12 August 2019
The Rt Hon Boris Johnson MP
Prime Minister, First Lord of the Treasury and Minister for the Civil Service
10 Downing Street
London, SW1A 2PP
Re: the UK construction industry’s preparations for Brexit and the potential impact of a ‘No Deal’
Dear Prime Minister,
On behalf of our members, we extend congratulations on your election as the leader of the Conservative Party and appointment as Prime Minister.
The Association for Consultancy and Engineering (ACE), Build UK, the Civil Engineering Contractors Association (CECA) the Construction Products Association (CPA) and the Federation of Master Builders respectively represent engineering consultants, clients, major & specialist contractors, civil engineering companies, construction product manufacturers and suppliers, and SME builders. Together, we account for hundreds of thousands of jobs and the majority of the UK construction industry’s £163 billion in annual turnover. This industry is relied upon by Government and society to provide and maintain our infrastructure, homes and wider built environment.
We have endeavoured to support and inform Government policy as preparations for Brexit have developed. We have also sustained an essential role with our members and the wider industry by sharing much needed expertise and information to help prepare for any eventuality. Crucially, our position underpinning this work has been consistent: while we recognise and respect the referendum result, we believe the UK must leave the EU in a considered, managed way in order to avoid the likelihood of massive short-term disorder and potentially long-lasting damage.
Even now, the continuing inability of policy-makers to agree a way forward has left our members – multinationals and SMEs alike – struggling to overcome the market uncertainty impacting their businesses. Data from the ONS and Markit/CIPS make clear the worsening erosion in recent construction activity; contracts for new major offices projects, for example, have fallen sharply since the EU Referendum due to concerns from investors over long-term economic prospects and returns.
This comes whilst our members seek to properly prepare for an unknown future after October 31st. As in other sectors, they are spending time and resources on stockpiling; transportation and logistics alternatives; auditing and guaranteeing the resilience of their supply chains; and vetting contractual risks and obligations.
Our forecasts show that with a deal in place and a smooth Brexit, construction output would rise by over £1.2 billion by the end of 2020. Leaving in an unplanned way with a No Deal Brexit however could lead to a fall of £10.5 billion over the same period, with the greatest impacts felt on the house building and commercial sectors.
The immediate effect of leaving without a deal in place is not knowing the cost of the materials and goods that construction projects rely on, or if they will arrive on sites across the four nations to keep projects of all shapes and sizes on track. Delays in completing building and infrastructure projects impacts our lives in so many ways; it may be the new hospital in a community which will speed up lifesaving treatments, the homes desperately required, urgent maintenance to our heritage buildings or vital repairs to bridges and roads that will keep Britain moving.
With the impact of the previous financial crisis not forgotten in an industry that experienced countless business failures, plant closings and nearly half a million job losses, the resilience of our industry has its limits. We trust that the Government and parliamentarians will agree the arrangements for trading with the EU as a matter of urgency. In the meantime, we are ready to reaffirm our willingness to work with you and your new administration, and would welcome an opportunity to discuss how we can make a success of the years ahead.
Hannah Vickers, Chief Executive Officer, Association for Consultancy and Engineering (ACE)
Suzannah Nichol MBE, Chief Executive, Build UK
Alasdair Reisner, Chief Executive, Civil Engineering Contractors Association (CECA)
Peter L. Caplehorn, RIBA, Interim Chief Executive, Construction Products Association
Brian Berry, Chief Executive, Federation of Master Builders