黑洞社区

Construction bodies have used a variety of adjectives to describe the government鈥檚 long-delayed immigration white paper, finally published in the dog days before the Christmas break. See if you can spot a common theme among them: 鈥渃oncerning鈥�, 鈥渦nsettling鈥�, 鈥渨rong鈥�, 鈥渧ery disruptive鈥�, 鈥渘ightmare鈥� 鈥� oh, and not to forget 鈥渃rackers鈥�. Yes, it鈥檚 fair to say not everyone鈥檚 completely happy.

What has made it particularly galling is the fact that the main industry bodies joined together over a year ago to create a Brexit manifesto saying what they needed a post-EU system to look like. Sarah McMonagle, external affairs director at the Federation of Master Builders (FMB), which was part of that effort, says: 鈥淭he white paper has in almost all respects gone in completely the wrong direction.鈥� 

"A year ago we predicted the industry would face shortages 鈥� fast forward to now, and our predictions are coming to pass"

James Bryce, Arcadis 

The white paper鈥檚 purpose is to describe the immigration system the UK will adopt from 2021 after the end of the UK鈥檚 transition out of the EU. But instead of the system the industry asked for, the politically charged white paper proposes a 鈥渟kills-based鈥� system that treats EU and non-EU migrants equally but broadly bars 鈥渓ow-skilled鈥� migrants while attempting to lure the most highly qualified. Given the centrality of immigration to the whole Brexit debate, and the fact prime minister Theresa May has prioritised immigration above all else in negotiating her Brexit deal, it is not hard to see why this approach has been arrived at. Prioritising those migrants with the most economically valuable skills seems, on the face of it, just common sense.

So, what is so bad about what the government has proposed? And why can鈥檛 the industry simply train more people to make up the difference? The debate shines a light on the industry鈥檚 reliance on foreign labour, and raises huge questions about how it will be affected, and whether it can respond and adapt.

Also read: Ready, steady, chaos: how is construction preparing for Brexit?

Also read: As conversations around Brexit become more anxious, construction demands answers to the question of immigration

Skills gulf

The white paper has been published at a critical time for UK construction, just two years after consultant Mark Farmer warned the industry to 鈥渕odernise or die鈥� because of the extent of the skills crunch it will face over the next decade. According to the CITB, the industry needs to recruit in excess of 31,000 people every year to 2022, while research by the UK Commission for Employment and Skills suggests more than 750,000 people will leave the sector between 2014 and 2024. The FMB鈥檚 McMonagle says around two-thirds of the body鈥檚 members are already finding it hard to recruit new staff. 鈥淚t鈥檚 the number one concern for us this year,鈥� she says.

In this context, the 165,000 EU-born workers in the industry perform a vital role, making up 7% of the workforce, according to the ONS. In London the reliance is much higher, with 28% of construction workers hailing from the EU. For many firms, the reliance is higher still. Mark Reynolds, chief executive of construction giant Mace, says an analysis of its 11,000-worker supply chain has shown half are foreign-born, 40% from the EU. 鈥淪ome construction sites are 100% EU,鈥� says McMonagle.

"They鈥檙e insulting tradespeople by telling them they鈥檙e 鈥榣ow-skilled鈥�. We reject the idea that these people aren鈥檛 needed. The government is departing from reality"

Sarah McMonagle, FMB

A report by consultant Arcadis in 2017 which considered a wider definition of construction roles, predicted that, depending on the type of Brexit deal and post-Brexit immigration policies we end up with, anything between 136,000 and 214,000 EU workers would disappear from the wider construction and property industry by 2020. The firm鈥檚 director of workforce planning, James Bryce, described the prospect then as 鈥渘ot a skills gap. It is a skills gulf.鈥�

Reflecting these concerns, the industry鈥檚 joint Brexit manifesto, which mirrored 黑洞社区鈥檚 own Brexit campaign, called for an immigration strategy without 鈥渁rbitrary thresholds based on skill levels or income鈥�, which could provide visas of at least two years, minimise bureaucracy, and take into account the role of self-employed migrant workers.

Upside down

In contrast, the government鈥檚 proposed immigration strategy (see 鈥淲hite paper in brief鈥�, above), rejects every one of these asks. In essence, it applies a reformed version of the existing immigration rules for non-EU workers to all migrants. The principles of it are that, aside from very wealthy investors and a small number of 鈥渆xceptional talent鈥� visas, for which most construction workers could not even be considered, most future immigrants would have to be sponsored by an employer, qualified to an 鈥渋ntermediate鈥� level and earning a minimum amount. The government has proposed setting the bar at 拢30,000 a year, though it has indicated it is willing to discuss where this threshold is set. Self-employed workers or those defined as 鈥渓ow-skilled鈥� would not normally be allowed in, other than on short-term, one-year visas.

Added together, the consequence for EU construction migrants is potentially severe. An analysis by the government鈥檚 adviser on the policy, the Migration Advisory Committee (MAC), says that 80% of existing European (EEA) construction migrants would be caught by one or other of these policies. It鈥檚 important to realise this doesn鈥檛 mean four out of five existing EU workers will have to return home, as many have been here long enough to have accrued the right to settle permanently. However, it does indicate just how curtailed future migration flows could be, despite the growing need for skills identified by the CITB and others. 

Suzannah Nichol, chief executive of industry trade body Build UK, says: 鈥淭he government is saying that we can bring someone in to play football, but we can鈥檛 bring someone in to build the stadium they鈥檙e going to play in. It just seems a bit upside down.鈥� 

And Arcadis鈥� Bryce says: 鈥淎 year ago we predicted the industry would face shortages 鈥� fast forward to now, and our predictions are coming to pass. I don鈥檛 feel the white paper acknowledges businesses needs at all.鈥�

While the exact impact of these policies, if implemented, is impossible to predict, many are now forecasting dire consequences for the government鈥檚 housing and infrastructure plans. The FMB鈥檚 chief executive, Brian Berry, said the target to build 300,000 homes a year would be 鈥渋mpossible鈥� under this system, and major infrastructure projects 鈥渘othing but a pipe dream鈥�.

