Sunak and Starmer should both be happy to embrace the squeezed middle

Anyone hoping for a dash of political inspiration would have been disappointed last week, as the prime minister and his chief rival outlined their competing visions for Britain.

Rishi Sunak’s five-point plan has the merit of being easy to grasp, even if – as a pragmatic response to the UK’s many ills – it failed to lift the spirits. By contrast, Keir Starmer’s neat inversion of “taking back control” into a much-needed new wave of devolution risks being swamped by the muddy waters of a controversial programme of constitutional and electoral reform.

Given the current circumstances, it is unfair to expect too much from either side. The prime minister is consumed by a battle to stabilise his crisis-torn government and divided party.

Moreover, even as the opposition is perfectly placed to point the finger at the party that has been in charge for 13 years, Starmer and his team need to present themselves as a capable government in waiting. Creating this new Labour brand for 2024 appears to mean that the “vision thing” must be dialled back a few notches, if only to keep some powder dry for when the election comes.

Now that the fiasco of the 2022 mini-Budget has cancelled out the reputational damage of the 2019 Labour Party manifesto, a new focus on sober managerialism is taking hold

The two speeches highlighted that both parties have coalesced towards a new centre of gravity after disastrous experiments in radical policy making. Now that the fiasco of the 2022 mini-Budget has cancelled out the reputational damage of the 2019 Labour Party manifesto, a new focus on sober managerialism is taking hold.

Labour’s promised “decade of national renewal” feels more like a repair and maintenance job to the UK’s body politic than a full rebuild.

Nowhere can this better be seen than in rival proposals for fiscal mandates and budgetary discipline. The Conservatives have tied their hands until 2028 with a settlement so tight that it is unlikely to withstand the first contact with the public sector’s pay demands. Keeping their heads down and powder dry, Labour is content for the moment to follow the same line, pledging to borrow only for investment.

I have mentioned before that current spending plans are simultaneously a cunning electoral trap while also being a recipe for long-term decline in construction sector opportunity. It will be hard for Labour to put forward plans for a much larger public investment programme without blowing the constraints of their new fiscal mandate. As a result, it is foreseeable that – regardless of the outcome of an election – levels of public sector capital expenditure will decline as inflation eats away at investment budgets.

This may explain why Great British Energy – Labour’s vision for a state-owned, sovereign wealth-funded energy company – was given such a high profile last week. In the context of the current energy crisis, it has the merit of being publicly owned, so that any profits from high energy prices will be reinvested. However, in the context of delivering 100% renewable electricity by 2030, Great British Energy feels like it is late to the party.

Renewable energy is a great UK success story. Licences for a further 11GW of renewable energy were awarded in summer 2022, mostly without subsidy, and many supply chains needed to deliver the investment are already in place. Faster progress has been made in the UK than anywhere else partly because the UK has successfully accessed the resources of a diverse global industry by being investable.

Great British Energy must add to the pace of UK decarbonisation, not just reinvest the profits

A UK national energy champion will have to compete in a mature and highly capable market. It could well be a success, but it must not do this at the expense of attracting private investment into UK renewables or by diverting public resources away from other worthwhile initiatives such as the UK Infrastructure Bank. Great British Energy must add to the pace of UK decarbonisation, not just reinvest the profits.

This brings me to the squeezed middle – not the “just about managing” electorate that has grown so much larger since identified by Theresa May, but the Tory capital programmes that are already underway and are broadly aligned to the middle ground of policy shared by both parties.

Labour and the Conservatives will both campaign on a platform of investment in the NHS and in schools. They will both prioritise expenditure in roads and rail and will no doubt compete on decarbonisation pledges too.

The point of course is that, by 2025, like the established supply chains delivering offshore wind, long-running public programmes and initiatives such as the Construction Playbook, the Social Housing Decarbonisation Fund and the New Hospital Programme will have matured and will be in their benefits delivery stage. Changing the delivery model after the next election could cause delay and may end up costing more.

The two parties still have many opportunities to create clear political water

So, my proposition – even after 13 years of Conservative-led government – is that there are some elements of the government programme that are not worth politicising. If party leaders want to make sure that scarce capital resources are well invested, then they can give those programmes greater certainty by avoiding the temptation to make them a political football.

This should not be impossible to engineer. The two parties still have many opportunities to create clear political water.

On decarbonisation for example, Labour has a readily available point of difference associated with private housing retrofit. We also have a long-standing political tradition of policy stealing.

>> Also read: Green infrastructure investment centre-stage at conference as Labour poll lead grows

The energy price cap was originally opposed by the Tories for example. Sometimes, circumstances demand a particular solution, and the source of the idea becomes less important.

As we proceed into 2023, we are no more than two years away from an election – an election which is more likely to be fought on the basis of competence rather than radicalism. Looking ahead, I have one simple appeal to the parties on behalf of the construction sector: stick to the middle ground.

The industry has had to deal with enough chaos through Brexit, covid-19 and the energy crisis without having programmes and policies put in doubt. A competent government in power or in waiting will recognise that this is the best way to deliver long-term value when resources and money are tight.

Simon Rawlinson is a partner at Arcadis and a member of the Construction Leadership Council