UK Construction Jobs has been operating in the London Construction Market since 2011 and has recently been taken over by Job Board Media allowing the advertising platform to expand their reach to include UK & Ireland
With the impending leave date getting ever closer, this article will take a closer look at how the UK’s departure from the EU will affect the construction industry
Yes, we’re going there. Though the mere mention of the dreaded B-word is enough to spark chaotic debate everywhere from the local pub to the House of Lords, with the impending leave date drawing ever closer, it’s important to readily assess how industries and sectors will be affected by the UK’s withdrawal from the European Union.
So, without further ado, take a deep breath, and let’s take a closer look at the implications of Brexit on the British construction industry.
With 28% of London construction workers migrating from EU countries, it’s no secret that the national construction industry relies heavily on migrant labour. However, following the eventual withdrawal from the EU, migrant workers will be stripped of their right to free movement and, subsequently, their automatic right to work in the UK. The implications of such could be drastic…
Immigration was a major influencer in the public leave vote and, in an attempt to satisfy the desires of hard-Brexiteers, Prime Minister Theresa May announced governmental plans to focus a post-Brexit immigration policy favouring workers of ‘high skill’, all but announcing the end of a free labour movement. As a result, some may argue that the consequences of this could include a skills shortagethat leads to higher project costs, with the demand for labour outweighing the ability to supply.
With the supply of labour likely to be unable to meet its demand, it’s very likely there will be a knock-on effect, with house builders unable to meet government housing targets. Consequently, this would see a rise in house prices and project costs.
Alternatively, Brexit could result in foreign investors withdrawing their money from the UK property market, resulting in a reduction in prices and a rise in the availability of original investment properties. Yet, while this may sound like a light at the end of the tunnel, the uncertainty of economic instability means the Bank of England will be increasingly apprehensive about the repayment ability of borrowers, subsequently altering their criteria for bad credit loans, guarantor loans and other personal loan options and thus decreasing the accessibility of credit.
It’s not just the free movement of workers that will be revoked following British withdrawal; the free movement of goods between the UK and EU will also come to an end.
Though some may celebrate a subsequent increased focus on the manufacturing of British goods, consequential tariffs imposed on British products across Europe could spell further trouble for British industry and UK enterprises. It is in situations like these that it becomes of vital importance for Theresa May to establish a fair withdrawal deal with the EU that protects British trade and the right to free movement of goods – a deal that, at the time of writing, is becoming an increasingly unlikely prospect.
The UK benefits from €7.8bn worth of investments in major infrastructure projects from the European Investment Bank and the European Investment Fund. In addition to this, these institutions lend over €500m to British SMEs every year.
The loss of these revenue streams could have a major impact on the industry, including the ability to deliver on large-scale infrastructure projects such as HS2. Though some have suggested this money could be replaced by that saved from EU membership fees, it is becoming increasingly unlikely that, in the face of consistent governmental cuts and budget reassessment across all sectors, infrastructure would see any significant investment.
Though it sounds all doom and gloom, we can’t say for certain how Brexit will objectively affect the construction industry without first establishing a clear exit strategy. With Theresa May and her Conservative government still yet to successfully negotiate a deal with EU representatives, it’s no exaggeration to declare that the future of the construction industry still very much hangs in the balance…
The UK is due to leave the European Union on 29 March, yet talks between the government and the EU about the withdrawal deal remain deadlocked. Joanne Starkie of the Immigration Advice Service looks at what a “no deal” scenario could mean for the construction industry
As the deadline to leave the EU looms ever-closer, there is still little clarity for UK industries and businesses as to what the future holds. With the government in disarray and the clock ticking, the UK is running the risk of withdrawing from the EU without a deal in place. This is a very alarming prospect for the nation as a whole and is particularly daunting for the construction industry, which relies heavily on EU workers and on importing essential building materials from the EU.
Labour shortages in construction
Foreign employees make up 15% of the UK construction industry’s workforce, out of which 51% are from an EU country. EU nationals are already leaving the UK in droves to seek work elsewhere in Europe and, depending on the outcome of Brexit and its implications on free movement, the sector could be set to lose 8% of its total workforce, which would obviously be a damaging blow.
The government has attempted to appease employers who are dependent on EU workers in the December release of the Immigration White Paper. The 12-month temporary scheme allows EU nationals to come to the UK to work for a year. While this may be viable for sectors that require temporary or seasonal staff, the offering is unsuitable for the construction industry. The proposed scheme does not allow employers to retain and develop valuable members of staff and could mean that they would be obliged to re-recruit in the middle of long-term infrastructure and building projects, causing disruption and inconvenience.
