At a glance
Construction output slipped again in late 2025, with ONS data confirming a broad-based contraction despite a modest uptick in new work.
The Autumn Budget and 10-Year Infrastructure Strategy set out around £725bn of capital plans, with water, energy, transport and social infrastructure in focus.
Project starts are rising quarter-on-quarter, driven by a sharp rebound in civils and major public schemes, but remain far below 2024 levels.
Housing delivery is lagging targets, prompting new Homes England ambitions and calls for stronger backing of SME builders and planning reform.
New procurement, planning and building control risks are reshaping how major projects will be financed, procured and regulated in 2026.
Today’s update: weaker output data and financial stress across the supply chain sit alongside an assertive Autumn Budget, a new 10-year infrastructure pipeline and a reset of housing and planning policy. Delivery risk is shifting from “if” schemes are funded to “how” they will be procured, permitted and staffed in a fragile market. Here’s what you need to know to stay ahead today.
Ongoing Stories
Following earlier coverage of emerging planning reforms and central override powers, today’s analysis highlights Labour’s push for mandatory housing targets, penalties for missed delivery and closer judicial cooperation to accelerate planning decisions. (Sources: Gov.uk, Mayer Brown)
Returning to the evolving procurement and delivery landscape, the new Procurement Act is now in force, with commentators flagging unresolved private finance models for major projects such as the Lower Thames Crossing despite budget allocations. (Source: Mayer Brown)
Building on previous notes on regulatory complexity, legal briefings now warn of heightened building control compliance risks following the collapse of a major building control firm, signalling a potentially wider impact on approvals and liability across the sector. (Source: Mayer Brown)
Top 5 Headlines
💰 ONS confirms construction output slide as housing and R&M drag
Total UK construction output fell 0.3% in the three months to October 2025, with new work edging up just 0.1% while repair and maintenance dropped 1.0%. October’s monthly output declined 0.6%, driven by falls in private new housing and repair/maintenance activity. The data underscore a fragile market where civils-led growth will have to offset ongoing weakness in core building segments. (Source: Department for Business & Trade / ONS)
💰 Project starts rebound in civils, but remain 29% below last year
Glenigan reports a 14% rise in UK project starts in the three months to November 2025 versus the prior quarter, driven by a 118% surge in civil engineering schemes such as roads, energy and ports. Activity is concentrated in London and the South East, supported by the roughly £300m HMP Grendon Underwood prison project, yet starts are still 29% lower than December 2024 levels. The figures suggest early momentum in public and infrastructure work, but not yet a broad-based sector recovery. (Source: Glenigan)
💰 Sector in deepest contraction for five years as financial distress peaks
The S&P Global UK Construction PMI for October 2025 shows all major subsectors—commercial, residential and civil engineering—firmly in contraction, marking the sharpest downturn in five years. Around 104,000 construction firms are now classed as financially distressed, with 7,361 in critical condition, the highest of any UK sector. Delivery capacity on the government’s new infrastructure and housing programmes will depend on how far this financial fragility spills into insolvencies and supply-chain disruption. (Sources: Tokio Marine HCC, Mayer Brown)
🏛️ Labour’s £725bn 10-year plan puts water, energy and homes at the centre
The 2025 Autumn Budget and 10-Year Infrastructure Strategy set out roughly £725bn of capital investment over the decade, with a strong focus on water (including nine new reservoirs and a quadrupling of investment), roads, rail, energy networks, schools, hospitals and net-zero programmes. The strategy reiterates a pledge to deliver 1.5m homes this parliament, backed by planning reforms and more planning officers, while the new National Infrastructure and Services Transformation Authority (NISTA) publishes a pipeline emphasising energy and health projects. For the industry, the scale and sectoral focus of this plan define where skills, capacity and private capital will need to pivot. (Sources: Tokio Marine HCC, Gov.uk)
🏗️ Homes England plan and SME push aim to close housing delivery gap
New housing output fell 5.1% in 2024, with private housing broadly flat and short of what is needed for the 1.5m homes target. Homes England’s 2025–2030 strategic plan now aims to support 280,000 new homes and unlock land for 400,000 homes, doubling annual completions by 2030 through greater use of modern methods and technology, while a new FMB report urges stronger government backing for small housebuilders. The combination of institutional targets and SME support signals pressure to diversify delivery models beyond volume housebuilders. (Sources: Homes England, Federation of Master Builders)
🚆 Budget directs £900m to megaprojects and boosts devolved transport funding
The Autumn Budget commits £900m to priority schemes including the Lower Thames Crossing and elements of Northern Powerhouse Rail, alongside £13bn in devolved infrastructure and skills funding channelled through metro mayors. While the government has earmarked public funds, private finance structures for some flagship projects remain unresolved under the new Procurement Act regime. These funding choices will heavily influence regional pipelines and the balance of risk between the public and private sectors. (Source: Tokio Marine HCC)
Also in the news
🚆 Northern Ireland construction starts fell 17% in 2025 amid economic uncertainty, but are forecast to recover from 2026 on the back of £933m roads/transport spending and £270m for education and infrastructure projects. (Source: ConstructionMagUK)
🌱 The Infrastructure Strategy foregrounds growth in nuclear (Sizewell C and Rolls-Royce SMRs), renewables, grid upgrades and the Warm Homes Plan, signalling sustained workstreams in low-carbon energy and retrofit. (Source: Tokio Marine HCC)
🌱 Treasury’s decision to maintain the two-tier landfill tax regime will continue to shape waste and materials cost profiles for demolition and construction projects. (Source: Mayer Brown)
🌱 The government-backed HARP water scheme has reached financial close using National Wealth Fund guarantees, showcasing emerging finance models in regulated utilities. (Source: Tokio Marine HCC)
🏛️ The All-Party Parliamentary Group for Project Delivery is calling for ringfenced skills funding, stronger PPP frameworks and enhanced NISTA powers to manage major projects end-to-end. (Source: Tokio Marine HCC)
The Daily Build is written for people shaping the UK’s construction and infrastructure pipeline, from boardrooms to site offices. If this briefing sharpens today’s discussions on budgets, bids or risk, consider forwarding it to your wider team.