UK Election 2024 – A Construction Perspective

The ability for a citizen to vote for their political leader is at the cornerstone of any democratic society.

Whilst other political parties are standing, and the possibility of coalition politics involving smaller parties is not ruled out, opinion polling indicates that the most likely outcomes are for a Labour or Conservative victory in the elections.

This article will therefore focus on the policies proposed by the two parties in their manifestos, from a construction industry perspective, as at 3 July 2024. 

Economic and Industry Landscape

The current situation in which the construction industry finds itself is challenging.

Uncertainty in Large Infrastructure Projects and Planning

There has been a lack of certainty in the industry and construction supply chain as to planned, larger projects going ahead due to factors such as post Covid19 austerity, the cancellation of the Northern leg of HS2, Westminster’s commitment to levelling up areas outside London and government support of large projects being withdrawn such as the British Volt Gigafactory in Northumberland. The industry has also been critical of the delays incurred by new projects due to out of date and overly restrictive planning laws.

Skills Shortage and Housing

The UK Trade Skills Index 2023 indicates a need for 937,000 new recruits in the construction and trades industry by 2032. Despite this, the sector has experienced a significant loss of 300,000 construction workers (including plumbers, electricians and carpenters) since 2019. This and the complex economic climate may reduce the government’s projected annual target of building 300,000 new homes by 40%. This has also been exacerbated by Brexit as there is less foreign labour to fill the skills gap.

Ageing Workforce

35% of the construction and trades workforce is aged over 50. This ageing workforce and the physical ability of some older workers to continue in the sector until they reach the official retirement age of 67 presents a challenge for the construction sector. Anecdotally, we are finding more experienced employees are retiring and not being replaced. This is proving difficult for construction organisations as there are fewer young people willing to work in the construction industry.

Youth

There are significantly fewer people embarking on construction related apprenticeships due to lack of pay and a traditional structure which can be perceived as outdated. This has led to a decline in education and training.. More needs to be done to promote the various career paths and opportunities available to young people to join a profession that is increasingly using cutting edge technology and digitisation.

Female Representation

The skills shortage highlights the lack of female representation which impacts opportunities to grow and move the sector forward.

Sustainability Targets

Whilst there is greater demand for low carbon and sustainability targets, many are sceptical about whether the UK Net Zero targets are achievable. New technology also factors into the issue of skills shortage. Innovative and sustainable designs and projects are not achievable when the builder is unfamiliar with the materials.

Rising Costs of Goods, Materials and Interest Rates

The various global events have led to turmoil regarding the increasing price of key materials such as steel and the price of oil in relation to transport costs. This is exacerbated by a sluggish property market, poor investment in housing and social housing, lack of investment or plan in relation to areas outside London and an economy which is seeking to bounce back from low and slow growth. The industry and general public remain focused on any interest rate cuts to promote growth.

Insolvency

The cost of materials and other factors such as mismanagement of projects, have led to numerous large construction companies entering into insolvency arrangements. Examples include Michael J Lonsdale Ltd entering administration at the end of 2023 and Geoffrey Osborne Ltd entering administration in 2024. Both organisations are thought to owe creditors millions of pounds which may be irrecoverable, impacting the entire construction supply chain.

Despite government recommendations on best practice, retentions continue to be applied at up to 5% on many projects. Further, payment terms remain lengthy in many cases, starving contractors of cashflow. In addition, the construction bonding market has become challenging and expensive with bondsmen increasing rates or withdrawing from the market.

