Industry’s expectations from the incoming UK Government

At the time of writing this, it is less than one week until the UK General Election, and after years of uncertainty and a record number of Prime Ministers in a parliamentary term, the country could potentially come close to some stability. There is a collective expectation from the industry, whichever the new Government is, to overcome the years of market uncertainty that have hindered economic growth. There are also many questions left unanswered in the recently published Party Manifestos, especially around the different Party’s abilities to meet net zero promises with limited investments.

Cundall’s energy, workplace, critical systems, and science and technology sector leads shared some of their expectations from the UK’s Government post the 4th of July to ensure that their sectors thrive in the next five years.

Energy

The demands from the UK’s grid already far exceeds what it can supply. With the green transition, it is unlikely that the demand-supply disparity will get any better. The Labour Government has remained ambitious with its net zero targets whilst also setting up Great British Energy (GBE), a publicly owned clean energy company that they intend on investing £8.3billion in. “In 1948, the then UK Labour Prime Minister, Clement Attlee set up the publicly controlled Gas Board. Its provisions included three primary duties to improve and co-ordinate the generation, efficiency and distribution of gas and energy across the UK. Fast forward 76 years, and Sir Keir Starmer is proposing the creation of GBE, which, includes an ‘initial three priorities’ focused on increasing generation capacity, investment, efficiency and distribution. Fair to say, the similarities are more than coincidence,” commented Kevin McGee energy sector lead.

“The UK Gas Board was one of the earlier examples of private-public finance having invested over £1bn into energy once set up. Once again, this number is no coincidence – that £1bn is about £28bn in today’s money – the same number Labour first quoted when they first proposed GBE. They have since rowed this back to £8bn (which is to be funded by the oil and gas taxation system – something not without its own consequences), and history tells us that is unlikely to be sufficient funding to make GBE work as well as it could.

“A future Labour Government needs to really get behind GBE and increase their investment back to the originally proposed £28bn, to not only replicate the success of Attlee’s Gas Board, but to maintain an effective presence in the energy sector itself where £8bn buys you very little.”

Labour’s Manifesto analysis by the wider industry and Cundall’s Alan Fogarty’s, seem to echo Kevin’s above views, that the investments into net zero is simply not enough. If Labour’s pledge of no tax rise is to be taken seriously, it begs the question of who pays for the net zero transition. The UK’s standing charges are already the highest in Europe and until all the renewable infrastructure is in place, it is likely the financial burdens on consumers will increase with such little investment from Labour.

Workplace

The workplace sector has slowed down over the last couple of years due to high interest rates, cost of finance and uncertainty of what is to come. Michael Gosling, workplace sector lead, recognised these challenges have lead to a fall in the UK’s inward investments. According to him, “Inward investments are incredibly important for the workplace sector to thrive. According to CBRE’s research, real estate foreign investment in 2023 fell by 44%, compared to domestic investment falling by 16%. This doesn’t necessarily mean all gloom; it is likely investors have just paused investments to wait for market conditions to be a bit more favourable. I would hope to see the incoming government prioritise policies that make the UK an attractive hub for real estate investments not only in London but across all the UK regions.”

While investment remains an overarching issue that the new government must address, there is still a lack of clarity on planning expectations. Frances Brown, who leads London’s workplace sector, said, “In my experience, inefficient planning systems have caused a lot of uncertainty and disruption in delivering workplaces.” Frances, similarly to Michael, acknowledged the negative impact economic instability has had on London’s workplace sector. “There is a need for economic stability so that both interest rates and construction costs are more predictable. I would also like to see the new government take the lead on sustainability using measures that will result in real improvements in the performance of buildings with enough forward planning so that the industry knows where to invest time and money to ensure the value into the future,” Frances added.

Life science sectors

In the past year, the UK life science sector has seen significant investment from both private investors and the government. With world-renowned universities and a strong research output, this sector has enormous potential to deliver much-needed growth for the country.

Both the Labour and Conservative parties say they recognise the importance of the life sciences sector and propose significant investment and support. The Labour Party emphasises sustainability, regional development, and collaboration between the NHS, academia, and industry. In contrast, the Conservative strategy focuses on maintaining global competitiveness post-Brexit, streamlining regulatory processes, and integrating innovations within existing frameworks. The Labour Party aims to increase public and private sector investment in R&D to 3% of GDP, with significant funding through a National Transformation Fund. Their "Innovation Nation" strategy seeks to strengthen the role of universities and enhance collaboration between the NHS, academia, and industry.

Rob van Zyl, science and technology sector lead, commented on the challenge of balancing investment between the "Golden Triangle" of Oxford, Cambridge, and London, and other regions. “Currently, around 80% of life science investments go to the Golden Triangle, while over 50% of science research comes from areas outside this region. This needs to be addressed to harness the full potential of the country.

“Post-Brexit trade deals will be crucial in ensuring that the UK remains an attractive location for global life sciences companies too, and immigration policies will need to be attractive to world-class scientists wanting to settle in the UK. The new government will need to strengthen international partnerships for research collaboration and promote the UK as a global leader in life sciences.”

Data centres

Peter Liddle, who leads Cundall’s critical systems sector, shared how the next government can help the sector succeed in the UK.

“Regardless of the party in power, the data centre industry needs growth. The Labour Party plans to expedite planning permission for data centres by overruling local council objections. In contrast, the Conservatives pledged to increase public spending on R&D to £22 billion annually, which will likely attract more technology companies to the UK. Both scenarios underscore the critical need for this infrastructure.

“One missed opportunity is prioritising district heating systems. It remains limited in practice, particularly in the UK, compared to notable examples in the Nordics and The Netherlands. This should illustrate to both potential governments that the hurdle lies not in the technical constraints but in the economic ones. As the size and scale of data centres continues to grow in the coming period, 100's of MW of waste heat will be available for re-use. It would be beneficial to see the government prioritise the creation of district heating networks and consider the benefits of a more wholistic approach to master planning of these data centres in association with local users who can benefit from any waste heat.”

While we have had weeks of promises leading up to the general elections, the UK's built environment can go a long way with progressive and pragmatic policies from whichever the new government is.