How will the new Labour government impact the infrastructure sector in the UK?

read time: 6 mins

The new government has based a lot of its rhetoric on boosting economic growth and getting infrastructure built. Now that it is in office, what can the industry expect? 

This article provides insight on Labour’s manifesto and breaks down the party’s key proposals that will affect the economy and growth sectors. We also explore what’s missing from the proposals, as well as the opportunities and risks that these promises could bring.

What did Labour promise?

Promises about economic growth and infrastructure were woven into the fabric of the manifesto. Of particular interest to our readers will be the work Labour wants to see done to build its 21st century renewable energy superpower: gigafactories for electric vehicles, new reservoirs, acceleration of roll-out of EV charge points, sustainable aviation fuel and various other pledges which sit under the umbrella of creating a dynamic net zero economy. 

Labour’s manifesto said: “Conservative chaos has seen major projects abandoned, decades-long delays, cost overruns, uncertainty for supply chains, and our infrastructure crumbling,”

“Labour will end this chaos by developing a ten-year infrastructure strategy, aligned with our industrial strategy and regional development priorities… The strategy will guide investment plans and give the private sector certainty about the project pipeline.”

A key part of Labour’s plans for economic growth is to oversee a rise in housebuilding, with a target of 1.5m homes over the course of the parliament, which would represent a 50% rise. 
The primary means of achieving this will be to reform the planning system and release more green belt designated land for housing delivery - although Labour has also set out plans to put ‘nature at the heart of house building’.

How deliverable is it?

The vision is ambitious but the detail is light. The new government appears to see the state as an active partner to the private sector, rather than the backseat role that Labour alleges has been preferred over the last 14 years. But the government is to remain an enabler of business, removing barriers to investment and growth, whilst the private sector does the heavy lifting. 

All of that is fine - and preferable in sectors where the expertise and investment potential already exists - but some of the challenges require serious attention and investment. Many major sectors have skills shortages, supply chains are struggling and planning delays cannot be quickly ‘enabled away’. A long-term, properly-aligned infrastructure and industrial strategy is the right approach but it needs to be clearly and logically thought-out so that the hard work of delivery can start. 

What isn’t there?

Labour has put a big emphasis on the planning system, saying the country is ‘hampered by a planning regime that means we struggle to build either the infrastructure or housing the country needs’.

Few who have tried to get major, or even minor, projects off the ground in the last 10 years would disagree, but acknowledgement of the problem is not new. Liz Truss made reforming planning a key ticket issue in her short-lived premiership, and Boris Johnson also had a stab at major reform. 

The problem back then was the embedded political trade-offs - people do not want new reservoirs or energy-to-waste facilities on their doorsteps, however much the economy might need them, and the Labour manifesto offers little indication of why the new government won’t face with similar challenges. 

Reforming planning will mean being bold enough to be unpopular, at least in the short-term and also require a clear vision and more resource for the local authority planning departments which are currently the source of much of the delay. 

In addition to this, despite the political rhetoric, Labour will need to recognise that some of the ‘cost overruns’, ‘delays’ and supply chain uncertainty were not to do with the Conservatives but the macro and global economy. Clear plans, honesty about the challenges and state intervention where necessary will be required. So will a long-hard look at our relationship with our nearest trading partner, which may mean addressing a B-word conspicuously absent from pre-election debates
In terms of house building, the new government may find its plans require substantially more effort than planning reform and land release to deliver the uplift in housing delivery it wants to see. 

Developers are currently struggling with price rises, labour shortages, higher interest rates, dampening consumer confidence and environmental burdens, including biodiversity net gain targets and nutrient neutrality. All of these forces are driving house building down not up. 

The private market alone has never delivered the amount of housing Labour has promised, and without extra funding the social housing sector will struggle to fill the gap. 

With regard to keeping nature at the heart of house building, new biodiversity requirements and flood resilience measures have recently come into force. Where green belt land is released, the new government says it will focus on ‘grey belt’ areas, not areas of natural beauty. 

It will also require builders to ‘include improvements to existing green spaces making them accessible to the public, with new woodland, parks and playing field’ and to ‘meet high environmental standards’, as well as delivering 50% affordable housing. Such a long shopping list may risk making these schemes unviable in what is already a challenging climate. 

What are the opportunities?

All investors crave certainty and a clear, long-term direction of travel, so Labour’s ambition should be music to their ears. 

We have a new government that knows what it wants to achieve and wants to work with industry to get there. This is a huge opportunity to set a positive direction of travel which will result in good business opportunities and genuinely lasting change.

Labour still needs to flesh out the detail of its vision now that it is in government, but it has the authority, mandate and time to get things done. Industry leaders must make sure this chance is not missed. 

What are the risks?

As mentioned, the new government faces bigger challenges than simply declaring an ambition and sitting back and waiting for it to fall into place. 

The challenges – political, practical and financial – of getting big infrastructure projects moving in this country do go beyond which party is in power. The new government will need to be decisive and incisive if it is to make a success of its ambition, and it is always a risk that short-term political wins or controversies will overwhelm what requires long-term thinking.
But with the right advice, these potential barriers can be overcome. This is an exciting time to be working in an industry which the new government wants to support.

For more information, please contact the energy and resource management team.

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