Predictability, payments and power: will the King’s speech remove friction?

Today’s King’s Speech landed at a moment when the economic outlook is being shaped as much by geopolitics as domestic policy and yet whatever the wider political backdrop, the construction elements of this programme look like they would command broad support across the industry.

The continuing uncertainty around the Middle East is already feeding through to the market with volatility and ongoing challenges for many clients and delivery teams. It would therefore seem that the most important question for the built environment is this: will this legislative programme help the industry deliver at pace and with fewer of the frictions that amplify risk?

Three areas of legislative announcement stood out for me.

Predictability for infrastructure

Economic growth is tied to national infrastructure and the government has announced legislation to encourage airport expansion, roads (including the financing of Lower Thames Crossing) and Northern Powerhouse Rail. Legislating to speed up large infrastructure projects is to be welcomed and will help our industry have confidence in pipelines alongside the financial commitments.

Greater predictability in planning, financing and delivery is critical to turning announced ambition into investable programmes. Greater certainty allows contractors and consultants to plan workloads, invest in skills and technology, and maintain resilient supply chains.

Over time, consistent and credible pipelines reduce volatility, improve value for money and strengthen the construction sector’s ability to support long term economic growth.

Payments: a necessary reset

A tougher stance on late payment should be welcomed as the government announced a bill to tackle late payments. The industry has lived for too long with practices that push risk and working capital stress down the supply chain, weakening resilience precisely when we need capacity, skills and investment.

Assuming it will be included, the proposed abolishment of retentions is the most significant signal for our industry. Removing them will address genuine unfairness and reduce losses to insolvency or non-payment but, it should also force a practical rethink about how quality risk is managed.

In an already fragile and volatile market, the transition needs to be handled carefully. If retentions are removed without credible alternatives becoming mainstream, we could see unintended consequences. We are already helping clients pre-emptively navigate these issues where they are choosing to reform practices in advance of legislation.

The positive opportunity is for the industry to move away from blunt instruments and towards clearer assurance, better evidence of quality, and more disciplined close-out processes that reduce defects risk rather than simply funding it.

Power for critical infrastructure

The pace of build out of critical infrastructure is now a national issue, and clean energy and electricity connections sit at the heart of it. The proposed Energy Independence Bill is therefore welcomed. The delivery of energy intensive assets, including data centres, will be hampered if we cannot deliver network capacity faster, with fewer delays in the consent and access process.

We have also seen the same focus on national resilience reflected in planned legislation to enable public ownership of British Steel, a timely reminder that enabling critical infrastructure depends on strategic inputs as well as the regulatory framework.

The need for power now comes down to implementation. The government has recognised that the scale of network build out required is significant and that existing processes need to change to deliver it. The industry’s job now is to turn that direction into delivery.

Legislation is necessary, but not sufficient

There is no doubt that new legislation creates burden: contracts, processes, reporting and compliance will all need to adapt. But that burden is immaterial if the changes help shift behaviours towards better outcomes: fairer contract practices, more predictable pipelines and faster delivery of critical infrastructure. This programme of legislation does have the potential to remove friction for the industry, but legislation alone can’t deliver projects, people do. The prize comes from how clients and suppliers act once the rules change.

Andrew Reynolds is RLB UK & Europe chief executive