Construction data company Glenigan has responded to the expected Conservative majority government resulting from yesterday’s general election “eases uncertainty” for the construction industry in the short term.
“Recent months have seen a cooling in construction activity,” said Glenigan economics director Allan Wilén. “The latest Glenigan Index recorded a marked drop in project starts, as private sector developers postponed decisions in the run up to the general election and government-funded projects were caught up in the traditional pre-election hiatus.
“With the votes now cast and the Conservatives set to form the next government with a small majority, the short term political uncertainties have now eased.
“However, over the next parliament the UK faces five years of constitutional change with a promised referendum on the UK’s EU membership by 2017, the prospect of further Scottish devolution and potentially a fresh vote on Scottish independence.
“The economic uncertainty posed by the European Referendum, in particular, is a potential threat to private sector investment over the next two years.
“Public sector capital expenditure programmes are likely to be squeezed hard as the new government strives to deliver its planned reduction in the budget deficit. While Conservative plans for large scale investment into the strategic road network bode well for construction, the sharpest increase in capital funding is not planned until after the next general election.
“Moreover, with a wafer thin majority, the Conservative leadership will not be able to push through bills against the will of rebel backbench MPs. It will be vital that the government builds cross-party support to ensure that important long-term decisions, such as HS2 and additional airport capacity in the south east, are not stymied by local Conservative backbenchers.
“Housing emerged as an important political issue during the election campaign, with need to increase housing supply an area of clear political common ground. Planning reforms made by the coalition government have enabled more housing permissions to be brought forward, while the Help to Buy scheme has provided much needed support for the housing market.
“However it is essential that the Conservative administration now builds on these reforms. Their stated aim to provide ‘200,000’ Starter Homes by 2020 would ease some strain on first time buyers, but this will need to be part of a wider strategy to solve the severe shortfall in homes.”