Scotland and Wales results raise questions for construction

While Sadiq Khan’s victory in London has captured the headlines, election results elsewhere in the UK, particularly in Scotland and Wales, have implications for the construction and infrastructure sector.

As with the Khan campaign in London, the newly returned administrations in Scotland and Wales both campaigned strongly for affordable housebuilding and as well as measures to boost infrastructure spending and address the industry’s ongoing skills shortage problem.

While both the SNP in Scotland and Labour in Wales fell short of winning an outright majority in their respective parliaments, the hope will be that many of their policies for construction should gain cross- party support. However, that will depend on agreements being struct with opposition parties in the weeks and months ahead.

The SNP manifesto committed the party to investing more than £3bn over the next parliament to build 50,000 affordable houses, of which at least 35,000 will be for social rent. The party also committed to investing in Scotland’s Help to Buy and Shared Equity schemes to help first-time buyers get onto the housing ladder.

While social housing is electorally popular, there are concerns from some in the industry that an over-concentration on the bottom end of the market will mean other developments being neglected.  

Alan Brown, CEO of CALA Group said: “My concern is that the Government-elect risks creating a law of unintended consequences, as these policies aimed at boosting the affordable end of the market, are encouraging Scottish housebuilders to focus on the provision of smaller homes, over large. While building a new two-bed home may meet the needs of a single small household or first time buyer, it will not result in any movement further up the housing ladder. Yet, building a new 4-bed home plays a two-fold role – addressing the demands of current overcrowded households who are in need of larger housing and, in turn, meeting the needs of smaller, newly forming households by freeing up smaller housing further down the ladder.

“What will happen in three to five years’ time when the current flurry of first time buyers turns into growing families who want to upsize but cannot, as housing policies today have stalled the supply of larger family homes for the future?” Brown asked.

Welcoming the SNP’s pledges on housing, Mary Taylor, chief executive of the Scottish Federation of Housing Associations , said: “Given the parliamentary arithmetic, we urge all parties to work together constructively to build the affordable housing to which they are all committed. 

“Commitments to increasing the amount of affordable housing, introducing extra energy efficiency measures to fight fuel poverty and using the new welfare powers to, amongst other measures, abolish the ‘bedroom tax’ are supported across the Scottish Parliament. It is vital that these pledges are realised over the lifetime of the next parliament in order for everyone in Scotland to have a warm, energy efficient, affordable home and to improve the life chances, health and wellbeing of some of the poorest and most vulnerable people in Scotland,” she said.

"Given the parliamentary arithmetic, we urge all parties to work together constructively to build the affordable housing to which they are all committed."

- Mary Taylor, Chief Executive, Scottish Federation of Housing Associations

RICS Scotland said the biggest challenge for Scotland’s next government will be tackling the chronic shortage of houses across all tenures. Sarah Speirs, director RICS in Scotland, said: “Certainty and stability are key to property investment, development and a vibrant economy. We would encourage the new government to be clear on how they will work to deliver that stability, given that they have no overall majority.”

Speirs said that the government needed to develop plans to bring back into use Scotland’s 27,000 long-term empty properties. “The poor condition of the country’s existing housing stock also needs to be addressed,” she said. “Through a planned maintenance scheme, which would involve mandatory building condition surveys for tenement properties, more homes will be available to house future generations in Scotland. This proposal could help increase the viable supply of homes, and create and maintain jobs in the construction sector – particularly for SME builders. We look forward to seeing these issues addressed as a priority,” she said.

The SNP manifesto also committed to a £200m expansion of the Golden Jubilee Hospital in Clydebank and the establishment of five new elective treatment centres in Aberdeen, Inverness, Dundee, Livingston and Edinburgh.

Nicola Sturgeon’s party also pledged to increase the number of Modern Apprenticeships to 30,000 a year by 2020, deliver 100% superfast broadband coverage for Scotland by the end of the next Parliament and bring forward a new Climate Change Bill to implement the Paris Climate Change Agreement that would set a new target for Scotland to reduce emissions by more than 50% by 2020.

All of the above should be good news for the construction sector if implemented by the new government with the support of the other parties in the assembly. Ongoing concerns over skills shortages are sure to be an issue however. 

CALA’s Alan Brown commented:  “The industry is still facing a serious skills shortage, which so far has not been properly addressed. Will Scotland be able to build the additional homes it so desperately needs if there are not enough bricklayers, carpenters, plumbers and electricians to actually build them? I believe a new national programme to promote the opportunities in the construction industry would go a long way towards addressing this skills gap in Scotland.”

"A new national programme to promote the opportunities in the construction industry would go a long way towards addressing the skills gap in Scotland."

- Alan Brown, CEO, CALA

In Wales, where Labour fell short of an outright majority in the Assembly, the party will still hope to implement a range of policies, which included a £2bn school building programme, the building of 20,000 affordable homes and the creation of 100,000 all-age apprenticeships.

Welsh Labour also pledged measures to make it easier for public sector contracts to be secured by Welsh businesses and like Scotland have also committed to superfast broadband to every property in Wales. Plans for new metro systems in the North and the South and for an M4 relief road and much-needed improvements to the A55 and the A40 should also be a boost for construction if these can be agreed by the new Assembly. 

With 29 seats in the Assembly, Labour will need 31 votes to get big projects, significant restructures, new legislation and budgets through, so the stage is set for many months of back room negotiations.

Both in Scotland and in Wales, how the new minority administrations will work effectively and whether key planks of their programmes will fall victim to political horse trading over the weeks and months ahead will be keenly watched by the construction industry, which in turn will no doubt be pressing both governments to deliver on their election promises.