The construction industry entered 2025 facing a mixed outlook: materials price inflation had eased over the previous 12 months but demand was uneven, with uncertainty over how the government elected in July 2024 would deliver on its manifesto pledges to reinvigorate infrastructure and housebuilding.<\/p>\n
Some clarity did emerge this year. The National Infrastructure and Service Transformation Authority (NISTA) was unveiled in April to integrate infrastructure policy, strategy and delivery within the government. This was followed by a 10-year plan committing at least \u00a3725bn to infrastructure projects.<\/p>\n
There was also positive news on specific civils projects. The government\u2019s green light in March for the \u00a39bn Lower Thames Crossing, for instance, was a clear statement of intent on infrastructure investment \u2013 although so far it has committed only \u00a3590m for early works.<\/p>\n
But while the formation of NISTA helped give contractors sight of a potentially lucrative 10-year pipeline, the authority\u2019s first annual report, released in August, rated nearly \u00a389bn worth of construction and infrastructure projects as \u201cunachievable\u201d.<\/p>\n
Despite some optimistic signs for civils, the HS2 saga continued to attract negative headlines, amid budget overruns and delays beyond 2033. In June, following a report submitted by HS2 Ltd chief executive Mark Wild, the government announced plans to reset the megaproject. Under the reset, HS2 Ltd said it was renegotiating its four main civils contracts, prioritising the phase one northern main works civils contracts held by the Balfour Beatty Vinci and Eiffage Kier Ferrovial Bam Nuttall JVs.<\/p>\n
The reset cut little ice with Geoffrey Clifton-Brown, head of the Public Accounts Committee. He pulled no punches in a critical report in October, describing HS2 as a \u201cdisaster\u201d with \u201cunacceptable\u201d uncertainty over its ultimate cost. \u201cWe are no more certain of the government\u2019s ability to successfully deliver this vast programme than we were a decade ago,\u201d he said.<\/p>\n
The government\u2019s ambitious target of 1.5 million new homes by the end of the decade also appeared unrealistic. The Office for Budget Responsibility estimated in March that the government would deliver 1.3 million \u2013 and housebuilding activity remained sluggish throughout the year amid high development costs, weak buyer confidence, poor affordability, high borrowing costs, and approval delays from the Building Safety Regulator (BSR).<\/p>\n
London was particularly affected by the housebuilding malaise. The government has said 88,000 homes are needed annually in the capital by 2029 if the 1.5 million target is to be met, but data from the Home Builders Federation showed just 30,000 had been built in the year to 30 June 2025.<\/p>\n
Building safety remained a prominent issue this year. In February, the government accepted all 58 recommendations from the previous September\u2019s Grenfell Tower Inquiry phase two report, including a unified construction regulator, tighter product certification, and potential debarment of firms for safety breaches.<\/p>\n
But some legal experts were unsure the government could ban Grenfell-linked firms from public sector contracts without reforming its own recently enacted Procurement Act. And debarment probes into seven organisations were paused in July after the police and Crown Prosecution Service warned these investigations could prejudice the ongoing criminal investigation into the Grenfell fire and future proceedings.<\/p>\n
The government said it would phase in reforms to the building safety regime over the lifetime of the current parliament. But in the meantime, the BSR was still grappling with teething problems. The biggest of these was the bottleneck in processing gateway two applications for higher-risk buildings (HRBs) as required by the Building Safety Act. A House of Lords inquiry heard in October that approvals meant to take 12 weeks averaged 43 weeks nationally and 48 in London, delaying HRB starts. In June, the government announced the BSR would become a standalone body next year, and appointed a shadow board chaired by former London Fire Brigade (LFB) commissioner Andy Roe, with LFB deputy commissioner Charlie Pugsley as chief executive.<\/p>\n
There could be some light at the end of the tunnel. The regulator announced in October that it aims to clear its legacy gateway two backlog by January 2026.<\/p>\n
An unrelated building safety issue is a shortage of BSR-registered inspectors in the private and public sectors \u2013 a problem exacerbated in November with the collapse of Assent Building Compliance.<\/p>\n
In annual results released this year, major firms such as Morgan Sindall, Laing O\u2019Rourke, Kier, Bam, Vinci and Galliford Try reported double-digit percentage growth in pre-tax profit \u2013 but the positive mood wasn\u2019t universal.<\/p>\n
EY-Parthenon revealed profit warnings among FTSE-listed contractors, engineering companies and building material firms nearly tripled in the first nine months of the year, with 14 warnings issued compared with five in the same period last year. The third quarter of 2025 alone saw six profit warnings, marking the highest quarterly total since the height of the pandemic in 2020.<\/p>\n