However, the current eligibility criteria for a Tier 2 Work Visa would make it very difficult for the large majority of construction workers to obtain. As it stands, the minimum salary requirement for this type of visa is £30,000 and, unlike many occupations that feature on the UK’s Shortage Occupation List, construction workers do not benefit from any visa discounts when applying. The replacement of free movement for the construction industry is prohibitively expensive: not only must migrants pay for their visa application and meet the requirements, they must also pay and pass an English language test and provide evidence that they have adequate savings to accommodate themselves.
Trade and transport problems in construction
It isn’t just staff from the EU that the UK construction industry depends upon. A no-deal Brexit would also be incredibly damaging to trade and would cause numerous problems when it comes to importing and exporting goods. According to the Department for Business, Energy & Industrial Strategy (BEIS), 62% of the building materials currently being imported into the UK originate from Europe, and 60 % of the materials being exported are also going to EU countries. The BEIS reports that in 2016, with the exception of China and the USA, four out of the top five import and export markets for building materials in the UK were European countries.
If the UK leaves the EU with no tangible trade deal, the resulting imposition of World Trade Organisation tariffs and new non-tariff barriers would make goods more expensive and difficult to obtain. There is also the risk of crucial building materials being in short supply, such as timber, 92% of which is currently imported from the EU, according to statistics published by the Construction Products Association.
The introduction of new regulations on quotas and the origin of goods, for example, would lead to more complex and drawn-out administrative processes and would cause severe transportation delays at border control. As well as the financial implications of more expensive materials, this would have a hugely detrimental effect on construction companies who are reliant on receiving goods quickly in order to meet project deadlines and it could result in loss of business and credibility if they are unable to complete the work.
An uncertain future for the construction industry
It is evident that if the UK walks away from the EU at the end of March without a deal in place, it would have an enormously negative impact on the construction industry and the wider economy. With so little time left and still no clarity on where the construction sector will stand with regards to both labour and trade post-Brexit, it is difficult for industry leaders and employers to determine the best course of action to minimise disruption and avoid lasting damage. Until a final decision is made by the UK government and its EU counterparts on Brexit, the future of the construction industry will remain uncertain.
UK construction activity fell during February, ending a ten-month period of sustained expansion, as a drop in commercial building and civil engineering activity was heavily to blame
A soft patch for new orders so far in 2019 meant that job creation remained subdued in February. Survey respondents repeatedly cited concerns about a lack of new construction and infrastructure projects to replace completed contracts.
At 49.5 in February, down from 50.6 in January, the seasonally adjusted IHS Markit/CIPS UK Construction Total Activity Index registered below the 50.0 no-change threshold for the first time since the snow disruptions seen in March 2018.
Residential work was the best performing area of construction activity in February, with growth recorded for the thirteenth month running. However, the rate of expansion was only modest.
Anecdotal evidence from survey respondents suggested that Brexit uncertainty had slowed decision-making on commercial projects and led to subdued client demand so far this year.
Fragile order books and a renewed decline in construction output meant that employment growth remained much softer than seen in the final quarter of 2018. Among those companies reporting an increase in staffing numbers, there were some reports that extra trainees had been taken on to help alleviate skill shortages.
The index measuring business expectations for the year ahead remained positive, but the degree of confidence eased to a four-month low and was well below the long-run survey average.
Input buying fell for the first time since September 2017, reflecting softer demand. However, suppliers’ delivery times lengthened to the greatest extent since last August.
Tim Moore, Economics Associate Director at IHS Markit said: “The UK construction sector moved into decline during February as Brexit anxiety intensified and clients opted to delay decision-making on building projects.
“Construction companies pared back their purchasing activity in response to subdued demand in February, but delivery delays for inputs were among the highest seen over the past four years. Survey respondents noted that stockpiling efforts by the UK manufacturing sector had an adverse impact on transport availability and supplier capacity across the construction supply chain.
“On a more positive note, input price inflation held close to January’s two-and-a-half year low. The slowdown in cost pressures from the peaks seen in the first half of 2018 provides a signal that the worst phase has passed for supplier price hikes related to sterling depreciation.”
A regional breakdown of construction activity in four of Britain’s largest cities outside of London has revealed that building is booming across the country. Despite uncertainty from Brexit and a downturn in the sector in 2018, Leeds, Birmingham, Manchester and Belfast showed sustained or increased activity across all construction subsectors.
