Copper Consultancy Director Ben Heatley discusses the effect of Brexit on infrastructure and development.
We’re in a critical period for the UK’s exit from the European Union. Again!
The main political parties now seem resigned to the fact that they are going to be dragged into dispiriting European elections. But there is still the outside chance that the Government and the Opposition may be able to agree enough common ground that a Parliamentary consensus could just be possible after the Easter break. Just don’t hold your breath.
But whatever the immediate future holds, it’s certain that the UK’s infrastructure sector will be watching these discussions closely.
Generating £90bn annually and employing approximately 10% of the UK workforce, infrastructure and development is vital to the health of our economy. However, by its very nature, the infrastructure sector relies upon certainty. It literally lays the foundations for society, and this means committing to long-term investment into projects which can be decades in the planning, and centuries in operation.
A lack of clarity about what the future holds is enormously detrimental. It impacts investment choices, disrupts supply chains, limits recruitment and undermines effective forward planning.
Alongside the broader impact of the ongoing Brexit negotiations on our economy, including sterling’s fall and the drop in overseas investment, the last few years have proven very challenging for developers because uncertainty is the enemy of progress. This has been particularly noticeable in the slowdown in construction that has been prevalent since at least the end of 2018.
On an operational level, it is creating a number of practical challenges. The inability to prepare for the anticipated skills shortage is already a major concern. With the Office for National Statistics reporting that the number of EU nationals arriving in the UK has fallen since the referendum, the risk of staff shortages is already keeping developers and their staff up at night.
We are in a competitive environment, not just for numbers of people, but particularly for the brightest and the best who offer in-demand skills, and can move themselves to projects around the world. UK PLC must be able to attract amazing talent to tackle the biggest infrastructure challenges, and at the moment our employee brand, to use HR jargon, is somewhat tarnished.
The same impact is being felt in investment. Risk and uncertainty are anathemas to investors. When global institutions and funds can move money around the world with the click of a mouse, the UK must be seen as a safe haven, and a place capable of offering secure returns from multimillion pound projects in order to compete. We don’t have to be in Europe to provide that assurance, but we can’t be in limbo.
However, perhaps more disruptive than these concerns is the policy paralysis caused by Brexit. With Parliament preoccupied with internal negotiations and debates for the past three years, other important legislation hasn’t been given the same level of attention. The UK’s energy strategy, waste planning, flood management and housing development strategies have been set largely to one side.
Policies in these areas will dictate how the UK faces up to life outside the EU and how it addresses issues of productivity, climate change and increasing resource scarcity. A clear path ahead will enable developers to plan effectively, maintain stakeholder confidence and deliver the frameworks needed to support people, businesses and services all across the country.
The infrastructure sector is far from alone in imploring the Government to offer additional security and clarity about what the future holds. But it is perhaps most affected because decisions that are taken today, really can have implications for centuries to come.