At a Glance
🏗️ New data shows uneven 2025 construction performance, with public housing output sharply down despite a growing overall orders book.
🏛️ Homes England sets out a 2025–2030 roadmap centred on affordable housing and new national funding vehicles, aligned with Labour’s 1.5m homes pledge.
🚆 Ofgem backs early investment for “electricity superhighway” links and National Grid advances Sea Link, reinforcing the UK’s clean power backbone.
🌱 A £1.5bn deal for Europe’s largest LNG terminal and an updated Green Financing Framework sharpen the energy security and green finance agenda.
💰 Forecasts point to moderate construction growth to 2027, but leaders report shrinking pipelines and persistent margin pressure from input costs and wages.
Today’s update: sector reports paint a picture of an industry pulled between weak public housing delivery, margin squeeze and a swelling but fragile project pipeline, just as government leans harder on housing and infrastructure targets. Grid upgrades, green finance and major energy assets are progressing, but delivery risk, skills and planning capacity remain central constraints. Here’s what you need to know to stay ahead today.
Ongoing Stories
Returning to the £530bn construction and infrastructure pipeline highlighted in recent editions, new analysis from Tokio Marine HCC and Currie & Brown adds detail on the drag from skills shortages, flat productivity and shrinking client pipelines, reinforcing concerns over deliverability rather than headline volume.
Following earlier coverage of planning and infrastructure reform, the Autumn Budget 2025’s new Construction Industry Scheme due diligence rules and council tax surcharges now emerge as concrete levers that could reshape development economics and supply-chain risk from 2026–28.
Building on prior grid and offshore wind stories, Ofgem’s latest approvals for Eastern Green Link 3 & 4 and the Grimsby–Walpole link, plus National Grid’s Sea Link contract award, show the “Great Grid Upgrade” moving from concept and consultation into committed delivery stages.
Top 5 Headlines
🏗️ Mixed 2025 as public housing drags on construction performance
New sector data show contractions in 5 of 13 UK construction sub‑sectors this year, with public housing output down 9.1% year-on-year and new public housing work 16.3% lower through September. Housing completions remain well below policy ambition, with only 185,000 homes finished in 2024 and just 39,000 completed in Q1 2025 against a 300,000 per‑year target. At the same time, new orders rose 9.8% in Q3 2025, led by private commercial and industrial schemes, highlighting a growing divergence between housing and other asset classes. This matters for the sector because contractors face a shifting workload mix, with residential specialists exposed to volume and price risk while non‑residential markets tighten capacity and pricing. (Source: Tokio Marine HCC)
💰 Margin squeeze intensifies despite softer inflation outlook
Cost inflation continues to erode construction margins, with BCIS reporting a 3.91% rise in input costs in 2025, compounded by wage growth amid persistent skills shortages. While inflation is projected to ease in 2026–27, productivity has declined by an average 0.1% annually since 1997, leaving firms with limited internal levers to offset higher costs. A recent report also warns that skills and productivity issues are beginning to fracture Britain’s £530bn project pipeline. This convergence of rising costs and weak productivity raises the bar for commercial discipline and risk pricing on new bids and framework commitments. (Source: Construction Wave / BCIS, Tokio Marine HCC)
🏛️ Homes England roadmap and Budget rules reset housing delivery context
Homes England has published its 2025–2030 Strategic Plan and Investment Roadmap, prioritising accelerated delivery of affordable and social housing, greater private capital mobilisation and deeper regional partnerships with mayors and local authorities. Key proposals include a National Housing Development Fund and a National Housing Bank, both awaiting Treasury sign-off by April 2026, while the Autumn Budget introduces tougher Construction Industry Scheme due diligence rules and from 2028 a council tax surcharge on homes valued above £2m. Coupled with Labour’s 1.5m homes target, 300 new planning officers and enforceable local housing targets, this package points to a more interventionist housing state with sharper incentives and penalties across the development chain. (Source: Homes England, JD Supra, The Intermediary)
🚆 Ofgem backs “electricity superhighways” as Sea Link moves ahead
Returning today in more detail, Ofgem has agreed early investment and updated timelines for key Electricity Superhighway projects including Eastern Green Link 3 and 4 (each 2GW subsea HVDC links bringing Scottish offshore wind power to England) and the onshore 400kV Grimsby–Walpole transmission reinforcement, with estimated consumer benefits of £3–6bn. In parallel, Sumitomo Electric has secured a contract to design, manufacture and install 140km of 525kV HVDC submarine cable for National Grid’s Sea Link project between Kent and Suffolk, with UK manufacturing and construction starting in 2027. These investments are pivotal for enabling the Clean Power 2030 pipeline, underpinning grid reliability and creating multi‑year demand for specialist civils, marine and electrical contractors. (Source: Ofgem, Sumitomo Electric, NESO)
🌱 Energy security strengthened by £1.5bn LNG deal and green finance refresh
ECP and Centrica have completed a £1.5bn acquisition of the Grain LNG terminal, Europe’s largest LNG facility, expanding regasification capacity and reinforcing the UK’s flexible gas import options. At the same time, HM Treasury has updated the UK Government Green Financing Framework, refining eligibility criteria and signalling continued sovereign support for renewable energy, clean transport and energy efficiency investments. This combination of hard energy infrastructure and financial architecture is likely to shape the pipeline of bankable low‑carbon and transition projects over the second half of the decade. (Source: Dakota, LexisNexis)
Also in the News
💰 Currie & Brown’s latest UK market outlook finds that construction project pipelines are shrinking by an average of 12.3% according to over 1,000 senior leaders, with inflation and macro‑economic uncertainty continuing to constrain capital decisions. (Source: Currie & Brown)
🏗️ A new skills assessment highlights the need for around 250,000 additional construction workers over the coming years, set against 500,000 expected retirements, compounding already stretched labour markets. (Source: Tokio Marine HCC)
🚆 The Nuclear Industry Association reports continued major construction at Hinkley Point C, with around 14,000 staff on site and future generating capacity for power equivalent to 6 million homes. (Source: NIA)
🌱 The UK and Ukraine have launched the second round of InnovateUkraine, allocating £17m to 14 low‑carbon energy projects to support innovative green solutions in Ukraine’s energy system. (Source: UK Government)
The Daily Build is written for people shaping the UK’s construction and infrastructure pipeline. If this briefing is useful, consider forwarding it to colleagues who are planning 2026 bids, investment committees or delivery strategies.