So for the fourth summer in a row, the UK is gearing up for a major public vote.
After the Scottish independence referendum in 2014, the general election in 2015 and the EU vote last summer, our political landscape is again at the mercy of the ballot boxes.
For the transport and infrastructure sector, it’s all very frustrating. Yet again big decisions are on hold – and we don’t know how much upheaval there could be to come. We could have our third prime minister in under 12 months (admittedly not likely – May is 1/10 to remain at No.10), and even if the Conservatives remain in power there could be a significant cabinet reshuffle. Grayling could well be moved out of transport.
Ahead of decision day on 8 June, what do we know about the two main parties’ policies and how they would affect the infrastructure sector?
Rail
Labour has promised to bring rail operating companies back into public ownership, saying it will do this “as franchises expire or, in other cases, with franchise reviews or break clauses”. Clearly this would be bad news for the existing private operating companies, and it would also have a knock-on effect on train builders, as investment in rolling stock would probably fall. Wages for senior roles in a fully nationalised rail sector would likely decline over time and talented people could be lost to other sectors.
Jeremy Corbyn’s party does explicitly promise to build Crossrail 2, though; something that is strangely missing from the Tory manifesto. The route connecting Surrey and Hertfordshire, via central London, was given support by the Conservatives at the last election just two years ago, and business leaders have this year been vocal in calling for government approval of the project.
Roads
The Conservative party, which is overseeing the current £15bn Roads Investment Strategy, promises to “continue to develop the strategic road network”. It says it will add lanes on motorways, fix pinch points and improve key routes.
This is in contrast to the rhetoric in the Labour manifesto, which is more about freeing up space on the existing network: “We will ensure new rolling stock is publicly owned and will encourage expansion of public freight services in a publicly owned railway that will leave our roads freer of traffic and our air cleaner.” Labour does promise to “refocus” the roads building programme, “connecting our communities, feeding public transport hubs and realising untapped economic potential”.
Aviation
While the Tories use their manifesto to maintain support for the third runway at Heathrow, which was backed by Theresa May last autumn, Labour is more circumspect, saying that it “recognises the need for additional airport capacity in the South East” and “welcomes the work done by the Airports Commission”. Perhaps this is just an attempt to curry favour in west London but it won’t impress Heathrow.
Water
While there is no direct mention of the water supply industry in the Conservative manifesto, Labour makes a staggering promise to “replace our dysfunctional water system with a network of regional publicly-owned water companies”. This is an un-costed policy in their manifesto.
How do they intend to do this? Thames Water, just one of the firms currently supplying UK homes from its privately-owned infrastructure, was sold for £8bn more than a decade ago, and was recently valued at around £5.2bn. How is Labour going to afford to buy all these assets? And how would it then find cash to invest in capital projects?
Energy
The UK needs greater energy security, so where is it going to come from? The Tories are anti large-scale onshore wind in England but back schemes on remote Scottish islands and pledge to “maintain our position as a global leader in offshore wind”. Shale gas also gets a boost from Theresa May’s party, with a pledge to mimic the “revolution” brought about by the resource in the US.
Labour says outright that it will support further nuclear projects, something that appears to be missing from the Conservative document. Jeremy Corbyn’s party also promises investment – in low-carbon gas and renewable electricity production.
However, Labour’s pledge to “transition to a publicly owned, decentralised energy system” appears to be almost impossible to enact without some incredible borrowing. To buy National Grid and the distribution network operating companies, along with all the privately owned power stations and other infrastructure, would cost well over £100bn.
Employment
Whoever wins the election, and whatever their policies, one thing seems certain – the UK will need more skills fast to keep up with demand for infrastructure projects. Brexit will not help here, and some uncertainty remains on how each party would meet this challenge.
Labour promises to create a new migration system “based on our economic needs, balancing controls and existing entitlements”; the Tories promise to “make the immigration system work” for those sectors with skills shortages.
The Conservatives also plan to double the immigration skills charge to £2,000 per year, something that won’t help tackle trades shortages but that will perhaps be grudgingly accepted as another tax on business.
Far harder to make work would be the Labour party’s 20:1 ratio – earmarked for the public sector and those bidding to work for it – whereby a chief executive could only earn 20 times the salary of his or her lowest-paid employee.
This could leave Balfour Beatty, whose chief executive Leo Quinn was appointed on a basic salary of £800,000 per year, having to pay every single member of site staff across the UK at least £40,000 if it wants to work on High Speed 2 or any other major scheme.
The Conservatives may have failed to commit to some major schemes in their manifesto, but many of Labour’s promises look extremely difficult to deliver on without a bottomless pot of gold.
If you can’t wait for whoever is elected to wave a magic wand and solve the shortage of senior talent in the transport and infrastructure sector, then click HERE to arrange a call with us. We promise to give you straight answers and sound, real-world advice.
