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Construction will be the worst affected major industry following Brexit, according to a study commissioned by mayor of London Sadiq Khan.

The report, produced by data analyst Cambridge Econometrics, looked at the effects on trade, investment and labour on different sectors of the UK under four different Brexit scenarios.

Under the ‘softest’ Brexit scenario, in which the UK leaves the customs union but remains in the single market to retain free movement of goods and people, construction’s contribution to total UK GDP would decline by 3.5 percentage points – the biggest decline out of any sector, the report found.

In the event of the ‘hardest’ form of Brexit – no transition deal, no membership of the customs union or single market, and trading under World Trade Organisation rules, the industry’s contribution would fall by 8.2 percentage points – with only agriculture’s share facing a bigger fall.

Arcadis market intelligence lead Will Waller said: “It confirms a lot of what we all fear.”

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He added: “We’ve done quite a bit on the ‘hard Brexit’ scenario and for construction it would be really bad news.

“The industry needs to be pushing hard to make the government aware of this.”

Cambridge Econometric attributed the industry’s potential decline to difficulties in acquiring labour; the knock-on effect of a slowdown in the wider economy; exposure to non-tariff barriers, such as quotas and trade licences on imports and exports; and falls in investment.

The data analyst said: “Once the UK leaves the single market, it is likely that the skills shortage could get worse if the new agreements don’t allow for free movement of people.

“This could result in even higher pressures on wages as labour supply contracts, causing construction firms to face considerably higher project costs.”

The report also highlighted that the UK had benefited from €7.8bn of European Investment Bank investment in infrastructure projects, and that SMEs received €666m in European Investment Fund loans during 2015 alone.

The country will lose access to both of these funding sources after Brexit, the study noted, which could “significantly impact the ability of firms to deliver big infrastructure projects such as HS2 and reduce development opportunities for start-ups”.

RICS London policy manager Abdul Choudhury said: ”The UK Government must act promptly to keep EIB funding or introduce a new lender, or lending mechanism, to plug the gap created from the potential loss of EIB funds, particularly for shovel ready projects that are of great importance to London.”

Mr Waller notes that Cambridge Econometics have been forced to make many assumptions in its work, and others are sceptical of its reliability.

CPA economics director professor Noble Francis said: “Forecasting the next 12-18 months is challenging enough given the uncertainties around so Cambridge Econometrics attempting to forecast the effect of a hard Brexit on the economy and construction in London by 2030 is dubious to say the least.

”According to the research, overall impact of a hard Brexit would be a 3% hit to the economy by 2030 but the margins of error must be greater than that.”

Mr Waller also noted that there were threats to construction that were not covered clearly in the report which also needed to be addressed.

“Just disruptions in customs could lead to practical delays in delivery of materials,” he said.

“So we’re all going to have to think about our projects in terms of: do we need to change our procurement, do we need to stockpile materials. And that planning needs to start now.”

He suggested that one possible silver lining could be a decline in commercial construction freeing up the supply chain to put more resources into housebuilding.

The mayor of London said the report emphasised the risks the country faced and called on the government to do more to avoid a hard Brexit.

Mr Khan said: “If the government continues to mishandle the negotiations, we could be heading for a lost decade of lower growth and lower employment.

“The analysis concludes that the harder the Brexit we end up with, the bigger the potential impact on jobs, growth and living standards.

“Ministers are fast running out of time to turn the negotiations around. A ‘no deal’ hard Brexit is still a very real risk – the worst possible scenario.”

As the year draws to a close and we look forward to the Christmas break it’s a good opportunity for us to reflect on 2017 and what the jobs market will have install for us in 2018.

It has been a very busy year for Intersect Global.
Demand for both permanent and contract staff has been strong and the skill shortages our industry faces have continued to become increasingly apparent and challenging.

As Crossrail’s completion date draws closer other major projects such as HS2 and Hinckley Point will increase in activity and it will be interesting to see how employers cope with their recruitment needs.

Its seems like significant changes are on their way for the contract workforce operating in the private sector, by way of changes to taxation.
Having recently attended a consultation meeting with HMRC on this matter it appears that industry has 18 – 24 months to prepare its self.

Here is a quick summary of the latest results from Jobs Outlook:

53 per cent of employers would have to take action if the recent budget introduces new measures which would increase their staff costs because of changes to taxation such as IR35, and one third of employers would have to increase their prices,

The latest Jobs Outlook survey of 600 employers also shows:
• 42 per cent of respondents expressed concerns that not enough permanent workers would be available to meet their demands and 40 per cent say the same for temporary agency workers.
• 80 per cent of employers say they have none or just a little spare capacity in their organisation to take on more work without new staff.
• 22 per cent of employers still plan to hire additional permanent staff in the next four to 12 months.

We would like to thank all of our clients, candidates and suppliers for their continued support and would like to take this opportunity to wish you all a Merry Christmas and a Happy and Healthy New Year.

