Construction & Infrastructure Lookahead for 2026

In 2025, the construction industry experienced a broadly stable year (following two more volatile years), with easing materials inflation and improved supply chain reliability, but tempered by weak private housing starts and the ongoing issue of constrained labour availability.

Alongside repair and maintenance works and energy-efficiency retrofits, the infrastructure sector has been the principal support to the industry, with a strong pipeline of future work ahead, taking account of the pipeline of projects disclosed in the Government’s 10 year Infrastructure Strategy, including HS2 Euston, Lower Thames Crossing and Sizewell C, a nuclear power station which got the go ahead last year.  However, concerns over the delivery of Government infrastructure projects continues, with some MPs calling for a radical shift in the Government’s approach to infrastructure delivery, warning that “systemic failures” in major infrastructure project delivery could derail the Government’s infrastructure ambitions.

Looking ahead to 2026, there is reason to be cautiously optimistic, with a modest amount of growth being predicted for the sector, overall.  The reduction in interest rates is hoped to improve housing demand, coupled with continued Government backing for transport, social infrastructure, and the energy transition.

Planning

Planning has been enjoying a moment in the national spotlight as the Government has shown real intent on changing the system to drive up growth and achieve the target 1.5 million new homes in this government. Most notably the introduction of ‘grey belt’ has almost immediately spurred a flurry of high-profile permissions for data centres and housing. 

The Planning and Infrastructure Act 2025 received Royal Assent on 18 December 2025, and further consultations and secondary legislation are expected later this year for changes still to be brought forward under the Levelling Up and Regeneration Act 2023.

Key changes being implemented in the Planning and Infrastructure Act include:

• Curbing repeat legal challenges to Government decisions on major infrastructure schemes, allowing just a single attempt for cases without merit.
• Updating the role of planning committees and establishing a framework for a national scheme of delegation.
• Granting development corporations wider powers aimed at fast-tracking major projects such as new towns.
• Streamlining aspects of the nationally significant infrastructure project regime – such as by removing statutory consultation.

However, as with the LURA, most changes require secondary legislation to come into force and provide the detail.

In addition to these legislative changes, the Government is consulting on proposed changes to its National Planning Policy Framework, with housing proposals near well-connected railway stations proposed to generally receive an automatic presumption in their favour, provided they satisfy specified criteria.

There are some rumours of the Government considering a relaxation of Biodiversity Net Gain requirements for small sites and introducing wider exemptions. The UK Green Building Council has published an open letter asking the Government to retain these requirements for small sites and adopt a more proportionate approach to reform.

Carbon Emissions

As expected, the Government is intending to legislate later this year to provide for a carbon border adjustment mechanism (CBAM). It is expected to apply from 1 January 2027, with the exception of indirect emissions associated with the production of CBAM goods, which are not expected to be addressed until 2029 or possibly later. This will apply a carbon price to imported goods to match the carbon cost of domestic production, to try to ensure fair competition.

Meanwhile, earlier adopters of the Pilot version of the UK Net Zero Carbon Buildings Standard will be keen to know that new Version 1 of the Standard is expected to be published early this year.

Future Homes Standard

Staying on the topic of emissions, for new build homes, regulations to implement the Future Homes Standard are now expected to be published early this year, with implementation in late 2026, subject to a transitional period.

The Standard is intended to reduce carbon emissions and improve energy efficiency of new homes. It is expected to mandate various measures for achieving this, including requiring new homes to be gas free and fitted with solar PV.  A new energy calculation methodology, Home Energy Model (HEM), is intended to be released alongside the Standard.

CIS

HMRC is looking to tighten up the industry’s compliance with the Construction Industry Scheme, with effect from 6 April 2026.  It is intending to introduce measures to tackle non-compliance, targeting businesses who knowingly engage with the tax evading businesses. They may:

• have their gross payment status cancelled (with the time limit for reapplication extended from one year to five years);
• be made liable for the lost tax; and
• apply a penalty of 30% of the lost tax to the business found liable, as well as to its directors and other persons connected to the business.

