Investors want openness and transparency
This article was produced in association with RICS
The sectors covered by professionals of the Royal Institute of Chartered Surveyors (Rics) are central to the government’s pledge to tackle the housing shortage, the infrastructure deficit, low industrial growth and poor productivity. In each of these areas there are two issues that we must confront, with urgency: skills and labour shortages; and investor confidence. If we do not take action on both, then the government’s ambitions will be either delayed or at worst, they will come to naught. Rics believes that more investment in the promotion of careers is vital, as are education and skills training, all combined with a strong emphasis on high ethical and professional standards. It will take a substantial effort, but the launch of the government’s industrial strategy and the prime minister’s willingness to listen to industry both give cause for hope.
And yet, the shortage of skilled labour in the construction sector is chronic—its worst position in over 20 years. Chartered surveyors, responding to our surveys, note long-standing skills shortages in housing and construction markets. Our research shows that up to 8 per cent of the construction workforce—175,000 workers—is from the EU. Losing access to them could be a serious setback. The government must ensure that EU workers are aware they can attain settled status.
More must also be done to develop home-grown talent. We, and our member firms, are working to develop talent and to promote careers in construction, especially in schools, where the opportunities on offer are not well understood.
Construction also requires investment— the industrial strategy is short on details to that end. EU membership means access to a number of EU funding streams, notably the European Investment Bank and European Structural and Investment Funds. Between 2012 and 2016 the UK benefited from €31.3bn of investment; €6.9bn of EIB investments in 2016 alone, the fifth largest in the EU.
This funding fed energy, transport and communications projects across the UK. The uncertainty surrounding future relations with the EU will severely impact the delivery of infrastructure projects. Well-planned and properly-financed infrastructure development boosts productivity which, in turn, attracts further investment—a virtuous circle. Given the present political and economic uncertainty, that investment is needed now more than ever.
Strong ethical and professional standards give investors confidence. Rics has been leading on the development of international standards with 100 other organisations
across the world since 2013.
With our ageing infrastructure, and public sector investment set to fall to 1.4 per cent of GDP by 2020 (from 3.2 per cent in 2010) the private sector has a critical role to play in updating Britain’ infrastructure. Post-Brexit, a significant level of infrastructure investment will be needed if the UK is to remain competitive. The government commitment to the Cambridge- Oxford-Milton Keynes corridor development plan is commendable but the UK needs several such plans.
The UK government’s aim to build 300,000 homes per year is impressive—but international investors do not just look to the UK for opportunity. Long-term investors seek certainty and transparency. Brexit threatens to reduce or remove or damage all these qualities, which may explain the recent drop in investor sentiment and the construction sector contraction.
The adoption of international standards will attract investment from both domestic and international sources and ensure the UK’s continued, and globally-recognised, excellence in construction. This may help to offset some of the Brexit apprehension among investors. The Rics paper “Attracting Infrastructure Investment Through International Standards” sets out the case in full.
International Construction Measurement Standards can be a key tool to manage investments. These can allow investors to monitor progress against costs. The UK construction and infrastructure sectors are competing in a global marketplace. Standards of this sort can make Britain more attractive.
Infrastructure investment will benefit the UK now, and for future generations, and the debate needs to be at the top of the political agenda.
Increased transparency, using qualified and regulated professionals who work in the public interest and who conform to globally recognised standards, will ensure the sector continues to be held in high regard, both domestically and globally. And this in turn will provide the best chances for the government’s industrial strategy to succeed.
Brexit Britain: the future of industry is a publication which examines the future of UK manufacturing through the prism of the recently released Industrial Strategy White Paper. The report features contributions from the likes of Greg Clark MP, Miriam Gonzalez, Richard Graham MP and Frances O’Grady.
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