Construction leaders in the UK have this week called on Rishi Sunak for improvements in post-Brexit rules to protect businesses.
The calls bring the spotlight back on the post-Brexit landscape in the construction industry, which has had to navigate new regulations, directives, and the inevitable uncertainties that come with significant change.
The departure from the European Union has had profound effects on various sectors, and construction law is no exception.
Free movement of labour force
One of the most significant impacts of Brexit is on the free movement of workers. The UK construction industry heavily relies on skilled workers from the EU.
Construction businesses now need to obtain a sponsor licence to employ builders from overseas, creating restrictions on the free movement of such workers.
This has raised concerns about possible labour shortages, impacting the cost and timeline of construction projects.
According to the joint findings of the thinktanks Centre for European Reform (CER) and UK in a Changing Europe, there has been a shortfall of 330,000 in the UK labour force post-Brexit.
Import and export of goods
Brexit has also influenced the import and export of goods related to the construction industry. Customs checks and tariff changes affect the cost and delivery times of construction materials, potentially leading to increased costs and delays in project completion.
A recent report found that the cost of construction materials including cement, timber and steel increased by 60 per cent in the years between 2015 and 2022, compared to just 35 per cent in the EU.
The new rules require firms to adjust their supply chain strategies to mitigate these potential problems.
Following Brexit, the UK has the autonomy to set its construction standards and regulations. It means that UK construction firms operating both domestically and in the EU need to comply with two sets of regulations, thereby increasing complexity.
The European Investment Bank (EIB) and European Structural and Investment Funds (ESIF) have historically been a significant source of funding for construction and infrastructure projects in the UK, so post-Brexit caused worry about how this would affect the finances of the construction industry.
The EIB financed £6.9 billion of public infrastructure projects in the UK in 2016, and post-Brexit, the UK and EU have agreed that the EIB will repay the UK its share of the EIB’s paid-in subscribed capital over a 12-year period.
While Brexit poses challenges to UK construction law and the wider construction industry, it also presents an opportunity for the UK to streamline regulations and practices to better suit its domestic needs.
If you’d like more advice about the continued impact of Brexit on your business, please contact us.