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BCIS reacts to Labour’s general election victory

Published: 05/07/2024

As Labour sweeps to victory in the general election, Dr David Crosthwaite, BCIS Chief Economist, reflects on some of the challenges the new government faces over the coming Parliament.

With Labour now in government with a substantial majority, we’re hoping for a period of much-needed stability. The new government must focus on creating a stable investment climate for construction to stimulate growth and restore confidence in the sector.

On a positive note, Labour’s proposal to establish the National Infrastructure and Service Transformation Authority (NISTA), with the aim of streamlining project planning, design, and costing, appears encouraging given the series of project delays and cost overruns in major public projects over the recent past.

Improving the public client’s capacity, capability and accountability in major project delivery would be a positive move in attempting to ensure best value for public funds.

However, Labour’s proposals for unblocking some of the planning backlog by increasing the number of planning officers and streamlining the approvals process seem unlikely to be a quick fix. It will take time to source and recruit planners into the public sector – years rather than months – assuming that the skillsets are actually available.

Further, while Labour’s proposals to build 1.5 million new homes over the election cycle is a lofty ambition, we are not sure how that will translate into reality.

The vast majority of new homes are built by private property developers who control the supply to maximise their returns. Over the last few decades, many governments have tried to influence the number of new homes being built, but most have failed. Simply put, governments have no lever to control the supply of housing.

We are in for an interesting few months while the new government beds in. We anticipate a period of adjustment post-election, but the longer-term outlook remains cautiously optimistic.

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Construction: how will the election result impact the industry?

The Labour manifesto promises several ‘first steps for change’ to kickstart economic growth, deliver economic stability and get Britain building again.

Join us for our next construction outlook webinar, where we will explore what this could mean for our industry; from the potential rise in construction costs to the impact on levels of demand.

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