Construction firms urged to build resilience following Starmer exit
The resignation of Prime Minister Keir Starmer could create fresh uncertainty for construction businesses at a time when the industry is already facing pressure from rising costs, fragile supply chains and contractor failures, according to construction investor Bradley Lay.
Lay, founder of TrueNorth Capital Group, believes the immediate challenge for construction firms is not who replaces Starmer, but the impact that political transition periods can have on investment decisions, infrastructure programmes and planning reform.
Lay said periods of political change often create hesitation among investors, developers and lenders, which can affect project pipelines and decision-making across the built environment.
He said: “Leadership changes inevitably create uncertainty and markets dislike uncertainty. Whenever there is a vacuum around policy, businesses delay decisions, investors become more cautious and projects slow down.
“The immediate concern for construction firms isn’t necessarily who replaces Keir Starmer, it’s the paralysis that leadership transitions create. Major infrastructure decisions, planning reform and investment programmes often stall while everyone waits for clarity.”
Political change adds to wider industry pressures
According to Lay, construction businesses are currently navigating several challenges simultaneously, with political uncertainty adding to existing market pressures.
He said: “The reality is we’re seeing three structural shifts happening simultaneously.
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“Firstly, political uncertainty creates hesitation across the market. Developers, investors and lenders all become more cautious when they don’t know what future tax policy, regulation or public spending priorities might look like.
“Secondly, energy prices have fallen sharply following the end of the conflict in Iran, but supply chains haven’t yet caught up. Tender prices are still reflecting higher material costs which creates opportunities for firms with strong supplier relationships and disciplined procurement.
“Thirdly, and perhaps most importantly, the repeated collapse of major contractors demonstrates that parts of the traditional main contractor model are fundamentally broken.”
Contractor failures highlight business model concerns
Lay pointed to the collapse of major contractors including Carillion, ISG and Ardmore Construction as evidence of wider structural issues within parts of the contracting sector.
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He said: “These failures aren’t isolated incidents.
“Too many businesses are chasing turnover rather than profit, relying on wafer-thin margins and using supplier credit as working capital. Eventually that catches up with them.
“Having reviewed hundreds of businesses through our own acquisition pipeline, there is a clear pattern. Specialist subcontractors with strong balance sheets, recurring relationships and proprietary expertise are proving far more resilient than large volume-driven contractors.”
Focus should be on resilience rather than political predictions
Lay argued that construction firms should focus on strengthening their operating models rather than attempting to predict future political outcomes.
He said: “Nobody knows exactly what the next six or twelve months will look like politically.
“But successful businesses aren’t built around predicting the future perfectly. They’re built around being able to absorb uncertainty when it arrives.
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“Political uncertainty will eventually pass. Material prices will stabilise. More businesses, unfortunately, will fail. But the companies that thrive will be those with strong balance sheets, predictable cash flow and management teams that understand the difference between revenue and profit.”
Strong balance sheets key to navigating market volatility
Lay said businesses that can withstand market fluctuations, supply chain pressures and policy changes are likely to be best positioned over the coming years.
He added: “Our acquisition criteria are simple.
“We look for predictable cash flow, defensible market positions and management teams with long-term thinking.
“Strategies that depend on political stability, cheap materials or competitors remaining solvent aren’t strategies at all. They’re dependencies.
“The firms that emerge strongest from the next few years will be those that build operating models capable of handling uncertainty rather than hoping uncertainty disappears.”
