The Construction Leadership Council was created with a remit to drive improvement within the construction sector. Since its creation, it has worked to encourage collaboration to build a better industry, and to act as a bridge between the public and private sectors in pursuit of this objective. The challenge of responding to the Covid19 pandemic has emphasised the importance of this, and the necessity of creating a more robust and sustainable industry which can build back better as the UK enters the period of recovery. This is why the CLC, through its own members and also through its wider links with the industry, has collaborated and supported the combined efforts of the Cabinet Office and Infrastructure & Projects Authority, with input from across the public sector, to develop and publish the Construction Playbook, and to endorse its aim of creating a more strategic relationship between Government and the construction sector.

Government Departments, other public bodies and the wider public sector represent key construction clients, investing in nationally significant infrastructure projects, capital programmes such as those in education and healthcare, projects that improve our cities and towns, and supporting the delivery of new homes. This spectrum of activity across the sector means the public sector has the potential to drive industry transformation, and how it approaches the development and delivery of construction can provide a powerful impetus for changes in industry practice and culture that extends beyond the projects it funds directly.

That is why the publication of the Construction Playbook is significant. It aims to embed a new approach to the procurement and delivery of construction projects and programmes, which is more collaborative, engages the whole supply chain, encourages investment in innovation and skills, and supports a more sustainable, resilient and profitable industry, capable of delivering higher-quality, safer and better performing built assets for its clients. It will create the foundation for a new approach to construction, where we can utilise digital and offsite manufacturing technologies to increase the capability of the industry, and accelerate the delivery of built assets.

It will also aim to deliver a better and fairer industry, with stronger and more open relationships between the industry and its clients, fewer disputes, and more equitable contractual terms, that ensure prompt and fair payment and a balanced allocation of risk, where these are managed by the organisation best placed to do so. Finally, it will help ensure that investment in construction projects creates the greatest economic, social and environmental value possible, and contributes to the delivery of strategic policy objectives such as our legal obligation to achieve net zero carbon by 2050 and levelling up across the UK.

These goals are our goals at the CLC. We share the Government’s desire to improve performance through new ways of working. But publishing the Playbook is just the first step in the process. For real change to happen, it is important that both Government and the industry embed the principles of the new approach, and invest in their capability to deliver this. The Government will be working to implement this across all central government Departments and public bodies, and mandating the adoption of this approach whilst recognising there is no-one-size-fits all approach to delivery. The CLC will work with organisations across the industry to ensure that this effort is matched, and that the public and private sectors can support each other in this shared endeavour.

 

 

Andy Mitchell
Co-Chair
Construction Leadership Council

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 iainmcilwee@thefis.org

You can access a further details and advice on the Points Based Immigration System Here.

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 31^st 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 1^st 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 1^st 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.

BREXIT: CLC Guide to Conformity Marking of Construction Products

Brexit Update: Demystifying Product Marking post Brexit

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.

You can access contractual advice via the FIS Brexit Toolkit here

Ongoing work

FIS will continue to represent your interests through the Construction Leadership Council and with the various Government Departments calling for flexibility and stronger guidance.

In the meantime, we encourage you to visit our Brexit Toolkit here

Our next Brexit Webinar takes place on 10th December at Midday

BREXIT: CLC Guide to Conformity Marking of Construction Products

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!).

FIS has joined a powerful coalition construction bodies in calling for reverse charge VAT plans to be scrapped.  In a letter signed by 44 bodies, the coalition points out that many SMEs in the supply chain are critical to delivering the Government’s ‘Build Build Build’ strategy.  The introduction of Reverse Charge VAT will have a significant negative impact on the industry, substantially increasing the burden on business and restricting cash flow in what is already an extremely difficult economic climate. 

As a result the changes will particularly impact SMEs that provide both services and materials. This is because they will have to pay VAT on the materials they purchase, including extremely costly elements such as steel, cladding and concrete, but will not be paid the VAT by their customer. For a significant number of companies this will be unsustainable and three case studies are set out are below.

FIS CEO, Iain McIlwee commented – “Whilst construction has powered through the COVID crisis, it has called on a deep reserve of determination and resilience, but we must not make the mistake of thinking all is well and Government can pile on more pressure.  The next few months will be incredibly challenging for construction businesses as we try to manage the pipeline and programme issues that COVID has thrown up and confront the very concerning issues linked to the new immigration system and the potential labour shortage issues that this exacerbates as well as other potential inflationary pressure linked to Brexit.  Many companies are simply battered and bruised and, with cash reserves depleted, facing further challenges from an unprecedented period of change – the Reverse Charge VAT could be the knock-out blow.”

Iain also expressed his gratitude to the working group that FMB have been chairing that has helped to keep this issue on the agenda and bring this coalition together to make a stand.

A full copy of the letter is available here – Joint letter to Rt Hon Rishi Sunak MP

The FIS Reverse Charge VAT toolkit is available here.

In the wake of growing concerns over immigration in 2021 and the impact of tighter rules on the finishes and interiors sector, trade body FIS, supported by Seddons Law LLP, Indigo Group, Lignum Group and Bamboo Project Solutions hosted a webinar explaining how companies should react.

At the FIS AGM (24th November 2020) it was revealed in data provided by economist Dr Noble Francis that EU workers had since 2018 fallen by 40% to Q3 2020, accelerated by a return home linked to COVID this year.  New data from the FIS indicates that 30% of members are already experiencing labour shortages and 62.5% are concerned for what the New Year brings.  FIS has been raising these concerns with Government and continues to lobby for a more phased approach to the new points based system.

The challenge for the finishes and interiors sector:

• The Shortage Occupation List: The common issue for all of construction is the lack of recognition on the Skills Shortage list.
• The Skilled Worker List:  Vital trades across construction are lost in catch-all “other” categories and have been overlooked in the definition of Skilled Worker (e.g. Drylining and Ceiling are included in SOC8149 Construction Workers Not Elsewhere Classified).
• High Reliance on Flexible Workforce:  Contractors in our sector operate in a project lead, phased trade environment and as a consequence of the nature of work and procurement practices relies heavily on contingent workers, this is not well recognised in the new system.

The webinar now freely available online here outlined how the new points based system will operate and how companies should start preparing for initial changes in January, followed by further tightening in June 2021. The event also warned of new company responsibilities and growing concerns about the potential for abuse of the system through modern slavery.

FIS continues to lobby government on these issues and has a meeting, with colleagues from the wider construction sector and the Home Office on the 4th December.  If you haven’t completed our labour market survey before this point, please do so here.

The FIS has set up a dedicated section on immigration in their Brexit Toolkit here.