What we know
The UK government handed formal notification to the European Council of the UK's intention to leave the European Union. Article 50 of the Lisbon Treaty, which outlines the process by which a member state leaves the EU, states that negotiations must be completed within two years, from the date that official notification was given.
Free movement of labour
There has been no change to the rights and status of EU national in the UK, and UK nationals in the EU, as a result of the referendum, says newly published government guidance.
EU nationals that have lived continuously and lawfully in the UK for at least 5 years automatically have a permanent right to reside, and those that have been in the country for at least 6 years are eligible to apply for British citizenship. EU nationals that have been in the country for less than five years will continue to have a right to reside in the UK in accordance with EU law, without having to register for further documentation.
Doing business in the EU
UK architects will continue to enjoy tariff-free access to the EU market under the European Union Customs Union (EUCU) until negotiations are complete. Tariff and import restrictions on goods will remain unchanged while negotiations are underway.
However, the Government has indicated that it does not intend to remain a full member of the Customs Union.
The UK’s public procurement system is based on the European Procurement Directives, which are in turn based on the World Trade Organisation Government Procurement Agreement. Issues like the procurement threshold and the requirement to open all contracts above this value to competition will be maintained during negotiation.
For architects bidding for public contracts in the EU, no immediate changes are likely. EU law expressly forbids any weight in a procurement decision being given to the country of origin of a bid for a public contract. As such, access to public contracts for UK bids is not dependent on the UK’s membership of the EU.
Product and environmental standards
All EU directives are to be translated into UK national law and regulations. When the process of the UK leaving the EU is complete, there will be greater flexibility for changes to be made, however all legislation will remain in-force unless specifically repealed by Parliament.
The UK’s standards body the BSI has stated that membership to the International Organization for Standardization and International Electrotechnical Commission will not be affected by withdrawal from the EU. While the UK remains a member of the EU, the BSI will retain membership of European standardisation organisations CEN and CENELEC. The BSI has stated that it will be working with government to assess its relationship with European organisations.
It may become more difficult to challenge decisions on affecting the environment. The European Commission has taken the UK to the EU Court of Justice several times over the high cost of challenges of decisions on the environment. The Commission is concerned that the potentially high cost of losing legal actions in the UK is preventing NGOs and individuals in the UK from bringing cases in the first place. Without EC pressure, a UK government may lack sufficient incentive to address the prohibitively expensive possibility of challenging decisions affecting the environment.
Standards in UK or devolved law will remain in force. However UK Parliament will have greater scope to re-evaluate regulations once the UK has left the EU.
Free movement of students within the EU will be maintained during the negotiation period. Research funding and academic cooperation agreements will continue during this time.
EU Funding and Investment
The European Investment Bank (EIB) provides significant investment in infrastructure across the UK, including £16 billion in the past three years. It recently agreed to provide £1 billion for new social housing investment.
The UK is currently the joint-largest shareholder in the EIB but it will have to give up its stake once the two-year period post-Article 50 invocation is up. Since future EIB lending decisions will no longer involve the UK, from that point EIB lending for British-based projects is likely to decrease.
In the meantime, the EIB has said that it will honour its existing deals in the wake of last week’s Brexit vote.
Philip Hammond, the Chancellor of the Exchequer, has guaranteed that the UK will continue to fund projects that were are otherwise in receipt of EU structural and investment funding, and signed off before this year’s Autumn Statement.
What we don't know yet
The Government has indicated that both the House of Commons and House of Lords will vote on the UK’s final deal with the EU.
Scotland’s First Minister Nicola Sturgeon has indicated that the Scottish Government will pursue a second referendum on Scottish Independence. However, indications from Brussels suggest any potential accession by an independent Scotland will not be a straightforward process.
Free movement of labour
The UK government has indicated that controlling the level of immigration into the UK is a top priority. However, they have also acknowledged that there is a need to ensure that the UK can secure the best talent and fill skills gaps. It is yet unclear how the government will balance these competing priorities.
The European Professional Qualifications Directives (EPQD) provides for the mutual recognition of professions across the trade area. Brexit will not necessarily have an impact on this issue, and the UK will have the option to maintain compliance with the directive. The RIBA has put together a further briefing on this issue.
Doing business in the EU
The UK Government has indicated that the UK will not be a full member of the European Union Customs Union, but as yet there is no further information on what the UK’s new place will look like. While the non-EU members of the EEA (European Economic Area) are not part of the customs union, Turkey is currently a member. However, EEA members (Norway, Switzerland, Iceland and Liechtenstein) maintain tariff-free access for goods originating in their countries despite not being part of the EU.
Members of the EEA adopt most EU standards as a condition of access so it is likely that the UK will be required to take a similar approach if we want to maintain access to the EEA.
Leaving the EU is very likely to have an impact on the number of EU nationals studying and working in the EU academic sector.
The UK is one of the largest contributors to the EU research budget - contributing €5.4 billion over the period 2007 – 2013. The best estimate that exists is that during the same period, the UK received €8.8 billion in direct EU funding for research, development and innovation activities. There are clear financial implications for UK universities if the UK chooses not to continue.
EU membership is not a prerequisite for participation in major European research initiatives. The European Council regulations provide for full participation for both EU and non-EU members in ERIC (the European Research Infrastructure Consortium). Non-EU members, such as Israel and Switzerland also participate in major European research initiatives, including the Horizon 2020 programme. The UK Government has indicated that it will seek to continue involvement with major research initiatives.
Impact on the construction industry
Output of the UK construction sector has fallen. The RIBA’s latest Future Trends survey shows that architects workload confidence shows signs of stability, but remains lower than pre-referendum levels. The Bank of England has set out a plan for maintaining liquidity in the financial system. The longer term impacts will depend on what agreement is reached between the UK and the EU and domestic regulatory decision.
The status of the UK’s trade relationship with Europe could have a significant impact on the cost of construction projects in the UK. If the UK stays in the EEA, tariff free trade in goods and services from the EU will be maintained. If the UK leaves the EUCU, the UK will be free to decide what level of tariffs it imposes on goods entering the UK. Imports from outside the EU are currently subject to the EU Common External Tariff. The UK Government would have the freedom to change rates as it sees fit – with consequential changes in the prices of building materials possible.
Representatives from the construction industry have been stressing that it is too early to say what the long-term impact of Brexit will be. This will depend, in part, on whether construction costs are significantly increased through a weak pound and/ or tariff barriers with the EU, whether there is a shortage of skilled labour through migration controls, and the wider impact of Brexit on the economy.
What will the RIBA be doing?
Championing our members
The process of negotiating the UK’s exit from the EU will trigger a broad discussion on a number of issues relating to the day-to-day work of architects. The RIBA has been meeting with Government to discuss key priorities for the sector.
Collaboration with other organisations
The RIBA is working closely with other organisations in the sector and the wider business community to ensure that the UK remains an attractive place to do business. We have been talking to our colleagues in RIAS, RSUA and RSAW the Architects Council of Europe, other professional institutes and key industry stakeholders and working together to lead the debate in the best interests of all our members.
Helping our members adapt to the new environment
Political and financial upheaval can create opportunities as well as challenges. The new circumstances we find ourselves in will require practices to be light on their feet and work with their clients to find and act on those opportunities. Architects are at their best when they can shape and respond to the changing world around us - the RIBA is committed to providing our members with the skills and support they will need.