How Brexit affects housebuilding

With Brexit yet again hitting the news, how will the delivery of much needed social housing be affected? Joe Bradbury of Housing Association Magazine investigates.

With them impending withdrawal of the UK from the EU looming large, Brexit is once again making the headlines as we rapidly close in on the 29th March 2019 deadline.

This time the crux of the Brexit debate is centred on the potential implications of the UK leaving the EU without any kind of deal in place by this date.

At the same time we face a housing crisis here in the UK with successive government’s over decades, failing to get the nation building enough homes and a yearly shortfall of tens, if not hundreds of thousands of affordable homes.

Sector reliance on EU materials

According to the Department for Business Skills and Innovation, the UK import almost two thirds (64%) of their building materials from the EU and export 63% of building materials to countries within the EU.

Following Brexit, the UK could face limitations on importing and exporting which could lead to a shortage in materials or an increase in cost.

The cost of materials has already experienced an increase since the announcement of Brexit, with the cost of imports from the EU increasing by 5.8% in January.

Our biggest concern about this post-Brexit is that a weaker pound will lead to the rising costs of imported materials.

We also risk losing our tariff-free access to the single market, as well as facing the imposition of duties and limits on quantities.

Could we end up stronger as an industry?

It isn’t all doom and gloom though; as all relevant parties within the housebuilding sector (employers, contractors, investors, etc.) stand to be affected by these changes, the incentive to work more collaboratively to limit such effects is far greater which could result in a stronger, healthier and more communicative industry going forward.

That said, it’s no secret that despite any positivity, material price increases are putting builders under severe pressure of late.

Following the fall in the exchange rate, it seems timber is the material that the majority of housebuilders say has increased most in price.

Indeed, everything from insulation to windows to bricks and blocks is currently soaring in price, pushing up the price of delivery, the need for remuneration and ultimately the rent expected from tenants.

What about migrant workers?

A recent major CITB (Construction Industry Training Board) report into migration and the construction industry revealed that one in three British construction firms are reliant on migrant workers, saying they have comparable skills to British workers and are more readily available. Some employers (22%) also said they have a better work ethic. But only 1% of firms said they specifically look to recruit migrants.

According to the study, over a third of employers who employ staff from outside the UK say they do so because there are not enough skilled applicants from the UK, rather than for cheaper labour. The issue is magnified in London where one in two employers say they are ‘very dependent’ on migrant workers, compared to around one in six in Yorkshire and the Humber.

The research also showed that while the largest number of migrant workers are general labourers (22%), there is a wide spread across many skilled areas such as architects (15%), carpenters/joiners (13%), plasterers (13%), bricklayers (11%), and directors/managers/supervisors (9%). A similar spread of occupations was reported by non-UK workers themselves.

The workforce is still mainly British, however, with only 1 in 8 construction workers born outside the UK. One in 15 or 140,000 overall come from the European Union (EU). The majority come from Poland (39%) and Romania (26%) and are largely London-based.

Whilst we can easily collate the data on how much of the workforce in construction is made up of migrant workers, the question of how reliant we are on this is difficult to quantify and remains to be seen.

One thing that is clear is that our industry is blighted by an ever-expanding skills gap, and this needs to be addressed urgently in order to limit negative impact on construction, leaving housebuilders in a post-Brexit Britain unobstructed to deliver the volume of homes sorely needed in this country today.

Grow your own talent

The knowledge and skills brought into our industry by migrant workers is indeed something to celebrate, yet the importance of attracting and retaining new talent from inside the UK cannot be overstated if we are to successfully thrive in a UK outside of the EU.

You cannot reach any destination without a journey and our journey into a life outside the EU will be long and, at times, arduous. The rising cost of materials is painfully inevitable but it alone cannot throw our industry off-kilter.

We must limit the harmful effects that come from changing states by paying heed to our mistakes and staying strong.

One way we can ensure we do this is by continuing to support the upskilling of our own workforce. An industry is only as good as its people, so investment in human capital will be key to the success of our industrial strategy post-Brexit.

As featured on Mitsubishi Electric's 'The Hub'