Given that construction typically recoils at the prospect of uncertainty, where does last week’s election result leave the sector?
Within hours of discovering she had failed to win a parliamentary majority, embattled prime minister Theresa May was promising to provide “certainty” for the UK by remaining in government off the back of a deal with the DUP. Three days later, she was telling Conservative backbenchers that she had got them into this mess, and she “would get [them] out”.
But with May’s rhetoric sounding desperately out of kilter with the fact that her authority over the government and her own party has been shredded by the Conservatives’ shock loss of 13 seats, the only real certainty is that the UK’s period of political turbulence is far from at an end. So, given that construction typically recoils at the prospect of uncertainty - political and economic - where does last week’s election result leave the sector?
For those who prefer their glass half full, there is already much speculation that May will be forced to soften her plans for a hard Brexit, thanks to the need for a more consensual style of politics to maintain her fragile grip on the Commons. For construction, this means that the prospect of securing labour arrangements that enable the industry to meet worker shortfalls suddenly looks a lot more plausible – both for a transitional period while the sector gets its house in order on training, and longer term, to meet targeted skills needs.
There are also clear signs that the Conservatives will turn their slight shuffle away from austerity-era spending into a bigger shift. Gavin Barwell, the former housing minister – who, thanks to losing his marginal seat, now finds himself May’s chief of staff – told the BBC this week that Labour had tapped into anger over austerity and Brexit, and his party needed to learn lessons from that.
Barwell’s point on spending was aimed at rethinking public sector pay freezes, but it’s easy to see the same logic applied to spending programmes that benefit social infrastructure.
Housing stands to be the most obvious sector to gain, given the consensus among the main political parties that the state needs to intervene to help create more homes, and to address the housing affordability crisis. The Conservatives’ manifesto promised a “new generation of social housing”, but the pledge had no specific funding or targets attached, leading to scepticism over how, or when, it would happen. A shift away from austerity makes it more likely the detail - and funds - will be forthcoming.
At a macro level, there are already signs that May’s weakened position will compound general economic instability
Bosses of capital programmes across the school and healthcare estates, meanwhile, while not facing the prospect of anything like a return to spending levels under recent Labour governments, can reasonably hope that the twin agents of a move away from austerity and towards more consensual politics will lead to a more receptive audience when it comes to putting spending requests to Whitehall.
However, this optimism is, in reality, likely to represent less than half the story. At a macro level, there are already signs that May’s weakened position will compound general economic instability. The pound had its biggest drop for eight months on Friday, while Stephen Martin, the director general of the Institute of Directors, said the consequences of “a parliament in paralysis” for British businesses and for the UK as an investment destination “would be severe”. This stands to compound the 3% and 10% drops in commercial activity already forecast for this year and next.
On construction projects, the major concern is around the fate of big-ticket infrastructure schemes: projects that, on paper, stand to benefit the economy hugely, but in practice necessitate thorny battles between political chiefs and constituency MPs. The difficulty a government faces to get projects like Heathrow and HS2’s second phase through parliament without a working majority is increased exponentially. And in any case, the increased scrutiny applied to these schemes compared with, say, a few dozen extra school projects, is more likely to suffer from the need to concentrate resource on Brexit negotiations.
It is for precisely this reason that the National Infrastructure Commission, set up to ensure big infrastructure schemes do not fall victim to shifts in political power, is such a vital initiative. But with the initial plans to grant the commission statutory independence scrapped in favour of making it an agency of the Treasury, the jury is still out on whether it has the teeth to fulfil its potential. That’s about to be heavily tested.
So, as the industry watches Westminster with a mixture of fascination and trepidation, the sector needs to do everything it can to ensure these schemes – so crucial for the economy’s development and the sector’s stability – are kept on the political agenda. Make the case to local MPs, devolved authorities, and - when they’re in place - those who make it into May’s administration.
A strong and stable message needs to come from somewhere.
Sarah Richardson, editor