What Would a No-Deal Brexit Mean for UK Construction?

JUST SHORT of two months until Brexit day and still nobody has an idea of how the UK will manage and what the landscape of our future will look like.

Theresa May has asserted that she would go back to Brussels to renegotiate the difficult question of the Irish border despite EU officials insisting that the backstop cannot be renegotiated.

The mess being made of the Brexit negotiations may well result in a no-deal Brexit, which would cause a number of issues for the construction industry.

Foreign-born Workers

Currently, foreign workers account for 15% of the construction industry, with 51% of these holding an EU passport. This shows that UK construction is dependent on foreign workers and this could be jeopardised by a hard exit. While the government has now U-turned on their controversial plan to charge Europeans £65 to stay in the UK, the loss of free movement will be a huge factor to consider for EU citizens unsure of whether to stay here.

1 in 5 in the construction industry have considered leaving because of Brexit, most likely down to the fact that construction work, especially in the capital has been an attractive, temporary opportunity for young Europeans to earn money before returning home. RICS have projected that UK construction could lose 200,000 EU workers after Brexit – or 8% of the total workforce.

The Current System

The current visa system is not set up to support the construction industry. The most common work visa, the Tier 2 Visa, is designed for highly-skilled workers and requires businesses to apply for a Sponsor Licence to sponsor each visa applicant to enter the country. While this will work fine for those in management positions, architects and engineers, there are still a vast amount of job sin construction which require specific skillsets. To say that bricklayers and roofers are unskilled is insulting and shows that those in power have no consideration for the basic needs of the industry.

The immigration white paper released late last year suggested that there would be a 12-month temporary visa introduced to tackle areas in need after Brexit may paper the cracks of supply in construction but aren’t likely to last unless something is done to make construction a more attractive industry to work in. This 12-month restriction also means that UK business owners will not be able to do any meaningful training with their staff and will find it difficult to keep good workers regardless of whether they’re willing to stay or not.

Border Troubles

£10 billion worth of construction goods are imported from the EU each year. Should we be faced with a hard Brexit, our trading certificates will no longer technically be recognised. While those at the border will most likely continue to accept products from the EU immediately after Brexit, there is no assurance that the EU will do the same. This could mean that any products exported to the EU could face much more difficulty in getting across. It has been reported that up to 30 minutes of delay could put 10% of companies out of business.

In addition, should the pound continue to weaken, importing will become more expensive and exporting less lucrative. This is a danger to construction as contractors find it difficult to source products, such as timber, from the UK. This would see the average cost of builds go up meaning lower profits for builders.

What Would a Good Deal Look Like?

An ideal agreement for construction would have to include agreements on a continued smooth border crossing for products and equipment. This would help mitigate the issues of late deliveries and would ensure that the industry could continue at normal pace.

The government should also be negotiating visa provisions that work for the industry and can still attract the number of workers it needs. Of course, in this late stage of the negotiations, this is unlikely. Industry stakeholders will need to think of ways to make UK construction attractive so that, even with a 12-month limit on “lower-skilled” visas, European workers are still interested in working here.

This could work in conjunction with a plan to lessen the industry’s dependency on cheap foreign labour – possibly incentivising apprenticeships or ensuring that construction’s image is encouraging to young prospective workers.

What Might Happen in the Long-term?

No matter what kind of deal we strike, if any, Brexit will change our country irreversibly. While this seems like a dreadful prospect considering the housing crisis and the disappointing economic projections being made, there may be some opportunities for recovery in construction.

Removing Europeans from the talent pool will likely cause serious issues in terms of supply and demand. However, more optimistic business owners must see this as an opportunity to move away from dependence on foreign labour. This will not be easy work and must consider ways to prove that so-called “lower-skilled” jobs are valuable and worthy of consideration as a profession.

This article was written by Damon Culbert, political commentator for the Immigration Advice Service.

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