At a Glance
💰 UK construction output is forecast to top £390bn in 2026, with strongest growth in infrastructure, energy and housing.
🚆 Big-ticket schemes – including Lower Thames Crossing, Northern Powerhouse Rail and RIS3 – anchor a multibillion-pound project pipeline into the 2030s.
🏛️ The Planning and Infrastructure Act 2025 and an NPPF rewrite are reshaping planning risk, with consultations running to March 2026.
🌱 Ofgem has cleared £28bn for energy network upgrades as government prepares further electricity market and nuclear regulatory reforms.
⚙️ Skills shortages, cost inflation and MMC fragility remain structural constraints, even as contractor confidence picks up.
Today’s update: headline forecasts point to a rebound in UK construction through 2026, underpinned by a dense infrastructure, energy and housing pipeline, while regulatory and planning reforms continue to reframe delivery risk. At the same time, skills gaps, rising costs and a still-fragile MMC ecosystem threaten to blunt the upswing. Here’s what you need to know to stay ahead today.
Ongoing Stories
Following earlier coverage of skills and capacity pressures in the £530bn national pipeline, today’s market outlook reinforces that labour shortages remain acute even as overall construction output is projected to grow strongly in 2026.
Returning to recent planning reform developments, the Planning and Infrastructure Act 2025 and live NPPF consultation now crystallise how centralised powers, brownfield focus and grey belt housing policies could reshape site selection and programme risk into 2026.
Building on previous scrutiny of energy transition and grid constraints, Ofgem’s £28bn networks package and forthcoming electricity market and nuclear regulatory changes add clearer timelines for investment decisions across power, hydrogen and CCUS projects.
Top 5 Headlines
💰 UK construction market set to exceed £390bn in 2026
New analysis suggests the UK construction market will grow 3.5–4.5% in 2026, taking total output above £390bn after a difficult 2025. Activity is concentrated in infrastructure (£23.8bn across 29 schemes), energy (an estimated £80bn investable pipeline over eight years) and housing (£6.9bn across 37 schemes), alongside over £6bn of commercial work in data centres and cultural projects. Workforce numbers already exceed 2.8m, but persistent skilled labour shortages and projected 15% building cost and 16% tender price inflation over five years will shape margins and bid pricing. This matters because the combination of volume growth and structural cost and labour constraints will force clients and contractors to reassess risk allocation, productivity strategies and procurement models on 2026–30 programmes. (Source: PBC Today, Pinsent Masons, BDC Magazine, ASD Ltd, Freemont Building, Construction Digital)
🚆 Major infrastructure programmes lock in long-term civils workload
The current pipeline highlights several flagship infrastructure schemes, including the £10.2bn Lower Thames Crossing, where a privately financed solution is expected this year, and Northern Powerhouse Rail, backed by a £45bn commitment to improve east–west connectivity in northern England. Road Investment Strategy 3 allocates £24bn for the 2026–31 period, while Network Rail’s Control Period 7 is set at £45bn of expenditure. These programmes collectively underpin multi-year demand for civils, transport and systems contractors and their supply chains, but they also heighten exposure to policy changes, financing structures and delivery capacity. (Source: PBC Today, Pinsent Masons, BDC Magazine)
🏛️ Planning and Infrastructure Act 2025 reshapes approvals landscape
With no fresh announcements in early February, the Planning and Infrastructure Act 2025 remains the core legislative framework for planning reform following Royal Assent in December. The Act enables more streamlined and delegated decision-making, regulates planning committee sizes and mandates training, and introduces spatial development strategies to coordinate cross-boundary housing and infrastructure. In parallel, ministers can issue “holding directions” on major refusals, and consultations on a revised NPPF – including brownfield and grey belt housing, and support for commercial, data centre and energy schemes – are open until March 2026. This evolving framework is critical for site promoters and project sponsors, who will need to align emerging schemes with new spatial strategies, central interventions and accelerated plan-making timetables. (Source: UK Government, Pinsent Masons, Homebuilding, Tyler-Parkes)
🌱 Ofgem approves £28bn for network upgrades as energy transition accelerates
Ofgem has signed off £28bn of investment to upgrade and expand Britain’s gas and electricity networks, aimed at improving system resilience and enabling decarbonisation while limiting bill increases. Alongside this, renewables now account for more than 42% of electricity generation, battery storage and flexible market mechanisms such as Market-wide Half-Hourly Settlement are rolling out, and further clarity is expected this month on electricity market reforms and streamlined nuclear regulation. For contractors, utilities and investors, the combination of regulated network spend and upcoming policy decisions on hydrogen, nuclear and CCUS provides a clearer platform for grid, storage and enabling works pipelines through the late 2020s. (Source: Ofgem, Argus Media, UK Government, Electricity Info)
🌱 Hydrogen and CCUS projects move towards next allocation rounds
Hydrogen network expansion is progressing ahead of Allocation Round 2 (HAR2), with project awards to be announced shortly and a third round planned for 2026 as part of the government’s low-carbon hydrogen strategy. In carbon capture, utilisation and storage, the Teesside, Acorn and Viking CO2 transport and storage clusters are advancing under current policy, supported by broader moves to firm up business models for transport and storage infrastructure. These steps are important because they begin to turn decarbonisation roadmaps into bankable workstreams for industrial clusters, creating opportunities for civils, marine, pipeline and process engineering contractors over the medium term. (Source: UK Government, Argus Media)
Also in the News
🏗️ Residential construction remains comparatively resilient, with around 245,000 homes completed annually and 83% of housebuilders reporting confidence for 2026 alongside rising investment in capacity and equipment. (Source: Freemont Building, Construction Digital)
⚙️ Adoption of modern methods of construction is increasing, particularly among volume housebuilders seeking to bridge skills gaps and manage cost inflation, even as recent offsite failures have highlighted commercial fragility in the segment. (Source: PBC Today, Construction Digital)
🏛️ The draft NPPF proposes expanded access to brownfield and underused land, faster local plan preparation and explicit support for data centres and energy schemes, which could shift land values and competition in key growth corridors. (Source: UK Government, Homebuilding)
🌱 Gas and power forward prices for summer 2026 to winter 2028 have fallen by 14% and 3% respectively, but with UK gas storage still at around 14 days’ capacity and potential site closures, security-of-supply risks remain a factor for energy-intensive project delivery. (Source: Argus Media, Electricity Info)
🌱 Nuclear new-build continues to face political resistance, even as government aims to finalise regulatory “red tape” reductions by late February to enable new projects, influencing timelines for potential large-scale baseload schemes. (Source: UK Government, Argus Media)
The Daily Build is written for people shaping the UK’s construction and infrastructure pipeline, from boardrooms to site offices. If this briefing is useful to your planning, commercial or bid discussions, consider forwarding it to your wider team.