With an on-going housing crisis making the property sector in the UK unaffordable for many, homeownership among 25-33 year-olds has halved in the past 20 years, and as a result Britain could be on the verge of a housing market collapse at an incredibly vulnerable economic moment for the nation. At the same time, the British construction sector endured a tumultuous period in light of Brexit pressures, and an economy plagued by sluggish productivity.
At the same time, the continued concentration of populations into urban areas means that one in six of the homes needed in the UK’s top biggest cities have not been built yet. In order to meet this demand of creating 10,500 new homes every month across Belfast, Birmingham, Bristol, Cardiff, Glasgow, Leeds, Liverpool, London, Manchester, Newcastle, Nottingham and Sheffield in the next 20 years, Mace recently predicted that construction firms would need to improve productivity by 30% to meet this demand. It also suggested doing so could unlock £53 billion in economic output.
As the country braces for Brexit, a new report from Deloitte has found that the construction sector has made major strides in the right direction, however. Construction activity in four regional cities in Britain is at a record high, including a flurry of building projects in Manchester, despite uncertainty about Brexit, the Big Four firm found. According to the Real Estate Crane Survey, which covers Leeds, Birmingham, Manchester and Belfast, there has been sustained or increased activity across sectors including offices, hotels, retail, education and student housing.
Manchester had 78 sites under construction – including 44 new starts – more than the US cities of Seattle, Los Angeles and Chicago as measured by Deloitte's North American Crane Index. The residential sector was the most active in the city, with 48 of the projects relating to new homes, and a further three developing student residential space. According to Deloitte, this demonstrates a marked change for the sector, with residential units under construction having enjoyed a pre-recession peak of 3,965 in 2007. In the 2019 survey, that figure stands at 14,480.
Leeds meanwhile broke multiple construction records in 2018, as the city built for the future, with new highs achieved in the Health and Education and Purpose-Built Student Accommodation sectors. Leeds saw 2,232 residential units constructed in its 2019 data, a much smaller level, than Manchester, but has seen its office space construction significantly increase by around 30,000 square feet in the last year.
Yet again, elsewhere, Birmingham saw record-levels of construction. The UK’s second city enjoyed both high developer and investor confidence, as preparations for HS2 get underway and the 2022 Commonwealth Games draw ever closer. Birmingham also saw city centre residential development reach an all-time high with over 5,000 units under construction. Belfast, meanwhile, saw its highest level of construction growth in the hotel sector. In 2016, only 98 hotel beds were completed in the whole year; in 2018, 1,249 new guest spaces were built.
Commenting on the findings, Deloitte Real Estate partner and regional head Simon Bedford said, "To have construction figures this healthy is somewhat of a surprise given a myriad of market uncertainties. Developer confidence is a key indicator for economic health and to have this many significant construction starts over the last 12 months, especially in speculative office schemes, is testament to the resilience of the regions and appetite for growth.”
Sheffield City Council have been given a £715,000 grant to tackle skills shortages in the construction industry. It was given by the Department for Education's Construction Skills Fund, and will be used to create a local training hub called the Building Block which is due to open on March 29. It is expected to help train 650 people and create 250 local jobs by March 31, 2020. Councillor Jayne Dunn, cabinet member for educations and skills, said: “The investment into the new hub provides a wonderful opportunity for local people in the city to learn new skills and begin a new career in the construction industry.
“Not only does the Building Block scheme provide people with very desirable skills, they are also gaining crucial work experience in order to provide them with the very best start into their new career.”
The Building Block will be situated in Manor Top next to the major Sheffield Housing Company developments at Manor Boot. The housing development is part of a 25 year plan to build 2,300 new affordable homes. Coun Jim Steinke, cabinet member for neighbourhoods and community safety, said: “We need skilled people to meet the demand and what better way to do this by offering training to Sheffield people.
“Sheffield Housing Company is a partnership to help us deliver some of the new homes that we need; all part of our plan to make sure everyone has a safe, warm and affordable home.” In order to be fully operational by the end of March, The Building Block project has been preparing since January 2019 and has already provided on-site placements to 35 local people aiming to start a career in construction. As skilled tradesmen will be in high demand, local people will have the opportunity to gain a two week construction training course covering disciplines such as bricklaying, decorating, electrical, joinery, plastering, plumbing and roofing. Sarah Beale, chief executive of CITB, said: “The Construction Skills Fund can be a genuine game-changer for both the construction industry and the individuals being trained. We have a massive need for home-grown talent and these projects will bring thousands of new people into our sector, giving them the crucial onsite experience they need to start a career in construction.”
