In today’s construction news, learn about how the construction industry in the United Kingdom is facing capacity restrictions, and the Chartered Institute of Building (CIOB) has recently published a paper that covers five major areas where reforms could help lower these levels. On the other hand, based on statistics collected in September, the decrease in building activity has once again levelled off, making it the mildest it has been since June. A more gradual decline in new work contributed to this.
UK Construction Capacity Identified in Five Categories by CIOB Study
Original Source: CIOB report identifies five areas to address UK construction capacity
The Chartered Institute of Building (CIOB) produced a report on five major areas where changes could decrease UK building capacity restrictions.
The paper, ‘Capacity Constraints in Construction: Rethinking the Business Environment’, prioritises industry volatility reduction. The second is ‘ensuring more visible, accessible, useable, and coordinated knowledge’, and the third is policy effectiveness.
The remaining areas are better policy coordination with clearer signals and improved innovation diffusion and adoption.
The UK construction industry struggles to meet housing and infrastructure needs, according to the CIOB research.
It examines recruiting, training, retention, and sector volatility.
The study, co-authored by economist Brian Green, highlights the annual collapse of hundreds of construction enterprises and their economic effects.
Green said, “Construction is the most volatile major sector of the [UK] economy and faces capacity challenges continually. Firms in the industry adapt to swings between too much work and too few resources. This is inefficient and harmful to the industry.”
For a forward-looking strategy, the CIOB advised policymakers and industry leaders to consider sustainable and innovative solutions that boost sector resilience.
While immediate measures are not mentioned, these ideas may affect future policy formulation, according to the group.
The CIOB also recommends a built environment oversight body. The report recommended a positive connection with environmental managers.
It warns against creating such a body all at once, advocating a phased approach.
CIOB policy and public affairs head David Barnes said, “The UK government’s target of 1.5 million new homes over the five-year parliament has continued to receive a lot of scrutiny, particularly on the construction sector’s capacity and capability to deliver.”
“This report seeks to shift the dialogue from aspirational targets to understanding and analysing the sector’s deep and often challenging structural issues that make it volatile and unstable.
“This detailed analysis of the sector shows the need to change the business environment, and the report details the five key policy objectives we believe need focus to improve performance and reduce capacity constraints on the sector.”
UK Construction Activity Decreases in September
Original Source: UK Construction Output Fall Slows in September
Figures for building activity in September showed the lowest decline since June. The decline was mitigated by a slower reduction in new work.
Construction firms remain cautious, with business optimism unchanged from August’s 32-month low.
The S&P Global UK Construction Purchasing Managers’ Index, a seasonally adjusted index monitoring industry activity, hit its highest level in three months in September at 46.2, up from 45.5 in August.
However, the latest result was below 50.0 for the ninth month and still showed a strong contraction.
Output Fall Slows
A slower decline in residential building work (index at 46.8) helped September construction activity fall slower.
Civil engineering (42.9) was the worst segment, but activity declined more slowly than in August.
The only subsector to decrease faster in September was commercial construction (46.4). Another major construction output bottleneck was a shortage of fresh project launches.
September data showed order books declined for the ninth month in a row, but only slightly and at the weakest pace. Survey respondents regularly indicated that low demand, high business uncertainty, and client hesitation made sales possibilities difficult to convert. However, several corporations reported successes in energy project business.
Job Numbers
Latest employment figures showed a ninth straight month of decline, mirroring new work. Construction companies claimed hiring freezes and non-replacement of departed staff due to reduced workloads; however, some reported an increase in apprentice recruitment.
September saw a little improvement in supply circumstances. Shorter delivery lead times were associated with lower vendor capacity pressure.
In September, construction firms saw another strong drop in input buying, extending the slump to 10 months. September saw a sharp rise in prices.
Although stronger than in August, cost inflation remained lower than normal in the first half of 2025. Survey respondents cited growing input prices, salary pressures, and energy, raw material, and transport expenses.
Reduced Expectations
Confidence in business activity predictions for the year ahead was roughly unchanged since August and the second-lowest since December 2022. Some construction companies anticipated an increase in infrastructure spending, higher demand from the energy sector, lower interest rates, and planning approvals, especially for upgrades to the Building Safety Act approval system. However, concerns about the UK economy, capital expenditure cuts, and client uncertainty ahead of the Autumn Budget offset this.
Client Caution
S&P Global Market Intelligence Economics Director Tim Moore said, “September data showed that the UK construction sector faced pressure on multiple fronts as residential, commercial, and civil engineering work all continued to decrease at solid rates.
Since January, building output has decreased, although the latest drop was the slowest in three months and new orders were the softest in 2025.
“Business activity expectations for the year ahead were among the lowest since 2022, suggesting construction companies were cautious about the near-term outlook and have yet to see a turning point.
“Some firms expect lower borrowing costs and new sales pipelines in energy security markets and infrastructure projects. Clients were cautious ahead of the Autumn Budget and hesitant to commit to significant capital spending projects against a weak domestic economic background, according to several survey respondents.
Weak business optimism, shrinking workloads, and strong cost pressures again reduced construction employment. Job losses have lasted nine months, the most severe stretch since the outbreak.
Comments from the industry
Attention Autumn Budget
Shawbrook MD of Development Finance Terry Woodley said, “Construction activity has fallen for the ninth consecutive month, with lack of new projects impacting the data the most. While developers have a ways to go before they can breathe a sigh of relief owing to recruitment, it appears businesses have eased into the reasons that caused the significant decline in July, such as rising prices and macroeconomic variables
However, these worries may pass. The Government has committed to transforming Britain, and the introduction of new towns across the UK will present significant development opportunities, necessitating external funding to expedite stalled infrastructure projects. The last Labour Conference showed that buildings are vital to the economy, providing employment, investment, and more. We will closely monitor the upcoming Autumn Budget to provide developers with increased confidence, particularly as the sector transitions into the off-season and experiences a decline in activity.
Gateway 2 Delays
MHA head of real estate and construction Atul Kariya said, “The slight uptick in construction PMI is positive news, but activity remains in contraction territory. The budget uncertainty and Gateway 2 approval delays are worsening the sector’s problems.
Fire safety is important, but Gateway 2 and 3 approvals are too complicated and slow. This disproportionately affects the start of inner-city initiatives, where housing demand is highest. Could the Gateway 2 approval procedure be simplified and risk-based on fire safety rather than the overall concept at a time when the sector needs to launch projects without delays?
The announcements earlier this year about expedited planning reforms and new towns were encouraging, but the industry is sceptical. They’ve heard government promises without results. Industry cannot afford to wait until mid-next year for a potential uptick. The Chancellor must provide housebuilders direct, practical stimulus in the Budget. Recent Irish declarations are an excellent model.”
Summary of today’s construction news
In summary, specifically, the study from the CIOB underscores the substantial issues that the construction industry in the United Kingdom is facing, notably in terms of satisfying the demands for housing and infrastructure. In addition to examining concerns such as recruiting, training, and retention, it also investigates the inherent instability of the business. This study, which was produced in conjunction with an economist named Brian Green, highlights the frequency of collapses that occur inside hundreds of construction enterprises on an annual basis and the effects that these failures have on the economy as a whole.
On the other hand, according to the data collected in September, order books experienced a decline for the ninth consecutive month, albeit one that was only minimal and occurred at the slowest pace over this period of time. Those who participated in the survey frequently mentioned that it was challenging to convert sales prospects due to the fact that there was a lack of demand, increased business instability, and general reluctance among customers. However, there were certain companies that commented on new business gains that were associated with energy projects.