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What is the Impact of the Election on Contractor Procurement?

The UK is at the start of a significant political shift, with the Labour Party having formed the next government. This change comes with promises of major policy shifts, especially in public spending and infrastructure. For contractors and businesses involved in government projects, understanding these changes are crucial. Here’s a look at how the election might impact contractor procurement.

Current Political Climate

The political landscape in the UK is charged with anticipation. The Labour Party’s rise to power brings a renewed focus on public investment and infrastructure development. Their ambitious plans aim to address longstanding issues like housing shortages and outdated infrastructure. As such, the political climate is one of both uncertainty and opportunity, with potential shifts in policy that could significantly impact the procurement landscape.

Potential Changes in Procurement Policies

Labour’s proposed 10-year infrastructure strategy is a central pillar of their platform. This strategy is designed to provide a clear roadmap for investment, offering the private sector much-needed certainty about upcoming projects. This long-term vision aims to stimulate economic growth and ensure sustained investment in crucial sectors. The party plans to improve rail connectivity in Northern England as part of a broader industrial strategy and regional development priorities, and will establish a National Infrastructure and Service Transformation Authority to set strategic infrastructure priorities and oversee project execution. [1]

One of the most notable pledges is the promise to make three major housing announcements within a fortnight of taking office. [2] This swift action signals an aggressive approach to tackling the housing crisis, likely leading to a surge in housing-related projects and opportunities for contractors.

Additionally, Labour plans to empower local councils to identify green belt land that can be reclassified for development. [3] This policy could unlock new areas for construction, providing a significant boost to the housing sector and associated industries.

Where is the Public Funding Going to Go?

Central Government

Labour’s infrastructure strategy indicates a substantial increase in central government funding. This investment will likely focus on large-scale projects such as transportation networks, renewable energy initiatives, and updates to infrastructure nationwide. Contractors involved in these sectors can expect a surge in opportunities as the government rolls out these projects.

Local Government

Local governments will also see a significant influx of funding, particularly for housing and community development projects. The reclassification of green belt land will give councils more freedom to approve new housing developments, addressing local housing shortages and boosting local economies. Contractors with strong local government connections and expertise in residential construction will be well-placed to benefit from these changes.

How Contractors Might be Affected

Contractors will need to adapt to the new policies and priorities set by the Labour government. The emphasis on long-term infrastructure planning means contractors should prepare for larger, more complex projects. Those with capabilities in sustainable construction and renewable energy will be particularly well-positioned to take advantage of the new opportunities.

The shift towards more rapid housing development will require contractors to be agile and responsive. Meeting the demand for quick project turnarounds and high-quality construction will be crucial. Furthermore, the potential reclassification of green belt land will open new markets, but also bring challenges related to planning permissions and community engagement.

Preparing for the Future

To prepare for these changes, contractors should:

Stay Informed: Keep abreast of policy developments and funding announcements. Understanding the government’s priorities will help in aligning business strategies with new opportunities.

Invest in Skills and Technology: Enhancing capabilities in areas such as sustainable construction, digital infrastructure, and modern methods of construction will be essential. Investing in the latest technologies and training will ensure readiness for new project demands.

Plan for Flexibility: The ability to adapt quickly to policy changes and new project requirements will be crucial. Developing flexible project management approaches and scalable business models will help in navigating the evolving landscape.

In conclusion, the appointment of a new Labour government is set to bring substantial changes to government spending and contractor procurement, however, in the current climate, sentiment is positive yet a need for stability is being strongly encouraged.

Construction News reported: ““As Keir Starmer takes power after a period of rising prices, rising interest rates and geopolicital instability, more than half (52 per cent) of construction professionals polled by data providers NBS and Glenigan said they expected more work after the election.” [4]

The Labour Government must deliver consistency and longevity in policy-making and communication with the industry. Peter Hogg of Arcadis emphasised the need for certainty from the government, warning against using a large majority to push through radical actions. [4]

By understanding these changes and preparing accordingly, contractors can position themselves to capitalise on new opportunities and contribute to the UK’s future growth and development.