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The Election: Will it be a Brave New World?

  

WHAT MIGHT THE GENERAL ELECTION MEAN TO THE INDUSTRY?

WILL IT BE A BRAVE NEW WORLD OR JUST MORE OF THE SAME?

 

 

Chris Goggin reviews the NetZero policy statements espoused by both of the main political parties this side of the General Election and considers the viability of these plans and  gives a summary of the key issues regarding investment, infrastructure and cost evaluated against the trajectory of the international energy market and realistic domestic requirements.

 

 

A potential change of government is thought to be likely after the forthcoming General Election. If a change of direction in UK governance is introduced a redrafting of every major UK policy will take place. One area of legislation that remains an important pillar of political discussion is the question of energy – its supply, its price, its security and its impact on NetZero.

To provide a brief overview: the current opposition believes that renewable generation should be expanded far beyond the present government’s ambitions. Nuclear expansion will also be pursued whilst all North Sea drilling contracts will be honored. However, the opposition’s long-term plan is to shelve oil and gas usage in favour of carbon reducing alternative energies.

A more detailed look reveals discrepancies between the opposition and the current government’s approach to all critical areas of UK energy. However, additional renewable energy integration into the UK grid is reliant upon electrical grid upgrades that assist in renewable grid connections. Both political parties have separate plans for UK electric grid upgrading, later visited in this article.

Solar power will be tripled from 15.6 GW to 50 GW of installed capacity, whilst onshore wind will be more than doubled from 15 GW to 35 GW. Green hydrogen targets will also be doubled from 5 GW to 10 GW. Existing nuclear projects will also be completed alongside the completion of smaller nuclear projects such as the construction of small modular reactors.  Clean offshore wind production will be quadrupled to 55GW by 2030.

Although the opposition has pledged to increase investment into hydrogen and CCUS (Carbon Capture & Storage) it has not been highlighted how this strategy would best result in a mutually beneficial outcome. For instance, the opposition has not stated whether they will purchase or invest in privately owned hydrogen projects or construct their own hydrogen projects.

A cornerstone of the opposition’s energy policy will be the creation of GB Energy which has been recently described in The Guardian as:

“a state-owned investment vehicle and company working alongside and often in partnership with the existing private sector suppliers. The plan is for it to be largely invisible to households, not offering electricity directly to consumers but financing and helping to build low-carbon infrastructure, from windfarms to – potentially – nuclear reactors.”

GB Energy will have access to £8.3 billion of capital to assist in the completion of strategic objectives. £3.3 billion will be directed towards the construction of localized smaller power projects whilst £5 billion will be invested into larger projects and supply chains. This money will be raised through the taxing of North Sea fossil fuel companies.

Both UK political parties believe that decarbonising the national electricity grid remains a priority that will enable cheaper customer costs and increase clean energy usage across the entire UK. However, they are yet to agree on an appropriate pathway that secures beneficial economic and societal benefits.

The opposition believe decarbonising the UK energy grid by 2030 can be achieved through capacitating £116 billion of investment, whilst the current government’s plan is to extend the 2030 timeline to 2035 and absorb £104 billion of additional subsidy. Time and finance are central issues to both strategies. Both approaches have been labelled as viable and non-realistic, according to which political party an individual subscribes to.

A financial breakdown report was commissioned by Policy Exchange, a research institute that aims to influence domestic and international policy. The report was completed by an independent energy market analytics company – Aurora Energy Research

The current opposition will require huge amounts of capital investment to achieve their aim of decarbonising. Aurora has calculated that £15.6 billion a year until 2030 is required (total £93.5 billion) and a further £4.4 billion a year from 2031 – 2035 (£22.5 billion) equating to a total of £116 billion over the next 11 years.

In contrast current government plans to decarbonise the UK’s power grid by 2035 will require £8.2 billion a year of additional investment until 2030 – a total of £49.3 billon. A further £11.1 billion a year of additional investment from 2031 – 2035 a total of £55.3 billion. The total accumulative investment over 11 years will amount to £104.6 billion over the next 11 years.

The approach undertaken by the current opposition when compared to the present Govt party focuses on the expanding of renewables, hydrogen and nuclear in a shorter span of time at increased financial expense.

We need to keep in mind also that future energy policy by both UK political parties is dependent on wider international energy market conditions and geopolitical influences. There is no doubt that there are no easy or quick answers to the question of providing energy to both commercial and domestic markets.

Rinnai follows all news and developments connected to national and international energy policy, investment and legislation. Rinnai will continue to provide updated information and data-driven knowledge to all UK customers on events that could potentially affect cost and energy options.

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Hung parliament – Keep Calm and Carry On!

The results are in and Britain once again finds itself with a hung parliament. As uncertainty spreads like wildfire as to what this will mean, speculation runs rife regarding how it will affect the construction sector.

