The Impact of Brexit on the Construction Industry

Five years ago, the U.K. voted to leave the European Union, and 18 months ago it did just that. The industry has some big concerns over a construction labour shortage as it relies on EU citizens. So what's next for the industry?

Last month marked the fifth anniversary of the U.K. referendum on EU membership.

The result of the vote in June 2016, which went 52% in favour of leaving, with 48% opting to remain, shocked many. In January 2020, after much debate, numerous high-level negotiations and the occasional political stalemate, the U.K. left the EU after more than four decades of membership.

So, more than a year on, what has been the effect of Brexit on the construction industry?

There had been much talk of the thousands of EU workers in the sector—either on site or in support services, architect practices, consultancies and more—heading home and never coming back, and the implications this Brexit caused labour shortage would have for the industry.

There was also talk of new red tape, transport restrictions and customs checks being applied to the importation of vital building materials, the result of the U.K. no longer being part of a frictionless trading region.

However, as 2020 unfolded, Brexit took a backseat to the more pressing problems brought about by the COVID-19 pandemic, which swept across Europe and into the U.K. at the beginning of the year.

The Brexit Labour Shortage

Nearly 18 months and three lockdowns later, the construction industry is starting to work on projects again. However, the Brexit-related issues that concerned people prior to the pandemic remain. Fears about a construction labour shortage persist, while pent-up demand for materials—and a raft of new rules and paperwork—has piled the pressure onto a hard-pressed supply chain to deliver.

The council pointed out that the U.K. had lost 15,000 European drivers this year alone due to Brexit. The CLC said its Product Availability Group was working with the Road Haulage Association in talks with the Department for Transport to address the shortage.

A Construction Labour Shortage

The workforce issue is the big one. In the last three months of 2019, EU citizens working in construction numbered 176,000. In the same period last year, this figure had fallen 28% to 127,000, the biggest construction labour shortage in years.

Some of these workers may have left the U.K. due to COVID-19, but whether because of COVID or Brexit, finding sufficient numbers of Brits prepared to replace those from overseas who have left the construction sector will take time, argues Suzannah Nichol, chief executive of construction trade body Build U.K.

And it isn’t just about the numbers, Nichol said. She told the BBC recently that it was about finding the people with the necessary skills to do the job. “We often underestimate the specialist knowledge and skills that industries need. It’s the same in construction. These aren’t skills that you can just gain overnight. We’re operating in a climate of limited availability of those skills where there is high demand.”

Nichol acknowledged that apprenticeships were hugely important, but argued they take time—12 months at least—to bear fruit, and that strategy doesn’t serve the industry now.

Get Immigration Right

It was vital, therefore, that the government addressed the immigration system, Nichol added, “because at the moment it is not fit for purpose, and it’s not supporting businesses that are being asked to grow the economy and get the UK back on its feet”.

“We’re not allowed to bring in the skills that we need from the EU. I’m not saying do away with [the immigration system] completely. [But] it’s about looking at what we need to build back better to deliver the infrastructure in our country right here and right now.”

And if EU citizens currently living and working in the UK have failed to apply for settled status by the 30 June deadline the Brexit construction labour shortage could worsen.

Yet some believe such adverse conditions can lead to opportunities. Ann Bentley, a global board director of construction consultancy Rider Levett Bucknall and a member of the CLC, believes that along with COVID-19, responding to the impact of Brexit on the construction industry can bring out the best in the sector.

Bentley recently said: “If the past 18 months have done anything, they have made us rethink the way we work. Many of us had to adapt overnight to working from home and embracing digitalisation of our processes while those on sites adopted new working practices to adhere to government guidance.”

Change Can Be Good

“Change has been thrust on us through necessity and, as an industry, we have not only survived, we have adapted and matured,” Bentley said. “We now need to take these learnings forward and rethink the challenges ahead, whether that concerns materials or labour shortages.”

Bentley certainly has a point. Necessity has often been the driver of invention. In a way, Brexit’s impact on construction may turn out to be a catalyst of sorts, helping to create a thoroughly modern industry fit for the 21st century.

Issues, challenges and constraints arising from the U.K.’s exiting the EU may drive the industry toward a more modern, focused future.

Such a future certainly could see more domestic workers employed. But in seeking to “build back better,” it will be crucial for the sector to use innovative, sustainable materials as a matter of course. So, too, is making better use of online technology to design and deliver modern and efficient homes, offices and the other buildings this country needs.

What Is the Price of Building Materials? The 2021 shortage