Westminster Watch: What the manifestos mean for the infrastructure, construction and transport sector

With the UK General Election on Thursday 4 July, it is in the interests of all clients to understand each party’s manifesto promises and the impact they could have on their businesses.

The Financial Times’ aggregation of national voting polls suggests the Labour Party maintains a 20 percentage point lead over the Conservatives (FT, 1 July 2024). No incumbent party has ever bounced back to close such a significant polling gap at this stage of the campaign season. As such, it seems very likely that the Labour Party will achieve an electoral majority on 4 July. While there is always a possibility that unexpected developments may change the trajectory of the campaign, we advise clients to carefully consider the policy commitments that are being proposed by the Labour Party in their manifesto.

This is the latest in our series of Westminster Watch client alerts, analysing the impact of the party manifestos on key sectors across the UK economy – including technology, financial services, energy and consumer goods.

In this article we offer an overview of the manifesto commitments affecting UK infrastructure, construction and transport. We’ve focused on the two major political parties, with additional insight into the manifestos of the Liberal Democrats, the Green Party and Reform UK, to give a sense of the parameters of the political debate.

This Westminster Watch has been written in collaboration with Howard Bassford, UK Head of Infrastructure, Construction and Transport, and the UK Government Affairs team.

THE LABOUR PARTY MANIFESTO

The Labour Party’s manifesto sets out its key ambition: to execute a strategic long-term program of investment in the nation’s “crumbling infrastructure”. Should Labour win the election on 4 July, they will have a strong mandate to “rebuild Britain” in line with these commitments.

Labour's manifesto commits the party to developing a ten-year infrastructure strategy to give the private sector a stable project pipeline to invest in. Other key initiatives include:

• Creating a National Infrastructure and Service Transformation Authority, bringing together the Infrastructure and Projects Authority and the National Infrastructure Commission to set strategic infrastructure priorities and oversee the design, scope and delivery of projects.
• Reforming the planning regime to promote the delivery of Nationally Significant Infrastructure Projects (NSIPS) and expanding their definition to include laboratories, gigafactories and digital infrastructure.
• Updating compulsory purchase compensation rules to speed up building projects. This would involve taking steps to reduce the compensation for compulsory acquisition payable to landowners. The Labour Party’s plan to increase the number of new houses built in the UK – advocated for by economists across the political spectrum including Liam Halligan (Home Truths, 2019) – is to target the “artificially inflated” value of undeveloped land that has the potential to be built on. However, what constitutes an “artificially inflated” value remains to be seen – and land-owning businesses should closely monitor developments in this space.

It should be noted that none of these proposals involve significant costs or spending commitments on the part of the government. As such, they are likely to be implemented in the form outlined in the manifesto, although their successful implementation will depend on the detail of each policy.

The Labour Party manifesto commits to building 1.5 million new homes over the next parliament, including "the biggest increase in social and affordable housebuilding in a generation". These would make up a series of “new towns”, with locations to be announced by the end of Labour’s first year in government (BBC, May 2024).

The National Planning Policy Framework would be updated to restore mandatory housing targets and strengthen the presumption in favour of sustainable development. Previously developed land would be prioritised, with urban brownfield sites fast-tracked through the planning approval process. Alongside this, Labour have expressed interest in releasing “grey belt” land (on the margins of the green belt designation) for development.

The party would also reform the Affordable Homes Programme to support local councils and housing associations and expand their capacity to deliver additional housing supply.

Although Labour proposes ambitious housing targets, it does not allocate a substantial amount of funding for housing construction, save for GBP20 million a year to be spent on new planning officers. The growth in housing construction and delivery would therefore be driven by the private sector.

Whether the inadequacies of the current planning regime forms the key limiting factor holding back a construction boom in the UK remains to be seen. It is likely that, should they win the election, a Labour government would need to do more to encourage private investment. This may require a formal public-private investment vehicle, perhaps along the lines of the Welsh government’s Mutual Investment Model (MIM).

The Labour Party would develop a long-term strategy for transport to ensure that infrastructure is delivered efficiently and on time. Key initiatives include:

• Plans to bring the operation of England's railways under public ownership as contracts with rail providers expire or are breached by the providers' failure to meet their contractual obligations. The party proposes to operate England's railways through Great British Railways, a new body with responsibility for ongoing investment and day-to-day operational delivery. These renationalisation plans may present an existential risk to franchised rail operators.
• Devolved transport responsibilities, including giving mayors the power to create unified and integrated transport systems. Labour would reform bus powers to enable all local authorities to franchise local bus services and lift the ban on municipal ownership of bus services.
• A target to fix an additional one million potholes across England every year.

When it comes to energy infrastructure, Labour would incorporate Great British Energy, a publicly owned clean energy investment company and a flagship Labour policy throughout campaign season. But the Labour manifesto – in common with the manifestos of all major parties – provides little detail as to how they would expand the capacity of the grid to support clean energy projects and the decarbonisation of the UK more widely. For more detail on the political parties’ plans for energy, check out our Westminster Watch article on the energy sector.

THE CONSERVATIVE MANIFESTO

The Conservatives make a point of setting out the six steps they would take to speed up infrastructure delivery to “achieve our infrastructure ambitions” and cut down the average time it takes to sign off major infrastructure projects from four years to one. These six steps include:

• Reforming the environmental impact assessment regime.
• Reducing requirements to offset the environmental impact of new infrastructure on an area.
• Allowing faster changes to consented projects.
• Ensuring regular updates to National Policy Statements.
• Ensuring statutory consultee feedback is provided only in line with clear objectives.
• Reducing the scope for judicial review.

