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Hard Brexit could shrink construction by 9 per cent, warns leading peer

Andrew stunell
  • 1 Comment

A hard Brexit could shrink the construction industry’s capacity at a time when it needs to grow to meet government objectives, a key peer has warned ministers.

Lord Stunell, who is leading a review into the impact leaving the EU will have on construction, also said the industry would ’need to expand its capacity by about 35 per cent’ in order to deliver major infrastructure projects on planned timescales.

The former Liberal Democrat MP said the construction industry needed to significantly grow to deliver major schemes such as Hinkley Point C, a third runway at Heathrow and High Speed 2.

However, in the event of a hard Brexit – where the UK gives up access to the single market, full access to the customs union, and freedom of movement – Lord Stunell said the industry ’will shrink by 9 per cent’.

He said this was based on the proportion of the UK construction labour force from elsewhere in the EU.

Balfour Beatty last week said that one in 10 of its recruits last year came from other EU countries.

The construction giant warned that leaving the union could increase skills shortages in the UK infrastructure sector – and push up costs.

Lord Stunell said: ’The first thing the government needs to realise is that having a healthy, expanding construction industry is central to the delivery of their infrastructure and housing agenda.

’No minister has engaged with the construction industry to say what the vital interests of that industry are’

‘I really don’t think they’ve got that at the moment.’

He added: ’We’ve seen ministerial recognition of the special case for the financial services, the car industry, even the special case for the agricultural industry.

‘No minister, as far as I can see, has engaged with the construction industry to say what the vital interests of that industry are.’

Lord Stunell said there was ‘a deficiency’ in regards to ’getting the industry’s voice heard’.

He added that, having spoken to industry leaders who were engaging with the government on Brexit, the ’message coming back to them’ was not to ‘come with problems but to come with solutions’.

Civil Engineering Contractors Association chief executive Alasdair Reisner insisted the industry was reacting to a ’substantial need to increase resources’. 

He said: “The industry is aware of the need to grow and is responding to that by putting in people and equipment to meet that challenge.”

Reisner said not enough was known yet to form a view on what the impact of a hard Brexit would be on the construction industry.

’If it contributed to a broader economic downturn in the country, that could have a clear impact on domestic repair, maintenance and improvement work – and possibly homebuilding.’

He added, however, that the government could increase spending on infrastructure to mitigate the impacts of a downturn.

Arcadis director of workforce strategy James Bryce said the skills gap could become a ‘skills gulf’ as a result of the UK leaving the EU.

He said: ‘The British construction sector has been built on overseas labour for generations, and restrictions of any sort – be it hard or soft Brexit – will hit the industry hard.’

This labour shortage would ’increase costs in the short and medium term’ according to Mr Bryce. 

He added: ’We welcome Lord Stunell’s analysis and will continue to work with ministers to assess the potential solutions available to the UK construction market.’

  • 1 Comment

Readers' comments (1)

  • The Right Honourable Lord Stunnel RIBA may be a remoaner obviously, but free EU movement of labour is scarcely more than institutionalised racism: it discriminates against british nationals of commonwealth origins and their dependents in those countries, who are paying the price that prioritises white EU labour.
    Construction (and design) industries are project based, so the biggest hindrance to flexible labour markets is the thatcherite extollation of home ownership over affordable renting.
    But the real issue is low pay and undercutting wages. The industry needs to implement Corbyn’s 1/20th differential. That is not a cap, but it means that a director on £500k pa. would pay a cleaner £25k pa, a skilled trade £50k pa, and a senior architect £100k pa. Good pay attracts talent, as our financial services industry likes to remind us.

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