Election fails to spark construction industry revival

Labour’s election victory was not enough to kickstart project activity in construction in July. Contract Awards, where businesses are formally chosen as suppliers for projects, remained 20% down compared to July 2023.

Meanwhile, almost 75% of all Commercial and Retail awards occurred in London with the £200m Lansdowne House mixed development topping these awards. Elsewhere, the East Midlands saw a 168% increase in Contract Awards from last month with a £120m battery storage system making up around 16% of all awards in the region.

Ed Griffiths, head of business and client analytics at construction analysts, Barbour ABI said: “Despite some promising energy projects, we have yet to see a significant increase in Residential and Infrastructure awards that we might expect with the new government in the coming year.

“Though there were increases in Residential and Medical & Healthcare both come from poor previous months. The largest project in Residential is the 564 flat £140m Green Quarter development in London.”

Planning approvals decreased by 9% in July totalling £8.8bn, a 36% decrease from a highly productive July 2023, although infrastructure bucked the trend with a big increase from June.

“Infrastructure planning approvals will be of particular interest as an area where Labour can have a more direct and immediate influence,” said Griffiths. “The top approval for Infrastructure in July was the £200m Medway One Energy Hub followed by two 400MW battery storage facilities. Ed Miliband’s headline grabbing approval of several large solar panel projects will likely have a big impact in next month’s figures.

“We will also be tracking residential approvals over the coming months to see the effect of new housing policies on the planning system. Housing project approvals actually fell 16% from July – a figure Labour will hope is an aberration rather than a long-term trend."

Analysis of planning applications in June, ahead of the general election, highlighted an industry on pause, with overall application value is down 32% from June 2023, its lowest for over 18 months.

“The next available set of data for applications with cover election month and it will be interesting to see if businesses were feeling brave enough to commit to future projects in the wake of Keir Starmer’s victory” concluded Griffiths.