REVIEW: CONSTRUCTION
46 INSIDER March 2020 http://www.insider.co.uk
activities to boost housing delivery
by 25 per cent. We are building
across an average of 45 active sites
at any time and delivering around
1,500 new homes each year. The
pent-up demand for new homes has
resulted in our core service offerings
of affordable housing construction,
mixed-tenure developments and
private housing projects picking up
pace and we are seeing real growth
emerging around retirement housing
and regeneration developments.”
Alastair Wallace, senior partner
at property and construction
consultancy Thomas & Adamson,
warns that the political uncertainty is
not over. “With the Brexit transition
period and negotiations ongoing,
added to the growing prospect of
a second Scottish independence
referendum, lack of certainty
remains, which undoubtedly impacts
investment decisions.
“Political stability returning to the
UK this year would be a major boost
for the industry. The possibility of
unlocking funds delayed by recent
political uncertainty would be
extremely welcomed by everyone. It
would release the extensive pipeline
of projects that the economy not
only requires, but also that the
construction industry needs.”
The uncertainty affects not only
senior-level investment decisions
but throughout the supply chain.
“Construction has been dominated
by conversations about Brexit,
in particular how clients and
contractors revise contractual
agreements to insure themselves
against the commercial uncertainties
associated with the UK’s departure
from the EU,” says Euan McLeod,
Shepherd and Wedderburn’s head of
infrastructure.
“Many standard-form contracts
contain clauses that relate to changes
in law during construction. However,
these are broadly drafted and do not
specifically address the key issues that
are most likely to arise post-Brexit.
“These would include the ability
to source a skilled workforce, delays
in the importation of materials
and equipment, and any increases
to duties, taxes or tariffs. Some
standard-form contracts are more
broadly drafted than others, so there
is no universal standard position
in relation to Brexit risk allocation,
though contractors are likely to bear
this risk by default in many cases.
“There is therefore a push from
contractors to expressly establish
a right to an extension of time
where the importation of goods and
materials is disrupted or delayed.
In addition, contractors are often
seeking an uplift to the contract sum
where Brexit causes difficulties in
securing labour, leading to a rise in
labour costs, and to cover new taxes,
duties or levies on imports.”
Shona Frame, partner and
construction sector specialist at law
firm CMS, also points to the risk of
skill shortages. “The Government’s
pledge to ‘implement the biggest
infrastructure revolution in living
memory’ is to be welcomed. For
the construction sector this should
translate into investment in rail,
schools, housing, hospitals and
further education across the UK.
“Our clients are however impacted
by the need for more skilled labour
in the short to medium term. The
pledge of £3bn funding for a National
Skills Fund will undoubtedly help but
it will take time for this to manifest
in ‘boots on the ground’ or indeed in
specialist design team and quantitysurveying offices. It will also need
to focus not just on traditional
construction skills but address the
raft of new roles from the increasing
digitalisation of the industry.
“At present around nine per cent
of the UK construction workforce
is made up of foreign nationals. It
will therefore be important to ensure
that the proposed points-based
immigration system works to secure
availability of key skills required to
support the industry.”
A month ago the Migration
Advisory Committee recommended
a mix of a minimum salary threshold
for those with a job offer and a points
system for skilled workers without an
arranged job. It also recommended a
reduced salary threshold of £26,500.
It was generally welcomed by the
Construction Industry Training
Board (CITB) and the Federation of
Master Builders (FMB).
A few days later the FMB released
research showing experienced
bricklayers, carpenters and plasterers
working six days a week can earn
on average £53,200 a year, taking
into account the eight unpaid
bank holidays. And 54 per cent of
construction bosses are struggling
to hire bricklayers, 53 per cent
carpenters and joiners, 35 per cent
plasterers.
“It is expected there will be a riseThe pent-up demand for new homes
has resulted in our core service
housing projects picking up pace
Kevin Reid, Cruden (below)