New government: now what? How the change at the top could impact construction

After a whirlwind election cycle, we woke up on Friday 5th July to a new government and a new Prime Minister in Labour’s Keir Starmer. Putting politics aside, knowing who is going to be in charge for the next few years is good news for the construction sector, an industry that by its nature thrives on economic and political stability.

Uncertainty has led to sluggishness in the sector in the first half of this year: with the expectation of a new government coming into power, and with many local authorities struggling for cash, there has been a reluctance from some and sheer inability from others to get started on larger scale projects. After all, what if regulations are shaken up, or processes for planning and procurement altered six months after you put spades in the ground?

But now that the new government is in place, what does this really mean for the construction industry and wider built environment? We’re looking at some of the big issues and questions facing the new Labour government now that they have the keys to No. 10.

 

Insights in housing

Housing has long been a big issue for the UK, with a recognition that the country’s housing stock needs upgrading and expanding. Our clients in the social housing maintenance sector, and our extensive work with modular housing contractors, and manufacturers supplying specialist products to the new build and retrofit housing sector, means that we understand the pressure on this specific segment of our industry. So when we saw that housing was likely to be top of the political agenda, it was music to our ears.

In their manifesto, Labour pledged to build 1.5 million new homes in the UK in the next three years – a huge uplift, as the previous trend was close to 200,000 new homes per year. It’s a bold claim, one that the Labour government says it will make announcements on in the first few weeks of its administration and which will likely be a key part of new housing minister Angela Rayner’s remit.

While investment into the housing sector is good news for the construction industry, from housebuilders and main contractors through to merchants and manufacturers, like others in the sector we understand that there are significant barriers that will need to be broken down or overcome to achieve this.

One of the areas the new government will need to address – apart from skills shortages and environmental matters, on which more later – is planning permissions and availability of land. Labour have stated that they will make it easier to build on ‘grey belt’ land and will free up more space and reduce red tape, but it remains to be seen quite how this will be achieved.

Contractors and housebuilders will also be looking for clarification on the Future Homes Standard 2025: will this legislation be upheld, or changed – or scrapped and replaced with something else? Environmental policy and the road to net zero were big ticket items for the Labour party on the campaign trail, and with Ed Miliband now confirmed as the energy secretary, will the government see the Future Homes Standard as going far enough – and if not, how can they prevent this from slowing down the housebuilding programme?

The government will also need to address the issue of financing this vast wave of housebuilding, and overcoming the increased mortgage rates that have priced many potential homebuyers out of the market. 

 

Environmental matters

The outbreak of war in Ukraine in 2022 was something of a wake-up call about the UK’s energy security, with fears or shortages and even blackouts touted in the media as bills rose and rose.

Labour’s answer to this is to invest heavily in renewables, both as a way to ensure that we have a secure supply of ‘homegrown’ energy, and to help the country to achieve its environmental pledges. That should mean the construction of more wind farms and incentives to improve take-up rates of technology like solar PV panels, on both private and public buildings.

Retrofitting existing properties to bring them up to standard in terms of insulation and energy-efficiency would also be a good step in the right direction, and we hope that the government make accessing funding for these projects simple and transparent so that work can begin to improve the existing housing stock and reduce emissions while improving living standards in the long term too.

There may also be investment in infrastructure, not least on our own doorstep, where West Yorkshire’s mayor, Tracy Brabin, is determined to break ground on the long-promised tram network for Leeds. For years infrastructure was a major driving force behind the buoyancy of the construction sector, and it would be fantastic to see this rolling once again. 

 

Skills shortage

The next big question facing the government is: who is building these things? The skills shortage has been a problem for the construction sector for years. Despite repeated attempts to encourage younger people into construction apprenticeships and some high earning opportunities from across the industry, there are simply not enough people with the skills to build the houses, public amenities, and infrastructure that Labour have pledged to build.

The previous government tacitly admitted this issue when it included several skilled trades on its Immigration Salary List (previously the Shortage Occupation List) including bricklayers, roofers, stonemasons, and welders: in fact, construction trades make up almost a quarter of the jobs on the list.

With a wave of construction promised, and a raft of other measures that will require skilled tradespeople to be very, very busy in the coming years, will we see more done to encourage people to ply their trade in the UK? And how will the government support the industry in attracting new talent and positioning itself as the economic powerhouse that those of us who work in the sector know it to be?

Along with our clients and partners in the construction sector, we will be keeping a keen eye on whatever happens next, and we’re ready to support the industry in getting the word out that construction is (hopefully) back and booming in 2024.