Former home secretary Lord Blunkett has vote to force the government to “pull its finger out” on skills to prevent a labour shortage for the UK’s major infrastructure projects.
Speaking to Construction News, the Labour peer said the government must get colleges and education providers “geared up” to offer the construction skills needed for projects such as HS2 and the expansion of Heathrow.
“If we don’t plan now to get the careers advice in place at schools and get apprentices increased we are going to be in real difficulty,” he said.
On the prospect of Brexit, Lord Blunkett said the situation “adds a real urgency to the immediate future”.
Arcadis has estimated that UK construction could lose up to 215,000 workers by 2020 under a hard Brexit.

The Labour peer added: “Either we get our act together with diversity, with women, with people who have been unemployed for a long time coming back into workforce, or we end up with a massive shortage.”

Lord Blunkett, who also served as education and employment secretary in Tony Blair’s government, warned:
“We could end up putting the work out for other countries, which in my view would be a catastrophic outcome.”
The Labour peer, who is chairman of the Heathrow Skills Taskforce, was speaking to coincide with the launch of an online forum to gather views on the airport’s future education, employment and skills strategy.
Four logistics hubs are expected to be set up by Heathrow across the country to create 180,000 new jobs, including 10,000 apprenticeships, as part of the airport’s proposed expansion.
As part of his role on the taskforce Lord Blunkett has also met leaders from other major infrastructure projects, including Tideway, HS2, Crossrail and Hinkley, to discuss tackling the skills strategy.

“It’s clear we’re all in the same boat trying to plan ahead for major investment and skill shortages,” he said.

“What we hope to do is time the requirement for particular skills in such a way that people can transfer from one major project to another.”

On the government’s new T-Levels, designed to give parity to technical qualifications, Lord Blunkett said they are a “contribution” but added “unless they are actually implanted very quickly they are going to be behind the timeline”.

He added: “Part of the job of the taskforce is to persuade the government to pull its finger out and make this part of the follow through from the industrial strategy green paper.”

The leaked document on the government’s Brexit immigration plan, obtained by The Guardian, is a frighteningly stark reminder of the threat to construction, once we leave the EU.

While the proposals are in a draft form and yet to be discussed by ministers, it is still a timely reminder that the sector cannot afford to waste any time in working out how it would deal with a sharp decline in EU labour.
Let’s remind ourselves of the numbers.

Nearly 10 per cent of the UK’s construction labour force is from the EU, with that figure rising to around a quarter in London. Indeed, Arcadis has estimated that UK construction could lose up to 215,000 workers by 2020 under a hard Brexit.
The leaked document suggests that all but the most highly skilled labour will be deterred from working in the UK.

The question is: what percentage of construction workers will be classified as ‘non-skilled’?
Much of the media coverage of the leaked report has focused on workers in hospitality and agriculture, but undoubtedly there are large swathes of construction that could get caught by this definition.
Whereas an engineer from Estonia may be given some leeway, a labourer from Lithuania could be treated differently – if the government is to get anywhere near hitting its immigration target.
With general labourers, our industry is still highly dependent on that kind of workforce and that’s where we will see pressure, come what may.

Defence secretary Michael Fallon has said people with the “right skills” will still be welcome in the UK.
The challenge then is for the industry to convince the government of the merits of workers employed in the construction sector.

“The government would be wrong to demarcate skilled workers as professionals rather than tradesmen,” Mr Farmer added. “Craft is something that is absolutely about skills; it’s more about working with your hands, but it is a skill.”

The other issue is the timescale for the changes. If the leaked plans become a reality, Britain would end the free movement of labour immediately following its exit from the EU. There is, however, mention in the document of a phased implementation, which would give some breathing space.

Ultimately, the government appears set on the idea that this is an opportunity for British firms to employ more native workers, is this really achievable? Personally I am not so sure.

It is hard to believe we are soon to approach the half way mark for 2017, the year has flown by so far and activity here at Intersect Global seems to reflect the general buoyancy of the civil engineering & construction sector at the moment.

The Recruitment and Employment confederation have recently released the latest job out look report, this information is gathered by corporate members of the REC so should give an accurate and valuable insight into where the jobs market is at the moment here in the UK.

I thought it would be useful to a share a snap shot of the latest findings :

42 per cent of employers who have had difficulty recruiting candidates have increased the salary on offer, according to April’s JobsOutlook report.

In an attempt to attract candidates after failing with an initial advertisement, 80 per cent of employers re-advertised the role, while 24 per cent have resorted to lowering the requirements of the role.

The REC’s latest JobsOutlook survey of 600 employers also reveals:
• 22 per cent of employers plan to increase permanent headcount in the short term (the next three months) and medium term (the next four to twelve months).
• Construction, engineering/technical and health/social care are the three sectors where employers most expect a shortage of candidates for permanent roles.
• 19 per cent of employers plan to increase temporary agency headcount in the medium term, and 12 per cent plan to do so in the short term.

As ever Intersect Global have a range of interesting career opportunities available. Many of the roles we are working on are not advertised, if you are considering a career move or looking for your next contract assignment please give us a call on 020 76820668.

All the best.