All change on 8 June (Wikimedia Commons)

UK industry reacts to shock election announcement

19 April 2017 | By GCR Staff 2 Comments

Britons returning from their Easter holidays may have been stunned on Tuesday when Prime Minister Theresa May called for a snap general election to be held 8 June – but the UK construction industry was quick to react.

Responses from companies, professional bodies and trade associations were mixed, ranging from expressions of unease to warm welcomes, but a common thread was the hope for greater certainty surrounding the UK’s decision to leave the European Union.

It would “allow the most wonderful platform for the Prime Minister to lay out her strategy to the electorate,” commented Julia Evans, chief executive of the research consultancy BSRIA. “It will be a strategy that will not be debated in parliament – as it properly should be – but it will be played out at the political hustings in the coming seven weeks.”

Evans added: “There has been much chaos and mixed-messages surrounding Brexit since June last year so we trust this announcement will bring much-needed clarity and order in the Brexit debate and beyond.

“Before all the detailed talks begin with the EU and Government sets out its vision and objections for Brexit legislation, such a General Election will demonstrate determination ‘to get the job done’. A stronger negotiating position will win the best deal on Brexit.

“Industry needs strong leadership to avoid a disruptive cliff-edge. Indeed, as we move forward, we must not lose sight of the fact that it is crucial that the construction industry’s voice is heard in the Brexit deliberations. What is evident is that the ‘construction industry is open for business’.

“Whoever forms the next Government needs to build a robust partnership between industry and Government that looks to future.”

Real estate a “willing partner”

Melanie Leech, chief executive of the British Property Federation, said the election should give whoever wins a clear mandate to negotiate the future relationship with the EU.

“The Prime Minister’s decision to call a new General Election creates some short-term uncertainty at a time when it’s critical to maintain business and investor confidence,” Leech said. “It should, however, provide the next government with a clear mandate to negotiate our future relationship with the EU and deliver the UK’s long-term economic health.

“Real estate is a willing partner for Government through this period as it delivers its industrial strategy and we have five key messages: work with us to maintain investor confidence in the UK and to drive growth; provide fair, competitive and stable tax, regulatory and planning systems; invest in infrastructure and free up public sector land; help us to address the skills shortage in our industry; and support more housing supply across all tenures.”

Lewis Johnston, Parliamentary Affairs Manager for the Royal Institution of Chartered Surveyors (RICS), said he understood the prime minister’s motivations. “With a working majority of just 17, the Government’s freedom of action is restrained and, understandably, the Prime Minister wants a stronger mandate as she embarks on the EU exit negotiations,” he said. “The real question is how the economy will react to yet another political rollercoaster ride.”

Johnston went on: “Since the EU Referendum last summer, our market surveys across the residential, commercial and construction sectors show we have largely moved on from initial negative reactions, but uncertainty continues to cloud the outlook and weigh on market sentiment. Today’s decision does very little to change that prognosis in the near term and, if anything, we are likely to see continuing deferral of major investment and hiring plans.

“While Theresa May’s stated intention this morning was to provide greater clarity and stability by calling a general election, in the immediate term the move inevitably puts a question mark over policy and creates further uncertainty across the built environment. It is now the responsibility of all parties to set out clear policy proposals across land, property, construction and infrastructure to ensure the UK can deliver the homes, infrastructure, factories, offices and major building projects it needs to thrive.”

Don’t forget infrastructure

Mark Naysmith, UK chief executive at WSP | Parsons Brinckerhoff, also welcomed the prospect of a clearer mandate for the UK in negotiating with the EU. “Recent uncertainty has knocked confidence, particularly in the private sector where investment has stalled and project start-ups delayed. So a new government with a clear mandate should hopefully create a more stable environment that reinvigorates confidence,” he said.

But he urged all parties to give greater priority to infrastructure delivery. “With momentum building behind high speed rail, Heathrow, highways and other infrastructure investments, a snap election presents the opportunity for the next government to build a strong mandate for speeding up the delivery of these vital long term projects,” he said. “We would like to see firm manifesto commitments to these schemes, as well as a determined, clear pledge for producing more of the construction and STEM skills we need for delivery.”

Naysmith added: “In the context of Brexit and the nascent Industrial Strategy, any future government needs to take a joined-up approach so that we can talk about the link between infrastructure investment and economic growth at a higher level. Whilst infrastructure delivery is supported by all main political parties in some form, 80% of the construction industry believes that the public doesn't understand the role it plays in enabling growth. We’ll therefore be looking for parties to explain at a national and regional level why pro-infrastructure policies are good for UK plc, for productivity and for local housing, services and jobs.”

Aggravating the uncertainty

Noble Francis, economics director at the Construction Products Association said: “In the short-term it adds a little more speculation for the UK economy generally. The run-up to 8 June – including the six-week period of purdah beforehand  – will temporarily aggravate the uncertainty around the numerous key issues which are important to our industry at this time.

“Whilst this short-term hiatus is unlikely to have a large impact on activity on the ground, it comes at a time when every week for preparations for Brexit negotiations is precious. In terms of the medium-term impact, it is far too early to say at this stage.”

Taking a broader business view, Carolyn Fairbairn, Director-General of the Confederation of British Industry (CBI), said the political parties now had to make their case to British business.

“With a snap General Election now called, businesses will be looking to each political party to set out their plans to support economic stability and prosperity over the next Parliament in a way that is fair and sustainable for communities across the UK,” she said. “Distraction from the urgent priorities of seeking the best EU deal and improving UK productivity must be kept to a minimum.

“Firms will want to hear commitments from all parties to work in close partnership with business and back a new Industrial Strategy to make the UK economy the most competitive in the world by 2030. It is essential to get the UK’s foundations right, from building a skills base for the next generation, to investing in infrastructure, energy and delivering a pro-enterprise tax environment.

“As EU negotiations now get underway, firms are clear about the serious risks of failing to secure a deal and falling into World Trade Organisation rules. It is vital that negotiators secure some early wins and all parties should commit to working to ensure businesses can continue to trade easily with our EU neighbours, while seeking new opportunities around the world.

“Whoever forms the next Government, they should seek to build a partnership between business and government that is the best in the world, based on trust and shared interest.”

Image: All change on 8 June (Wikimedia Commons)