It’s election season. The 2015 general election is set to be one of the most unpredictable in decades. The polls are tight, and the traditional two (or three) party system looks to be disintegrating. There’s a very real chance that we could be heading for another hung parliament. Will the eventual outcome be a Lab-Lib, Con-Lib, Con-UKIP, or even a Lab-Lib-Green coalition, or will the Conservatives or Labour make a late surge and claim a majority? The result is certainly up in the air. Of course, while this uncertainty may make political correspondents and 24-hour news channels rub their hands with glee, for the rest of the economy the uncertainty is unwelcome. For the construction industry in particular, this state of limbo is hugely damaging. How can you tackle these uncertainties? There’s no short answer to that question, but an awareness of current events, sound planning and the use of construction accounting software will certainly help.
The housing crisis
Housing has always been an important issue to the electorate, but over the past few years the housing crisis has become one of the most important political battlegrounds. Soaring rent costs, a dwindling supply of housing and the UK’s rising population have pushed the issue to the top of the political agenda. All the major parties recognise the need to increase housing supply, but their approaches differ. At the time of writing, the 2015 manifestos haven’t yet been released, but we can draw on 2014 documents and other pledges.
The Conservatives announced that first-time buyers under the age of 40 would receive discounts of 20% on 100,000 new starter homes built on brownfield sites. The party also announced plans for a rent-to-buy fund which will enable young people to rent homes at discounted rates for a minimum of seven years, at which point they will have the opportunity to buy their home.
At Labour’s 2014 conference they repeated their target of building 200,000 homes a year by 2020. They will implement an annual mansion tax on properties worth over £2 million. Councils will not be able to borrow more to build new homes. ‘New Homes Corporations’ would be established to help increase the number of new homes built and boost the speed of their construction. Mechanisms would be put in place to insulate five million draughty homes.
The Liberal Democrats are focusing on the role of garden cities in solving the housing crisis, while UKIP would tackle empty homes and relax planning regulations in some areas.
Dealing with uncertainty
Of course, none of these pledges are guaranteed to actually emerge. If a hung parliament and a coalition government are the result of the next election, there will be compromises and sacrifices as the parties attempt to negotiate with each other.
Construction companies should do their best to remain fully aware of the various pledges and policies made by each party in the build-up to the election. Additionally, companies should consider using construction accounting software to keep a close eye on their finances in this crucial period. By making use of cost value reconciliation (CVR) software and tracking the changing cost of every job, you can tackle problem areas before they start to affect your cashflow. Focus on the most profitable types of jobs, and try to build up some cash reserves to enable you to take advantage of any opportunities that arise following the election in May.
Use construction accounting software to create financial forecasts for your company and identify the root causes of any slowdowns. Now is the time to tend to your company’s cashflow and financial health, to ensure that you’re on surer footing by the time the general election comes around.