The biggest casualty this year was \u00a3313m-turnover Ardmore Construction, which called in administrators in August. The London-based firm was facing legal claims from housebuilders on multiple historical remediation jobs, but the administrators said that subcontractors could face up to \u00a3204m in \u2018downstream\u2019 cladding claims if they are passed on to Ardmore\u2019s supply chain.<\/p>\n
CN<\/em>\u2019s analysis of data provided by Creditsafe showed 238 construction administrations from January to October 2025 \u2013 two more than in the same period the previous year. And insolvency specialist Begbies Traynor revealed a 70 per cent rise in the number of construction firms in \u201ccritical\u201d financial distress in the third quarter (Q3) of this year compared with Q3 2024.<\/p>\n Last September\u2019s demise of ISG also cast a long shadow into 2025, as shown by annual financial results from firms in its supply chain. To cite just two examples, building services firm Ivegate took a \u00a33.8m hit, while Hensall Mechanical Services said it was forced into a \u201csubstantial gross write-off\u201d. More than two-thirds of ISG\u2019s former staff are pursuing legal claims over the way they were made redundant. And CN<\/em> revealed in August that lawyers acting for six ISG subcontractors had threatened the Ministry of Justice with legal action over unpaid money they say is owed on former ISG prison projects.<\/p>\n Retentions and late payments were firmly in the government\u2019s sights. It launched a consultation as part of its pledge to enact \u201cthe toughest late payment laws in Proposed reforms specifically target retentions in the construction sector. Options include an outright ban on retentions or new requirements for these funds to be held in protected accounts or secured by guarantees. Each choice has its supporters among industry bodies: Build UK favours a total ban, while the idea of ring-fenced accounts was supported by the Construction Industry Council, Electrical Contractors\u2019 Association and the Civil Engineering Contractors Association.<\/p>\n This year saw significant merger and acquisition activity. Vinci acquired FM Conway in January to reinforce its capabilities in the UK roads sector. Two months later, US private equity firm Atlas Holdings completed its \u00a335m acquisition of Lendlease and rebranded the contractor as Bovis, marking a comeback for this historic contracting name. And in November, Sisk acquired Farrans Construction in a move that could push its turnover beyond \u00a31bn.<\/p>\n Boardroom changes caught the eye too, especially at Balfour Beatty and Kier. The two firms will start 2026 with new chief executives. Leo Quinn left Balfour Beatty in September after a decade in charge, with Philip Hoare as his successor. And at Kier, Andrew Davies handed over the reins to Stuart Togwell, having retired at the end of October following six years in the role.<\/p>\n Hoare and Togwell took up their new posts in a sector grappling with long-standing skills and labour shortages.<\/p>\n The Construction Industry Training Board estimated a need for 239,300 additional workers over the next five years. It warned in April that skills shortages remained acute across trades and technical roles, with demand expected to peak in 2027 as major infrastructure and energy transition schemes ramp up.<\/p>\n Yet the UK construction workforce in Q2 was 12 per cent smaller than in the same period in 2019, and fewer jobs are available in the sector \u2013 construction vacancies in July-August were a quarter lower on a year-by-year basis, for instance.<\/p>\n Government initiatives this year included a UK-wide construction skills funding package worth \u00a3745m, most of which will fund the training of 60,000 construction workers by 2029. The package, announced by chancellor Rachel Reeves in her Spring Statement, includes \u00a3100m to set up 10 new advanced technical training colleges, \u00a3165m to expand construction course offerings in colleges, \u00a3100m to extend Skills Bootcamps and \u00a340m for new foundation apprenticeships in construction. But while the funding is substantial, CN<\/em> reported that three-quarters of the cash will not be spent before April 2027.<\/p>\n So progress on the civils side was offset in 2025 by sluggish market conditions in the residential sector. Meanwhile, the skills problem remained as intractable as ever. Will 2026 bring tangible progress?<\/p>\n","protected":false},"excerpt":{"rendered":" The construction industry entered 2025 facing a mixed outlook: materials price inflation had eased over the previous 12 months but demand was uneven, with uncertainty over how the government elected in July 2024 would deliver on its manifesto pledges to reinvigorate infrastructure and housebuilding. Infrastructure Some clarity did emerge this year. The National Infrastructure and …<\/p>\n","protected":false},"author":135716,"featured_media":533033,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"ep_exclude_from_search":false,"footnotes":""},"categories":[79552,547,549,79553,552,39314,559,553,575],"tags":[],"class_list":["post-533028","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-building-safety","category-buildings","category-civils","category-features","category-financial","category-hs2","category-long-reads","category-ma","category-skills"],"yoast_head":"\nPayments<\/h3>\n
\nthe G7\u201d.<\/p>\nMergers and movers<\/h3>\n
Labour shortages<\/h3>\n