Reviving the construction industry sits at the centre of the government’s economic strategy. Ministers are cutting back regulatory hurdles to spark activity, yet can these reforms deliver the results they are aiming for? Andrew Harbourne of Thackray Williams’ Commercial Real Estate team explores where progress is being made, where challenges remain, and whether the government’s combined efforts can realistically meet its construction and economic targets.
The government has placed construction at the heart of its economic revival plan. Ministers have committed to faster planning decisions, major infrastructure spending and efforts to address long‑standing skills shortages. These reforms are intended to unlock delivery of 1.5m new homes by the end of this parliament and accelerate everything from clean‑energy facilities to transport upgrades.
However, despite the scale of the ambition, it is unclear whether these measures can shift supply and demand within the political timetable. Long‑standing constraints around skills, funding, planning capacity and market confidence remain deeply embedded and may take far longer to resolve than hoped.
Modernising planning: faster, digital – but still clogged?
Planning reform is positioned as one of the government’s most powerful tool for boosting development. Digitalisation, streamlined processes and increased resources are all intended to relieve pressure on an overstretched system.
Digital improvements are showing early promise. By late 2024, automated tools were already reducing planning‑officer workloads by as much as 85% in some areas, saving significant administrative time. A new AI tool, Extract, is expected to accelerate this further by converting planning records into digital formats in minutes. With planners currently spending an estimated 250,000 hours annually on such tasks, the potential efficiency gains are substantial.
Beyond digital upgrades, ministers want more decisions made by officers rather than committees and have simplified pathways for nationally significant infrastructure projects. Early indicators suggest these steps are encouraging activity: around 335,000 homes outside London entered the planning system in 2025, up sharply from the previous year.
But these improvements cannot fully compensate for the lack of qualified planners. Although the government plans to recruit 350 additional officers, it will take time to build experience and capacity. Meanwhile, local authorities must adapt to new ideas such as Grey Belt classifications and station‑adjacent development zones, both of which demand careful local interpretation.
Accelerated delivery: investment, incentives and land use flexibility
The government is also focused on speeding up delivery once permissions are granted.
The 2025 Budget allocated £13bn to seven mayoral authorities for growth‑focused programmes. A further £900m has been distributed to eleven authorities in the North and Midlands through the Local Growth Fund, while a £500m Mayoral Revolving Growth Fund will invest directly in development.
Ministers are also considering a statutory build‑out mechanism requiring developers to submit and follow construction timetables. Planning authorities may gain powers to refuse applications from developers with a pattern of slow delivery.
Land‑use rules are also shifting. Lower‑quality Green Belt land (Grey Belt) is becoming easier to develop, and housing near well‑connected railway stations could receive automatic approval where certain criteria are met.
A live consultation proposes easing biodiversity net gain (BNG) rules for smaller schemes and exempting developments of 10–49 units from the Building Safety Levy. While designed to support SMEs, these proposals have drawn criticism from environmental and market groups who fear weakened protections and long‑term ecological impacts.
These delivery‑focused measures could improve output, but success depends heavily on the capacity and confidence of local authorities, investors and developers — all of which remain uncertain.
Skills: the industry’s most stubborn constraint
Even if planning and investment reforms succeed, construction output ultimately depends on workforce availability — and this remains the sector’s most intractable challenge.
The Construction Industry Training Board and Oxford Economics estimate that 48,000 new workers will be needed annually between 2025 and 2029. The sector faces an ageing workforce, post‑Brexit recruitment pressures and a continuing mismatch between training and industry needs.
Government initiatives — including Homebuilding Skills Hubs, expanded Technical Excellence Colleges and Skills Bootcamps — are backed by more than £700 million and expected to create over 40,000 training places a year.
Modern Methods of Construction (MMC), digital construction, AI‑enabled workflows and advanced design tools require a blend of traditional skills and technical expertise. Current training pathways may struggle to deliver this breadth at sufficient scale and speed.
The result is a workforce stretched between the demands of modernisation and the realities of a shrinking labour pool.
Innovation and construction technology: helpful but not a quick fix
Technologies such as MMC and 3D printing are frequently cited as solutions to capacity challenges. Off‑site manufacturing and modular systems can reduce onsite labour and speed up delivery. But uptake has been patchy. Several MMC factories have closed due to inconsistent demand, and funders and insurers remain cautious. Without sustained government intervention and stronger investor confidence, MMC may struggle to reach the scale required.
3D printing offers speed, precision and reduced waste, but it remains costly, requires specialist skills and lacks a mature regulatory framework. It is more likely to influence large infrastructure projects in the near term than mainstream housebuilding.
Innovation will undoubtedly shape the long‑term future of construction, but it is unlikely to transform national output within the current parliamentary cycle.
Demand challenges: the missing piece of the puzzle
Supply can only increase if market demand is strong enough to support development — and at present, demand appears fragile.
Mortgage approvals in late 2025 were below the previous year, and both housing starts and completions remain beneath 2007 levels. The affordable housing sector has also slowed, with registered providers buying fewer units; this has left many completed homes unsold, delaying private phases of mixed‑tenure schemes and placing financial strain on developers.
Many homeowners, especially flat owners, are struggling to sell, limiting movement up the housing ladder. Frozen tax thresholds, higher living costs and student loan deductions continue to limit disposable income. Job‑security concerns, including the impact of AI on employment, are also dampening buyer sentiment.
Meanwhile, increased regulation and taxation are prompting some landlords to exit the private rented sector, while second‑home owners face rising council tax charges. Although this may free up stock, it can depress prices and weaken incentives for developers.
With the Help to Buy Equity Loan scheme no longer available in England, the government now faces pressure to introduce new demand‑side interventions — potentially involving stamp duty reform or fresh support for first‑time buyers.
Conclusion: Progress, but still a long road to delivery
The government has launched a broad, ambitious programme to reinvigorate construction and stimulate economic growth. Many measures — from digitalised planning to expanded skills initiatives and flexible land‑use policies — offer real potential.
But taken together, they may still fall short of delivering housing and infrastructure targets within the current parliamentary term. Skills shortages, planning capacity constraints, fluctuating investor confidence and weak demand/affordability issues for home buyers all remain significant barriers.
Without strong demand‑side policies to complement supply‑side reforms, the UK risks creating a more efficient planning system without achieving the level of output needed to meet national goals.
