6 industry news EU REFERENDUM Could Brexit put our industry at risk?
Monika Slowikowska, director of Golden Houses Developments, looks at the possible consequences for the UK construction sector of a Brexit.
tage our sector in terms of recruitment, foreign investment, procurement and funding for major regeneration schemes. Let’s take a closer look at the issues. Firstly,
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labour. The industry relies heavily on foreign work- ers to fill both skilled and non-skilled jobs. Around 10 per cent of our workforce is made up of people born outside the UK. Brexit would make it far more difficult for them to enter the UK. This, in turn could make the current worrying skills short- age in the construction and housebuilding sector even more detrimental. The current cost of con- struction has increased by average eight per cent on labour cost in the last six months and is set to keep on rising. By leaving the EU, we predict that this could increase by 15-20 per cent. We are also powerless to prevent a willing and
hardworking labour force choosing to work in EU countries like Spain, Germany and France instead of the UK. Compounding this are the residual effects of the recession and an ageing workforce. According to the Shepherd+Wedderburn Brexit Analysis Bulletin – Construction & Infrastructure, over 22 per cent of UK construction workers are over 50 and 15 per cent are over 60. In the coming decade and beyond, we are going to see a high retirement rate across the sector. The second big issue is investment. A UK that’s
outside the EU suddenly becomes a more difficult market for the 27 members to invest in and do busi- ness with. More complicated travel and import and export tariffs could become factors that undermine
EU REFERENDUM
Leading housebuilder urges vote for certainty Karl Hick, CEO of The Larkfleet Group of Companies gives a personal view on why we should vote Remain.
were on 22 June. That, in my view, would be good for the UK economy, good for business and good for all of us as individuals. Those who advocate leaving the EU are in no
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position to offer certainty. The only certainty they offer is that, if they win the vote, the future after 23 June will be uncertain. Uncertainty means job opportunities lost, businesses not started, homes not built. Carried
respond online at
www.hbdonline.co.uk
f we vote to stay within the EU we can be sure that following the vote on 23 June things will be pretty much the same as they
forward (as it will be if we vote to leave the EU) that uncertainty also risks becoming higher inflation, higher mortgage rates, higher unem- ployment, and lower wage growth for those still in work. Much of the campaigning from those seeking
to leave the EU is based on issues far removed from business and economics. That is not to say these issues are not important. Matters such as nationality, sovereignty and democratic account- ability are real concerns, even if they do not easily translate into pounds and pence. Yet the
reality on these issues is that little will in practice change. For example, if we want a trading agreement
with the EU, which even the leave campaign regards as essential, we shall have to sign up to pretty much the same agreement with regard to freedom of movement for citizens of other EU nations as we have now. Unpredictability is not good for business. It is
therefore not good for any of us as individuals because we all rely on business to provide jobs, incomes and pensions.
believe a leave vote in the EU referendum would have serious consequences for the UK construction industry. Brexit could disadvan-
the profitability and viability of once-lucrative busi- ness arrangements. Senior executives at businesses such as Airbus and German engineering firm, Festo, are warning their fellow Europeans against invest- ing in a post-Brexit UK until the trading landscape becomes clear, and many are taking heed. This is because being part of the EU allows us to trade in an environment free of barriers. Once out, we will need to negotiate new
arrangements with 27 countries, either collectively or individually, which could take several years. Furthermore, as no country to date has left the EU,
“Brexit would make it far more difficult for workers to enter the UK – this in turn could make the current worrying skills shortage in the construction and housebuilding industry even more detrimental”
there is no precedent for the post-exit process. So nobody can say with any certainty what these new arrangements would look like. This could also lead to us paying higher prices
for building materials or having limits on quantities imposed. Currently, we do a significant amount of our trade in building materials with the EU. The Government’s February 2015 monthly Statistics of Building Materials and Components showed that 59 per cent of the building materials we imported came from EU countries. These same countries
Monika Slowikowska
accounted for 62 per cent of the UK construction sector’s exports. With the UK a member of the EU, these trans-
actions are relatively straightforward. However, I fear that as a non-member, the UK will face higher costs and added red tape in our dealings with what would be our ex-fellow member states. The inevitable effect of this will be reduced profits for construction companies and/or higher costs for people buying, developing or renting both com- mercial and residential property. Lastly, perhaps the most damaging effect of
Brexit for the UK as a whole would be the loss of EU funding. Funds, such as the European Structural Investment Fund (EUSIF), European Regional Development Funding (ERDF) and Joint European Support for Sustainable Investment in City Areas (Jessica) have proved invaluable to the UK. Examples include the €755m committed to the north west of the UK between 2007 and 2013, a £24m contribution to a £50m regeneration fund for Scotland in 2011 and a similar investment in Wales. The list goes on, extending to most of the major regeneration and social housing retrofitting schemes around the UK. In fact, we are one of the EU’s biggest net beneficiaries of these funding schemes. Leaving the group means disqualifying ourselves from this incoming investment. It’s no surprise, then, that most leaders in the UK
construction industry are wholeheartedly in favour of us remaining in the EU. In a recent survey carried out by professional services firm Smith & Williamson for City A.M., only 15 per cent of respondents said leaving would be a good thing for the UK.
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