Planning reforms: no room at the inn for cost complacency

A raft of planning reforms were cemented ahead of the new year, including formal enactment of the Planning and Infrastructure Act 2025 and proposed changes to the National Planning Policy Framework.

BCIS chief economist Dr David Crosthwaite explains why planning progress is welcome but does not leave room for cost complacency.

Planning reforms: no room at the inn for cost complacency

Supply-side reforms like the newly ratified Planning and Infrastructure Act (PIA) should, in theory, bring more projects to market and accelerate activity in construction and the wider economy.

It’s a future many have been waiting on and one where robust, consistent cost planning plays an increasingly integral role.

Hard evidence of the government’s planning upheaval landed just before the new year in the form of a royally approved PIA and new consultation on an adapted National Planning Policy Framework (NPPF).

The PIA brings both immediate and longer-term updates for construction. Chiefly, this includes a faster planning process via refined, upskilled planning committees, allowing councils to set their own fees when making housing and infrastructure decisions, improving local government land acquisition, and cutting time spent on non-viable major infrastructure schemes through a cap on judicial reviews⁽¹⁾.

‘First come, first served’ on grid connections will shift to ‘first ready, first connected’ to prioritise clean energy projects.

Non-water sector companies can now also build reservoirs and the rollout of Environmental Delivery Plans (EDPs) under the Nature Restoration Fund will give developers the option of paying toward wider environmental improvements where work disrupts local ecosystems.

The potential for a revisited NPPF is equally encouraging.

Officials have until March 2026 to consult on default approval for building suitable homes around railway stations, increasing residential blocks in urban areas, and making it easier for developers to build higher density housing on smaller sites and underused land⁽²⁾.

The shiniest jewels in the draft NPPF reforms are those proposing direct cost cuts for SME housebuilders.

A possible exemption from the Building Safety Levy – which would charge most residential developers for building control applications made from October 2026 – would ease the cost burdens mounting on housebuilder shoulders.

It’s part of the wider introduction of a new ‘medium site’ category developed for schemes comprising between 10 and 49 homes. If approved, the measure would see smaller housebuilders facing rules and costs more proportionate to their size and hopefully make more housing schemes financially viable.

On paper, the latest batch of planning reforms certainly seems to be ticking the right boxes in terms of getting projects off the drawing board.

A slicker planning system is just one missing puzzle piece though, albeit a very important one.

Sure, it would likely see a reduction in costs arising from decision-making delays. But there’s still a risk that costly holdups will persist.

Weak points in construction’s labour supply are a major concern.

The consensus is construction doesn’t have enough workers to complete the scale of work required to revive our economy. Insight from BCIS panellists has highlighted more specific pinch points. Examples include the lack of green- and white-collar workers generally, and the lack of client-contractor negotiation skills in infrastructure.

In the latest meeting of the BCIS All-in Tender Price Index Panel, panellists observed the compounding pressure that rising demand for M&E-intensive sectors is placing on existing M&E skills shortages.

They gave the data centre sector as an example – an area the government is actively trying to stoke growth in. As of November 2025, there are plans to invest in extra AI data centre planning capacity, unblock decisions for AI growth zones and update national planning policy to strengthen support for AI data centres⁽³⁾.

In an ideal world, construction’s skills crisis would be patched up before regulatory chains are loosened. Boosting the pipeline of new work is of little use if the right people and resources are not in place to deliver the work and will likely transfer the costs arising from planning approval delays to the wait on labour as it becomes more thinly spread.

The key message here is that planning reforms, while welcome and needed, are not the only blockers causing construction to stagnate.

If nothing else, a better planning system in isolation won’t change the trajectory of rising construction costs – BCIS estimates a 15% increase in building costs over the next five years.

Scrupulous cost planning and benchmarking with up-to-date, real-world cost data, are therefore as essential as ever.

It’s important cost consultants get a reliable reading of the total project cost as early as possible and build contingency into the budget as a buffer against the potential costs of greater skills bottlenecks. Tracking costs and using relevant benchmarks throughout the project will improve cost visibility and risk mitigation too.

These actions are already common practice, but planning-related new work growth would make them more pertinent.

Swifter decision-making at the planning stage will make early supply chain engagement increasingly key to getting projects on site sooner too.

The implication for the industry is clear. Planning reforms may smooth the front end of the development process, but they could introduce added resource strain further down the line. Without sufficient skilled labour, robust procurement strategies and realistic cost allowances, faster approvals risk intensifying competition for scarce resources and amplifying inflationary pressure rather than easing it.

The role of cost intelligence in distinguishing deliverable projects from aspirational ones has become more important as a result.

To keep up to date with the latest industry news and insights from BCIS, register for our newsletter here.

^{(1) GOV.UK – Landmark Planning and Infrastructure Bill becomes law – here}

^{(2) GOV.UK – Housing Sec pledges to ‘go further than ever before’ to hit 1.5 million homes – here}

^{(3) Ministry of Housing, Communities & Local Government – Proposed reforms to the National Planning Policy Framework and other changes to the planning system – here}