Regardless of whether we end up with a coalition government led by Theresa May or a minority government fronted by Jeremy Corbyn, there are bigger fish to fry in the long run! Buildingspecifier investigates:

Brexit

Brexit still looms over us as an industry, and whatever shape the new government takes, they will still need to ensure it happens as smoothly as possible. We need to continue to harness the potential for future infrastructure investment and economic growth, championing ourselves as bastions of innovation and construction prowess.

Although the snap General Election has added more uncertainty and speculation into British economy as a whole, as seen with fluctuations in the value of the pound, 2017 has been a tumultuous year politically. As a country and as an industry we have shown resilience to these challenges and risen to meet them. Let’s keep up the good work!

The election campaigns of all parties have focussed heavily on upcoming Brexit negotiations, and for the construction sector in particular a major priority has been to make sure we still have access to the wealth of skilled labour afforded to us by close ties with Europe.

From an economic perspective, market surveys across both residential and commercial sectors now reveal an overall acceptance of Brexit and people are now looking beyond and seeing the bigger picture. However, there is still ongoing concern about deferral of major investment and recruitment plans, which are understandable but likely to subside in coming weeks and months following on from the distraction of a dramatic election.

Skills

An inescapable truth is that there needs to be a drastic narrowing of the construction skills gap as soon as possible, and today’s result doesn’t negate this harsh fact. The new administration will undoubtedly continue to reinforce the importance of the construction industry to the country’s physical and economic wellbeing, and will need to continue implementing modern technologies such as offsite and modular into our projects nationwide, contributing to further growth of the UK economy by championing us an a lucrative opportunity for investors.

In summary

There is going to be a lot of confusion and insecurity following today’s result; it is vitally important that as an industry we do not lose sight of what we need to achieve as an industry. Today’s result doesn’t change this, it merely adds another dynamic that we will need to evolve and change in order to adapt to. We mustn’t allow procrastination, frustration or insecurity to unravel all of the good things we have achieved over the past few years. We must keep calm and carry on!

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Building the case for construction ahead of General Election

In order to improve policy making and provide a better understanding of the construction industry’s contribution to society, the Chartered Institute of Building (CIOB) has outlined five interlinked policy proposals for prospective parliamentary candidates and the next Government to consider ahead of the General Election.

Chris Blythe OBE, Chief Executive of the CIOB said “The quality of our built environment affects every member of society. Construction creates and maintains the places that people live, work and play, the infrastructure that supports them and the services that sustain them. And it is vital that those elected to represent their constituents in Parliament understand this.

“Our manifesto showcases how construction can act as a solution to major policy issues. Our proposals are interlinked, showcasing the need for a collaborative approach to productivity, skills, quality, investment and Brexit.

“It is crucial that policy makers appreciate the contribution of the construction sector: the decisions made today will be felt for decades and generations.”

The five aims outlined in the CIOB’s Building the Case for Construction manifesto are as follows:

  1. Continue support for the Industrial Strategy and recognise construction’s role in improving productivity
  2. Work alongside the construction industry to support a robust system for training and skills development
  3. Recognise and address both the opportunities and risks that Brexit will bring
  4. Ensure quality is at the heart of the nation’s construction programme
  5. Focus on regional investment in construction to rebalance the UK economy

The CIOB will be communicating with prospective parliamentary candidates, urging them to consider the importance of the built environment both at a local and national level. The CIOB has also published a series of articles under the ‘Building the Case for Construction’ banner. It contains a number of resources including the manifesto, an overview of the timetables for the 2017 election and a series of questions for CIOB members and non-members to ask prospective parliamentary candidates.

The full manifesto can be accessed here.

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RIBA urges next Government to Build a Global Britain

The next Government must build new communities across the country and keep secure the UK’s position as the global leader in architecture and design innovation says the Royal Institute of British Architects (RIBA) in its General Election manifesto published today (Thursday 25 May).

RIBA’s ‘Building a Global Britain’ manifesto says the UK must:

  • Grow as a global trading nation –ensuring the existing mutual professional recognition agreement with the EU is maintained as part of the Brexit negotiations and that new mutual recognition agreements are developed with other key trading nations including the United States, Canada, Australia and New Zealand.
  • Put local people at the heart of the planning system – delivering powers on housing and planning to regional and Metro Mayors so cities and regions can deliver more.
  • Deliver many more good quality homes that meet the needs of society – perusing development of new high-quality, affordable homes that alleviate the housing crisis and unstick some of the UK’s productivity problems.
  • Build schools that are better spaces for learning –ensuring better design of public buildings like schools, museums and hospitals to inspire communities and make the best use of scarce public money.
  • Show greater leadership in resilient infrastructure – Supporting innovation in flood defences to catalyse the UK’s export potential in new technologies.

RIBA President Jane Duncan said “People across the country will be keen to see how political parties respond to the challenges and opportunities of these changing times. Our political leaders recognise the need to improve quality of life across the country; they can start by supporting a better built environment. The RIBA’s manifesto outlines how the next UK Government can ensure that our communities have great high quality, sustainable places in which to live, work and play.
“The UK has a thriving architecture sector delivering inspiring buildings and places across our great nation and around the world. Our multibillion pound contribution to the UK economy and to the country’s reputation abroad is highly prized, and our universities train and equip the architects of the future.

