UK General Election results and implications for the infrastructure sector across Wales

Last Thursday some of us voted in a UK General Election. It’s fair to say that there weren’t many surprises in the outcome. But what does this mean for infrastructure, and especially infrastructure in Wales?

It’s probably a bit too early to work this one out but I thought I’d dig out some pre-election “promises” from the then Shadow Chancellor Rachel Reeves MP who is now the UK Chancellor. The “promises” were made in the annual Mais Lecture which she presented a few months ago – and I’d like to thank my colleague Marie Claude Hemming of CECA for distilling the lecture into something a simple bloke like me could understand! The speech demonstrated a clear direction of travel in Labour’s economic policy. Recognising the challenge the UK economy faces, the speech introduced the concept of “securonomics” with a dedicated focus on future stability, long-term investment and improved outcomes for all. She particularly recognised CECA’s long-term argument that short-term instability inhibited investment and drove up infrastructure costs, resulting in fewer and smaller new capital projects. Her solution would be a decade of national renewal, driven by a modern industrial strategy.

Her speech argued for an economic approach which recognises how our world has changed. Guided by an active government, it identified three imperatives upon which to build growth, driven by an adherence to far stronger fiscal rules:

  • Guaranteeing stability;
  • Stimulating investment through partnership with business; and
  • Reform (I think she meant the verb rather than the party!) to unlock the contribution and potential of working people.

Improving productivity, especially outside London was a key theme of the speech and very relevant to us in Wales. Reeves highlighted a weak investment environment, low levels of basic skills, gaps in technical and vocational education, comparatively poor management capability and reduced labour supply since the pandemic. All these things sound  very familiar to our sector.

She also spoke about the need to strengthen the UK’s resilience by supporting our supply chains. Stating that “globalisation as we once knew it is dead”, a Labour Government would be strategic about the way in which it chose to deepen the UK’s economic relationships. This includes forming new bilateral and multilateral partnerships, and forming a closer relationship with EU countries. Without mentioning the “B-word” I suspect this means a remodelling of our relationship with EU countries.

Specifically, on infrastructure and industrial strategy she referred to establishing a new British Infrastructure Council with a revived Industrial Strategy Council, placed on a statutory footing. The new strategy will focus on where the UK can develop comparative advantage in crucial sectors like floating offshore wind and carbon capture and storage (CCS). With opportunities in the Celtic Sea, as well as CCS and hydrogen generation in the north and south of Wales this would be very welcome. An immediate challenge for us in Wales will be a “transition plan” for those made redundant following the closure of blast furnaces by Tata Steel at Port Talbot. As disappointing (some would say understandable) as the decision to cease primary steel production is, the opportunities to “transition” workers to new industries are significant but both Welsh and UK Governments need to be active partners in any transition – market forces alone won’t cut it!

On the planning system, which is devolved in Wales, she talked about reform and the next Labour government overhauling the nationally significant infrastructure regime, updating all National Policy Statements within 6 months of coming into office, modernising the regime to reflect the types of infrastructure crucial in our changing economy, and cutting red tape by embedding principles of proportionality and standardisation. Mandatary local housing targets, recruiting hundreds of new planners to tackle backlogs and bringing forward the next generation of New Towns all got a mention. In the first few days of this new government this Chancellor has already made a further statement, which is all well and good but will be extremely difficult to achieve unless there is a recognition that we don’t have enough skilled people across the construction sector to deliver these ambitions (assuming the planning bit is sorted!). I suspect it’ll be no less challenging in Wales!

She spoke about handing key economic powers to regional and local leaders so it will be interesting to see if rail is devolved to Wales along with an HS2 Barnett consequential which would really transform our transport systems. Sadly, Jo Stevens, the new SoS for Wales has already been lukewarm on this which is very disappointing – but it isn’t going to go away!

Replacing the broken Apprenticeship Levy with a new Growth and Skills Levy could be popular across our sector especially in Wales where the link between the levy and actual upskilling has never really existed. There were also lots of pointers towards “growth” including strengthening the Office for Budget Responsibility with a new fiscal lock guaranteeing in law that any government making significant and permanent tax and spending changes will be subject to an independent forecast from the OBR. The OBR will also report on the long-term impact of capital spending decisions which should be a good starting point for maintaining investment in infrastructure. Other commitments were made on longer term R&D investment, employment rights and supporting women in the workplace.

Now that there is a Labour Government in Westminster (and obviously Welsh Labour in Wales) it will be interesting to see if Rachel Reeves is still committed to progressing these pre-election promises, and if she is, how she will seek to fund some of them.

From a construction industry perspective there’s a few things that need to happen quickly :

  1. Give the industry clarity on what governments want to achieve in terms of infrastructure, when they plan to do it (roughly) and how they will fund it – that will instill confidence in businesses to invest in their businesses and to recruit and develop their workforces.
  2. Remove (or at least better manage) the horrendous bureaucracy around consents to build that inhibits the delivery of infrastructure (large and small) – the Infrastructure (Wales) Bill may go some way to achieving this but the jury is very much out on how effective this is likely to be, legislation is one thing as is the need for more “planner” resources, but changing the “culture” of regulators is another.
  3. Address the increasingly dreadful public sector procurement processes and, more importantly, cultures that “crush” our ability as an industry to deliver real value for money infrastructure to our communities across Wales and beyond. This remains dysfunctional, bureaucratic and disproportionate and turns off so many suppliers, especially the smaller local ones, from bidding for public works. It shouldn’t be like this! The Social Partnership and Public Procurement Act will help no doubt, but unless we see a change from the appalling culture of “risk dumping” by public sector clients (including local and Welsh government) and “lowest price wins”, then the policy aims of supporting local supply chains will remain “pie in the sky”
  4. Support businesses with visible workload today so that they can develop the workforce of tomorrow through training, upskilling and apprenticeships. Without this happening now, we will never have enough of a workforce to deliver the opportunities of the future, particular around floating offshore wind, nuclear, hydrogen and other forms of energy generation. And please don’t think that throwing money at Further Education Colleges at the last minute to deliver “apprenticeships” will address this – it won’t. We need a clear and long term industrial strategy with clear links to people development to make this happen. It takes time to develop people! And can anyone explain the role of “Regional Skills Partnerships” in Wales?!

I could go on but it’s early days so let’s see what Rachel and her “partners” in the Welsh Government can come up with.  All I will say, finally, is that honeymoon periods never last long so we need to see some action pretty quickly!

Ed Evans – Director, Civil Engineering Contractors Association (CECA) Wales