A Euro Vision: What Brexit could mean for planning and building projects
- Published: 15 June 2016
With the European Union (EU) Referendum looming, the potential implications and debates surrounding the two choices – whether to stay or go – are becoming increasing visible to the British population. A departure from the EU will result in the UK making its own amendments to laws previously imposed by EU directives. And it’s not just about controlling its borders and the migration of workers allowed to live and work in the UK, but it also concerns EU legislation, environmental regulation and changes to funding that could affect how planning and building in the UK will be undertaken for years to come.
The option to vote on the UK’s membership of the EU has been on the political radar for years. Events following the referendum date (Thursday, 23 June 2016) will mark new beginnings for the UK, regardless of the outcome. Parties backing the ‘In’ campaign champion that the UK needs the EU. The EU is good for trade, the free movement of people to live and work, and the skills, culture and diversity of being part of the European family. But with Britain’s credit rating currently scored at AA+ with a stable outlook, could it also be that the EU needs the UK? Not least because an exit from the European Union could hurt the credit ratings of other EU countries with close trade or financial links to Britain – including Germany, the Netherlands, France, Spain and Ireland. Furthermore, an ‘Out’ victory could subsequently see Scotland leaving the UK and potentially encourage other smaller countries and regions to seek independence. If the UK does exit the EU and continue to prosper, other countries may follow suit and negotiate leaving the EU too. Should the UK vote to leave, the so-called Brexit terms would define how aspects of life, such as planning and housebuilding, would be affected.
The Need to Build
When it comes to housebuilding needs in the UK, what impact could Brexit potentially have? In broad and simple terms, a drop in EU migration to the UK could reduce the need for new houses to be built. This would lead to a reduction in housebuilding, which in turn could slow or even stall economic growth and result in potential redundancies from building firms. Any adverse economic conditions in the wake of Brexit, affecting multi-million pound industries such as construction, could make the UK increasingly susceptible to economic instability. It could also cause a fall in property prices. For example, accountancy specialists have indicated that 66% of real estate experts think Brexit would damage overseas investment in London’s property market. The International Monetary Fund (IMF) has also warned that the unknown outcome of the upcoming referendum and soaring house prices, often far outpacing wages, are threats to Britain’s successful economic recovery. IMF’s managing director Christine Lagarde has stated that a vote for Britain to leave the EU would leave ‘no winners’ and that the negative effects of the impending vote are already being felt.
On the flipside, in the event of Brexit, housing need assessments could become more accurate, flexible and reliable. If the UK was able to closely control immigration from other EU member states – by creating its own rules as part of a wider policy of restricting entry into the UK – it could reduce the potential for inaccurate forecasting of housing needs and other demographics affected by increased population, such as infrastructure or health matters. But as MP Chris Grayling acknowledges, building on the scale recommended by the EU Commission to match demand, due to immigration into the country, would fundamentally change the ‘nature and character’ of the UK.
Planning for the Future
The EU affects many aspects of our lives, including having a direct impact on UK planning policy. For example, in 2015, the European Commission used the terms of the EU Stability and Growth Pact 2010 to recommend that the UK took steps to increase housing supply and also called for reforms to the National Planning Framework. Outside the EU, the UK would be able to control its own laws and requirements, matching them directly to UK, rather than EU requirements. As an example, the UK could review the way EU environmental regulations are applied. For planners Environmental Impact Assessments (EIAs) and Strategic Environmental Assessments (SEAs) are the result of EU directives from Brussels applied to UK law. EIAs look at the anticipated measureable effects on the environment of proposed developments or projects, while a SEA is a systematic decision support process that ensures environmental and other sustainability aspects are considered effectively in policy, planning and programme making.
However, many UK infrastructure projects, which are often directly linked to housing needs and population fluctuation, are also part-funded by the EU at various stages of their development. Depending on the degree of the UK exit from EU legislation, this could result in major changes in the way large UK infrastructure projects are implemented and financed. And even the Europe-wide transport network could be redrawn to bypass the UK, should UK legislation no longer be compatible with the EU. Brexit would also terminate the UK’s membership of the European Investment Bank (EIB), which would affect future infrastructure plans. In the last three years, the EIB has invested approximately £16 billion in UK projects, including funding the £280 million expansion of facilities of University College London, and a £700 million contribution towards the Thames Tideway Tunnel. The UK is among the largest shareholders in the EIB and benefits significantly from its funding – in 2015, EIB lending in the UK reached a record amount of €7.77 billion. There are many huge question marks about how UK and EU will look following the referendum and only time will tell how it will fully impact the building and planning sectors. But…however the vote goes in June, the only certainty is that nothing is certain.