Canary Wharf boss says UK 'needs to be more self-sufficient' after Brexit

The man who built Canary Wharf has said the UK construction industry needs to start producing home-grown labour and materials if firms are not to be crippled by materials price hikes caused by a weak pound.

Canary Wharf Gorup chairman Sir George Iacobescu warned that contractors tied into guaranteed maximum price contracts (GMP) signed before last year’s vote to leave the EU meant firms were now suffering losses on schemes on which they had expected to make a profit.

“There are serious construction inflation costs in the industry,” he told Building. “A lot of contractors have lost money because they are locked into GMP contracts from two or three years ago.”

He added: “Costs are going up and developers will have to start looking at replacing some products [for their buildings]. Around 60-70% of materials come from overseas. Cladding, steel, lifts, rebar – it all comes from overseas. The UK needs to shape up and be more self-sufficient.”

And he warned that contractors were now starting to increase their prices at which they could do jobs as they factor in the possibility that access to labour might be cut following the vote to leave the EU.

He said contractors had relied too much on overseas labour and added: “Contractors have to get smarter. They need to get on their bike and do a lot of training. It’s up to the government [on overseas labour] but you need high skills and low skills. These people are not a burden on the economy.”

Iacobescu was speaking as Canary Wharf Group launches the most high-profile phase of its residential plot at the London Docklands site with a 58-storey tower designed by Herzog & de Meuron.

He said the costs of the building had increased by 15% since Brexit and admitted: “It’s an expensive building to build but worth every penny. We could have done a building 20% cheaper [but] we’re trying to build a special building, the way architecture should be, not just a glass box.”

The 483-apartment scheme, called One Park Drive, is the first residential development by the Swiss practice in the UK and is expected to be completed towards the end of 2020. Prices starts at £575,000 for a studio with 3-bed apartments starting at £1.6m.

Grid Architects and Stanton Williams are already working on schemes at the site on the east side of the Canary Wharf estate.

Around 20 buildings will be built at the plot with two-thirds given over to residential that will eventually have more than 3,000 homes.