Payments and Company Reporting

On 1 January 2026, the Companies (Directors’ Report) (Payment Reporting) Regulations 2025 came into force, making changes to the reporting requirements in The Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008. This includes a requirement for large companies to report information about their payment practices and performance within Directors’ Reports. 

With the information being published on a Government portal, prospective suppliers and others will be able to check the average time that it takes a large business to pay its suppliers as well as the proportion of payments that the business does not make on time.

In addition, a late payment consultation was issued last year, intended to consider proposals to tackle poor payment practices (not just within the construction industry).  Among other things, the retention practices of the construction industry are again to come under scrutiny, with the consultation proposing either to prohibit the use of retentions or to introduce requirements to protect retention funds deducted and withheld from insolvency and late or non-payment.  Other proposals include:

• Mandating overall payment terms between UK business not exceeding 60 days (reducing to 45 days after five years); and
• Making the statutory interest rate payable on late payments mandatory, removing a party’s ability to negotiate compensation rates for late payment lower than the statutory rate.

You can read more on this: A Review of Payment Practices in the Construction Sector: Will Retentions Be Retained or Regulated?

Right to Work

The Border Security, Asylum and Immigration Act was passed in December 2025, which contains clauses to extend the right to work regime to ‘non-standard’ employment scenarios. These are broadly:

• Sub-contractors defined as "a person who has agreed to carry out operations for a contractor by themselves individually, or by their employees or own sub-contractors", targeting the construction sector,
• Workers (as opposed to employees or apprentices) including zero hours contracts, and
• Gig-economy scenarios (e.g. where there is an online matching platform)

As explained in the accompanying public consultation (now closed):

“The extension of the Right to Work Scheme will ensure those who engage individuals as casual or temporary workers under a worker’s contract, individual sub-contractors, and online matching services (that provide details of service providers to potential clients or customers for remuneration), are required to carry out right to work checks. The associated civil and criminal sanctions for non-compliance will be made applicable in these circumstances.”

The Government has stated it will publish a response (presumably this year but no timeframe has been given) and this should indicate what the final Code of Practice and guidance documents will look like.

Building Safety

Of course, no lookahead would be complete without a look at building safety. 

In December, we had a flurry of publications from the Government, including:

• More data on the progress being made by the Innovation Unit processing gateway 2 building control applications for new build higher risk buildings;
• Outcomes of various research commissioned by the Government as part of its technical review of Approved Document B (fire safety);
• Assessment of the current provisions related to trigger and threshold levels in Approved Document B (fire safety) and in Regulation 7(4) of the Building Regulations 2010 (meaning of ‘relevant building’);
• Outcome of the Government’s review of the definition of ‘higher risk building’ – good news for some in the Built Environment sector, with the outcome being no change, for the present;
• A prospectus and consultation for a single construction regulator; and
• Next steps for the proposed reform of the fire engineering profession.

For those involved in building higher risk buildings with residential accommodation, there is reason to be optimistic, with oversight of the Building Safety Regulator moving from the Health and Safety Executive to the MHCLG this month and various measures being implemented to see an improvement in the gateway 2 experience. This has included the creation of the aforementioned Innovation Unit dedicated to processing new build applications, promotion of staged applications for single tower projects and updated gateway 2 guidance published by the CLC. 

This optimism may need to be tempered, with the Industry and Regulators Committee’s Second Report, published on 11 December, warning that close attention from both the Government and the BSR will be needed, and swift additional action is necessary, without which, “there is little chance that the Government will meet its targets to build new homes and remediate dangerous cladding”.

In Wales, legislation for the introduction of a higher risk building control regime, alongside a new dutyholders and competence regime, has only just been passed. It comes into effect on 1 July 2026, with transitional provisions.

You can read more on what is to come in 2026 in relation to building safety and key cases expected to be heard in Building Safety Lookahead 2026.