Brexit: UK-EU Movement of People (EUC Report)

Lord Stunell Excerpts

Monday 17th July 2017 Lords Chamber

[Lord Stunell (LD)]

I am delighted to contribute to this debate. I thank the committee for its diligent work in bringing forward this report, which brings into plain sight many of the issues and concerns which certainly ought to be important to Members of this House but even more so to those outside it, who wait very anxiously to see what the next 19 months of negotiation will produce.

I speak not only to the report but also draw attention to a report launched last week by the All-Party Parliamentary Group for Excellence in the Built Environment, entitled Building on Brexit, which looks particularly at the implications for the construction industry and those who depend on it. I very much commend that report to the Minister and the department. Indeed, I think that several departments would benefit from seeing the evidence that has been brought forward. I need to declare that, rather too generously, the authors of that report have credited me with participating in it. Be that as it may, I certainly commend what it says.

I focus particularly on chapter 4 of the EU Committee’s report, which relates to EU migration for low-skilled work. The noble Baroness, Lady Prashar, skilfully brought out the way in which the Government have discriminated in favour of what is determined high-skilled as opposed to low-skilled work. She made the point—as does the report—that that distinction seems to be unnecessary and is potentially confusing and damaging. The Government have a clear view that high-skilled migration may be desirable but low-skilled migration is undesirable. The problem, of course, is that there is a very poor correlation between skill and pay. The point is made in the report that nurses are low-skilled according to the criteria currently used. That is why they have needed to be considered as belonging to a shortage occupation rather than be dealt with as highly skilled and highly desirable workers. Recognition of that is very important. I therefore hope that the Government will consider the fact that in many industrial sectors—the construction industry is certainly one—pay levels do not give a good guide to skill levels; therefore the skills versus unskilled argument is not appropriate.

The National Farmers’ Union gave evidence to the committee, which is reported, that the strawberry crop in the United Kingdom was at risk unless there was a freedom to permit EU 27 migrants to come and pick it. It made the point that 50% of strawberries in the UK are now homegrown—or rather, farmgrown—and that that could be at risk if that migration was not permitted. I do not know whether pressure from the All-England tennis club or from Buckingham Palace will mean that special arrangements will be made; I rather suspect that they will, because we have heard Ministers comment quite favourably about the need to accommodate the horticultural sector in the final agreement.

That brings me to the second report I referred to: Building on Brexit. The construction industry does not pick strawberries—it builds houses. It is responsible for flood prevention works, the schools expansion programme—we have just had a Statement saying that further schools are proposed—and there is a prison-building programme and HS2. In fact, £500 billion-worth of infrastructure work of one sort or another is in the pipeline. KPMG has estimated that to deliver this, the construction industry is required to expand by 35%. Who delivers it? It will be delivered by a 2.9 million-strong workforce in every part of the country, comprising 8% of GDP, which is bigger than aerospace and vehicle manufacturing put together. In other words, construction is a strategic industry, and it is being taken for granted. It does get a mention in the committee’s report, but, even so, somewhat marginally. It currently employs around 200,000 workers from the EU 27, and if those no longer come, that will lead to a 7% reduction in capacity. So, at a time when government projects and policies are looking for a 35% increase in construction’s capacity, the consequences of a hard Brexit would be a reduction in capacity of 7%. The Federation of Master Builders, in Building on Brexit, is recorded as saying that at the moment, 58% of its members—small builders, building houses around the country—are already having difficulty recruiting bricklayers, 57% are having difficulty recruiting carpenters, and 32% are having difficulty recruiting electricians, and that is pre-Brexit. Barratts, the major housing developer, which employs 4,500 people in London on a housing programme which is desperately needed, says that 57% of its workforce in London is from the EU 27.

There are course opportunities—I was interested to hear what the noble Lord, Lord Trees, had to say about vets—for recruiting, retraining, mentoring and developing a UK workforce. However, some of the work there is far from advanced. One of the figures that was recorded in the second report is that 90% of trainee bricklayers never get round to working in the building industry laying bricks. So there are some fundamental problems, which have to be dealt with on quite a lengthy timescale and which cannot be dealt with in the next 19 months. The RIBA reports that 25% of architects registered in this country are from the EU 27. It is not a solely a question of those working on the sites.

The gender balance in the construction industry is very poor—about 9% are female. However, probably not too many of your Lordships would recommend your 16 year-old granddaughter to take up a life in the construction industry, although you might recommend them to be a vet, judging by what we have heard so far. At a time of practically full employment—here I wonder where the noble Lord, Lord Green, thinks things will be going—it is extremely difficult to see how the construction industry in the short term will have either the appeal or the capacity to grow using UK manpower and personpower.

There are deep problems with regard to skills and development, which are for another day. But I will press the Minister on one or two key points with regard to how the migration system might be developed over the next couple of years. First, if you need an evidence base, some things have to happen if you want 1 million homes and all those other projects. Does the Minister accept that construction is a strategic industry? This will be about how key government policy objectives are delivered, and without it flourishing, those objectives cannot be delivered. If we do not have enough strawberry pickers, we can import the balance, and if there is not enough investment in the car industry, we can import them from elsewhere. But if you want more houses, you have to have bricklayers and carpenters in this country, building the homes that are needed. Of course, we all know that Brexit will lead to an “export-led economic boom”. I do not know whether that is in the same category as the £350 million. But let us take that at face value and say that that means more laboratories, factories, warehouses, ports, roads and rail investment. Where will all that come from? It will come from the construction industry, which looks like it will be shrunk by 7%, when there are already objectives which require it to increase by 35%.

Does the Minister agree that construction cannot be left in the third tier of industrial sectors of minor importance when it comes to getting Brexit deals and policies? If she accepts that it is a strategic industry and that it must be pushed up the priority level, does she also recognise that special action will be needed to safeguard and deliver it? That includes safeguards for the workforce that is already in this country, allowing construction firms to rotate people in and out—you do not necessarily work for two years on one project, as there are all sorts of different ones—making sure that the shortage occupation list properly reflects the needs of the construction industry, probably changing the income threshold at least, and certainly not moving towards a tier 2 visa system where an extra £1,000 or £2,000 per year premium will be placed on every person employed in the industry, and where, as the evidence in the EU report says, three to eight months is a normal delay to expect when an application is put in. Will the Minister encourage her Government to work with industry on a massive training package of recruitment, training, mentoring and retention to make sure that in the longer term the construction industry can go on delivering what is needed?

Finally, can the Minister say when she expects the Government to respond to the Farmer review, which looked at many of these structural issues in the construction industry, and when she intends to see the Morrell report on the construction industry training board published? Both of those are part of the longer-term solution which is so urgently needed as well. I do not say that Brexit is the cause of the construction industry’s woes at all, but it has brought into sharp relief the need to do something very quickly to stop government policies simply running aground as the construction industry shrinks.