Political rhetoric doesn’t meet reality with 2 in 5 construction firms seeing hit to bottom line
Tom Lees, our CEO & founder—in the New Civil Engineer on how the infrastructure and built environment sector faces a paradox.
Improved social, energy and transport infrastructure are widely seen as key elements of a successful and productive economy; something the UK desperately needs after terrible growth for nearly 20 years.
We have a government committed to a 10-year investment pipeline and increased capital budgets that could provide improved clarity for planning and delivery.
Yet our latest research – Bradshaw Advisory’s UK Political Risk Report 2026 – shows that political risk is constraining investment decisions, pushing projects back and forcing businesses to reduce staffing at precisely the moment we need to scale up.
More than two in five firms (43%) firms in the built environment report real cost impacts from policy reversals or changes in government guidance over the past year.
These aren’t minor administrative headaches – they are issues that translate directly into changed scopes, redesign costs, consenting delays, workforce redundancies and contract variations that increase costs and extend timescales.
One in five construction firms are delaying UK investment, while nearly a quarter are scaling it back entirely. Rather than cancelling schemes outright, activity is being pushed further back in the pipeline, with projects being slowed down or rephased at pre-construction stages. For long-cycle, capital-intensive projects and programmes, uncertainty around policy, planning conditions, and fiscal frameworks can materially alter project economics.
Over a quarter of construction firms (27%) report that political risk is contributing to workforce reductions. In a sector already facing critical skills shortages and dependent on specialist expertise and integrated delivery teams, these cuts have direct implications for delivery capacity and productivity. We risk creating a vicious cycle where political uncertainty drives down capacity precisely when government ambitions require us to scale up.
The pre-budget period in 2025 proved particularly damaging for the sector. Nearly two-thirds of business leaders felt that the constant speculation created undue uncertainty. For construction, where financing decisions and contract negotiations operate on fixed timelines, this extended period of policy ambiguity had real commercial consequences. As former Bank of England Chief Economist Andy Haldane noted at the time, the “halfway house of leaks and speculation serves absolutely no one – least of all the economy”.
Interest rates emerge as the single biggest political risk driver for the sector which is understandable given the capital intensity of infrastructure and the mortgage sensitivity of built environment work. Fiscal policy uncertainty compounds this, with businesses unclear whether public investment commitments will actually materialise as promised or be subject to Treasury revision as economic and political conditions shift. Especially worrying with the ongoing leadership speculation around prime minister Keir Starmer.
The planning and consenting system ranks as one of the sector’s highest risks. While the government says that reform is a priority, the gap between rhetoric and delivery on the ground remains wide.
The prime minister wholeheartedly welcomed the impressive Fingleton Review into new nuclear that (if implemented) would radically speed up delivery and reduce costs. However, powerful nature NGOs are now mobilising MPs to water down recommendations tackling overly oppressive environmental regulations.
The Planning and Infrastructure Act wanted to move away from the Hinkley Point C “fish disco” and HS2 “bat tunnel” approach to specific on site mitigations, towards a more strategic approach of a Nature Restoration Fund that would benefit far more wildlife and be more cost effective and faster – a win win. However, this was watered down by the government due to NGO pressure making it less transformative, easier to challenge in the courts and harder to deliver.
The Grenfell Tower fire was an appalling tragedy, but the previous government’s response contained within the Building Safety Act and the Building Safety Levy (a tax on every new home built) do not appropriately address the issues caused and hangover from the tragedy nearly a decade ago.
New housing starts since Labour came to power have new starts averaging 32% lower than the long run average of the previous 30 years. If these trends continue, our calculations show that Labour will miss their 1.5M new homes target by more than half.
The government deserves credit for committing to long-term infrastructure investment. But good intentions must be matched by policy stability and most importantly delivery.
For businesses in the sector, they need to treat political risk as a balance sheet issue not a reputational one and assess it with the same rigour as interest rates or material prices.
Second, plan for volatility over clarity, building flexibility into strategies that allows rapid adjustment as policy crystallises.
Third, engage earlier and upstream of ministers announcing decisions. I don’t mean having some junior minister visit for a photo op on site but doing serious Treasury-grade work that helps officials solve delivery and implementation problems before official positions become fixed.
The construction sector cannot afford another decade of stop-start funding decisions, sclerotic consenting and policy uncertainty. The sector certainly has the ambition and eagerness to deliver, what we need now is the political stability and backing to get on with the job.
