Brexit looms, a deal remains elusive and we continue to be inundated by messages from the Secretary of State and various government departments to, “get ready”, but there remain some real challenges and uncertainty. There are some practical things you can do, but “Get ready” may mean in some cases “brace yourself and be prepared to flex fast”. At FIS we have produced the Risk Assessment Toolkit and continue to run webinars on key issues (next is the 10th December at Midday). Here we look at three of the big issues impacting the Finishes and Interiors Sector.
ISSUE 1: People (The Points Based Immigration System)
The new points-based system means there is additional cost to bring workers in, even if you can get to the 70 points required, which is very difficult for most occupations in our sector.
The Home Office have not, in the opinion of FIS, adequately considered the COVID effect when applying the Points Based Immigration System. It is creating a real concern on three levels. Firstly many skilled workers have left the UK due to COVID and a combination of currency fluctuation and work at competitive rates in or near their home country means that they do not now intend to return. Across the sector we employ around 175,000 people, circa 40% of all workers are from the EU and according to the ONS the number of these workers available has declined by 40% to Q3 2020. The Home Office have not adequately taken this into account when appraising the shortage occupation list. Secondly they are relying on out-dated Standard Occupational Codes (2010 as opposed to 2020) with no granularity applied to the occupational areas included in “other” categories. As a consequence, trades such as ceiling fixing and drylining have been classified wrongly as semi-skilled. Finally the system fails to recognise and guidance is not forthcoming about workers employed through the Construction Industry Scheme (CIS), via agencies and through umbrellas, the tax system recognises the need for a contingent workforce in construction, the immigration system does not.
Whilst we had been reassured that the Points Based System was designed to be flexible, a recent meeting with the Home Office advised that no change is likely until 2022. We are optimistic that we can increase our trainee and apprenticeship programmes, BUT we need time to train (e.g. 18 months to train a dryliner). A drive to employment seems to be motivating Government, but this requires a radical rethink of procurement practices in construction. In the interim this leaves us with the potential of a shortfall in labour that could inflate rates, delay programmes and projects starts and could even make it difficult to fulfil existing contracts.
The solution must be to look at phasing the changes in over a longer period, allowing applications for pre-settled status to run into next year. We can then work with the Migration Advisory Committee to understand the impact and how we can progressively tighten the immigration process together, controlling flow of workers at the same time as improving the training infrastructure. The alternative is huge uncertainty and business failures damaging our ability to adapt as a sector. This will in turn impact the nations home building and infrastructure programmes and constrain the potential of construction for the UK economy.
FIS continues to lobby on behalf of our community here, but if you are impacted, we have prepared a template letter that you can use to contact your MP. To receive a copy of this template, simply email firstname.lastname@example.org
ISSUE 2: Product (Movement and Marking)
For many who already export or import products, change will largely mean a bit more admin, tariffs and communication to reassure your clients. If you are already trading internationally, then it should be relatively straightforward.
First time importers and exporters (i.e. those that have not previously purchased product or sold product from outside the EU) you will need to add some new processes, make sure they understand the product marking and consider tax implications and any tarriffs, but beyond a bit of bureaucracy it should be manageable. We have had questions raised as to whether UK Test Standards will still be applicable for export – realistically there should be no change if Building Regulations or Codes in the respective country are not altered to remove reference.
However, there is a big BUT….
If your products are currently subject to the Construction Products Regulation and rely on CE marking then it may not be so straightforward. Whilst there is a 12-month transition (to January 2022) before UKCA and UK NI marks become mandatory, as far as the EU is concerned all UK notified bodies lose their status to issue CE Marking Certificates from midnight on the 31st December 2020. Exporters need to be working now with their notified body (or notified test laboratories) about transfer of certificates to European Notified Bodies and validity of evidence for ongoing CE Marking if declaring using The Assessment and Verification of Constancy of Performance (AVCP) System Level 3 (e.g. Gypsum Products, Flooring and Internal and external wall and ceiling finishes) .
The impact goes beyond exporters, this EU Commission stance means than any Declaration of Performance (to support CE Marking) that relies on Engineered Technical Assessments (ETAs) from a UK Notified Body or where CE marking declarations is made using AVCP System Level 3 and where Tests have been conducted in a UK Notified Laboratory, will be invalidated from 1st January 2021. Government has confirmed that, if you cannot switch to an EU Notified body to continue CE Marking, you will be expected to start UKCA Marking with immediate effect from 1st January 2021.
Above applies to all supplying the GB market from 1st January 2021 (regardless of whether you are an importer, exporter or domestic manufacturer). UK Approved Bodies will be allowed to issue the UKCA mark from 1st January 2021, but the legal structure is not yet in place and concerns are mounting that it may not be in time. Time is running away to manage the associated logistics of stamping or labelling products, uploading and replacing declarations of performance and updating manuals/marketing literature and packaging.
A question therefore remains what to do if you cannot maintain your old CE certificate (due to the status of your notified body) and UK Approval Bodies are not ready to issue a UKCA certificate to allow the UK company to operate legally? Government Guidance on UKCA confirms that “in some cases you will need to apply the new UKCA marking to goods being sold in Great Britain immediately from 1 January 2021”. It is important to remember that the entity “placing the product” on the market will have responsibility here.
As well as what to put on the product when you make it, you must also consider stock and if you have manufactured for stock that has not yet been “placed on the market” or wish to supply into Northern Ireland (where UK Approved Bodies can play more of a role initially and support the issue of the UK NI mark). It is also vital to consider if your product is a system or an assembly (a set of discrete components), if the latter, you will need to consider the CE marking of each individual item.
ISSUE 3: Process (Possible Delays, Costs and Tarriffs)
There are growing concerns around delays at UK ports holding up crucial deliveries. This weekend the Builders Merchant Federation warned that the ports were becoming a “major issue” for its members with products that would normally take one week to clear, taking up to four.
Since September, the country’s biggest container port, Felixstowe, has been handling about 30% more goods than usual, with businesses rushing to replenish stock after the end of lockdowns and building stockpiles before the end of the Brexit transition period. As a consequence of hold-ups there have even been reports that loads destined for the UK being partially onloaded or dumped at European ports.
According to the BMF the high level of demand has prevented the building trade from stockpiling in the run-up to Brexit. Shortage areas mentioned include screws, timber, ironmongery, tiles, fixings and electrical products. A fear is that this could drive further inflation.
Clearly depending on your position in the supply chain, the impact will impact you in different ways, but one thing that is vital is that we must all check our contracts to ensure that any responsibility and impact of delays is not unfairly set as our responsibility.
FIS will continue to represent your interests through the Construction Leadership Council and with the various Government Departments calling for flexibility and stronger guidance.
Blog prepared by Iain McIlwee 8th December 2020, updated on the 10th December (correct to the best of our knowledge at the time of writing!).