Participants who successfully complete this training will get a two week work experience placement on-site, working alongside subcontractors on the various SHC new build sites in order to achieve accreditation to make them construction site ready.
Output in Britain’s construction sector contracted in February to its lowest level in almost a year as Brexit anxiety continued to weigh on firms as they delayed making decisions on building projects.
The IHS Markit/CIPS UK Construction purchasing managers’ index (PMI) fell to 49.5 in February from 50.6 the previous month.
This missed economists’ expectations of 50.5. A reading below 50 indicates contraction.
February’s construction PMI registered below the 50 threshold for the first time since the weather disruption caused by the Beast from the East in March 2018.
Last month, construction firms saw a steep contraction in commercial building activity and civil engineering.
IHS Markit said uncertainty related to Britain’s impending departure from the European Union slowed decision-making on commercial projects, which led to subdued demand, while a general drop in confidence in the housing market halted residential building projects.
"There were also reports that the more fragile housing market confidence has begun to act as a brake on residential work, which adds to signs that house building has lost momentum since the end of last year"
Tim Moore, IHS Markit
Parliament has been in a deadlock over Brexit since MPs rejected Prime Minister Theresa May’s Withdrawal Agreement with the risk of a no-deal Brexit increasing.
Tim Moore, economics associate director at IHS Markit, which compiles the survey, said: “The UK construction sector moved into decline during February as Brexit anxiety intensified and clients opted to delay decision-making on building projects.
“Risk aversion in the commercial sub-category has exerted a downward influence on workloads throughout the year so far. This reflects softer business spending on fixed assets such as industrial units, offices and retail space.
“The fall in commercial work therefore hints at a further slide in domestic business investment during the first quarter, continuing the declines seen in 2018.
“There were also reports that the more fragile housing market confidence has begun to act as a brake on residential work, which adds to signs that house building has lost momentum since the end of last year. This leaves the construction sector increasingly reliant on large-scale infrastructure projects for growth over the year ahead.”
Mr Moore added that stockpiling by British manufacturers had an adverse impact on transport availability and supplier capacity across the construction supply chain.
Howard Archer, chief economic adviser at EY ITEM Club, said if the UK does leave the EU with a deal at the end of March, construction companies will hope that this reduces uncertainty and increases client willingness to commit to major projects.
“With the economy clearly continuing to struggle in the first quarter amid heightened Brexit uncertainties and slower global growth – after a marked slowdown in the fourth quarter of 2018 – we now believe that the Bank of England is unlikely to hike interest rates before November.”
He said central bank policymakers will “likely wait for some time before edging up interest rates from 0.75% to 1.00% as it will likely want to see sustained evidence that the UK economy is improving”.
Mr Archer added: “There is a genuine chance now that the Bank of England will sit tight on interest rates through 2019 – especially if Brexit is delayed and extends the uncertainty”.
Research shows that the number of migrant workers in unskilled, general labouring roles has doubled in the last year, rising from 22 per cent to 40 per cent. Within the sector, Romanians have “risen rapidly” to becoming the largest national group working in construction, up from 27 per cent in 2015 to 64 per cent in 2017.
However, the data also shows that less than a third of firms have taken action “or plan on doing” so as Brexit approaches.
In a survey of more than 400 firms, respondents said keeping hold of the workers they currently employ is the most important aim to employers in the run-up to Brexit.
Steve Radley, policy director at CITB, said: “With Brexit approaching, construction employers are expecting the recruitment of skilled workers to get harder as they anticipate restrictions on access to migrant workers. However, few employers are making firm plans to address this and instead are focusing on retaining their existing migrant workforce.”
He added that the research highlighted a need for a “twin-track strategy” of investing in the domestic workforce while enabling employers to “continue to secure the vital talent of migrant workers”.
Mr Radley said: “With an estimated 158,000 construction jobs to be created between now and 2022, it is critical that industry works together to deliver its part of this strategy.”
The most recent industry data showed construction activity picked up in June, with the latest Purchasing Managers’ Index showing a figure of 53.1, up from 52.5 in May, indicating the fastest growth in seven months.
However, analysts warned the the industry is still under a “cloud of uncertainty” because of Brexit.
