Last week’s elections have reshaped local power across the UK, creating hung councils and planning uncertainty just as the Gulf conflict drives up costs – with big implications for development pipelines, prices and delivery, says Chloe McCulloch
Here we go again. Yet more political upheaval and uncertainty for UK businesses. Last week’s elections across Scotland, Wales and councils in England have reshaped the political balance of power, and have sent the Labour party into a leadership tailspin. It’s all a stark contrast to the hopes for much-needed stability after Keir Starmer’s general election landslide in 2024.
Instead, the recent polls show voters have backed parties from the right (Reform UK), the nationalist centre-left (Plaid Cymru, SNP) and the environmental left (Greens), while the two main traditional parties (Labour and the Conservatives) took heavy losses and the Lib Dems made modest gains in England, while performing well in Scotland but badly in Wales.
Dozens more planning committees in England are now being run by new coalitions, minority administrations or first-time councillors learning the job
Dozens more planning committees in England are now being run by new coalitions, minority administrations or first-time councillors learning the job at a time when most councils are already under financial strain. Birmingham’s hung “rainbow” council says it all: previously controlled by Labour it is now split between Reform, Greens, Tories, Lib Dems and independents. This political fragmentation is not a one-off, it is a widespread trend that is expected to play out in the next general election.
But before we skip ahead, local politics and what the fallout could mean for construction and housebuilding schemes is a more immediate concern. Crews Hill, the 21,000-home proposed new town, is a case in point. Not formally adopted into the local plan, Crews Hill was set to be approved by Enfield council but the Labour administration has now lost its majority. Now the Conservatives are the biggest group, with the Greens holding the balance of power. Both parties, in talks about forming an administration, and have previously pledged to oppose the new town.
It’s possible the London mayor could bypass the council, progressing the scheme under a development corporation instead, but if attempted expect a row between the council and Sadiq Khan. The point is that Crews Hill and many other schemes like it will now be scrutinised by different people, throwing many of them into doubt.
As we reported in our pre-election coverage, the biggest impact may be disruption rather than doctrine: new groups learning the system, signalling hard to voters and taking time to strike deals in fractured councils. For developers and builders, that means slower planning decisions, more scheme-by-scheme political risk and a potentially leaky pipeline at a time when hitting Labour’s housebuilding targets already looked ridiculously over-ambitious.
All of this comes just as the industry is being buffeted by a different kind of uncertainty. The global shock brought on by Trump’s war with Iran is being felt in higher energy costs, supply chain disruption and material price inflation.
The impact is already showing up in the numbers. Activity has slumped again, with the latest PMI data down to its weakest reading for months and respondents pointing directly to the Middle East conflict as the cause of subdued demand, disrupted shipping routes, fuel surcharges and the sharpest rise in lead times since 2022.
Housebuilders are warning that build cost pressure is coming down the line as oil prices feed into plastics, haulage and site energy. Behind the scenes, as we detailed in our recent analysis, some housing bosses are stress-testing scenarios that would have felt extreme six months ago, including double-digit increase in build costs and a renewed squeeze on build rates and land buying.
Tendering behaviour is shifting with the oil spikes. Simon Rawlinson says some clients and suppliers are delaying sign-off, hoping volatility eases once the war is resolved - and projects are slipping as a result.
Resilience at a company and sector level now means expecting uncertainty and planning for it
The market response to uncertainty is familiar: more price adjustment mechanisms in contracts, more arguments about who carries delay risk if supply chains seize up - and, in some quarters, more “silly figures” thrown into bids by suppliers trying to cover the risk. In a weak market, some contractors will stand behind pre-war prices to keep order books full. Others will refuse to carry risk at all. Either way, delivery slows.
Which brings us to Simon Rawlinson’s point about the role of government as client. He argues that in a crisis government has to be decisive on build programmes that already active. It should adjust budgets where inflation bites and share risk so that sites keep moving.
But political fragmentation and global instability makes those responsible client behaviours harder to deliver. A Treasury spooked by markets, ministers pulled between competing factions and a local government map in flux all undermine the consistency and pragmatism that give public sector pipelines credibility.
Resilience at a company and sector level now means expecting uncertainty and planning for it, whether that is with contracts that share risk, programmes that can be resequenced when procurement or consent slows, or business models that assume disruption is the norm not the exception.
Construction firms cannot wait for a time when clarity and calm prevail, they must move early to find their own responses to today’s challenges. Initiating conversations with reshaped councils and local public sector clients could be one place to start. Political divisions may dominate the headlines, but this industry knows engaging positively with local leaders and stakeholders is often the best way to get stuff done.
Chloë McCulloch is the editor of Building
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