Keith Brooks, partner at consultant Cast, agrees that the policies would be 鈥減otentially very disruptive鈥� to UK construction. 鈥淗ow will HS2 be built under this new system and at what price?鈥� he asks, with McMonagle claiming wages would rise, putting businesses operating at slim margins under considerable strain. However, Cast鈥檚 Brooks also believes the government will not be persuaded by what it regards as special pleading from an industry that has failed to reform and train enough staff over a generation. Modern construction methods should, he says, be being used to improve productivity and reduce the need for new staff, while the industry makes the case for a sensible transition period in which to adapt. 鈥淭he UK construction industry should not be lobbying for exemption or special treatment. Times are changing and we need to adapt,鈥� he says.

But others maintain it is unrealistic to assert the industry can in the long term do without migrant labour, however hard it works to reform. Build UK鈥檚 Nichol says: 鈥淭raining domestically has to be part of the agenda, and absolutely the industry has to do more. But the UK currently has effective full employment 鈥� these people are already in jobs; we鈥檇 just have to steal them from other sectors.鈥� 

McMonagle echoes this. 鈥淭here鈥檚 room for improvement in productivity but it鈥檚 not going to be a silver bullet. Ultimately there鈥檚 only a finite number of people and it鈥檚 just going to be a dogfight with other industries.鈥� Meanwhile RIBA chief executive Alan Vallance points out it takes seven years to train a qualified architect. 鈥淵ou can鈥檛 just turn the tap off immediately. There鈥檚 been no time to plan,鈥� he says.

So far, however, it appears none of these arguments are persuading the government to change its mind. This is despite the fact different industry bodies have displayed an unusual degree of co-ordination to get their points across. Currently seven trade bodies, including the FMB and Build UK along with others such as the Civil Engineering Contractors Association and Construction Products Association, are joining together to submit evidence on the issue, and are planning a parliamentary event with construction minister Richard Harrington and immigration minister Caroline Nokes in March to press their case. The Construction Leadership Council has also convened an emergency Brexit 鈥渟ummit鈥� to work through the implications of leaving the EU. 

But given the prime minister鈥檚 backing for the white paper, the chances of getting a fundamental shift under the current leadership seem low (at the time of going to press). 鈥淲e understand that Theresa May is specifically very keen on the ideas in the white paper,鈥� says McMonagle. 鈥淥thers in government are more pragmatic. If we see the PM go it might make it easier to push back on the issue we鈥檙e concerned about.鈥� Given the unprecedented twists and turns we have seen in the Brexit saga so far, this far from impossible scenario may be the best the industry can hope for.

Why is it so hard for the industry?

1. Definition of skilled worker 

The first problem is that the policy鈥檚 definition of the skill level under which it will be possible to obtain a visa, cuts out about two-thirds of tradespeople. The government sets the bar at a 鈥渓evel 3鈥� skill under its regulated framework, which is equivalent to an A-level qualification. While some tradespeople are qualified to this level, most are not, and the MAC鈥檚 own analysis finds that 66% of migrant workers are in roles that are level 2 and below 鈥� which the government is classing as 鈥渓ow-skilled鈥�. The FMB鈥檚 McMonagle says: 鈥淏y defining it like this they鈥檙e insulting tradespeople by telling them they鈥檙e 鈥榣ow-skilled鈥�. We reject the idea that these people aren鈥檛 needed. The government is departing from reality.鈥� 

While the government will allow those classed as 鈥渓ow-skilled鈥� in on a one-year visa, these people will have to return home after this with no right to come back to the UK for another 12 months. They will acquire no rights to live permanently or settle, and will not be able to train while here to 鈥渂ump up鈥� to the skilled visa system. Mace鈥檚 Reynolds describes this low-skilled route as 鈥渁 nightmare鈥�, while Build UK鈥檚 Nichols calls it 鈥渃rackers鈥� and a bar to investing in people.

2. 拢30,000 salary threshold 

For those with professional or higher-level trade qualifications that meet the skilled criteria, the 拢30,000 salary floor will exclude many more. According to the ONS, about a third of full-time construction industry jobs pay less than 拢30,000, while according to the MAC, four out of the five occupations most commonly carried out by migrant workers in construction have a median salary below the threshold. RIBA chief executive Alan Vallance says this will be a particular problem for architecture practices, where one in five staff are from the EU, but who earn, on average, just 拢28,000. Calling for 鈥渄rastic reform鈥� of the proposals, Vallance says: 鈥淚t鈥檚 absolutely critical the government looks at the [salary]cap and lifts it. If this comes in it鈥檚 going to have a quite serious impact on the profession.鈥�

3. No route for self-employed 

The final straw for the industry is the strategy鈥檚 failure to provide a route for self-employed migrant workers (other than for entrepreneurs with money to invest). Across all industries, government data suggests the majority of migrant workers 鈥� 55% 鈥� are self-employed, while the MAC suggests that around 40% of all EU self-employed workers in the UK work in construction sector jobs. Steve Turner from the Home Builders Federation says: 鈥淗ousebuilding activity is predominantly undertaken by a skilled subcontract and self-employed labour force [鈥�] If we are to continue to increase housing supply and deliver the government鈥檚 housing target, it is essential we have continued access to skilled labour from abroad.鈥� Likewise, Steve Radley, policy director at the CITB, says 鈥渃onsideration is needed鈥� for self-employed migrants.