At a Glance
UK construction is running a “two-speed” market in 2026, with infrastructure and industrial work offsetting weak private housing, retail and commercial demand. (Source: Arcadis)
A £725bn, 10‑year infrastructure pipeline is set to drive 2.8–4.5% industry growth this year, but delivery depends on solving a 266,000‑worker shortfall. (Source: UK Government)
UK housing markets are softening, with the first monthly price fall of 2026 and the steepest June asking‑price drop in 14 years. (Source: Rightmove)
Ofgem’s 13% energy price cap rise from 1 July and new climate/BNG rules tighten the cost and compliance backdrop for projects. (Source: Ofgem)
Planning and infrastructure reforms, plus the forthcoming Building Safety Levy, signal a tougher but more centralised regulatory framework for delivery. (Source: Charles Russell Speechlys)
Today’s update: the UK’s 2026 construction outlook is increasingly defined by a robust, state-backed infrastructure and energy pipeline set against weakening private housing and tighter finance. New planning, safety and environmental rules are landing just as the sector confronts skills shortages, higher energy bills and uneven regional markets. Here’s what you need to know to stay ahead today.
Ongoing Stories
Following earlier coverage of the UK’s construction pipeline pressures, today’s data puts a headline figure of £725bn on the 10‑year infrastructure programme and quantifies the workforce gap at 266,000 additional workers needed to deliver it. (Source: UK Government)
Returning to planning reform, the Planning and Infrastructure Act now in force from 1 July 2026 introduces concrete measures to limit repeat legal challenges on major schemes, moving from proposal to implementation. (Source: Charles Russell Speechlys)
Building safety policy, previously trailed via the Building Safety Act, progresses with confirmation that a new Building Safety Levy will apply to English residential schemes from 1 October 2026, sharpening cost planning for developers. (Source: DLA Piper)
Continuing the focus on Lower Thames Crossing, today’s update confirms it as the first test case for a Regulated Asset Base model under the Highways (Financing) Bill, alongside a £590m allocation for 2026–27. (Source: UK Government)
Top 5 Headlines
🏗️ Two-speed construction market emerges for 2026
Industry data portray a split market: infrastructure, energy, water and industrial projects remain resilient, while private housing, retail and commercial work are subdued. Overall construction growth for 2026 is forecast between 2.8% and 4.5%, driven largely by public and private infrastructure investment. Non‑residential project starts rose 6% in Q1, led by civil engineering and utilities. This divergence will shape where contractors, consultants and investors can find growth versus where to expect margin pressure and competition. (Source: Arcadis)
🚆 £725bn, 10‑year infrastructure pipeline confirmed
The UK’s 10 Year Infrastructure Strategy sets out at least £725bn of investment across energy, water, rail, roads and social infrastructure, with a pipeline of 734 projects totalling about £718bn. Infrastructure output this year alone is expected to grow 3.9–4.4%, underpinned by HS2, Lower Thames Crossing, Trans‑Pennine Route Upgrade and urban transport schemes. For delivery teams, this is a clear, long‑term workload signal – but one that hinges on capacity, skills and procurement reform to translate into real projects. (Source: UK Government)
🏗️ Planning and Infrastructure Act rewires consents regime
Coming into force on 1 July 2026, the Planning and Infrastructure Act introduces measures aimed at curbing repeat legal challenges to major projects and streamlining decision‑making. The reforms sit alongside wider construction policy changes focused on skills, supply chains and public procurement to support the national infrastructure pipeline. Developers and promoters of Nationally Significant Infrastructure Projects will need to adjust strategies to reflect both faster timetables and a potentially more centralised challenge environment. (Source: Charles Russell Speechlys)
🌱 Ofgem energy price cap rise tightens cost backdrop
Ofgem has increased the domestic energy price cap by around 13% from 1 July 2026, lifting a typical dual‑fuel bill from £1,641 to £1,862 a year. The regulator cites higher wholesale gas prices linked to the US‑Iran conflict, which are estimated to add about £155 a year for the average household even after green levy shifts to general taxation. Rising operating and living costs for households and businesses will feed into affordability, operating budgets and potentially wage expectations across the built environment. (Source: Ofgem)
🏛️ Building Safety Levy and RAB roads model reshape project economics
The Building Safety Levy will apply from 1 October 2026 to most residential developments in England, creating a new cost line aimed at funding remediation and improving building safety. In parallel, the Highways (Financing) Bill introduces a Regulated Asset Base funding model for strategic roads, with the Lower Thames Crossing as the first scheme to use it and a £590m allocation set for 2026‑27. These changes will affect viability calculations, risk allocation and funding strategies, particularly on large residential and highways schemes. (Source: DLA Piper, Travers Smith)
Also in the News
💰 RICS reports that 61% of construction firms are constrained by finance, with credit conditions expected to tighten in Q3 2026 even as overall output edges up in low single digits. (Source: RICS)
🏠 UK house prices fell 0.6% in May, the first monthly decline this year, and June asking prices posted their biggest June drop in 14 years, signalling a cooler but orderly housing market. (Source: Rightmove)
🏠 Homes England recorded 42,433 housing starts and 40,332 completions in 2025–26, indicating continued delivery despite softer demand and affordability headwinds. (Source: UK Government)
🌱 Biodiversity Net Gain requirements for NSIPs, in force since May 2026, are beginning to shape scheme design and environmental assessments for major energy and transport projects. (Source: Osborne Clarke)
🌱 The UK’s 2040 target to cut emissions 87% below 1990 levels, set against record June temperatures and a late‑June heatwave, is reinforcing policy momentum behind low‑carbon infrastructure investment. (Source: Carbon Brief)
The Daily Build is written for people shaping the UK’s construction and infrastructure pipeline. If you find this useful, consider forwarding it to colleagues before today’s bids, investment committees or design reviews.