At a Glance
UK civil engineering is forecast to grow 5.4% in 2026 on top of 6.1% in 2025, largely off the back of energy infrastructure, even as labour shortages bite. (Source: Atradius UK)
Overall construction output is expected to edge up 1.5% in 2026, with housing recovering but non-residential slipping and tender prices rising up to 5% for infrastructure. (Source: Libra Construction; Atradius UK)
Government housing ambitions face planning, cost and building safety bottlenecks, despite new funds for council-led delivery and social housing. (Source: Sharpe Pritchard)
A £725bn, 10-year infrastructure plan centred on HS2 Euston, Lower Thames Crossing and Sizewell C is underpinning workloads but attracting warnings on systemic delivery risk. (Source: ICE; Charles Russell Speechlys)
Policy shifts via the Planning and Infrastructure Act 2025, Warm Homes Plan and NPPF consultation will reshape planning, retrofit and small-site requirements through 2026. (Source: Charles Russell Speechlys; Sharpe Pritchard)
Today’s update: forecasts point to modest aggregate growth masking a split market – infrastructure and energy works running hot while non-residential and smaller contractors struggle with weak demand, late payment and insolvency risk. At the same time, housing delivery is being pulled in opposite directions by ambitious targets, fresh funding and tightening building safety oversight, against a backdrop of significant planning reform. Here’s what you need to know to stay ahead today.
Ongoing Stories
Following earlier coverage of infrastructure delivery risks highlighted by the Institution of Civil Engineers, today’s data show that civil engineering and energy projects remain the primary growth engine for the sector, even as MPs warn about systemic risks to the government’s £725bn, 10-year plan. (Source: Atradius UK; ICE)
Building on previous reporting of the Planning and Infrastructure Bill and building safety reforms, today’s notes confirm the Planning and Infrastructure Act 2025 is now moving through secondary legislation, while the Building Safety Regulator’s Gateway regime is already slowing some large schemes. (Source: Charles Russell Speechlys; Sharpe Pritchard)
Top 5 Headlines
💰 Civil engineering set to outpace wider construction with 5.4% growth in 2026
Atradius expects UK civil engineering output to grow 5.4% in 2026, after 6.1% in 2025, largely driven by energy infrastructure schemes despite persistent labour shortages that are slowing delivery. Overall construction output is forecast to increase 1.5%, with housing up 3.5% and non-residential down 1%, while tender prices could rise 3.5% for real estate and up to 5% for infrastructure. Late 2025 brought a sharp rebound in new orders – industrial work doubled and commercial rose 51.4%, particularly in London and Yorkshire – although early 2026 activity has dipped amid a weak economy, high insolvencies and ongoing payment delays for smaller firms. For contractors and clients, this points to a more competitive pricing environment on civils and energy, contrasted with tougher trading conditions and heightened credit risk elsewhere in the supply chain. (Source: Atradius UK; Libra Construction; Construction Management; Infrastructure Now)
🏗️ Government’s 1.5m homes target collides with planning, cost and safety pressures
Ministers’ ambition to deliver 1.5 million homes by 2029–30 is being challenged by planning delays, higher employer costs from National Insurance and living wage rises, and large schemes stalled while they await Building Safety Regulator approvals. An Innovation Unit established in October 2025 is intended to speed planning approvals, while the £39bn Social and Affordable Homes Programme for 2026–36 has opened for bids and the Council Housebuilding Support Fund was boosted by £3.5m in January 2026 to support around 9,800 new homes. The combination of regulatory scrutiny and higher input costs means the policy drive on housing will only translate into starts where local authorities, developers and registered providers can navigate a more complex approval and funding landscape. (Source: Sharpe Pritchard; Charles Russell Speechlys)
🚆 £725bn infrastructure plan underpins HS2, LTC and Sizewell C, but risks mount
The government’s 10-year infrastructure investment plan now totals £725bn and is anchored by major schemes including HS2 Euston station works, the Lower Thames Crossing and the Sizewell C nuclear power station, which secured development consent in 2025. Alongside newbuild, the infrastructure sector is being sustained by repair, maintenance and energy retrofit activity, offsetting contraction in non-residential building. Returning today alongside earlier warnings from the Institution of Civil Engineers, MPs and industry voices are flagging systemic delivery risks across the programme, suggesting that governance and execution will be as critical as the capital committed. (Source: ICE; Charles Russell Speechlys; Atradius UK)
🏛️ Planning and Infrastructure Act 2025 and NPPF shake-up to reshape development
The Planning and Infrastructure Act 2025, which received Royal Assent in December, is now progressing through secondary legislation that will determine how its streamlining measures apply in practice. In parallel, the National Planning Policy Framework consultation is proposing a stronger focus on housing delivery around rail stations and potential relaxation of Biodiversity Net Gain rules for small developments. For promoters, these changes could unlock some urban and transit-oriented schemes while easing the burden on smaller sites, but they also introduce another round of policy uncertainty that needs to be factored into land strategy and programme risk. (Source: Charles Russell Speechlys)
🌱 £15bn Warm Homes Plan to drive retrofit and local authority capacity
Announced on 21 January 2026, the Warm Homes Plan commits £15bn to home upgrades, clean energy retrofits and bolstering local authority capacity to deliver them. The programme is positioned alongside the wider Social and Affordable Homes Programme and infrastructure investment plan, signalling that energy efficiency and decarbonisation of the existing housing stock will be a major workload strand through the decade. This creates a significant pipeline for contractors, consultants and manufacturers in retrofit and low-carbon technologies, with local authorities emerging as key commissioning clients. (Source: Sharpe Pritchard)
Also in the news
⚙️ Bam Construction UK has returned to profit in early 2026 on the back of strong project execution and higher turnover, suggesting that scale and delivery discipline remain decisive in a volatile market. (Source: Facilities Management Now)
💰 Construction insolvency rates remain elevated into 2026, with some improvement expected later in the year, but payment delays continue to strain cash flow for smaller contractors. (Source: Infrastructure Now; Atradius UK)
🚆 Infrastructure work related to repair, maintenance and energy retrofits is increasingly important in offsetting weakness in non-residential building, reinforcing the sector’s pivot towards long-term asset stewardship. (Source: Atradius UK)
🏗️ Legal advisers are highlighting that stalled large projects awaiting Building Safety Regulator approval could pause significant capacity and capital, reinforcing the need to factor regulatory lead times into bid and programme planning. (Source: Sharpe Pritchard)
🏛️ Infrastructure delivery is being reasserted as a core government priority for 2026, with particular focus on resolving delays, tightening building safety compliance and managing insolvency risk in key supply chains. (Source: ICE; Sharpe Pritchard)
The Daily Build is written for people shaping the UK’s construction and infrastructure pipeline. If this briefing is useful, feel free to forward it to colleagues who are planning bids, programmes or investment decisions this week.
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