It’s time to prepare for change – although we don’t have much to go on

The results of this month’s local and mayoral elections contained few surprises. If there was a sliver of doubt about the likely outcome of a forthcoming general election, it has been eliminated.

Even recent claims about the potential for a hung parliament seem to ring hollow as Labour consolidates its already strong position. If only we knew what the plans are, businesses could now prepare with a high degree of certainty for a Labour government.

Beyond the five missions and shadow chancellor Rachel Reeves’s concept of “securonomics”, so far there is little detail on which to prepare. Even with its planning pledges, “get Britain building” – mission No1 in Labour’s most recent statement, Let’s Get Britain’s Future Back – turns out to be more about kickstarting growth than a direct investment in bricks and mortar.

Building’s own policy tracker highlights the narrow range of commitments made so far

While it may be prudent for a political party that seems to be on the cusp of getting elected to say as little as possible, as we move deeper into actual campaigning, defined programmes will need be fully funded to be “tax bombshell” proof. This means that they will either be modest by comparison with the rhetoric, or vague enough to provide electoral cover.

Building’s own policy tracker highlights the narrow range of commitments made so far, with little clarity beyond some high-level targets for housebuilding, planning reform and ambitious green investment plans.

One other area of certainty which will paradoxically make planning even more difficult is the timing of the upcoming spending review. While it is now widely understood that future government spending will be tight, there is much less appreciation of how little time there will be to finalise these constrained spending plans. Currently most public sector bodies have little or no visibility of their funding allocation from next April onwards.

Rishi Sunak’s survival as the leader of a sullen Conservative party virtually guarantees that the election will not take place until late autumn – perhaps as late as mid-November after the results of the US election. This means that the incoming government will have much less time to prepare its spending plans than usual.

According to the Institute for Government, the timing for the review will be the tightest in 40 years – which will make it even harder for the next government to drive change in its first year in office, no matter how ambitious its plans might be.

It is difficult to predict what the implications might be but, on the basis that public sector clients will not be able to plan with certainty beyond next April, there is a substantial risk that their decisions will be put on hold until funding allocations are confirmed. Getting Britain building may be tougher for the public sector than we might have hoped.

On the brighter side, there are the long-running funding programmes of course, so the spending plans of the regulated utilities and national road and rail bodies will provide certainty for firms on the right frameworks and alliances. Long-term funding allocations like the City Region Sustainable Transport Settlements (CRSTS) also support long-term spending. But these represent only a portion of public spend and do not indicate how other policy levers – including incentives or planning – might be used in the future to encourage developments.

So, given the levels of uncertainty, which sectors are likely to provide the best future opportunities?

There are the obvious ones – highlighted by an absence of any real policy gap between the main parties. Defence stands out, although how capital spending is allocated between material replenishment, new equipment and the military estate could change quite radically in response to a new defence review.

Renewable energy is another, with some exciting ancillary opportunities in ports for example, building the vast new quayside facilities that will be needed to assemble floating offshore wind turbines.

Clearly building in the “grey belt” alone won’t fix the sector’s problems, so there is a lot of heavy lifting to be done in both the planning and finance worlds

PFI hand back is another near-certain workload generator – although how any further upgrading of time-expired facilities will be delivered and funded has yet to be clarified.

Housing might not deliver quite as quickly as promised, despite the evident need for an acceleration in production. Labour presently has a delivery target of 1.5 million new homes for the next parliament. Clearly building in the “grey belt” alone won’t fix the sector’s problems, so there is a lot of heavy lifting to be done in both the planning and finance worlds.

Savills has recently warned that production might remain stuck at around 160,000 per annum unless extra government support is provided, such as additional grants for affordable housing. A rebound in housing markets will of course be welcome but the demand side looks like it needs a longer-term fix to sustain a higher rate of production

The scope and timing of wider public investment programmes are trickier to predict, not only because of the constraints of fiscal rules which will crimp future investment planning, but because of increasing competition between large programmes such as Northern Powerhouse Rail or the New Hospitals Programme. Both health and mobility are priorities. Only by generating more growth and tax revenue can these programmes all be funded, so its foreseeable that some programmes will extend further into the future – relying on extra revenue generated by existing and future pro-growth measures.

Ultimately, it is the growth agenda that gives me the greatest cause for optimism. Growth has been so weak over the past two years that measures to accelerate recovery will trump almost every other policy.

In Reeves’s Mais Lecture last month, she highlighted investment alongside stability and reform as the three pillars of Labour’s ambition for growth on strong foundations. One key idea is that investment is focused on creating capacity on the supply side to eliminate the capacity constraints that have driven inflation and held back growth in the UK since covid.

Pro-growth investments, delivered alongside an industrial strategy – in education and skills development, R&D, public infrastructure and a sustainable environment – could well be the hot spots over the next five years, particularly if measures to crowd-in private investment succeed.

The UK’s strong bounce back from recession is a source of optimism regardless of who is in charge. Predicting accurately what wider measures will be taken to maintain this pace will be key for our sector to plan for its own recovery.

Simon Rawlinson is a partner at Arcadis