Industry Welcomes Capital Investment Plan, but Delivery Challenges Loom
The UK’s construction, housing, and infrastructure sectors have broadly welcomed Chancellor Rachel Reeves’ £113bn capital investment programme, unveiled as part of the recent spending review. Touted as a cornerstone of the government’s plan to “deliver Britain’s renewal,” the investment has been hailed by industry leaders as a long-overdue step toward addressing decades of underinvestment and fostering economic growth. Alasdair Reisner, Chief Executive of the Civil Engineering Contractors Association (CECA), described the announcement as a “once-in-a-generation opportunity” to revitalise infrastructure and unlock high-skilled employment opportunities across the country.
Central to the review is a £39bn, 10-year Affordable Homes Programme designed to deliver 1.5 million homes by 2030, accompanied by a rent settlement that caps annual increases at CPI +1%. This was widely praised by organisations including RICS, the National Housing Federation, and RIBA, which see the package as a crucial move to support long-term planning, boost social housing delivery, and provide certainty to local authorities. However, workforce shortages remain a key concern, with less than one-third of real estate firms believing the housing target is achievable without significant action on skills, training, and workforce modernisation.
The spending review also commits substantial resources to infrastructure and energy projects. These include £14.2bn for the Sizewell C nuclear power plant, £2.5bn for small modular reactors, and significant transport upgrades such as £3.5bn for the Transpennine Route and £2.5bn for East West Rail. A £2.2bn multi-year settlement for Transport for London was welcomed, though some in the sector expressed disappointment over the lack of clarity around shovel-ready projects such as the DLR to Thamesmead and Bakerloo Line extension.
Concerns were raised about regional equity, with some arguing that London was overlooked in favour of other parts of the UK. John Dickie, Chief Executive of BusinessLDN, noted that while investment in affordable housing is promising, it remains to be seen how much will reach the capital where the housing crisis is particularly severe. He also emphasised the need for further devolution and more robust commitments in upcoming infrastructure and industrial strategies.
Private sector analysts noted that the review sends a positive signal to investors, particularly in regional real estate markets. Knight Frank reported a 39% increase in cross-border capital flows to UK regions in Q1 2025 alone, highlighting growing confidence in markets beyond London. However, caution remains, with commentators warning that execution risks, fiscal constraints, and global uncertainties could impact investor confidence unless backed by detailed delivery frameworks.
Overall, the spending review has been positively received as a clear policy shift towards long-term investment and economic rebalancing. However, industry leaders agree that successful delivery will depend on coordinated implementation, strategic workforce development, and ongoing collaboration between government and the construction sector to ensure the promised outcomes are fully realised.
