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Maintaining standards through Brexit and beyond

The Health and Safety Executive released data in 2018 showing a 27% increase in construction fatalities in the past year[i].  Then in another blow to the sector, at the start of 2019, a report by Construction News stated that there had been a rise in construction fires between 2015-17[ii]

As an insurer specialising in insurance cover for mid-size contractors and in particular those working in the electro-technical sector, the statistics are worrying but perhaps indicative of the challenging environment facing contractors today.  Challenges that may be exacerbated further as a consequence of Brexit.

The first of these challenges is a shortage of skilled workers.  Research from ECIC in 2017 found that 78% of UK contractors had been impacted by this scarcity[iii]. As Britain’s workforce of skilled contractors has aged, with 500,000 expected to retire in the next ten years,[iv] the younger generation joining the sector have struggled to fill the gap.

The dearth in skills has been filled to some extent by a significant population of migrant workers with 1 in 3 construction firms using this valuable resource according to research by The Construction Industry Training Board[v].  However, based on the Government’s Brexit white paper[vi] following Brexit, this resource is at risk of dissipating.  

Scarcity of skills may push labour prices higher and increase reliance on subcontractors.

Bringing in ‘subbies’ on site, inevitably, has its own considerations and risks.  Electrical contractors must fully appreciate the differences between bona-fide and labour-only subcontractors and what their responsibilities and requirements are to them from a health and safety perspective.

Labour-only subcontractors generally work under the direction of the electrical contractor who will typically provide materials for the job.  The electrical contractor’s duties towards labour-only subcontractors are the same as to their own staff.  Their health and safety documentation and procedures should reflect this.  Electrical contractors must recognise the specific skill and experience of a labour-only subcontractor and consider additional health and safety procedures where necessary.

In comparison, bona-fide subcontractors are generally deemed to be specialist contractors who are responsible for their own systems of work and control the work undertaken by their employees. They are responsible for managing their own health and safety risks for their element(s) of a contract. The electrical contractor should satisfy themselves that bona-fide subcontractors adopt safe working practices and produces suitable risk assessments and method statements.  They should also ensure they carry suitable insurances to cover the works they are undertaking.

It is also important to note that the main contractor on a project will retain responsibility for overall health and safety for a site as detailed in the Construction (Design & Management) Regulations 2015. They have a duty to clearly and effectively communicate health and safety measures, and matters relating to risk management to the electrical contractor and their bona-fide subcontractors which usually takes the form of a site induction.

The second challenge is rising material costs. Almost all construction materials are imported and may be subject to tariffs following Brexit. This may lead to reductions in supply as companies become more cautious in their ordering which may in turn drive up costs further. If contractors resort to using cheaper materials this could have massive implications for worker safety during the construction phase and the longer term safety and integrity of the building.                 

The hard truth is that aside from the high personal cost of accidents at work, all these factors could give rise to an increase in insurance claims and insurance premiums may increase to correspond with this. 

To help mitigate against these risks, seek out an insurance broker who understands your market and the daily risks you face.  This will help to ensure you have adequate protection when you need it most.  Be honest about your business challenges – your broker may be able to recommend additional protections such as legal expenses insurance, tax advice or  professional indemnity insurance. 

Also invite a risk management expert to review your health and safety processes if you haven’t done this for some time.  At the very least, ensure you have a process in place where every worker attends toolbox talks and signs a risk assessment as the start of each job to confirm they have read and understood the risks they will be dealing with and the protective tools and measures they have agreed to take to mitigate those risks.  This is not only good practice, but also provides important evidence of health and safety compliance if required.

Preparation and planning are key, as the statistics indicate there is a continuing requirement for electrical contractors to consider how they can protect and manage their businesses in such an uncertain climate. 

[iii] Survey undertaken with Construction Enquirer, March 2017, completed by 357 Contractors