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Election special: four industry experts react

12 June 2017

Prime Minister Theresa May at her constituency on 9 June 2017 after her party’s shock election upset (Matt Cardy/Getty Images)

The outcome of the general election has left the government, the country and certainly the construction industry in limbo. New junior ministers have yet to be appointed and we’re told that the manifesto is being ripped up as Theresa May clings on to power. And The Queen’s Speech, in which the government sets out its legislative programme and which was due to be delivered next Monday (19 June), has now been delayed.

We asked four experts to give us their thoughts on what the impact might be for issues that matter to the industry.

Shelagh Grant, chief executive of the Housing Forum

Housing should continue to remain important in the new government. In the manifesto there were pledges to building more homes and the importance of ensuring they were of good design and quality.

We don’t yet know who the new housing minister will be, having seen Gavin Barwell lose his seat. But the fact that Sajid Javid retain his cabinet post as minister for communities and local government and Barwell, who was widely respected by those of us in housing, has reappeared as May’s chief of staff, bodes well for housing. At the weekend too, May said she would be concentrating on Brexit and social issues, such as housing.

It’s great that there is a growing realisation that councils must build more – and hopefully organisations like ours can help in that regard, bringing private and public sectors together. We would hope the work of the National Regeneration Programme will continue, despite Heseltine being out of the picture. However, we are hearing from manufacturers that they have been feeling the pinch because of the uncertainty.

Marie-Claude Hemming, director of external affairs, Civil Engineering Contractors Association

The last six weeks in the run up to an unexpected general election have generated a period of uncertainty for the construction industry.

Every election causes disruption, as the machinery of government goes into purdah with ministers focusing on their own and their colleagues’ re-election. This means that everyday decision-making pauses until a new government is established.

Generally, once a new government is formed, it is business and usual, but given the outcome of last week’s election this is less clear cut this time around.

Over the weekend, Theresa May began talks with the Democratic Unionist Party which represents seats in Northern Ireland to establish a majority of MPs who will support legislation proposed by a Conservative government.

She also began her Cabinet reshuffle, and it is perhaps reassuring to see that there has been little change from the previous one. Notably the only change at secretary of state level affecting our industry is that Liz Truss has replaced David Gauke as chief secretary to the Treasury. 

While it seems that government is getting back to normal, business confidence has fallen, according to a recent poll by the Institute of Directors. This is concerning for our industry given that our most recent member survey showed orders dropping for infrastructure contractors for the first quarter since 2013.

CECA members are awaiting decisions on key issues such as the award of major contracts for HS2.   

Progress on issues such as this are vital to building the infrastructure the UK needs, yet there is concern that there is a lack of clear leadership in Westminster and speculation that there will be another general election in six months.

Furthermore, our industry needs clarity on the direction of travel on Brexit, most notably on the movement of labour across the European Union, and on the rights of existing EU workers to remain the UK.

Without some clear decision-making from government over the coming weeks, there will be a downturn in the construction sector due to an inability to secure vital decisions on world-class infrastructure.

This has the potential to open the road to a full-blown recession which much be avoided at all costs.

CECA therefore calls on the new government to set out its stall quickly and clearly and to commit now to continued capital investment in infrastructure to secure our economy in a period of potential further political uncertainty.

Chris Hallam, partner - energy, projects & construction group, CMS Cameron McKenna Nabarro Olswang LLP

So, twice in the space of a year, different prime ministers’ self-serving political gambles have spectacularly backfired, and plunged the nation into crisis. 

The uncertainty that awaits us, at the cusp of what is probably the most important negotiation in our nation’s history, is a sad and yet entirely appropriate indictment of the state of political leadership in this country. 

There is no good news coming out of this for the construction industry.  

Expect to see further delays to the investment into infrastructure that our country desperately needs while our politicians fumble around trying to cobble together a government of some form or other. 

Expect the Northern Powerhouse agenda – and its associated transport projects – to fall off the edge of a cliff. 

Expect the potential investors into infrastructure, energy and construction projects to hold fire until the politicians sort out this unholy mess. 

Expect the housing crisis to continue – as it has done with successive governments over the last 30 years – although a probable fall in average house prices in the coming months may at least help with affordability. 

And expect another election soon, for if a 10-seat Conservative majority couldn’t work for Theresa May, how on earth can a patch-up with the DUP bear fruit? 

Liz Jenkins, partner at Clyde & Co

While ongoing uncertainty is clearly bad for business, the good news is that this surprising election result could lead to a softer Brexit.

After a shocking result for the Conservatives, you would expect them to have listened to the public and businesses and realised that perhaps they do not want the hard Brexit that had been trailed in the election campaign. 

It is not entirely clear whether this is the case from the prime minister’s Cabinet reshuffle. She has selected Damian Green, a pro-European, as her unofficial second in command, but she has also promoted Michael Gove into the Cabinet as environment secretary, perhaps to pacify those who want a hard Brexit.

Current signs are that the Conservatives are not going to change their direction of travel towards a hard Brexit but business is certainly calling for it.

A shift in the government's Brexit strategy could be a huge win for the construction sector as there has been a dark shadow looming over the industry with an already widening skills gap and the prospect of a severe cut off from the European talent pool post-Brexit.

Whatever the newly formed government ends up looking like, it’s vital that we as an industry continue to bang the drum for infrastructure. We must ensure that the skills gap and the industry’s need for skilled immigration is high up on the new government’s agenda.

As we all know, the sector is currently partially propped up by skilled manual labour coming from outside the UK. While this is an issue that needs to be resolved in the long term – by improving training, diversity and incentives for UK workers to engage in the industry – in the short term we will still need migrant workers to help to build and improve the country's infrastructure.

The next few weeks will be critical for business across the UK. Let’s hope that enough noise is made for a change to the immigration stance laid out in the Conservative manifesto.

Comments

That a hard Brexiteer takes over in Environment might mean an easing of European standards on building materials.

L.Schilcher, 12 June 2017

The terms "Hard" or "Soft" Brexit are terms invented by the media. The UK seems to have a different view from the rest of Europe regarding what the negotiations will be about. We have served notice under Article 50 that we are leaving the EU in two years from March 2017. The negotiations are about our ongoing liabilities.
This has become confused with a separate negotiation about a new deal for trading with the EU after we leave. Mrs May, having failed to control immigration from all sources, not just the EU, for the past seven years is hell bent on causing chaos to the UK economy just to try and prove that it can be done. Which of course it can't.

Mike Underwood, 13 June 2017

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