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UK’s snap general election – a chance for a better Brexit for construction?

9th May 2017

A little over ten months since the EU referendum, we are yet again thrown into the season of elections. Prime Minister Theresa May has called a snap general election on 8 June 2017, and this has already been dubbed the “Brexit election”, given that the Prime Minister has painted it at the outset as a fight for a mandate for Brexit negotiations. Sir Keir Starmer, Labour’s Shadow Secretary of State for Exiting the EU and former Director of Public Prosecutions, described the snap election as offering “a choice of two visions of Brexits”, although that is an understatement given the wide spectrum of party manifestos the electorate is being presented with.

This development has created yet another layer of uncertainty, so much so that the RICS notes that there is a continuing deferral of investments and hiring decisions in the construction industry. Nevertheless, it would be helpful to understand some of the key implications of the snap election on Brexit and the construction industry.

Whilst all the major parties are hammering out their manifestos and soldiering on in their campaign trails, their policies on Brexit at a very high level of generality (as currently known) can be summarised as follows:

Party Leave Single Market

(“Hard Brexit”)

Stay in Single Market

(“Soft Brexit”)

Support Free Movement of Citizens/Workers Second referendum on Brexit deal
Conservative X    
Labour   X    
Lib-Dem   X X X
SNP   X X  
Plaid Cymru   X X  
Green   X X X
UKIP X      

 

All of the major parties accept that Brexit will take place, and although the recent YouGov poll suggested that more Britons think Brexit is bad decision than a good one (45% vs. 43%), that is unlikely to reverse the reality of Brexit – the die is cast. The snap election is therefore, as canvassed at the beginning, more a choice of the version of Brexit and the shape of the final deal with Brussels.

Indeed, the Prime Minister herself has admitted that the key purpose of calling this election is to get a stronger majority, a better mandate to negotiate and achieve the final deal, in order to ensure a smoother Brexit according to the Government’s vision. However, as noted in Building magazine, “the benefits to the [construction] sector of a strong parliamentary majority will only be felt if that majority is used to push for the right things”.

Other commentators such as the Economist have suggested more hopefully that a stronger majority could enable the Prime Minister to “face down ultra-Eurosceptic backbenchers” and “strike sensible compromises with the EU”. This coincides with interesting comments from John Callilan, Ireland’s top Brexit official, that there is “a gradual realisation that Brexit in many ways is an act of great self-harm, and that the focus now is on minimising that self-harm”.

As we are still waiting for the manifestos from all the major parties, it is premature to speculate too much on the result of the snap election and the likely policies which would ensue. However, as far as the construction and infrastructure are concerned, the snap election can be a chance for the industry to make its voice heard and elicit commitments to protect the industry from the significant risks posed by Brexit. As Lord Stunell has rightly observed, “now is the moment construction could actually have some leverage as party candidates try to impress voters with their various local infrastructure project wishlists”.

Two immediate issues spring to mind, namely securing labour and other construction resources, and a commitment to supporting housebuilding projects across the UK to stimulate the industry.

In terms of labour resources, there will inevitably have to be continuing efforts in pressing for measures to enable EU construction workers to continue coming to the UK and meet the current well-documented labour shortage, before the fruits of the new “T-levels” materialise in the long run.

As for housebuilding, a stronger majority could help accelerate current commitments as expressed by the Chancellor in the Autumn and Spring Statements, and ensure that there is a stable increase in construction projects and output for the near future. It would be helpful to have express policies in the manifestos on increasing housing supply, and this is a real possibility in the light of the Government’s ongoing initiatives and the constant clamour from the opposition in recent years.

Therefore, the obvious priority now is to give the next Government a strong mandate based on specific policy commitments supportive of the construction and infrastructure industry. As the Economist noted in a recent article, the danger is “a shortage of meaningful election promises to which she can later be held”, which “would put Mrs May in a freer position than any recent predecessor to do whatever she chooses when it comes to policy—for good or ill”.

Whilst anecdotal reports abound on Jean Claude Juncker’s supposed comments to the Prime Minister that Brexit “cannot be a success”, and there will inevitably be much posturing from both sides throughout the negotiations, none of that should change the industry’s fundamental focus. The construction industry should make active and constructive recommendations over the coming months and years, whilst carefully managing the potential risks of Brexit when taking up new building projects, with careful contract drafting and detailed advice of legal advisers.

Mathias Cheung

Mathias-Cheung-Atkin-Chambers

Mathias’ practice covers all areas of Chambers’ work, including construction, engineering and infrastructure, energy and utilities, information technology, and professional negligence. In addition to these specialist areas, he has gained experience in a wide range of commercial disputes, including cases on fraud, insurance, assignment, subrogation, and conflicts of law. Mathias is also the winner of the SCL Hudson Prize 2015 for his essay entitled ‘Shylock’s Construction Law: the Brave New Life of Liquidated Damages?’.

As a native of Hong Kong, Mathias is fluent in both Cantonese and Mandarin, and he is therefore able to take instructions for cases involving Chinese-speaking parties and Chinese documentation in Hong Kong, Mainland China, Singapore and other jurisdictions.





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