Ongoing uncertainty about what will happen after Britain leaves the EU is likely to have an impact on project delivery times and cost.
Actions needed to protect the construction sector against the potential negative effects of a no-deal Brexit were discussed at a recent conference hosted by the Construction Leadership Council (CLC).
The conference, attended by over 100 industry leaders, CEOs and membership organisations, including ICE representatives, was held at ICE’s London headquarters at One Great George Street.
Planning to increase resilience and taking steps to minimise, as far as possible, the disruption that a no-deal Brexit could cause for construction has been ongoing for some time. With less than two months to the UK’s departure from the EU, and with uncertainty clouding the outcome of continuing negotiations, pressure is on to step up this activity.
Throughout the negotiations, ICE has maintained a series of consistent policy positions. These have included calls for enhanced physical infrastructure to maintain beneficial links with the EU, the need to explore a replacement for the European Investment Bank (in the event that access is lost) and warnings about a lack of construction workers and other built environment professionals if migration rights to work in the UK are too restrictive.
No clarity on no-deal
Uncertainty around what form Brexit will take, or even if it will happen, has affected confidence in the supply chain and around project decision-making. Indeed, new economic figures released in February, by the Office for National Statistics, showed growth has slowed to its lowest level since 2012 and increasing numbers of companies have engaged their contingency plans for a no-deal Brexit.
If badly handled, Brexit could do significant damage to the economy, cause months of delays at the border for imports and exports and affect projects’ ability to be delivered to budget and to deadline.
The CLC conference provided a space for discussion on these issues, including EU citizen access to the UK labour force, the need for new import and export licences, and changes to how products are regulated.
Skills and migration
Skills will be a fundamental challenge in the weeks, months and years ahead for the construction industry.
There are concerns that, with 124,000 new engineers and technicians needed every year, restrictions on access to EU workers, or uncertainty about existing workers’ right to remain, will severely curtail the ability to deliver projects, push up costs or worse still, both.
The CLC has set up a Brexit Contingency Group to urgently review the sector’s short, medium and long-term skills and migration requirements. A report, with asks for government, is due by the end of the month.
Arrangements for imports and exports drew considerable attention at the conference.
Attendees were told that 60% of construction materials are imported from the EU – with 92% of the UK’s supply of softwood coming from the EU 27.
The cost risks for the construction industry are less to do with any new tariffs and more with potential delays at the border due to custom checks and a need to make decelerations. For example, with Value Added Tax, at the border, which could hit project timetables and cash flow.
The government has taken positive steps since the conference, including HMRC announcing earlier this month a simplification of importation rules in the form of Transitional Simplified Procedures, which will delay the need to make customs declarations at the border for the first 12 months after Brexit.
Regulation of construction products post-Brexit
Standards or regulation of construction products are not expected to change immediately after Brexit, as current EU law will be retained in UK law. However, in the event of no deal, those who sell construction products will need to ensure that their CE marks are registered properly.
For products manufactured and sold in the UK, a new notifying body will set up a UK mark, but exports will still need to register for a CE mark from a notifying body inside the EU. This will remain the case until an agreement is reached. More details can be found here if this affects your business.
CLC will be writing to the government in the coming days outlining the matters discussed at the conference. However, what’s clear is that the built environment, like the rest of the economy, needs clarity.
The longer uncertainty reigns, the greater the impact will be of delayed decision-making, sunk costs and withheld investments. Unfortunately, while there is gridlock in Westminster, people’s jobs, livelihoods and entire projects are on the line.