UK construction sector: what’s on the cards for 2026

Our global construction group advises on both contentious and non-contentious matters, supporting our clients throughout the full life-cycle of the construction project, from procurement, contract advice and coverage right through to successful dispute resolution, should they arise.

Following the success of our first UK construction sector conference last year, our UK construction experts came together once again on Tuesday 27 January 2026 for a repeat performance. They were joined by key speaker, Rob Browning, Head of Legal, Gardiner & Theobald for a fireside chat with our very own Caitlin Galagher on risk management from an in-house perspective.

Amid growing economic uncertainty and geopolitical turmoil, the UK construction sector faced rising costs, insolvencies, sustainability pressures, project delays and regulatory transformation in 2025.

This summary accompanies a recording of the event and provides a synopsis from our experts on the impacts of these challenges and how we can better manage these risks as we enter 2026. With more change to come, this year will evoke practical resilience required to navigate the continuing global uncertainty. However, more positively, output growth is forecast to accelerate by 10%, inflation is projected to ease toward 3.6% and interest rates are to stabilise near 4%. In this measured recovery climate, infrastructure and retrofit sectors are set to lead this upturn.

Key takeaways across the sector

Transitioning from post Grenfell cladding claims to Building Safety Act claims – a defence lawyers’ perspective

Speakers: Christopher Butler and Paul Carter

Increased risk for designers

The Building Safety Act 2022 (the Act) introduced new duties for designers. More recently, many of these are now being replicated within consultant appointments and collateral warranties. The Act also establishes stricter safety regulations, particularly relating to building materials, fire safety and structural integrity. Consequently, designers face an increased risk in ensuring that their designs and advice comply with these new standards.

We are already seeing many of the new obligations and requirements written directly into contracts such as the Principal Designer role, and with ever increasing scope, duties and responsibilities. In some cases, the contractual position is intentionally more onerous than the Act requires. This creates a material claims exposure – not only because it heightens the likelihood of claims, but also because such claims may fall outside the scope of professional indemnity insurance.

Firms should ensure that any contractual obligations they accept do not exceed those set out in the Act, to mitigate the risk of uninsured losses.

Gateway applications

The Building Safety Regulator is currently working through a backlog of Gateway approval applications for works (to ensure fire safety and building regulation compliance) and it is expected to take up until mid 2027 for the processes to flow smoothly. This is primarily due to operation challenges in processing these applications efficiently and inadequate submissions. The backlog has resulted in delays to the commencement of works on sites and subsequently effected lending and project programmes. Ensuring building regulation compliance has also resulted in delays to existing projects, as defective works have to be remediated mid-project and “enhanced compliance” sought often. This has also resulted in increased project costs and there is no doubt that claims will inevitably flow from these delays and increased costs.

Transfer of Building Safety Regulator (BSR)

The transfer of the BSR from the Health and Safety Executive (“HSE”) to a standalone body took effect on 27 January 2026. Although the transferred BSR is now a standalone entity it is sponsored by, and will retain ultimate accountability to, the Ministry for Housing, Communities and Local Government. The transfer allows the BSR to enter into contracts, employing staff and be legally responsible in its own name. In the long term it is hoped this transfer will strengthen accountability and eventually establish a single construction regulator.

Elephant traps – common contractual traps for design professionals and contractors

Speakers: Scott McKinnell and Rachael Adekunle

Contract clauses that require closer scrutiny to prevent both contractors and design consultants from taking on onerous risks include:

Building Safety Act obligations: The employer is responsible for its own obligations under the Act. The contractor should not be liable for the employer’s failure to achieve its obligations, even if it agrees to assist the employer in fulfilling its obligations [AD1] .
Fitness for purpose: The market standard insurable for design liability is limited to the reasonable skill and care to be expected of a properly qualified, experienced and competent member of its profession experienced in carrying out services of a similar scope, size, nature, timescales and complexity to the project. Design liability wording exceeding this can confer implied fitness for purpose obligations.
Copyright licence: The contractor can only give a licence within the perimeters of the licence it has in its possession. This rarely includes a perpetual or exclusive licence. Therefore, licences that include this wording should be avoided.
Extension of time (EOT): The contractor should be entitled to an EOT for any delay to key dates or completion caused by events for which the contractor is not solely and directly liable.
Absolute obligations: Strict obligations are unlikely to be insured, exposing the consultant/contractor to uninsured losses, unless they are statutory obligations that relate to the consultant’s discipline.
Unlimited and undefined Collateral warranties: If there is no cap on the number of collateral warranties the client can request, this widens the consultant’s scope of liability. The warranty should also be in a particular form agreed in advance.
Fees: The consultant should be entitled to extra monies for additional services that arise due to matters out of its control and matters that give rise to loss and expense.

Impacts of the Economic Crime and Corporate Transparency Act 2023

Speaker: Matthew Poli

Under the Economic Crime and Corporate Transparency Act, and as of 18 November 2025:

Mandatory identity verification is required for directors, persons with significant control (PSCs) and anyone filing information at Companies House on behalf of the company.
Existing directors and PSCs must verify their identity by the date of their company’s first confirmation statement filed after 18 November 2025.
The company must register an email address with Companies House and keep it updated.

