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General election 2024: what the construction sector needs is stability

Posted: 24/06/2024

There are various similarities between the manifestos of the main parties in relation to housing and construction: while Labour promises to build 1.5 million homes during the next parliament, the Conservatives aim for 1.6 million and the Lib Dems 380,000 a year (ie 1.9 million over the next term). 

What is less clear is how the leading parties propose to build these homes. The Conservatives have been in government for 14 years and are well behind the promised 300,000 homes built annually (albeit Covid, and construction inflation have had a significant impact on this in recent times) and many clients will be sceptical of these manifesto figures. 

One of the key challenges facing registered providers of social housing, for example, is the enormous need to retrofit existing homes. Development spend is reportedly 24% below that forecast for Q1 2024 because of the need to improve existing stock, address the new building regulations and provision for cladding and toxic mould. If a provider is faced with a choice between creating new homes or improving their current properties, many providers are focussing on what they have and are ignoring the opportunities in the market to acquire compliant stock. 

Looking at construction and infrastructure more widely, the Conservatives pledge to build 40 new hospitals by 2030. During the next parliament they would create four new prisons and invest £8.3 billion in refilling potholes. Ambitiously, they pledge to reduce the time it takes to sign off major infrastructure projects from four years to one, by simplifying the planning system.

While also promising planning reforms, Labour has included a ten-year infrastructure strategy that includes improving rail connectivity in the North, an area that has become a big focus since the scrapping of the northern leg of HS2. Other manifesto points could provide a boost to coastal areas, such as investment in nuclear power and ports. 

The CEO of Balfour Beatty recently said that what the construction industry needs is 'stability, consistency and urgency' – in short, the sector needs a period of certainty and investment. Construction projects are years in the making and we have been through an extremely turbulent period both politically and economically. When inflation sat at 9%, it was near impossible to budget a project that could take two years. 

So, while manifestos are full of promises, clients will be looking forward to the general election to be completed. Once a government is in place with a mandate, the hope is they will be able to steady the ship, remove the barriers to development and have some credible long term plans to kick start the industry and allow confident investment into the sector again and now inflation has largely plateaued.

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Penningtons Manches Cooper LLP

Penningtons Manches Cooper LLP is a limited liability partnership registered in England and Wales with registered number OC311575 and is authorised and regulated by the Solicitors Regulation Authority under number 419867.

Penningtons Manches Cooper LLP