Industry responds to hung parliament election result

The construction and infrastructure sector has responded to the general election result with a mixture of suprise, concern and not a little trepidation.

Given that the result of the general election has come as a shock to the political class and media commentators, it's perhaps little wonder that professionals working in the construction and infrastructure sector are viewing the hung parliament outcome with a degree of concern.

Richard Laudy, global head of infrastructure at Pinsent Masons, said: “Whatever the wider political ramifications of a hung parliament might be, this looks like a bad result for the UK’s infrastructure as we head into another period of political uncertainty. The UK desperately needs to attract investors if it is to improve its ailing infrastructure yet the political uncertainty in which we now find ourselves is precisely what puts off investors and will make our infrastructure problems more difficult to solve. There must also now be a real fear that the government will be distracted away from addressing questions such as the UK's skill shortage as it seeks to shore up its own position. The UK needs an additional 36,000 workers every year to meet the current demand for infrastructure and the government needs to address this. The problem is immediate and acute and will not be solved by reskilling or apprenticeships alone. There needs to be an open conversation between government and industry, recognising the need to collaborate, map the skills required to deliver our infrastructure and provide for this within any post-Brexit immigration system."

In contrast, Will Waller, market intelligence lead at Arcadis, struck a more optimistic tone, saying: "Despite the disquieting election result this morning, UK construction has clearly weathered the preceding year of uncertainty relatively well and there is therefore reason to have hope that it can continue to do so, with clear long term investment opportunities transcending relatively shorter term tumultuary for many investors.”

Simon Child, director at architecture and design practice, Child Graddon Lewis, said: “Perhaps the clearest sign from this election is dissatisfaction with the last government on a range of issues - the sign of a weak government with a small majority. Everyone who works in the built environment is aware of the rapid improvements needed to develop our communities and economy, whether urban or rural. Two of the many themes all parties agreed on were the desperate need for more housing and preventative health measures. The best outcome of this hung parliament must be some form of coalition to push forward a rapid, diverse and collaborative housebuilding programme, as well as better transport infrastructure to connect communities and improve air quality.”

But will the industry see any kind of stability in a fragile coalition that Theresa May has cobbled together with the DUP? Henry Fordham, director of Bellis Homes, said: "If we can gain the stability we have been craving for, the housing market can slowly push on. You can definitely see a fear factor with purchasers, especially at the higher level, when it comes down to final decision making. Labour policy on general taxation (especially land) to me seems like a hit on homeowners. However, housing policy from both parties seems to be a far cry from reality, to achieve the one million new homes by 2020 target from the Conservative party is not achievable at the current rate."

Nelson Ogunshakin, chief executive of Association for Consultancy and Engineering, said that the election result would mean more uncertainty for businesses but that cool heads would be needed to weather the storm. “We are facing an extended uncertain future for the UK today but we must remember that the UK has been here before and survived," he said. "We must maintain a calm and cool head, focus on delivery of the current infrastructure investment pipeline, continue to encourage inward investment and maintain UK competitive advantages. We must also not let our fear get the better of us but continue to be positive about the future of our industry and this country," said Ogunshakin. "Now more than ever we can see the importance of collective actions and working within our membership associations to articulate and fight for the issues that mean so much for our companies, industry and country. I will be meeting with ACE members and key stakeholders throughout the days and weeks ahead and will continue to champion our industry in the corridors of power no matter who is the government," he said.

"ACE will continue to monitor the political landscape and will be making further statements as the situation unfolds over the coming days. We will also be producing briefing notes for members that will help to navigate the challenges ahead and shape the future direction of our industry during this turbulent time," said Ogunshakin.

Undoubtedly a key impact of the election result will be uncertainty affecting the financial markets. Nigel Green, founder and CEO of deVere Group said: "The financial markets had almost already priced-in a hard Brexit and will now have to quickly reassess their position. As this adjustment takes place we can expect the uncertainty in the financial markets not only to continue but to intensify. Looking towards Theresa May striking a soft Brexit agreement, the pound will begin to regain ground, short-term gilts will fall in price as yields go up and FTSE100 stocks will fall as the likelihood of an improving economy emerges. The bloody nose delivered to the British government last night by the electorate means the UK’s power at the Brexit negotiations is now likely to be relatively weak. This further complicates the talks, due to start on 19 June and combined with the markets’ readjustment, means we’re entering turbulent waters in the short term.”

Looking at businesses engaged in the environmental sector, Matthew Farrow, executive director of the Environmental Industries Commission, commented: "It may well be that a weak Conservative government ends up negotiating a softer Brexit, which in turn could make it more likely that UK environmental law post-Brexit will mirror EU law indefinitely (the EU Parliament has insisted that full UK compliance with all EU environmental regulations should be a non-negotiable part of any UK-EU trade deal), which could increase certainty in some environmental markets. Equally though, a weak UK government makes an unstable and unpredictable run up to Brexit more likely which makes business planning more difficult and could have serious repercussions for the wider economy in which environmental firms operate.”

Steve Gillingham, Mace’s director for the north, commented: "The surprising results of the election make it hard to judge what the impact will be on the north. Whatever the make-up of the new government, it should recognise the potential for further growth in the regions and work closely with our new metro mayors to achieve that vision. Our analysis of both sets of manifestos during the campaign showed that both Labour and the Conservatives were committed to developing significant regional infrastructure across the Northern Powerhouse, so I would expect to see that agenda develop regardless of any inertia created by the hung parliament."

Gillingham said that a hung parliament highlighted the benefits of having further devolution to the regions. "While the makeup of the future leadership in Westminster is uncertain and there is likely to be more difficulty getting bills through parliament, devolution has given us a platform for stronger local leadership in the great cities of the north," he said.

With skills being vital for those working in the natural and built environment, Samantha Hurley, director of operations at the Association of Professional Staffing Companies, said: “The impact of this result on both the permanent and flexible labour markets has the potential to be significant. Ever since the phrase ‘gig economy’ was coined, media attention has consistently focused on lower skilled and lower paid workers and we are absolutely determined to ensure that the new government recognises that professional independent flexible talent is not only a completely distinctive group within the gig economy but that it also has a critical role to play in the future success of the UK plc.”

Adressing the business impact on the housing market, Naomi Heaton CEO of London Central Portfolio, said: "Following the unprecedented election result, the UK looks set to face an extended period of uncertainty, historically unattractive to inward investment, with knock on effects for the housing market. However, the weakened position of the Conservative party, in conjunction with a pro 'soft-border' DUP, would suggest that the UK will be on course for a softer Brexit, encouraging news for both institutions considering their position in the City of London and international investors looking at the UK."