What does the Windsor Agreement mean for construction in Northern Ireland?

Last month the UK government published a landmark agreement which – if ratified – will ease the movement of goods between Northern Ireland and the British mainland. But what will the deal mean for builders either side of the Irish Sea?

For embattled UK prime minister Rishi Sunak, the Windsor Framework unveiled at the end of February could provide a political lifeline. The yet-to-be-ratified deal raises the prospect of reduced post-Brexit trade tensions between the UK and the EU – and could lead to the restoration of the Stormont Assembly in Belfast. For construction firms in Northern Ireland, on paper at least, it holds out the prospect of lower costs and less red tape when importing building materials.

The prospective agreement would replace large parts of the Northern Ireland protocol, agreed between the Boris Johnson administration and the EU after Brexit. The original protocol, operational since January 2021, has meant most goods – including construction materials – imported into Northern Ireland from the UK have faced customs inspections and document checks, even if they are due to remain in the territory.

In addition, the post-Brexit arrangements have meant that Northern Ireland continues to follow European rules relating to tariffs – a situation that blew up in August when the EU changed rules on steel imports due to Russia’s invasion of Ukraine. At a stroke, the cost of importing steel from the UK mainland to Northern Ireland rose by 25 per cent – a situation described at the time as “farcical” by UK Steel director general Gareth Stace. So what changes does the Windsor Framework herald – and are they all good news for the sector?

Time for change?

“Encouragingly, the Windsor Framework should make it easier to transport construction products between Great Britain and Northern Ireland,” says Rebecca Larkin, head of construction research at the Construction Products Association. Under the new framework, customs checks will only apply to goods with a final destination of Ireland or the rest of the EU. Goods with a final destination of Northern Ireland will face far fewer checks. This system has been dubbed the “green route”.

Most firms will be subject to a turnover threshold in order to move their goods under the scheme – any business with revenue below £2m a year will be able to use the green route (up from £500,000 for the small number of firms enjoying eased requirements under the existing protocol). However, construction is one of a number of sectors (along with animal feed, healthcare, and not-for-profit) given special treatment. These industries will be exempt from the threshold, meaning buildings material firms and contractors of any size will be exempt from onerous checks when moving goods.

But in practice, experts said, the changes are likely to make a marginal difference at best – and could even create headaches. The existing Northern Ireland protocol effectively retained the single market on the island, meaning many contractors and building merchants merely switched to importing goods from the EU into Irish ports and then across the border. One senior sector figure told CN: “We have already put in workarounds. Doing so has not necessarily been easy and we don’t necessarily see a reason to reverse them.”

Larkin agreed, saying that suppliers who have already adjusted once to the existing protocol now face a tricky new round of decisions about the costs and hassle of reverting to UK suppliers. “If Northern Irish contractors or merchants have switched to Irish suppliers in the last few years, will easier access to British-supplied products and materials see them switch back?” she said.

Steel support

Another prong of the framework tackles the issue of steel tariffs. The problems at the end of last summer were caused by EU rule changes, bringing to a swift end a UK workaround to tariffs on steel imported to Northern Ireland under Johnson’s deal. However, under the terms of the Windsor Protocol, tariff-free movements of all types of steel into Northern Ireland would be guaranteed, bringing the prospect of price stability.

Stace said: “Today’s deal will make a significant difference in being able to move steel tariff-free from Great Britain to Northern Ireland, in the context of a complex interplay between the terms of the protocol and the EU’s steel safeguard quotas. The provision of separate quotas for certain products that can be earmarked for the UK’s use for shipments into Northern Ireland creates a blueprint that can be more widely applied and demonstrates a willingness to find workable solutions.”

In the febrile political climate in Northern Ireland, it is almost impossible to find construction leaders willing to stick their head above the parapet and comment on-the-record about the Windsor Framework. The DUP is currently going through the document with a fine-tooth comb and, until it makes its mind up (it is set to make a decision by April), the document remains a political hot potato.

Political stability

However, there is widespread agreement that the biggest long-term prize for construction firms in Northern Ireland to emerge from a new deal might not actually relate to custom forms or tariffs. Instead, many sector leaders point to the boost in economic confidence (and construction activity) that the deal would unlock if it led to the restoration of government in Stormont.

Currently, the government is being run by civil servants who are avoiding taking big strategic policy decisions. Gavin McGuire, director of the Federation of Master Builders in Northern Ireland, said: “It would be great to see stable government being able to give the sector a guide on important issues such as retrofit. If we get ministers in place to take decisions then that will be a welcome outcome.”

David Fry, director of external affairs at Northern Ireland construction trade body the Construction Employers Federation, echoed the sentiment. He pointed to a range of issues where a locally run executive could unlock progress – notably reform of the planning system, a clearer procurement pipeline and housing targets. “The reality is that we have not had a functioning administration since early 2017,” he said. “Restoration of the executive would act as an incentive to investment. Even with the Windsor Framework’s [provisions on custom rules and tariffs] the incentive to invest is not as strong as it could be without this political issue solved.”