Back in February, the CITB* predicted that, assuming a Brexit deal was struck with the EU, construction output in the UK was forecast to grow by 1.3% in 2019.
This was largely due to the infrastructure sector, which was expected to experience strongest growth rates of 9.3%, as per the forecast for 2019.
However, a review** published this week suggests that doubts over major infrastructure projects could actually mean total construction output figures would fall by 1.7% in 2019 and experience no growth up until 2021.
In light of this, we all wait with baited breath to hear what key interventions our 55th prime minister will make on the likes of HS2, Northern Powerhouse and Heathrow Expansion. The results, for or against, will have a large knock on effect across the infrastructure, construction and transport sectors.
What do we expect?
1. Heathrow
One of the most surprising things since Boris’ promotion to Number 10 has been the scale of the cabinet re-shuffle, which led to the appointment of Grant Shapps to Transport Secretary. Putting aside Shapp’s previous appearances in the headlines, his position on key infrastructure issues could well be favourable to the industry.
He is a massive supporter of Heathrow expansion. In 2016 he organised a letter to Theresa May calling for her to hurry up and make a decision (preferably in favour) and has been pushing the policy as far back as 2012.
This will be welcome news to the Heathrow Expansion team considering that Boris has historically been very outspoken in his opposition.
Shapps was also chair of the British Infrastructure Group of MPs up until his appointment as Transport Secretary. The group have been major advocates of aviation and high speed internet projects.
2. HS2
As for HS2, Shapps has voted in favour of the new high speed line at every opportunity. Not only this, but HS2 supporter Sajid Javid has been selected as Chancellor, and the new prime minister has chosen Douglas Oakervee, former HS2 chairman, to lead his independent review of the project. Back in 2013 Oakervee said that cancelling the project would be “catastrophic”.
3. Northern Powerhouse
HS2 isn’t out of the woods just yet though. Last weekend Boris, whilst wearing a badge saying “Northern Powerhouse”, put his weight behind a faster rail route between Leeds and Manchester. The funding for this will be detailed this autumn, following the review into High Speed 2.
It is also unclear from reports if this is a completely separate, new high speed line between Leeds and Manchester or if he is just backing the Trans Pennine Route Upgrade, West of Leeds project which has been in development through an Alliance (Network Rail, Amey, BAM Nuttall, and Arup) since October 2017.
4. Nuclear
Shortly before being ousted as Business and Energy Secretary, Greg Clark began a consultation for the proposed “regulated asset base” (RAB) model of funding new nuclear projects in the UK. A proposition that EDF has been seeking for its Bradwell B and Sizewell C projects.
According to a government analysis; between 30GW and 40GW of dispatchable low-carbon generation would be needed by 2050 to meet emissions targets. The UK’s existing nuclear fleet – eight power stations with a combined capacity of 9GW are all due to be shut down by 2035. Yet so far the only nuclear new build in process is Hinkley Point C (3.2GW).
It will be interesting to see how Clark’s replacement, Andrea Leadsom, tackles this problem. This may suggest renewed government backing to re-open discussions regarding Moorside and Wylfa.
*Construction Industry Training Board
**by The Construction Products Association’s (CPA)
