With the polls pointing to a potential change in Government next year. We take a look at what Labour are planning and what their policies meant to construction last time they were in office.

By all accounts, the state of Britain’s infrastructure should be higher up the political agenda. Last year the joint committee on the National Security Strategy said the UK’s critical national infrastructure had been left exposed because of “extreme weakness” at the heart of government.

On top of this, the climate emergency has highlighted how inadequate much of the UK’s building stock is and that millions of Britons lack decent, affordable housing.

Certainly, whoever wins the next General Election will find an in-tray packed with built environment challenges. And, if a Labour Prime Minister is in Downing Street for the first time in 14 years, as is becoming a very real possibility, then what can we expect the new government’s priorities to be?

Housing

The most important commitment made by Keir Starmer’s Labour Party is on housing. Their decision to reinstate the target to build 300,000 new homes annually is key to addressing the backlog of housing need. Despite a pledge in their last manifesto to match this target, the Conservatives abandoned their promise due to pressure from backbench MPs.

Labour has also promised to overhaul planning and CPO regulations to accelerate the building of new homes and would set a target to ensure 70 percent of Britons own their own homes. This will sound familiar to anyone who has heard of the British dream of a property-owning democracy, and whichever party cracks it is likely to be rewarded at the polls.

Starmer’s party also has its sights on restoring social housing as the second biggest tenure, under plans to build a new generation of council housing.

Further policy details will emerge closer to the election, but one thing is clear – it will not be business as usual.

Arguably, business has been somewhat low on the agenda, as a high turnover of prime ministers has delivered constant political and economic uncertainty. It’s why the Financial Times recently argued that, as governments become more interventionist, every big business needs a chief political officer to help navigate rolling crises and fast-changing policy.

Recalling the last time Labour entered Government after a long period in the wilderness, ShineX CEO Anne McNamara says many construction companies were not always prepared for change.

“In the early 2000s Labour rolled out the Decent Homes Programme. This involved wholesale refurbishment of local authority housing stock. It involved enveloping schemes- roofs, windows, door replacement, and internal – kitchens and bathrooms modernisation.

While the work was not complex, the depth of interaction with families on this scale was unfamiliar. It required contractors with strong communication skills, local context charm and flexibility! A lot of major contractors weren’t agile enough to win Decent Homes packages in the early days. They lacked the understanding of what was needed. This allowed smaller regional contractors to grow with predictable work and clear margins.

Decent Homes and other New Labour capital programmes created a momentary shift in power from the big national contractors to the regional ones.”

Labour is playing its cards close to its chest on how it sees the private sector playing a role. We are unlikely to go back to the days of Private Finance Initiatives (PFI) and off-balance-sheet investment in social infrastructure. We are very likely to see.

Energy

But if housing is looking like Labour’s signature policy, it’s closely followed by a promise to boost clean energy and energy security. Their promise to create a Great British Energy Company would be supported by plans to increase development in solar, offshore and onshore wind, tidal and nuclear.

Other plans to nationalise the railways, create a national infrastructure bank and scrap the Government’s Levelling-Up missions similarly represent a change in direction. The Conservative’s signature policy of Levelling-Up is not likely to be scrapped, however, as regional inequalities, crumbling social infrastructure, and the need to repurpose high streets to meet changing needs remain a big challenge for whoever is in power.

Labour has promised to create an “independent advisory council” to monitor progress on tackling regional inequality and has a five-point plan on levelling up, which includes jobs, high streets, transport infrastructure, devolution of power and community safety.

Procurement

After the collapse of Carillion and the controversy of ‘Covid-19 VIP Lane’ contracts, procurement is under increasing scrutiny. A Procurement Bill is going through Parliament this year, which is set to deliver increased transparency in decision-making and greater accountability from suppliers. A Labour Government would undoubtedly make further changes, and shadow ministers have already vowed to bar companies registered in offshore tax havens from winning government contracts.

This comes after research showed that one in six government contracts issued between 2014 and 2019 had tax haven links.

Schools

Last year a leaked government report revealed that school buildings in England are now in such disrepair that they posed a “risk to life”. Shadow ministers have promised to make fixing the perilous state of schools a priority and, as Anne McNamara explains, the construction industry will need to be ready for major changes.

“When Labour last came into office there was a huge shift towards PFI projects. This created an opportunity for the major contractors to create equity companies to partner with their construction companies. The smaller contractors and those slow off the mark found themselves in a beauty parade to equity houses. Sometimes missing out on market share.”

Again there was a shift in what it took to win these highly lucrative opportunities. As McNamara recounts,

“There was a change in how bids were evaluated. With up to 70% of the scoring going to quality issues. There was a big move into social impact. For example, bidders had to integrate a key education policy ‘Every Child Matters’ into their bid. Some contractors couldn’t adapt and lost out on early rounds.

Policy detail is still light, but Labour shadow ministers’ comments about the need to transform the country’s school estate suggest major plans are being cooked up.

Making Britain a Green Superpower

Much of this activity will be underpinned by green policies that seek to re-industrialize the country and turn the UK into an independent green superpower before 2030.

With the Government admitting that the UK’s Net Zero strategy will fail to cut greenhouse gas emissions enough to hit its own legally enforceable targets, there is a pressing need for any new government to inject some urgency into the UK’s clean energy transition.

This will be largely driven by the Shadow Chancellor’s plans to ramp up spending to hit an extra £28billion a year target on tackling the climate crisis and assisting net-zero. Flood defences, restoration and building energy efficiency and a public-private investment scheme to create a green industrial revival in deprived areas, will be some areas where funding is concentrated.

Many policy areas are still lacking detail, but decarbonisation and energy-resilient infrastructure, sustainable drainage and transport policies with an increased emphasis on cycling and walking are key infrastructure themes that will guide their thinking. This lack of detail, however, has not protected Starmer’s Labour from criticism that it lacks a vision – and they are certainly a different party to the one entering government in 1997 with a plan led by architect Richard Rogers to revitalise and humanise Britain’s cities.

Pragmatism over Utopianism

There is still some way to go before the next General Election, though, and there will no doubt be many more solutions put forward as Labour prepares its manifesto. These are likely to err on the practical side, with suggestions already including a wave of ‘new towns’ and garden cities. What’s unlikely to be included, however, is the kind of mega infrastructure projects that Boris Johnson talked up such as tunnels linking Scotland to Northern Ireland, the Garden Bridge and Thames Estuary Airport.

With challenging public finances, Labour has promised “iron-clad discipline” as it seeks to assure the markets that it would pursue a responsible fiscal policy.

For political historians this presents more than a hint of déjà vu, as Labour last came into Government after a long period in opposition with the then shadow chancellor Gordon Brown promising to freeze public spending for at least two years.
Once Labour were established in Government, though, and trusted enough to be re-elected in 2001, the chart below shows how the spending taps were turned on again.

Labour’s plans so far may not have the same visionary ring as they did 25 years ago, but after an era of over-promising and under-delivering, a period of pragmatism and delivery may be welcome.

The data underlying this figure, and full details of the sources, can be downloaded from http://www.ifs.org.uk/ff/lr_spending.xls.

Be prepared

But after a period of 14 years in the wilderness, they are not going to waste the opportunities that come from being in power, and the cautious approach of opposition will most likely be replaced by fierce ambition and decisive action.

To understand the opportunities this presents for your business and to seek strategic advice, get in touch to talk to our policy experts.