Brexit and skills: Joining the dots

You may have noticed a winter chill in the air this week, not least in the latest activity figures which show the housing sector propping up construction growth, just, while performance in the commercial sector nosedived in November.

Admittedly the bad news was offset by the Markit/CIPS data showing that overall construction work rose to its highest point since June this year. But what this snapshot does reveal is how unbalanced construction activity remains – demand for housing is strong, backed by recent policy boosts, while commercial building, and worryingly also civil engineering, are experiencing their longest period of decline since 2013.

As so often with downturns, architects are among the first to feel the squeeze. And confidence levels among the profession have taken the biggest hit in London, where they are reporting that commercial clients are more reluctant to commission schemes. Weakening business confidence is the culprit. Not only are commissions down, the RIBA says it’s also proving harder to get paid.

There is of course hope that the government’s recent commitments to essential infrastructure, such as HS2 and the Cambridge-Milton Keynes-Oxford corridor to name just two, will improve the situation. But exactly when this pipeline feeds into the stats is an unknown.

Indeed, it feels like we are dealing with a lot of unknowns at the moment. The country is in a state of limbo, holding on with bated breath to find out the outcome of the first phase of Brexit negotiations which will determine our “divorce” deal from the EU. If levels of uncertainty could be measured, events this week appear to have sent it off the scale.

There is an irony in the fact that at the very moment that homes, and the infrastructure around them, finally receive the political attention they deserve, the country is about to be drained of the people we need to build them all

Today the prime minister had been expecting to announce a breakthrough that would enable the UK and the EU to proceed to the all-important trade talks, but that was not to be. The impasse created by the DUP’s demand for no “regulatory divergence” with the rest of the UK, and Ireland’s insistence that there be no return to a hard border appeared to have, at least temporarily, scuppered a deal. One can only imagine the frantic bargaining behind the scenes at Whitehall this week to get things back on track.

Northern Ireland is not the only sticky issue. Apparently, Brexit negotiators have also been trying to square the circle of the European Court of Justice and its role in overseeing EU citizens’ rights. Which brings us to the value of EU workers to the UK construction industry, and in particular the housing sector.

Census data of 37,000 workers from the Home Builders Federation (HBF) this week shows just how reliant the sector is on this source of labour: one in five workers on housing sites across the country are from outside the UK with 17% coming from the EU. In the capital where the housing crisis is at its most acute, just under 50% are EU workers. And the trades where this reliance is most pronounced? General labour, groundworks, finishing trades, carpentry and brickwork – all obviously vital to housebuilding.

Statistics like these are alarming given the annual target of 300,000 new homes a year unveiled in last month’s Budget. While there has been a broad welcome for the chancellor’s £15.3bn housing stimulus, there is an irony in the fact that at the very moment that homes, and the infrastructure around them, finally receive the political attention they deserve, the country is about to be drained of the people we need to build them all. It’s an example of policy makers failing to make vital connections, and it is therefore up to the industry to point out the obvious.

So it’s encouraging to see seven trade bodies coming together to launch a Brexit manifesto for construction last week and also the HBF’s census backing that up with some hard data. FMB boss Brian Berry has been forceful in his condemnation of using existing EU workers as a “bargaining tool” and demanding a two-year transition period that grants “settled status” for all current EU construction workers in the UK. The only quibble with this demand is that two years is probably not enough, given the length of an average apprenticeship.

But perhaps more significant for the future workforce is the call for a work permit system that prioritises key occupations rather than level of income or skill. This is surely the most sensible way to control immigration while not switching off the skills tap before the industry has had a chance to train more home-grown talent.   

Almost immediately after this week’s DUP backlash, ministers rushed to state that no part of the UK will be treated differently in the Brexit negotiations. We can only hope that when it comes to the UK’s various industries’ ministers are able to take a more bespoke approach and that construction gets the deal it needs to keep the economy on track.