Industry groups have warned that builders have been forced to shut down their tools in the “worst case of construction” questioning Britain’s economic recovery.
The cost of building materials has skyrocketed by 20%, exacerbating the problems facing the UK economy, worth around £ 117 billion.
Worker shortages and delivery delays in the UK, combined with global supply shortages and the new Brexit bureaucracy, have already ruined construction projects across the UK, leading to higher prices.
In addition to rising supply costs, global transportation bottlenecks and a shortage of heavy truck drivers have forced many small construction companies, which account for about 90% of the sector, to put projects on hold. increase.
Building material costs rose 20% year-on-year in July, according to figures released by the business unit on Wednesday. Independent. Evidence collected by the Bank of England during the three months to June suggested that supply shortages and labor constraints were beginning to impede sector recovery.
On Friday, homebuilder Berkeley became the latest construction company to warn investors about the impact of inflationary pressures on the cost of building materials.
He warned of the ongoing supply chain and labor market problems caused by Brexit and the pandemic, saying that despite strong home sales, the business environment remains harsh for the construction industry.
Andrew Goodwin, UK Chief Economist at Oxford Economics, said construction accounts for about 6% of UK economic output and significant delays in the project “recovered if the construction company did not complete the project quickly. May have a knock-on effect. ” , Consultant company. This is not yet sufficient to significantly reduce total GDP growth, but there is a risk that prolonged these delays could exacerbate the problem.
“If you stop building work because you know people are facing delays, it will start to have a real impact on the wider economy,” Goodwin said. This is because it can undermine self-confidence and discourage people from spending the savings accumulated during the pandemic-induced blockages on improving their homes.
Still, despite the risk of growing handbrake, a request from the Master Builders Federation and other industry groups to alleviate the shortage of truck drivers by issuing temporary visas to EU drivers was rejected by a business secretary last week. it was done.
The logistics industry, which is already facing challenges due to Brexit, needs to deal with the further turmoil during pandemics due to maritime and road freight issues, which contributes to higher costs for businesses. Large construction companies can stockpile, but managing supplies is especially difficult for small construction companies who have to rely on the daily inventory of the contractor’s merchants.
Still, according to those familiar with the discussions within the Construction Leadership Council of the business unit, including government officials and various construction industry groups, the business unit has some practical steps to help address the issue. Has not been reached. Industry insiders familiar with the group said they felt the government was missing out on the ongoing “best storm for construction.”
Some issues, such as the global shortage of certain products, are out of the control of the government, but there are immediate changes that the government can use to ease pressure on the sector, such as fine-tuning the immigration system. The insider said.
Brian Berry, Chief Executive Officer of the Federation of Master Builders (FMB), said:
“According to the latest FMB membership survey, 98% of small builders are seeing price increases and expect this to continue until the fall.
“That’s why it’s so important that a significant amount of material reaches local merchants, and we’re helping FMB put HGV drivers on the list of deficient occupations and call for alleviating distribution delinquency. “Berry said. He added that builders must rely on the understanding of the head of household as their work timeline grows.
The construction crisis is in the midst of the government’s promise to “rebuild better,” pushing for efforts to improve the energy efficiency of UK housing to achieve climate change ambitions.
According to Jonathan Portes, a professor of economics at King’s College London, investment in infrastructure will be at the highest sustainable level since the 1970s if government plans proceed. He said the government is borrowing at low interest rates to make “hardcore” investments in long-term infrastructure projects.
“But to make a physical investment, you need to have construction workers on site,” says Professor Portes.
One of the biggest problems construction companies face when looking for skilled workers is that the Interior Ministry has been unable to tailor the post-Brexit immigration system to meet the needs of the industry. Many workers, including those from Eastern Europe, are self-employed contractors and groups that are not well serviced by the new UK immigration system.
“Actually, it’s very generous for middle- and high-income employers, but there are no provisions for self-employed people,” said Professor Portes.
A business spokesperson did not answer questions about the sector’s request for changes to immigration rules.
However, they said that the ongoing problem in the supply of materials was that “global demand exceeded supply and the ongoing disruption of manufacturing operations, transportation and logistics caused by the global Covid-19 pandemic. It was caused by the combination of. “
Their spokesperson added that the government monitors the supply of products and materials and “cooperates with the construction sector on these issues through regular meetings of the Product Availability Group of the Construction Leadership Council.” ..