“Whomever forms the next UK Government must recognise the strength and importance of our global cultural links and influence, and continue to support us by safeguarding our ability to attract the brightest and best talent from around the world, as well as ensuring post Brexit that architects practising in the UK are in an environment where they can thrive.”

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SME’s central to May’s house-building vision

In their election manifesto, the Conservative Party has pledged to 500,000 extra homes by 2022, as well as reaffirming their previous 2015 commitment to deliver a million homes by the end of 2020. As part of this, Theresa May must put SME house builders at the heart of her ambitious plans for housing, according to the Federation of Master Builders (FMB).

In response to last week’s release of the Conservative Party’s manifesto, Sarah McMonagle, Director of External Affairs at the FMB, said “The importance of addressing the country’s chronic shortage of homes is as great as ever, and the Conservative Party’s manifesto seems to appreciate the scale of the challenge ahead of us. A revised house building target of 1.5 million homes from 2015 to 2022 ups the ante on housing delivery again, but these ambitions can only be delivered with an accompanying focus on creating a more diverse and innovative house building sector. The decline in the number and output of smaller local house builders over the past few decades has led to the industry’s capacity haemorrhaging. To deliver the PM’s vision we will need to reverse this. The Manifesto’s explicit pledge to diversify the delivery of new homes is therefore extremely welcome. Key to doing this will be being able to build on some of the sensible reforms outlined in the recent Housing White Paper, which we hope to see implemented.”

“The Conservative Party’s manifesto sets out an ambition not only to build more, but to build better. There is a welcome emphasis on balancing the pressure for increasing the delivery of new properties with the need to deliver those homes to a high standard. As is widely recognised, smaller scale house builders have a strong focus on quality. By supporting greater diversity in terms of the companies building our new homes, a Conservative Government would be killing two birds with one stone. This is a vision that SMEs can build on.”

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What Corbyn’s leaked draft manifesto says about construction

A few details from a draft version of Labour’s upcoming manifesto have been leaked. What does it say about construction, house building and infrastructure? Buildingspecifier.com investigates:

Energy

The leaked data highlights plans to bring parts of the energy industry into public ownership and introduce a local, socially owned energy firm in every area. Also introduce an “immediate emergency price cap” to make sure dual fuel bills stay below £1,000 a year.

Infrastructure

As well as nationalising the railways, Corbyn proposes to borrow £250bn to invest in infrastructure but stick to the fiscal credibility rule to balance day-to-day spending. He also plans to complete HS2 from London to Birmingham, Leeds, Manchester and Scotland.

Housebuilding

The draft includes a target for tackling the housing shortage, suggesting that we build 100,000 new council houses per year. Additionally, Labour would see the homes of disabled veterans insulated for free.

Skills

In a bid to tackle the skills gap without jeopardising the potential for attracting home-grown talent, the draft manifesto urges us to recognise the benefit that immigrants have brought to our industry but also introduces fair rules and reasonable management. Corbyn promises to work with employers that need to recruit from abroad but emphasises the need to prevent exploitation.

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General election: dividing opinion

The construction sectors are currently abuzz with discussion about the potential effects a General Election will have on our industry. With some seeing it as an opportunity to refocus strategy and others concerned the fallout will impact heavily on future investment, Theresa May’s announcement has certainly divided opinion.

Carolyn Fairbairn, Director-General at the Confederation of British Industry (CBI) said “With a snap General Election now called, businesses will be looking to each political party to set out their plans to support economic stability and prosperity over the next Parliament in a way that is fair and sustainable for communities across the UK. Distraction from the urgent priorities of seeking the best EU deal and improving UK productivity must be kept to a minimum.

“It is essential to get the UK’s foundations right, from building a skills base for the next generation, to investing in infrastructure, energy and delivering a pro-enterprise tax environment.
“Whoever forms the next Government, they should seek to build a partnership between business and government that is the best in the world, based on trust and shared interest.”

Lewis Johnston, RICS Parliamentary Affairs Manager said “Since the EU referendum last summer, our market surveys across the residential, commercial and construction sectors show we have largely moved on from initial negative reactions but uncertainty continues to cloud the outlook and weigh on market sentiment. Today’s decision does very little to change that prognosis in the near term, and if anything we are likely to see continuing deferral of major investment and hiring plans.

“Whilst Theresa May’s stated intention this morning was to provide greater clarity and stability by calling a general election, in the immediate term the move inevitably puts a question mark over policy and creates further uncertainty across the built environment. It is now the responsibility of all parties to set out clear policy proposals across land, property, construction and infrastructure to ensure the UK can deliver the homes, infrastructure, factories, offices and major building projects it needs to thrive.”

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