It forecasts that average output in construction will grow 1.3 per cent annually, with 158,000 jobs created over five years
More than 150,000 UK construction jobs are set to be created over the next five years despite Brexit uncertainty and Carillion’s collapse, according to a new report.
The Construction Industry Training Board (CITB) predicts 15,350 carpenters and 9,350 labourers will be needed as more homes are built.
The strongest job growth in the sector is expected to be in a range of professional and managerial roles as the industry seeks to boost its productivity.
It forecasts that average output in construction will grow 1.3 per cent annually, with 158,000 jobs created over five years. Infrastructure remains the strongest sector, with an annual growth of 3.1 per cent, with housing output also expected to grow.
In contrast, commercial building is expected to stagnate over the next five years, as investors hold back decisions due uncertainty about the impact of leaving the EU.
The CITB predicts employment will grow for the fourth consecutive year at 0.5 per cent a year on average to 2022. That would equate to 2.77 million people working in construction, slightly below the peak reached in 2008.
CITB Policy Director Steve Radley said: “Despite all the gloom around Carillion and uncertainty from Brexit, our report’s message is that construction will continue to grow and create more jobs.
“Though growth is slightly down on 2017, it’s looking more balanced with housing and infrastructure both expanding significantly. And the range of job opportunities is growing. While we need to bring in lots of people in the trades, the fastest growth will be for professionals at 7.8 per cent and for managers and supervisors at 5.6 per cent.
“By 2022, employment will be in touching distance of the heady 2008 peak so we face a massive recruitment and training challenge, which is likely to get harder after Brexit. So while we can take some comfort from weathering the recent storms, it’s vital that we make the investment in skills today that will shape our own destiny for tomorrow.”
The report reveals a mixed picture across UK regions with Wales seeing 4.6 per cent annual output growth and Scotland predicted to remain flat.
In Northern Ireland, annual growth is down from last year’s 1.6 per cent forecast to 0.5 per cent – this is largely attributable to a slackening of the commercial sector.
The report comes after data on Friday indicated the building industry fell into stagnation in January on the back of a slump in house-building.
The Purchasing Managers’ Index (PMI) for construction came in at 50.2 in the month, down from 52.2 previously and just barely above the 50 mark that separates growth from contraction.
Ireland West Airport has appointed a joint venture of Lagan Airport Maintenance and Clare Civil Engineering (LCJV) to carry out runway rehabilitation following an early contractor involvement process.
The appointment of the contractor for the project at the airport in Knock follows an EU tender process. This design and tender process was led by Atkins Ireland following its appointment last year by Ireland West Airport as specialist consultant.
The project will cost €11.2m (£10.1m), with the Department of Tourism, Transport & Sport funding 75% of the total and the airport using in the region of €2.8m from its own funds to for the remainder.
Preparatory works will begin immediately with main resurfacing works scheduled to start in May. The rehabilitation includes a complete resurfacing of the existing runway and taxiway surfaces as well as the removal and reinstatement of lighting and ducting. The work is designed to ensure that the runway at Ireland West Airport continues to meet the strict regulations governing the operation and specification of runways at major airports.
The resurfacing work will take place overnight outside of operational hours over a three-month period. Construction teams will overhaul a portion of the runway every night before it’s handed back to operations early each morning in time for the first wave of flights into the airport. The window for construction is only about five to six hours per night due to the set-up process required and the preparations for returning the runway to normal operations every morning.
"We are delighted to award this key works contract to LCJV and to move together with our specialist consultants Atkins to the next phase of our plans to commence work on this project," said Ireland West Airport chairman Arthur French. “The project is an essential investment in the future of Ireland West Airport in safeguarding the operation of the airport for the next 15-20 years.”
Atkins Ireland technical director Brian McKavanagh said: “Ireland West Airport made the incisive decision at an early stage to develop and deliver this project through a transparent and collaborative agreement that allows for properly managed risk sharing. Atkins and their cost management team, Faithful+Gould, were able to use their extensive NEC experience to develop a procurement strategy that brought the successful contractor into pre-detailed design, early contractor involvement (ECI) and then into a negotiated contract for the main works. This process allowed for the mitigation of safety, programme and commercial risk and provides a strong foundation for the continuance of the partnering ethos through the construction stage. This strategy also ensured that the detailed design developed by the Atkins airfield team, drew all the benefits from the Lagan Clare Joint Venture’s long experience in the construction of airfields in Ireland and internationally.”