A targeted immigration approach
The native UK construction workforce is ageing and hundreds of thousands will retire in the next few years. So, as Arcadis partner Richard Jones argues, we will need Brexit negotiations to allow skilled immigrant labour to come to these shores to build
As conference season kicks in this spring, I feel a sense of optimism within the residential sector. At the CIH gathering in Brighton I did not bump into anyone who did not tell me how busy they were and how much work there seems to be around.
Although the Brighton conference is very much aimed at London and the south east, I am still hearing similar reports from my other UK offices including Manchester, Birmingham and Bristol. The question, I suppose, is whether this is a pre-Brexit bubble or the beginning of a more structural change in the residential sector that perhaps, at last, is beginning to address the significant shortfall in housing numbers.
Although I agree with most commentators that the government’s White Paper was short on pragmatic solutions, I am pleased that it does establish a much more strategic framework for increasing housing numbers that recognises that there is no “silver bullet” and that the industry must use all of the levers available to provide a much more comprehensive solution to housing delivery. In particular a multi-tenure approach seems to be at the heart of government thinking. This is a major change from the approach of successive governments in the recent past.
When Brexit is talked about it seems the topic of migrant labour always appears as the main area of concern. This should be no surprise when considered against the existing backdrop of a constrained supply chain that has been struggling to cope with the current levels of delivery, which of course needs to be increased substantially. The negotiations have not even begun yet on Brexit, but uncertainty about migrant UK status and the increased control at the UK borders is beginning to give some housebuilders sleepless nights. Two of the largest housebuilders in London told me recently that they have a labour workforce of more than 75% migrant labour. The question of repatriation of key workers therefore becomes a key issue for them. Outside of London it is less of a problem.
One of the things that I have reported on recently has been the approach to risk management for housebuilders which majors on retaining its current supply chain, the concern being if they lose it they will not get it back. This position is made even worse if that loss is not to another competitor but a loss of labour out of the country.
When we look at the demographic of the current construction labour force we can see that there is already a major problem with the structure of the industry. More than 50% of the UK construction force is over 40 years old*. The age of UK nationals working in construction currently peaks at 50-54 years old whereas that of EU and other nationals peaks between 25–35 years old*. This provides a stark warning that there is a significant number of the UK born workforce closing in on retirement that potentially leads to a loss of between 500,000 to 750,000 workers in the next ten years. Migration therefore becomes an important part of any wider strategy to provide the appropriate response to this looming problem.
Construction will be lobbying government hard to ensure a sensible approach to the control of UK borders and the need for attracting properly qualified migrant labour to underpin what they have labelled as a major infrastructure requirement to underpin the wider economy – in other words, housing. The current posturing around the status of EU nationals within the UK is causing concern and uncertainty, however it can only be a negotiating ploy. There surely can be no real intention to repatriate large swathes of the UK’s essential workforce – it would destroy the economy. In addition, the rhetoric behind immigration has, I believe, been largely misunderstood. I do not know anyone that I have talked to who was anti-immigration per se – it was always the control of immigration that was the concern. Therefore a targeted immigration policy that still allows the controlled movement of labour, focused on an essential workforce that maintains economic prosperity, is the likely outcome of the much anticipated Brexit negotiations. The construction industry must obviously feature quite highly in any considerations and allocation of numbers.
Although this uncertainty does not do too much to underpin confidence, I believe that if we do get this approach to immigration right it could, by the adoption of a much more focused policy of attracting the most appropriate labour to the UK, help to fix what has been a growing structural problem in the construction labour force.
* (Source: Labour Force Survey, compiled by Brickonomics)