Construction

The construction sector – both housebuilding and larger infrastructure projects – is closely linked to the overall health of the economy. The sector depends very much on the confidence of buyers and confidence from investors. Construction companies have been reporting that, while confidence of buyers has remained largely positive, confidence of investors, in particular overseas investors, has raised concerns.

Key stats

  • 2.2 million employees
  • £102.3 billion GVA (6.2% of total GVA)
  • £1.6 billion exports
  • £1.2 billion imports
EU Trade: A large percentage of construction materials are imported from the EU so a tariff-free relationship is important

Given that the UK imports more than it exports, it is vital for the entire sector to have clarity on the status of these material imports from the EU. Furthermore, the concentration of imports of building materials and components to the UK is from EU countries rather than non-EU countries.

Regulation: Opportunities for more flexible regulation must be balanced against the benefits of harmonisation

EU regulation has been embedded into the sector for some years. Clarity is therefore vital, including on regulation, public procurement and health and safety requirements, as well as the future of climate and environmental regulation and directives such as the EU Emissions Trading Systems and Industrial Emissions Directive. There may be some opportunities to deregulate in construction. However, the view of many companies in construction is that this benefit is outweighed by the importance of harmonisation in standard setting. Construction products are currently subject to EU-wide standards such as Eurocodes – which have been embedded into Building Regulations - and CE marking which is an important standardisation for those companies exporting across EU member states. The UK construction industry believes this should be maintained, as easy trade with the EU is a greater priority for the sector.

Migration: Access to EU skills and labour is important to the construction sector, as is the domestic skills programme

The skills gap is already a significant issue for the construction sector. There is a need for a better understanding within the sector of numbers of those with EU passports working in its companies and their future. The sector employs a considerable number of EU nationals in the UK: in 2015, 11.6% of the UK Construction workforce was of non-UK origin [1] . Their future status needs to be clarified. While there are regional variations, access to skilled professionals remains vital for the sector as a whole. Uncertainty from construction companies over their future access to adequate workforce means they are now limited in the future projects they can bid for.

Government and industry must continue to work together to tackle the skills shortage in the sector as a core tenant of this partnership. This means developing the skills of the UK workforce, providing good quality careers advice in schools and ensuring that companies can recruit the people and skills that they need from outside the UK. But this is a long-term solution and the industry has needs now.

International: New international trade opportunities must consider the needs of domestic producers

There is a real opportunity for the UK's agricultural sector to expand its exports across the world with a revived trade agenda. However, the UK Government will have to take care to balance access to UK markets with the needs of domestic producers.

Funding: Long-term funding for infrastructure must not be interrupted by leaving the EU

Long-term funding for infrastructure must not be interrupted by leaving the EU. As a member of the EU, the UK has access to both the European Investment Bank and the European Investment Fund. Both funds have invested around €7.8billion in major UK infrastructure projects [2] , including the expansion of the port of Liverpool. Ensuring continued investment for infrastructure projects across the UK will be key for the construction sector, since they are a necessary prerequisite for successful housing, office, retail and industrial developments.

Our members say:

"Continued government investment programmes in infrastructure is key to provide some clarity for the sector." - British construction services company

"We're seeking clarity over a huge range of issues. Climate and environmental regulation, status of material imports, eurocodes, standards, CE marking and Scotland – just to name a few." - multinational building materials company

"The projects that we work on are longterm. We're at the start of a four year planning cycle, we want to invest in the UK, but it's hard to see how we can plan for strong growth in the economy during that time." - multinational construction company
Our partners have more information:
  • British Property Federation
  • Build UK
  • Construction Employers Federation
  • Construction Products Association
  • Federation of Master Builders
  • Home Builders Federation

For construction at the CBI, contact: Fiona Geskes on 07469 155 269 or Fiona.Geskes@cbi.org.uk


References

[1] CITB, Workforce Mobility and Skills in the UK Construction Sector 2015

[2] RICS, EU Referendum: what it could mean for construction

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