A British withdrawal from the EU, also known as a ‘Brexit’, is perhaps the biggest political issue of the entire decade.
As with every other industry in the UK, the construction industry has mixed views on the prospect of a Brexit. Will it help to tackle the skills shortage? How will it affect import and export of construction materials? Will there be less or more red tape to adhere to?
There’s a lot of information out there so we aim to answer these questions, giving you a better understanding of what a Brexit could mean for you.
Will a Brexit help to tackle the skills shortage?
A fundamental issue is access to labour as the construction industry relies heavily on foreign workers for skilled and non-skilled job roles, and always has done. Without this the skills shortage within the construction industry could worsen.
A core principle of the EU is the right to free movement, making immigration between member states relatively easy and somewhat stress free. This has been a vital resource for the construction industry and a Brexit could mean foreign workers find it more difficult to emigrate to the UK.
If the number of construction workers decreases as a result, it is also likely that the capacity of house builders will decrease – or at least their costs will increase. This could in turn be detrimental to the housing market and construction companies that operate in it.
A recent survey also revealed that London firms may be among those most worried about the Brexit due to its current building and infrastructure boom which requires skilled workers from the EU. Leaving the EU could lead to a fall in house building in London at a time when it’s needed most, deepening the housing crisis further.
How will a Brexit affect import and export of construction materials?
Being part of the EU not only allows for the free movement of people but also the free movement of goods. This eliminates custom duties and quantitative restrictions. Like any other industry in the UK, construction benefits from this principle.
A 2010 study by the Department for Business Skills and Innovation revealed that an estimated 64% of all building materials were imported to the UK from the EU. The same report estimated that 63% of our construction material exports were to the EU.
Leaving the UK could mean importers and exporters may face heavy duties or limits on quantities. This could either lead to a shortage of construction materials in the UK, or an increase in costs to get hold of the materials needed.
Will there be less or more red tape to adhere to if we leave the EU?
A major perception is that the UK is subject to extensive red tape from the EU, making it difficult for businesses, especially small ones, to keep their operations legal. A prime example of this is that by 2020, nearly all new homes will need to be zero carbon.
The government has already scrapped the zero carbon homes target for 2016 which received a lot of negative criticism as many developers had already invested time and money in reaching this.
It is important to note that a vote to leave the EU will not break all ties between the UK and the EU. A negotiated free-trading arrangement may occur in an exit scenario which could allow the UK access to the free movement of people and goods.
With this in mind, it is almost certain that one condition on the UK of such an arrangement would be compliance with EU trading standards. Not only would the UK have to comply with the same standards that it is subject to today, but it would also have minimum say in setting the standards in the first place, meaning the same red tape would apply but with less of the benefits.
Are there any ‘out’ views within the construction industry?
A recent survey by Smith and Williamson recorded that 15% of construction executives favoured a UK exit from the European Union. A key voice in the vote to stay is Lord Bamford, the chairman of JCB. He is convinced that a Brexit could reduce the costs of bureaucracy so much so that any additional costs of leaving the EU would be easily covered:
“I think it would be, because I really don’t think it would make a blind bit of difference to trade with Europe. There has been far too much scaremongering about things like jobs. I don’t think it’s in anyone’s interest to stop trade. I don’t think we or Brussels will put up trade barriers.”
However, Lord Bamford seems to be in the minority.
With the prospect of worsening skills shortages, along with uncertainties over the industry’s ability to import materials from the EU, the construction industry seems to be steering towards support for the ‘Remain’ in the EU campaign.
By Olivia Catterall
Please Note: Every care was taken to ensure the information in this article was correct at the time of publication. Any written guidance provided does not replace the reader’s professional judgement and any construction project should comply with the relevant Building Regulations or applicable technical standards. However, for the most up to date LABC Warranty technical guidance please refer to your Risk Management Surveyor and the latest version of the LABC Warranty technical manual.