Construction Policies in Manifestos

Policy area	Conservative Party	Labour Party
Housing	No mandatory housebuilding targets for local authorities 150,000 new homes in Cambridge by 2050 Build 1.6 million homes over the course of the parliament Launch a new Help to Buy scheme to provide first-time buyers with an equity loan of up to 20% towards the cost of a new build home Renew the affordable homes programme Complete leasehold reform by capping ground rents at £250, reducing them to peppercorn over time	Mandatory housebuilding targets for local authorities Build 1.5 million new homes over a five-year period Planned new towns with a minimum of 40% of affordable housing, using design codes 150,000 social and affordable homes a year ‘Freedom to Buy’ policy to get 80,000 people on to the housing ladder by making the government’s existing mortgage guarantee scheme permanent ‘First Dibs’ policy to give local people first refusal on homes in new development
Planning	Restrictions on time extension agreements between councils and applicants on planning decisions Performance league tables for time taken to make planning decisions 30 more towns to receive £20m each over the next ten year under levelling up plan Require councils to set aside land for smaller builders them and lift Section 106 burdens on smaller sites Abolish ‘nutrient neutrality’ rules to immediately unlock the building of 100,000 new homes with developers legally required to pay a one-off mitigation fee Retain a “cast-iron commitment to protect the Green Belt” Create locally-led urban development corporations in partnership with the private sector and institutional investors to develop brownfield regeneration sites Amend the law to make it more difficult for people to bring judicial reviews against planned projects that don’t have “merit”	Agreed design standards for “gentle urban development”.  Require combined and mayoral Authorities to strategically plan for housing growth in their areas. Combined authorities to receive new planning powers along with new freedoms and flexibilities to make better use of grant funding Planning passports for developers which meet design standards, allowing easier brownfield development Create new ‘grey belt’ land class for poor quality areas of the green belt with requirement for at least 50% affordable housing Reform planning system for onshore wind to allow more projects to go ahead Hire 300 more planning officers, paid for by increasing stamp duty on homes purchased by non-UK residents by 1% “Tough action” to ensure planning authorities have up-to-date local plans Strengthen presumption in favour of sustainable development
Infrastructure	No northern HS2 leg between Birmingham and Manchester £4.7bn for small projects in the North and Midlands, taken from scrapped HS2 funds Speed up infrastructure projects and reduce costs by allowing quicker changes to consented projects, ensuring national policy statements are regularly updated and ensuring statutory consultees are focused on improving projects in line with clearer objectives.	Independent inquiry into HS2 to look into how future projects can avoid cost overruns Fully committed to Northern Powerhouse Rail Merge the National Infrastructure Commission and Infrastructure and Projects Authority into a new body called National Infrastructure and Service Transformation Authority (NISTA), which would have new powers. Designate prisons as ‘nationally significant’ projects in an effort to deliver 14,000 additional places by 2030
Skills	Proposed ‘Advanced British Standard’ to replace A levels and T levels with a single qualification An additional 100,000 apprenticeships a year by the end of the next parliament to be funded by scrapping poor quality university courses	Revamped apprenticeship levy to fund specialist training colleges Firms can use up to half of apprenticeships funds to train existing staff or pay for pre-apprenticeship training New law aiming to cut immigration by forcing government departments to draw up skills improvement plans in high migration sectors including construction
Net Zero	Exemptions to boiler ban for some households Heat pump grant increase from £5,000 to £7,500 Deliver net zero by 2050. Provide a bonus, on top of contract payments that support offshore wind, to reward energy firms that invest in manufacturing in the most disadvantaged places in the UK. Build the first two carbon capture and storage clusters, based across North Wales and, the North West of England and Teesside and the Humber.	£15bn on green investment a year (£4.7bn of which is new money) Upgrade five million homes to an EPC C rating over the course of the parliament Decarbonise UK power by 2030 under new body, Great British Energy Targets for faster approvals on renewable projects Double onshore wind, triple solar and quadruple offshore wind by 2030

Comment

The manifestos indicate that, irrespective of which party forms the new government, the additional taxation proposed to promote increased infrastructure spend may limit the effectiveness of proposals for growth and to help the construction industry get back on its feet. 

What is clear however, is that change is coming with the construction industry keen to see developments. Whether that change is for the better of worse will become clear after the general election on 4 July.

Related items:

• Dissolution of UK Parliament: Which Bills made it through Wash-Up?
• The King’s Speech 2023: the countdown to the general election begins

Read other items in Commercial Brief - July 2024