf of the Federation, he said “We recognise the uncertainty that this result will bring to the sector and we are working with our housing association members to support them to continue delivering the homes and services this country needs. Whatever happens there is still a housing crisis and we remain committed to ending it.”
David Brown, the head of agency Marsh & Parsons, addressed the widespread moral panic gripping the housing sector in the Guardian. He pointed out that regardless of the result of the referendum there was still plenty of pent-up demand in the UK housing market “and a leave vote doesn’t change that overnight.”
He added: “When you think back to before the financial crisis and the volume of transactions we were witnessing on an annual basis, there’s clearly scope for further improvement. The decision to leave doesn’t alter the fact that plenty of people have to and still want to move.”
One reason perhaps that indicates that Brexit will not impact the construction industry quite as heavily as other sectors is that many construction companies work exclusively within the UK. A recent CBI study into the implications of British withdrawal from the EU, showed that construction is the second most domestically focused major UK sector, surpassed by a hairs breadth by Government. “It’s a domestic market, so while there are some that operate internationally, what really affects them is what they do in the UK,” says Suzannah Nichol, chief executive of Build UK.
Whilst the skills gap is likely to worsen in the short term, Brexit is perhaps the catalyst for change long term regarding the training and retention of a better homegrown workforce. According to the Federation of Master Builders (FMB) The UK construction industry has been heavily reliant on migrant workers from Europe for decades now – at present, 12% of the British construction workers are of non-UK origin.
Brian Berry, Chief Executive of the FMB, said “we need to ensure that we invest in our own home-grown talent through apprenticeship training. We need to train more construction apprentices so we are not overly reliant on migrant workers from Europe or further afield. That’s why it’s so important that the Government gets the funding framework right for apprenticeships – when you consider that this whole policy area is currently in flux, and then you add Brexit into the mix, it’s no exaggeration to say that a few wrong moves by the Government could result in the skills crisis becoming a skills catastrophe. The next few years will bring unprecedented challenges to the construction and house building sector, and it’s only through close collaboration between the Government and industry that we’ll be able to overcome them.”
In summary, the biggest immediate threat to the construction industry following news of our departure from the EU is widespread confusion, stalling due to a feeling of insecurity and failure to act going forward. Demand remains strong as shown by reports from some of the major contractors and housebuilder’s across the UK. The construction sector remains strong but we need to keep moving and resist succumbing to hype in order to ensure it stays this way. It has to be business as usual. Keep calm and carry on!
Angela Eagle MP, Shadow First Secretary of State and Shadow Secretary of State for Business, Innovation and Skills, commenting on the warnings from UK Steel about the impact of a leave vote on the industry, said “UK steel is a vital foundation industry. But with the industry in crisis and teetering on the brink, leaving the EU could push it over the edge.”
“The EU is a crucial market for UK steel, accounting for over half of our exports. And by working together across the EU, we are better able to stand up to the illegal dumping of Chinese steel.
“The leave camp have cynically used the steel crisis to further their aims. But the industry is united. Both the employers and the steel trade unions all say that staying in the EU is essential for the future of this foundation industry.”
This is a stark contrast to the counter argument made by UKIP leader Nigel Farage who has earlier stated “If we vote to Remain on June 23 it is the end of the steel industry in this country. Simple as that.” He suggested that only by voting leave can UK steel truly have a “fighting chance” of survival.
The Prime Minister David Cameron has also expressed the opinion that it is vital that EU markets remain open to British steel-makers, saying “Around 50 per cent of British steel production goes into the EU. So we need to be in there working with others to stop the unfair dumping of steel into Europe by other countries and we’ve done that.
“But we need to be in there making sure the markets are open.
“If we were on the outside we might well find that is was our steel that was having those tariffs and those taxes put upon it.”
One thing that both sides of the debate are in agreement on is that there are “no guarantees of success” in saving the UK steel industry long term because of “the problems the steel industry faces worldwide.”
How do you think the referendum will affect UK steel? Let us know in the comments below!
A survey carried out by the Federation of Master Builders (FMB) has revealed that 80% of construction bosses of SME’s will vote in the upcoming European Union referendum according to their own personal beliefs rather than casting a wider business interest-based vote overall.
The poll results indicate that more than 50% of small construction company owners feel like they haven’t received enough relevant information on the issues that might affect their businesses should we stay or leave come referendum time.
40% of respondents said that the main appeal to leave the EU would be the ability to “freely legislate” to meet the demands of British business. The argument to remain seemed largely based on the economic stability provided by the EU.
Only 17% of respondents said that they would put their business interests first when it came to deciding on the issue.
Brian Berry, Chief Executive of the FMB said “The outcome of June’s referendum on Britain’s membership of the EU will have significant ramifications for construction SMEs, regardless of the outcome. That’s why it’s fascinating that more than 80% of our members have indicated that their vote will be determined by their personal beliefs ahead of anything else. It just goes to show that although it’s important to explore the business case for leaving or remaining within the EU, for many people their decision will be based first and foremost on other drivers. These could include the desire to be part of the wider European community or a compulsion to reclaim British national sovereignty.
“However, a recent survey by Ipsos MORI revealed that the public want to hear the perspective of SMEs more than any other type of business. Unfortunately our research shows that the people who run small construction firms feel that the ongoing debate over Brexit has done little to enlighten them on the issues that really matter, with 52% stating they do not feel well informed on the issues that might affect their businesses. This is perhaps a reflection of how few of the impartial facts that are so widely craved have actually been offered by either side. No wonder then, that the vast majority of builders will be opting to vote based on their wider personal beliefs, when the economic and business case of each argument remain so unclear.
“What’s clear is that few sectors are more sensitive to uncertainty than construction. Already, there are signs that the unpredictability surrounding the outcome is beginning to sag on industry confidence as investment is deferred and home owner confidence wanes. This explains why continued economic stability has been cited as the best reason to remain in the EU. On the other hand, 40% of SMEs identified the potential freedom that Brexit could grant the Government to set legislation that truly meets the needs of British business as the biggest potential positive of Brexit.”
How will you vote? Be sure to take our one-click poll at the top right-hand side of this page!
We polled both our twitter following and our database of construction professionals about how they were planning on voting in this coming referendum. Here is what they came back with.
— BuildingSpecifier (@BuildSpecifier) March 17, 2016
Of the 75 respondents, which consist of building specifiers, contractors, architects and decision makers within the industry, 65% voted to remain in the EU and 35% said that we should leave. What are your thoughts?
Let us know in the comments section below!
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