At a glance
UK construction downturn is easing, but January’s PMI still signals contraction and persistent cost pressure.
Planning approvals continue to fall despite rising applications, deepening delivery bottlenecks for 2026 housing targets.
Major rail and station investments, including a £1.2bn Liverpool Street overhaul, highlight transport-led regeneration momentum.
Record CfD auction round secures 14.7 GW of clean power, but grid connection and policy uncertainty threaten timelines.
Infrastructure funding plans remain substantial, yet execution risks from skills, planning and financing remain elevated.
Today’s update: the sector is edging towards recovery on activity metrics while facing sharper cost rises, slower planning decisions and continued financing strain for developers. At the same time, rail and clean energy announcements underscore that long-term demand is intact, with delivery capacity and regulatory certainty now the key variables. Here’s what you need to know to stay ahead today.
Ongoing Stories
Following recent coverage of planning reform, the updated National Planning Policy Framework consultation now sets out proposals for minimum housing densities around rail stations and potential Green Belt flexibilities, sharpening the focus on transport-linked growth corridors. (Source: GOV.UK)
Building safety reform continues with the Building Safety Regulator’s transition to an independent MHCLG body from 27 January 2026, adding a new institutional layer that clients and contractors must factor into higher-risk residential and mixed-use schemes. (Source: GOV.UK)
Returning to the theme of delivery risk across the pipeline, developers are now reporting that high financing costs and planning delays are directly jeopardising the government’s 2026 housing targets, not just longer-term ambitions. (Source: The Property Daily)
Top 5 Headlines
⚙️ Construction PMI signals easing downturn but sharper cost pressures
The S&P Global UK Construction PMI rose to 46.4 in January 2026, up from 40.1 in December, marking the slowest contraction in seven months but still below the 50.0 growth threshold. Commercial work led the improvement with a PMI of 48.4, while housebuilding remained weak at 39.3 and civil engineering at 40.6. Purchasing costs saw their sharpest rise since September 2025 and overall construction costs are forecast to climb 3.6% in 2026, meaning any activity recovery is emerging in a higher-cost environment. This matters for pricing strategies on new bids, risk allowances and the viability of marginal schemes. (Source: Investing.com, Building)
🏗️ Planning system squeeze deepens as approvals fall despite more applications
Latest figures show planning approvals down 11% year-on-year even as applications rise 6%, signalling growing friction in the decision-making process. Coupled with high financing costs, this is feeding into warnings that 2026 housing delivery targets are at risk. With NPPF reforms still under consultation, there is a widening gap between policy intent and what LPAs are currently able to consent. Developers and funders need to allow for longer lead times and higher pre-construction risk when structuring deals. (Source: The Property Daily)
🚆 £1.2bn Liverpool Street station overhaul tops transport moves
Approval has been granted for a £1.2bn redevelopment of London Liverpool Street station, including mixed-use towers above the Grade II-listed asset. The package sits alongside a series of February 11 announcements: a £60m refurbishment of CrossCountry Voyager trains centred on Derby, a new construction hub for key Cardiff metro stations, and resurfacing programmes across multiple Northern Ireland roads. With London Northwestern and West Midlands Railway services also back in public ownership from 1 February, rail and station upgrades are consolidating as a major workstream for civils, M&E and regeneration specialists. (Source: Rail Business Daily, Infrastructure NI)
🚆 UK transport pipeline anchored by €81bn allocation and HS2 spend
The UK government’s infrastructure plan currently allocates around €116bn overall, with approximately €81bn earmarked for transport, including HS2 construction at £42.6bn and rolling stock at £7.5bn. These figures reaffirm the scale of committed transport spend even as individual schemes face scrutiny over costs and delivery models. For contractors and consultants, the numbers point to sustained medium-term demand but also heighten exposure to political and cost-overrun risks on marquee projects. (Source: Rail Business Daily)
🌱 Record CfD auction secures 14.7 GW of low-cost clean power
The latest UK Contracts for Difference auction has awarded contracts to 201 renewable projects totalling 14.7 GW of capacity across solar, onshore wind and tidal schemes. This volume is estimated to be enough to power 16 million homes, with strike prices more than 50% cheaper than building new gas-fired plants. However, grid connection delays are now cited as the top barrier by nearly two-thirds of energy firms, and UK generating capacity has grown 16% versus a 17% global average, while UK–EU carbon price spreads add further uncertainty. The combination of record pipeline and delivery constraints points to sustained demand for grid, storage and enabling infrastructure but also greater programme and regulatory risk. (Source: Mirage News, Business Wire)
🏛️ NPPF reforms target station-led housing and small builders
Returning today in more detail, the government’s NPPF reform consultation proposes streamlined permissions and minimum densities for housing near rail stations, alongside measures to unlock self-build, SME developers and brownfield opportunities. Potential flexibilities around the Green Belt are flagged, though not yet defined, and come against a backdrop of falling approval rates and high funding costs. If implemented, the changes could tilt land strategies towards transport nodes and smaller plots, but much will depend on how quickly LPAs adapt in practice. (Source: GOV.UK, Homebuilding.co.uk)
Also in the news
🏗️ Building Safety Regulator’s shift to an independent MHCLG body from 27 January 2026 reinforces the permanence of the post-Grenfell regime and may influence approval timelines for higher-risk buildings. (Source: GOV.UK)
🏗️ Developers continue to report financing challenges as lenders tighten terms, compounding planning delays and stalling some 2026 housing starts despite stated government ambitions. (Source: The Property Daily)
🚆 A new construction hub for Cardiff metro stations at Butetown, Cardiff Bay and Queen Street will concentrate delivery logistics for the programme’s next phase. (Source: Rail Business Daily)
🚆 Northern Ireland’s Infrastructure Minister Liz Kimmins has confirmed multiple road resurfacing schemes worth several million pounds on key routes including the A25 Newry Road, Ahoghill Road and Creighton Road. (Source: Infrastructure NI)
🌱 Political uncertainty is widening UK–EU carbon market price spreads, increasing volatility for carbon-intensive contractors and clients exposed to trading schemes. (Source: Business Wire)
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 before your 9 a.m. so everyone is working from the same picture.