A radical rethink of how we build is essential for construction in 2026 to help hit government targets and deliver the growth this country so desperately needs, writes Richard Steer
If I had a pound for every time I have started a column at this time of year by apologising for not being more cheerful, I would have enough money to pay my increased tax bill, created by last month’s Budget. Still, as someone once said, predicting the future is a fool’s game; the only certainty is that events will happily make liars of us all.
As we move towards 2026, thanks to the chancellor’s recent pronouncements, the industry can at least be guided by the Office for National Statistics (ONS), rather than Mystic Meg, as was previously the case. Last January was all about an economic outlook shaped by caution over a dismal Tory legacy, Trump’s tariff uncertainty and the realisation of government being much harder than opposition.
It is clear that the success of those working in the built environment is still perceived as vital to shore up some big targets by which Labour will be judged
The unmistakable direction of travel at that time was that our sector was going to benefit from more investment in housing and infrastructure. One year on, it is clear that the success of those working in the built environment is still perceived as vital to shore up some big targets by which Labour will be judged.
First, the headline target that will hang over the sector this year is the government’s five-year ambition to deliver 1.5 million homes. The ownership may now rest with Steve Reed and not Angela Rayner, but the metric still hovers above the head of government like the mythical sword of Damocles.
It is a transformational objective, but it is not self-executing. Reaching it will require an iron-clad pipeline, smarter planning and, above all, a radical rethink of how we build.
The planning overhaul and consequent ministerial pressure on local delivery were intended to accelerate output, but targets of this scale expose every weakness in the system: finance, land, skills and regulatory burdens. The numbers are not good now and they will not be much better in 2026.
We have fewer workers in our sector than at any time in the last hundred years and the number of applications received for new homes is low. The proportion of applications granted, meanwhile, is close to an all-time high.
If “the market” is more the enemy of housebuilding than “the blockers”, then there are two possible solutions. The first is to fix the market – create a golden opportunity for housebuilders to get rich by building swathes of new housing, improve access to finance, train an army of skilled workers (or encourage them to immigrate to the UK).
The second is to stop relying entirely on the market. In the 1960s, local authorities were building close to 200,000 homes a year. In 2023, they built about 4,000 homes.
Which brings me to the biggest challenge: people. The numbers are irrefutable. The sector needs tens of thousands more employees with trades and technical skills.
The welcome national skills investment and the headline commitment to train some 60,000 additional workers over the life of this parliament are necessary but not sufficient when we need around 250,000 new workers by 2028. The increases in employers’ national insurance contributions, living and minimum wages and the new workers’ rights act, in spite of some revisions, are some of the reasons our sector is not hiring. These impact now – not in the future.
Construction is now making the largest positive contribution to year-on-year growth in output per hour worked
Above all, let’s use this year to make this industry an attractive place to craft a career – that is how the houses, hospitals, power plants and prisons will actually get built. Productivity remains key, and the ONS said that construction is now making the largest positive contribution to year-on-year growth in output per hour worked.
The promised £820m to 2029, for a new “youth guarantee” is important and a commitment to ensure that every 18 to 21-year-old has access to an apprenticeship, training, education or a job opportunity is essential to give confidence to an industry that was denied construction talent by Brexit.
Like all sectors, the influence of technology on the built environment is exponential. The industry is finally moving beyond pilot projects with AI, digital twins, smarter procurement analytics, drones and sensor-based safety systems migrating from proof-of-concept to everyday practice.
These tools are not replacing human judgment, but eventually they will materially change the shape of labour demand, displacing routine tasks while increasing a requirement for people who can operate, manage and interpret digital tools.
Finally, we cannot ignore the international backdrop in 2026. China’s manufacturing power, US trade policy and evolving EU product rules will influence materials pricing, lead times and investment flows into Britain.
That volatility argues for two practical responses: first, greater domestic resilience through strategic stock, alternative sourcing and on-shore capability where it makes sense; and second, clearer political dialogue to prevent the global swing to protectionism undermining projects and investment here at home.
The prime minister was called “never here Keir” in 2025 due to the time that he spent abroad. Let’s hope that all those air miles will bear fruit in deals, inward investment and de-regulation in 2026.
Richard Steer is chair of Gleeds Worldwide and a Building The Future Think Tank commissioner
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