Written by the Leading Edge team – 21st July 2026
Over the past few months, one theme has consistently emerged across the UK construction sector: the industry isn’t short of ambition – it’s short of delivery.
That theme has become even more relevant this month following the appointment of Andy Burnham as UK Prime Minister. Throughout his leadership campaign, Burnham placed housing, regional investment, planning reform and infrastructure firmly at the centre of his agenda. His first commitments as Prime Minister have already included pledges to deliver the biggest council housebuilding programme since the post-war era, accelerate infrastructure investment and devolve greater powers to regional authorities.
For an industry that has spent the last few years navigating rising costs, skills shortages, planning delays and political uncertainty, the reaction has been cautiously optimistic. The vision is broadly welcomed, but many businesses are asking the same question: will this Government succeed where others have struggled by turning policy into projects?
The latest market data suggests the sector remains under pressure in the short term. However, there are growing signs that the foundations for longer-term recovery are beginning to take shape.
Planning reform finally moves from policy to implementation
Planning reform has dominated construction headlines for much of the past two years. July marks an important milestone, as elements of the Planning and Infrastructure Act begin moving from legislation into practice.
The Government has confirmed that mandatory pre-application consultation requirements for Nationally Significant Infrastructure Projects (NSIPs) will be removed later this month. The changes are expected to cut up to 12 months from the planning process, potentially saving the industry £1 billion during this Parliament.
Developers will instead receive earlier technical advice from the Planning Inspectorate, while examinations will become more focused on key planning issues rather than lengthy procedural requirements. More than 80 major schemes have already received early support under the new approach, with East West Rail among the first projects expected to benefit.
The ambition is equally significant. The Government is targeting at least 150 major infrastructure decisions during this Parliament and has already approved projects including the Lower Thames Crossing, Mona Offshore Wind Farm and Gate Burton Energy Park, developments expected to support more than 82,000 jobs while strengthening the UK’s energy and transport infrastructure.
For construction businesses, the reforms could prove far more significant than another planning announcement. Faster approvals provide greater certainty for developers, improve confidence for investors and help bring projects to market sooner.
The real test, however, will be whether these reforms genuinely shorten delivery times or simply move delays elsewhere within the planning system.
A new Prime Minister brings renewed focus on housing
Housing remains one of the defining challenges facing the construction sector, and it featured prominently in Andy Burnham’s first speech as Prime Minister.
Among the headline commitments were plans to oversee the largest council housebuilding programme since the post-war period, increase investment in social housing and give regional authorities greater control over housing delivery.
These priorities have been welcomed across much of the housing sector. Organisations including the Chartered Institute of Housing, the National Housing Federation and the Chartered Institute of Building have all supported Burnham’s emphasis on council housing, regional decision-making and tackling homelessness.
Greater devolution could allow local authorities to bring forward developments that better reflect regional housing demand while reducing some of the delays associated with centralised decision-making.
However, industry leaders have also urged caution.
Dr David Crosthwaite, Chief Economist at BCIS, noted that while the ambition is welcome, significant questions remain over how these homes will actually be delivered. Funding, planning capacity, development viability and labour availability continue to present major obstacles, regardless of political ambition.
This echoes a recurring theme throughout 2026. The industry broadly supports the direction of travel, but delivery will depend on creating the commercial conditions that encourage both public and private investment.
Regional growth could become one of construction’s biggest opportunities
One area where Burnham could leave a lasting mark is regional investment.
Having spent almost a decade leading Greater Manchester, his vision places greater emphasis on devolving powers away from Whitehall and allowing regions to shape their own economic priorities.
His proposal for a “Number 10 North” reflects that ambition, alongside greater local influence over transport, housing, regeneration and infrastructure spending.
For the construction sector, this could create significant opportunities.
Regional authorities are often closer to local economic priorities, housing demand and infrastructure needs. Greater control over investment decisions could accelerate regeneration schemes, unlock brownfield development and provide stronger pipelines for regional contractors and suppliers.
Infrastructure remains central to this agenda. Burnham has reaffirmed support for major transport investment, including improved northern rail connectivity, alongside continued investment in energy, utilities and regeneration.
The challenge, as several industry commentators have observed, will be ensuring that increased local powers are matched by long-term funding certainty and a planning system capable of keeping pace.
Infrastructure remains a bright spot
While residential construction continues to experience difficult trading conditions, infrastructure offers one of the strongest reasons for optimism.
The Government’s recently published infrastructure pipeline exceeds £700 billion, covering transport, energy, water, defence and public sector investment over the coming decade.
Combined with planning reforms designed to accelerate nationally significant projects, the pipeline provides greater visibility for manufacturers, contractors and supply chain businesses planning future investment.
Projects linked to offshore wind, electricity networks, water infrastructure, rail improvements and energy security are expected to remain among the strongest performing areas of the construction market over the medium term.
For businesses operating across the built environment, this reinforces an important message.
Although current market conditions remain challenging, long-term demand for construction products, engineering expertise and specialist services continues to build.
Market conditions remain challenging – but confidence is beginning to improve
While the political landscape has shifted, the latest economic data confirms that businesses are still operating in a difficult market.
The S&P Global UK Construction PMI edged up slightly to 38.4 in July, compared with 38.2 in June. Although this marked a modest improvement and represented the strongest reading for three months, the index remained well below the 50-point threshold that separates growth from contraction.
There were, however, some encouraging signs beneath the headline figure.