ECCTA also brings in a new corporate offence – the failure to prevent fraud for large organisations meeting at least two of three criteria: (i) 250 employees, (ii) £36 million turnover, or (iii) £18 million in total assets.

To manage these risks, Boards should:

Review director and PSC information to ensure its correct and up-to-date
Prepare for identity verification requirements now
Audit Companies House filings for accuracy
Review group and ownership structures
Assess fraud risk and prevention controls

Continued supply obligations under the Insolvency Act 1986 – practical consequences for construction companies

Speaker: Darren Bradshaw

Section 233B of the Insolvency Act 1986 may be used (a) to render ineffective termination clauses on an Employer’s insolvency (b) prevent termination due to a pre-insolvency breach and (c) prevent creditors making payment a condition of continued supply in an insolvency scenario. A supplier should therefore:

Consider the definition of “insolvency” in contracts
Review payment periods to reduce risk
Reduce contractual obligations
Review security provisions/credit insurance
Conduct closer monitoring of solvency and breaches
Check Retention of Title provisions

Adjudication: the good, the bad and the ugly

Speakers: Sarah Mather, Lee Cooper and Christopher Butler

The good

It is a cheaper and faster dispute resolution process
Confidential (to a degree)
Best forum for discrete issues and can result in a wider settlement
No counterclaims
Difficult for defendants due to time constraints, which can be used tactically
Quality of adjudicator’s is generally good, especially when they can be agreed between the parties.
The parties respect the process and do pay out

The bad

It is used less for cashflow issues (i.e. its original purpose) and increasingly more for the resolution of complex issues, including professional negligence claims.
Legal costs can ‘rack up’ quickly and they will not be recoverable inter partes.
It is an extremely fast paced process, which means there can be significant time pressures on clients and witnesses.
Adjudication can sometimes feel like ‘rough justice’.

Prepare, prepare, prepare

Negotiate a reasonable timeframe with your opponent for all steps as early as possible upon receiving the Notice of Adjudication
Seek to agree an adjudicator with your opponent to minimise any jurisdiction issues
Request disclosure, site visits and hearings for the adjudicator to ask questions, particularly of experts to help narrow the issues in dispute. These steps can be used to apply pressure – especially when other lawyers offer fixed fees
Reply promptly to emails to any adjudicator in case he / she gives a direction before you have your say.

Avoiding the fall: managing CDM duties, work at height risks and contractual responsibilities

Speaker: Joe McManus

Key basis for claims against the company

The construction parties most likely to face a personal injury claim are the client, contractor or principal contractor, depending on the extent of their duties under the Construction (Design and Management) Regulations 2015.
Claimants will typically rely on a breach of regulations (eg Work at height, Management of Health & Safety at work, Provisions of use of work equipment) as evidence of negligence.
Consideration of apportionment of liability or contributory negligence should take into account the statutory duties of the parties.

Practical considerations

Check that the policy responds and whether the insured should be notifying the loss under any other policy – project policy?
Consider the extent of control exerted by the insured over his work – this is likely to be relevant to policy response
If the claimant was essentially a “de facto employee, the company are likely to owe the same duty as that owed to its contractual employees.
Consider seeking an indemnity/contribution from the relevant party.
For low value claims, be cautious about admitting liability purely for commercial reasons as these may later “escalate”.

Vicarious Liability – a settled subject?

Speaker: Joe Lewin

What can an employer be liable for?

Recent case law suggest that vicarious liability is not simply settled law. The court is incrementally tightening its control on what conduct it is willing to hold an employer for and we may see further controls placed by the court in what it will allow to satisfy the legal test for vicarious liability.
Particularly in relation to the second stage of the legal test for vicarious liability - namely demonstrating “sufficient closeness” between the wrongdoing and the actions authorised within the wrongdoers employment – we may well see greater attention paid to this by parties and the Court where vicarious liability arises as an issue.
The small but growing caselaw in this area makes clear that great attention should be paid to understanding both the contractual and practical roles and responsibilities of “employees” and how this may affect an employers liability in the event of an injury suit.

New rules, real risks: the latest in health and safety law

Speakers: Kadie Cooper and Marta Tomlinson

Latest update in the context of the construction sector

Of all industries, the construction sector has the highest rate of work-related musculoskeletal disorders (2023/24 -2024/25 figures).
124 fatal accidents in the workplace in 2025, 35 of which were in construction with falls from height being the most common cause.
The government has published their second and third progress reports on implementation of the Grenfell Tower Phase 2 Report (the Phase 2 Report) recommendations and there will be major reform impacting the sector in the next few years. Of these, the two key impacts are
- The appointment of a single construction regulator
- Regulation of fire engineers
Construction parties will need to ensure that their compliance strategies and policies include measures to manage the risks of the above changes and all changes recommended in the Phase 2 Report.

A view from In-house

Caitlin Gallagher interviews Rob Browning, Head of Legal at Gardiner & Theobald

Q: In terms of risk management, what do you look for from your brokers and insurers?

For claims management, we are looking for speed and certainty, namely quick and clear advice to help minimise our exposure so that we may advise the business as to the legal strategy as soon as possible.
For policy management, we would like certainty and no ambiguous policy wordings so that we know where we stand with our policy cover when we are negotiating contracts.
Generally, knowing your client is a business priority. We expect you to understand our business and help us operate in a commercially effective way.
"Commerciality is gold"

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