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SFHA report finds 70% of respondents think Brexit will decrease capacity of construction workforce to deliver new homes

Report on possible effects of Brexit on housing associations

A new report on the potential impact of leaving the European Union on Scottish housing associations and co-operatives has found that 80% of respondents foresee a possible negative impact.

The key areas of concern highlighted in the report, The Potential Impact of Brexit on Housing Associations in Scotland, released by the Scottish Federation of Housing Associations (SFHA), are the ongoing uncertainty; impact of uncertainty on financial markets and impact on private finance; and the possible impact on construction and workforce supply chain and costs.

However, the report also found some organisations are more pragmatic and see some balance between the risks and opportunities of Brexit.

SFHA members prioritised their key areas of concern as follows:

  1. Capacity of the construction industry to deliver new social housing developments
  2. Financial investments via European funds for social housing
  3. Equally weighted were: workforce capacity for service delivery and private sector investment in social housing
  4. Potential changes in regulation and procurement
  5. Demand for social housing and future developments

Nearly 70% of respondents think Brexit will decrease the capacity of the construction workforce to deliver on new social housing developments and over 80% believe it will impact on the supply chain of trade and building materials through increasing costs in general – inflation and exchange rates – and in building materials and components in particular.

One respondent stated:

“Many components are sourced from the EU, or contain materials sourced from the EU, which could potentially result in cost increases or shortage of supply if trade agreements are not in place when the UK leaves the EU.”

However, some members said they thought opportunities could arise from leaving the EU regarding developing a greater supply of Scottish and British construction trades and an increased workforce.

While the majority of respondents said they have not experienced any change in attitude from potential private finance providers or investors since the referendum, there are examples of uncertainty and concerns in future growth and development plans due to current discussions with lenders.

Two thirds of respondents do not foresee any change on the Scottish Government’s Housing Association Grant (HAG) rate but some consider overall pressure on Scottish public finances may result in reductions of HAG overall. A respondent stated:

“If support from UK Government has to be reduced to meet additional costs as a result of Brexit, then there is potential for an across the board reduction in grants, including housing.”

Not surprisingly, 90% of respondents said Brexit will ‘significantly restrict’ access or ‘restrict’ access to three investment options in particular – the European Investment Bank, European funds such as the European Social Fund, and the European Regional Development Fund. Many communities have benefited from the wider community development work which housing associations do, much of which is currently paid for using EU funds.

Mary Taylor, Chief Executive of the SFHA, said:

“The capacity of the construction industry to deliver new social housing is paramount at a time when 50,000 affordable homes are to be delivered within five years. It is therefore a huge concern that almost 70% of respondents to our survey think Brexit will decrease capacity of the construction workforce.

“While there is little optimism about the challenges ahead, there is a recognition that it may prompt better training and employability opportunities. However, to exploit those effectively, and minimise disruption, we need to start acting now. I have already written to Scottish Ministers to encourage them to create a significant number of apprenticeships in order to safeguard the future of the housebuilding sector in Scotland.

“Access to funding and investment is also an area of huge concern for the social housing sector, and we will be seeking clarity on the situation as negotiations progress.”

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