As Britain goes to the polls, how concerned should construction be about the impact of a close election outcome?

Sarah Richardson

So, the voting is underway… and, unless there is a major surprise, the UK is heading for the most complicated election outcome in decades. Going into today’s polls, there is little to split the Conservatives and Labour; and, with the potential for a formal coalition to be formed also far from certain, a minority government is looking a realistic possibility.

So, amid the (to many) perplexing talk of confidence and supply arrangements, vote-by-vote partnerships, and unchartered post election scenarios, how troubled should the sector really be about the impact of a prolonged negotiating period between the political parties? And - even if there is a swift resolution to who will take the seat in Number 10 - how much concern should the industry have about ongoing uncertainty over future policy from a government which, in all probability, will have to tread far more carefully to get its votes passed in the Commons than any in the recent past?

The good news is that so far, despite fears, the election campaign itself appears to have caused only a slowdown, rather than a hiatus, in the growth of construction work. The market recovery and housing demand, in particular, have driven continued rises in output and new orders, albeit at their slowest rate for 22 months. But any post-election period, even where there is a clear outcome, will be followed by a new administration first finding its feet and then using them to stamp authority - meaning that while some priority areas of construction might benefit from fast-tracked legislation, others will face delay and uncertainty. And this situation will inevitably be compounded the longer it takes an administration to form.

However, the likely closeness of the result should not necessarily be accompanied by alarm from the sector - at least in the short term. After the 2010 election, the stark contrast between Labour’s economic stimulus packages and the new coalition government’s austerity mandate meant that a change of government was accompanied by the uncertainty of a hovering axe over public spending - and then the damage of severe cuts.

How much concern should the industry have about ongoing uncertainty over future policy from a government which, in all probability, will have to tread far more carefully to get its votes passed in the Commons than any in the recent past?

But the choice now is broadly over whether the next government continues along the current path, or invests more. So, however much time party officials spend making overtures to each other in the Downing Street rose garden, this time around those working through a pipeline of projects on social housing, schools and healthcare can be reasonably confident that there will be no sudden stop to their work.

Where both protracted negotiation and a possible minority government do risk damage, however, is in the stability of longer-term pipeline work which is dependent on private sector investment. This includes large-scale infrastructure projects, as well as commercial schemes. The Confederation of British Industry (CBI) has already warned that confusion over a new government risks unsettling private sector investors - and while this impact may not be felt by construction for a while yet, it poses a serious risk to the momentum of recovery.

To counteract the impact of this uncertainty, the CBI has called for any new administration - however long it takes to form - to demonstrate the appetite to take big decisions on infrastructure projects during its first 100 days. This is something that Building supports. But also, given the increasing sense that the UK is entering an age of coalition politics, the risk of hiatus also strengthens the case for an independent infrastructure commission. This would ensure that any uncertainty over the ability of the next administration to push decisions through parliament, or indeed around the outcome of future elections, does not act as a deterrent to involvement for investors or industry - and therefore derail the long-term projects which have been identified as critical for the UK’s future stability and competitiveness.

As the politics of government becomes, through necessity, more consensual, it would be a damaging irony if the ability to secure the infrastructure the country needs were to become harder rather than easier.

Sarah Richardson, editor