New orders improved from 37.5 to 41.5, suggesting that demand may be beginning to stabilise after a prolonged period of decline. Business confidence also strengthened to its highest level since March, while input cost inflation eased to a three-month low as supply chain pressures continued to improve.
The picture remains mixed across the different sectors of construction.
Residential construction continues to struggle, with the housing activity index falling to 35.9, reflecting subdued buyer confidence, affordability pressures and cautious housebuilders. Commercial construction performed slightly better, rising to 41.5, while civil engineering remained the weakest area of the market at 22.1, recording its sharpest decline since the height of the pandemic.
Commenting on the survey, Tim Moore, Economics Director at S&P Global Market Intelligence, noted that firms continue to report subdued housing demand, elevated borrowing costs and delays to infrastructure projects. At the same time, businesses were becoming more optimistic about opportunities linked to energy investment, defence projects and infrastructure schemes that had previously been delayed.
Taken together, the data suggests that while activity remains subdued, sentiment across the industry may finally be beginning to improve.
Construction output continues to tell a similar story
The latest Office for National Statistics (ONS) figures reinforce this picture.
Construction output increased by just 0.1% in April compared with March, but remained 1.0% lower than a year earlier.
New work continues to experience the greatest pressure, falling 4.8% year-on-year, while repair and maintenance activity remained relatively resilient, increasing by 4.4% over the same period.
Private housing output declined by 8.2%, with public housing falling 12.6%, underlining the continued weakness across residential construction despite ambitious government housing targets.
Commenting on the figures, BCIS Chief Economist Dr David Crosthwaite highlighted that viability remains one of the industry’s biggest challenges. Rising labour costs, affordability pressures, investor caution and continued uncertainty around material costs are all influencing developers’ willingness to commit to new projects.
In many respects, this reflects the challenge now facing the new Government. The policy framework is becoming clearer, but improving confidence sufficiently to unlock investment will inevitably take longer.
Skills remain one of construction’s biggest barriers to growth
Even if market conditions begin to improve, another significant challenge remains.
According to the latest Construction Workforce Outlook from CITB, the industry will require an average of 41,200 additional workers every year between now and 2030 to meet expected demand.
In total, construction is expected to need more than 206,000 additional workers over the next five years.
This issue has become increasingly linked to the debate around devolution.
Writing recently in the Financial Times, SCAPE Group Chief Executive Mark Robinson argued that regional authorities understand their local workforce challenges far better than central government but lack sufficient control over skills funding to address them effectively.
His letter highlighted research showing that 40% of senior local authority officers now identify skills shortages as the single biggest constraint on delivering infrastructure projects.
This aligns closely with Andy Burnham’s long-standing support for devolved decision-making and technical education. During his time as Mayor of Greater Manchester, he championed greater regional control over skills, apprenticeships and vocational education, arguing that local areas are often best placed to connect employers with future workers.
For the construction sector, the message is clear.
Planning reform and increased infrastructure investment may help generate future workloads, but without a larger, better-skilled workforce, many of those opportunities will remain difficult to deliver.
What does this mean for manufacturers, suppliers and contractors?
Over the past few months, a consistent picture has emerged.
Construction businesses are no longer asking whether there is demand for new homes, infrastructure or investment in the built environment. The need clearly exists.
Instead, the focus has shifted towards the practical barriers preventing projects from moving forward.
Planning delays, development viability, labour shortages, affordability pressures and investor confidence all remain critical issues.
For manufacturers and suppliers, understanding which sectors are likely to recover first will become increasingly important.
Infrastructure, energy, utilities, education and healthcare all appear relatively well positioned over the medium term, supported by government investment and longer-term funding commitments.
Residential construction may take longer to recover, particularly while affordability and development viability remain under pressure.
Businesses that continue to monitor changing market conditions, maintain close relationships with customers and adapt to evolving procurement priorities will be better placed to take advantage as confidence gradually returns.
Final thoughts from Leading Edge
July feels like something of a turning point for the UK construction sector.
A new Prime Minister has arrived with a strong focus on housing, infrastructure, regional investment and planning reform. At the same time, long-awaited changes to the planning system are finally beginning to move from legislation into implementation.
None of these developments will transform the market overnight.
The latest construction output figures and PMI data both confirm that trading conditions remain difficult, particularly across housebuilding and new work.
However, there are signs that confidence is beginning to improve. New orders are stabilising, supply chain pressures are easing and long-term infrastructure investment continues to provide reasons for optimism.
The challenge now is ensuring that ambition translates into delivery.
Over the coming months, the industry will be watching closely to see whether planning reform accelerates project approvals, regional authorities gain greater influence over investment decisions and businesses regain the confidence needed to commit to new developments.
For manufacturers, suppliers and contractors alike, understanding how these changes influence market demand will remain essential.
At Leading Edge, we continue to support businesses across the construction sector with independent market research, customer insight and strategic market intelligence, helping organisations make informed decisions in an increasingly complex and fast-changing market.
Looking for tailored market insight? Leading Edge provides independent market research, customer insight and strategic market analysis to help construction manufacturers, suppliers and service providers make informed commercial decisions. Contact us to find out more.
Sources
This market update has been prepared using the latest data, forecasts and industry commentary from the Office for National Statistics (ONS), S&P Global UK Construction PMI, BCIS, Glenigan, CITB, Construction News, New Civil Engineer, the UK Government, the Financial Times, the Chartered Institute of Housing, the National Housing Federation, and the Chartered Institute of Building.
Written by the Leading Edge team – 21st July 2026
