The UK construction industry employs approximately 3 million people in the UK, making up 10% of UK employment. Significant skills shortages are restricting construction economic growth in the industry that employs 8% of EU workers, however in London this amounts to a staggering 28%. According to research by TowerEight, 35% of
Increased woes have been reported on the matter of the potential of the UK exiting the European Union; SSE has stated that the move may put its business at risk should a perceived period of legislative and, or regulatory uncertainty pursue. Of course, in the short term SEE has reported
Landlords are warned to take a closer look a t the upcoming EU Mortgage Credit Directive, the new piece of European Union legislation which, in effect puts a halt to “risky” mortgage lending. And placing an additional emphasis on landlords, the legislation also reassesses the definition of landlord mortgages as
The UK construction industry employs approximately 3 million people in the UK, making up 10% of UK employment. Significant skills shortages are restricting construction economic growth in the industry that employs 8% of EU workers, however in London this amounts to a staggering 28%. According to research by TowerEight, 35% of construction workers stated Brexit has created a shortage of EU migrant labour in the UK construction industry that has already increased project costs. Non-UK workers in the UK construction industry are mainly employed as general labourers (22%) and architects (15%). However, a high percentage of professional roles such as quantity surveyors (11%), project managers (11%), engineers (7%), have been placed within the last year by agencies as EU workers. Labour shortages appear to have increased rapidly since 2013 and a majority of surveyors have stated this is a significant hinderance on output. Skills’ shortages created more pressure on the delivery of projects with the triple constraints of time, cost and quality. A survey by Inside Housing revealed that the biggest skills shortages were for construction project managers (32%) and quantity surveyors (31%), followed by electricians (29%), plumbers (24%), carpenters/joiners (24%) and bricklayers (20%). However, only a fifth of those surveyed saw Brexit as the biggest problem, suggesting that skills shortages have been in existence for numerous years. This finding is supported by The MacFarlane who reports that 68% of construction SME’s are struggling to hire bricklayers and 63% are struggling to hire carpenters and joiners which have increased more than 10% in Q4 2017. The skills’ problem is an issue the sector has been facing for some time. RICS warns that “30% of construction professionals surveyed believe that hiring non-UK workers was critical to the success of their businesses”. The Construction Industry Training Board (CITB), estimates that to meet current demand more than 36,000 new workers a year will be required. Both skilled and non-skilled in labour will decline rapidly in the coming years in the UK construction industry. Data by Build UK found that 43% of contractors reporting rising labour costs in the first quarter of 2016, with a lack of suitably qualified staff a key factor. This impending threat of reduced labour movement, coupled with already existent shortage of labour would appear to pose a major risk to the future performance of the UK construction industry. The ONS data suggests that on the date the UK voted to leave the EU, migration fell from 336,000 to 246,000. A survey by Helm supports this as they had found 55% of skilled workers were either planning to leave or considering leaving the UK. However, could departing from the EU be beneficial? It could create a wider range of job opportunities within the UK that would become available and allow a growth of UK suppliers. Knight Frank reports that Brexit has done little to deter investors from London as purchases of assets increased from the previous year. The value of the pound is likely to go down which could create an upsurge of overseas investment in UK real estate. Brexit will reduce EU competition when tendering for work. But there is also the likelihood that wage rises are likely to occur and restrictions on free movement could pose a problem for the UK construction industry which already faces a labour skills crisis. Under a soft Brexit the UK GDP would decline by 3.5% and a hard Brexit, the construction industry’s contribution would fall by 8.2%. Brexit will affect urban areas more than rural communities and if access to skilled EU workers is cut, projects such as HS2 and Crossrail will be undeliverable. In conclusion, James Morris, Director at Tower Eight explains why there is a real importance of immigration to the labour market, “It is critical that we have flexible access to labour from overseas as without this we would fail to deliver against the commitments for construction, such as housebuilding and infrastructure. The pound’s value has descended as a result of the UK voting to leave the EU. Costs are expected to climb for contractors and UK developers due to their heavy reliance on importing and exporting with a less favorable exchange rate. Once the UK has left the EU, the UK Government could potentially only allow UK-based firms to tender for government work, consequently meaning that the UK’s construction Industry would no longer have to compete with foreign firms. But until the exit plans are revealed we are left hoping that the Government recognises the dual challenges of an ageing workforce and a lack of skilled labour; both of Britain needs to meet housing targets and deliver the infrastructure required for growth.”
Increased woes have been reported on the matter of the potential of the UK exiting the European Union; SSE has stated that the move may put its business at risk should a perceived period of legislative and, or regulatory uncertainty pursue. Of course, in the short term SEE has reported that there would not be a direct risk to the provision of its service to customers, and it is expected that the industry giant will be able to continue investing back into its business and infrastructure as planned, regardless of the decision made on the EU referendum. Yet, in the longer term, the effects of drawn out regulatory and legislative changes may cause a degree of risk for SEE, as it most likely would also effect other key industry organisations. As for predictions over the course of the year, SSE has predicted a similar degree of success this year as was achieved in the last, perhaps a nod to the potential uncertainty of the market as a whole, yet also maintaining a positive outlook on being able to turn a meaningful profit in various areas of the business this year. Specifically, those profits pertaining to networks operating are expected to see a degree of increase, with wholesale operating profits expected to maintain, and those retail operations expected to see a reduction due to reduced energy-supply customers. Key areas attributed to the mixed predictions on profits can be attributed to the challenges faced by dropping prices for commodities, as well as increased competition within the retail market. However, Gregor Alexander, Finance Director of SEE commented towards a more positive outlook, saying: “Nevertheless, completion of the CMA investigation and the UK government’s consultation on the future of the electricity capacity market imply progress towards a more settled regulatory and policy framework.” With this in place, a far more positive outlook could be perceived for next year, and we can only expect predictions for the year to follow suit.
Landlords are warned to take a closer look a t the upcoming EU Mortgage Credit Directive, the new piece of European Union legislation which, in effect puts a halt to “risky” mortgage lending. And placing an additional emphasis on landlords, the legislation also reassesses the definition of landlord mortgages as a former of consumer lending, thus bringing down harsher boundaries for receiving mortgages (specifically in cases where they may not be able to afford them). With new affordability checks in place, mortgage lenders will have to ensure that all borrowers can afford repayments, not today, but onto and into the future, taking into account predictions of rate increases of up to six or seven percent. And while this is something which may actually be deemed as common sense, it yet remains something which has been overlooked with regard to landlord mortgages, most specifically because of their classification as not being consumer lending; until now, that is. Additionally, the new regulation will have a particular effect on those remortgaging their properties too, where homeowners looking to consolidate and reduce their monthly payments may actually be told that the rates they would wish to remortgage to (naturally, lower than they are presently paying) are too high and unaffordable to them – a peculiar situation indeed, but one which may see a reduction in remortgaging, putting a little extra strain on those struggling to pay off their mortgages at present rates, yet also potentially encouraging people to take alternative methods of consolidating their outgoings. Most specifically, the change is expected to have a considerable effect on what are known as “accidental landlords”; those who have had no intention of renting out a property they have purchased, but, for a variety of reasons, have decided to do so – likely due to the need for extra income and asset utilisation. Yet, starting in 2017, landlords will no longer be able to claim tax relief on their mortgage repayments and, as opposed to extracting mortgage interest repayments from their taxes, will instead be charged a rate of 20% on the amount. In effect, this could result in taxes actually being paid on losses..