The Conservative Party would invest in local infrastructure, committing GBP36 billion towards local buses, rail and roads (GBP8.3 billion would go towards potholes and road resurfacing) from the cancellation of HS2. The Conservatives would adhere to the CP7 funding settlement for Network Rail, providing GBP44 billion over the next parliament and deliver the Lower Thames Crossing and A303 projects. The vast majority of these proposals, and all of the infrastructure-related commitments in the Conservative manifesto have already been announced or are currently underway.

The Conservatives do not lay out such substantial planning reforms as those found in the Labour Party manifesto. But they do commit to implementing a fast-track route for new homes on previously developed land in 20 of the UK’s largest cities. They would also promote locally led urban development corporations in partnership with institutional investors to support delivery of new quarters in Liverpool, York and Leeds.

In common with the Labour Party, the Conservatives express their broad support for the ongoing roll out of gigabit broadband across the UK. The Conservatives would also spend GBP1.5 billion on large-scale compute clusters to build out the UK’s processing capacity to take advantage of future developments in AI. For a review of political parties’ plans for technology, take a look at our Westminster Watch article on the technology sector.

THE LIBERAL DEMOCRAT MANIFESTO

The Liberal Democrat manifesto emphasises the importance of investing in infrastructure as the route to unlocking economic growth in the UK.

The manifesto commits the party to building 380,000 new homes per year, including 150,000 social homes a year. They would require all new homes and non-domestic buildings to be built to a zero-carbon standard, including being fitted with solar panels. As technologies improve, the Liberal Democrats would progressively increase standards to compel home-owners to upgrade their houses in line with net zero targets.

To increase construction of new housing, the Liberal Democrats would encourage the development of existing brownfield sites with financial incentives and ensure that affordable and social housing is included in these projects. The manifesto commits the party to introducing a "use-it-or-lose-it" planning permission to address developers failing to implement permissions.

The Liberal Democrats would accelerate the roll-out of sustainable transport networks, with more electric vehicle charging points and a target to electrify every rail line by 2030. Devolution would also be on the agenda, with local authorities given more power to franchise services and local councils receiving a greater share of the roads budget.

OTHER MANIFESTOS

Reform UK is averaging 16% in the polls, looking to establish a small cohort of MPs in the next parliament (FT, 1 July 2024). They are unlikely to have a significant voice in the House of Commons, as consistent levels of minority support across many constituencies are not conducive to electing MPs under Britain’s First-past-the-post voting system. But polls suggest their policies have been gaining traction with disillusioned Conservative voters, a trend that may well continue over the next five years and beyond.

Reform UK’s manifesto commits the party to implementing a single government infrastructure funding stream by merging the National Infrastructure Commission and the Infrastructure Bank. Their flagship policy would be to scrap all net zero related objectives, a commitment that would affect every stage of the infrastructure delivery process. In common with the Labour Party and the Liberal Democrats, Reform UK would also fast-track planning and introduce tax incentives to develop brownfield sites.

Interestingly, Reform UK call for a national database for councils, contractors, government and utilities to ensure coordination of transport infrastructure projects. The manifesto additionally promises to “incentivise innovation to speed up building”, including modular construction and digital technology. Quite how construction technology firms would be incentivised remains to be seen.

Reform UK’s housing policies propose an alternative route to meeting demand for housing – through planning reforms and “cutting immigration”. Its reasoning contrasts significantly with the manifesto of the Green Party, which would invest over GBP19 billion in transport infrastructure over five years, committing to providing over 150,000 new social homes each year through new build and the purchase and refurbishment of old housing stock.

The Institute for Fiscal Studies has analysed the economic credentials of the policies proposed by both political parties – with the Greens setting out plans for an unprecedented increase in public spending, and Reform UK advocating for an unprecedented reduction in the size of the state. The IFS comes to the conclusion that neither could be implemented in the form outlined in the manifestos without “real economic cost” (IFS, June 2024). As such, it is best to view each of these proposals as illustrating the parameters of the political debate, rather than as a workable agenda for government.

NEXT STEPS: 4 JULY AND BEYOND

Polling day is Thursday 4 July. On 9 July, parliament returns for the election of the speaker. The state opening of parliament is set for 17 July, when the King’s Speech will set out the new government’s proposed legislation for the coming session.

Before the election was called, the House of Commons was scheduled to break for summer recess on 23 July. But if the Labour Party wins the general election, it may extend the sitting of parliament until early August to keep momentum up to implement its legislative priorities (FT, June 2024).

The first hundred days of a new government is a critical period of time. Whichever party wins the election, new secretaries of state and their special advisors will be entering government departments with the ambition and momentum of a recently elected administration.

With campaigning behind them, ministers will have to get up to speed with the regulatory and legislative complexities of government.

Both of the major political parties have signalled their openness to working with the private sector to broaden their understanding of the issues concerned.

Businesses have an important contribution to make to the development and implementation of effective policy, targeted at specific outcomes and minimising any unintended consequences that could unduly affect their commercial interests.

HOW WE CAN HELP

Our UK Government Affairs team supports companies to take a proactive approach to addressing the risks and opportunities arising from political change.

Unlike government affairs agencies, we combine political, legal and regulatory knowledge with an in-depth understanding of the workings of Westminster and Whitehall. As regulated Consultant Lobbyists, we’re experienced in supporting you to execute sophisticated engagement and advocacy strategies.

Our clients also benefit from the insights and understanding of our strategic consultants Lord David Blunkett, Lord Edward Garnier, Lord Gavin Barwell and Lord Andrew Tyrie.

Please contact Paul Hardy for further information on how we can support you to navigate the opportunities arising from a new government in the UK.