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Published: 23/06/2026
Keir Starmer’s resignation sets in motion a Labour leadership contest that will formally open on 9 July, the second anniversary of the opening of this Parliament. The timing underlines the scale of what has changed in two years, and the uncertainty surrounding what comes next.
Starmer will remain as Prime Minister until a successor is chosen, with Labour committed to concluding the process before Parliament returns in September. Andy Burnham has confirmed he will stand, with Wes Streeting moving quickly to back his bid. But whoever emerges, the construction sector faces a summer of questions it cannot yet answer, and an economic inheritance far more complicated than the policy agenda alone suggests.
For an industry that depends on long-term investment decisions and confidence in future workloads, uncertainty can become a problem in its own right. Even where policy remains unchanged, delayed decisions can slow activity across the development pipeline.
What the new leader inherits
The government’s flagship housing commitment, 1.5 million net additional homes this Parliament, was always overly ambitious to say the least. The latest data(1) makes it look harder still. Starts in England totalled just 112,880 in the 2024/25 financial year, the weakest in recent years and well below the 175,000 or more recorded in 2021/22 and 2022/23. Although 2025/26 has seen a modest recovery to around 130,000, two years of suppressed starts mean completions are likely to fall further before they recover. The next Prime Minister will inherit a housing programme that is well behind where the government would have wanted it to be by now, whatever happens to planning policy.
The private sector has driven most of the contraction. Private enterprise completions fell from 139,540 in 2022/23 to 104,400 in 2025/26. Housing association completions have held up rather better and grown slightly, one of the few positive signals in the data.
The economic backdrop
The new leader will take office at a moment of considerable uncertainty. A 60-day ceasefire between the US and Iran, agreed on 15 June, offered the prospect of gradually easing oil and transport costs, both directly relevant to construction, where diesel prices feed through into operational costs across the supply chain. That prospect remains fragile. Peace talks in Switzerland are producing contradictory signals. While US Vice-President Vance has described ‘great progress’, President Trump has simultaneously threatened further strikes on Iran and Israeli military activity in Lebanon continues.
Even under a sustained ceasefire, the inflationary after-effects are still building. Producer input prices rose 8.7% year on year to May 2026, up from 7.9% in April. Producer output prices rose 4.0% over the same period, slightly down from 4.1% in April but remaining elevated. The gap between the two indicates that higher input costs are currently being absorbed by producers amid weak demand, a position that is unlikely to hold once activity recovers, at which point those costs are likely to pass through to construction supply chains and consumer prices.
The Bank of England held rates at its most recent meeting, and with input price inflation elevated and GDP contracting by 0.1% in April, early rate cuts look unlikely. The sector had anticipated rate relief as a key driver of recovering mortgage demand and development viability. That may take longer to materialise than the industry had hoped.
What happens to the policy agenda?
The 2025 spending review set capital budgets for three years, providing some structural stability for the infrastructure pipeline. Commitments already in motion, including the Heathrow expansion consultation launched just days before Starmer’s resignation, are unlikely to be immediately reversed. But a new Prime Minister and a new Chancellor will not feel bound by their predecessors’ priorities. Even within existing spending budgets, reprioritisation is possible, and the sector will not know where it stands until the new team declares its intentions.
The challenge for construction is that uncertainty itself can have economic consequences. Major projects depend on long-term investment decisions, funding commitments and confidence in future market conditions. During periods of political transition, organisations often delay decisions while they wait for greater clarity. Investment approvals take longer, viability assessments are revisited and procurement timetables slip. The result is that activity can slow even before any new government announces a change in policy.
Heathrow is worth watching specifically as it has historically proved vulnerable to changes in political leadership, and a contest featuring candidates with differing views on aviation expansion could reopen a debate that appeared, briefly, to have been settled.
On housing, the central question is whether a new leader adopts the 1.5 million target with the same conviction, or quietly recalibrates in the face of delivery challenges. Burnham, shaped by his time as Mayor of Greater Manchester, may bring a stronger devolutionist instinct to housing and planning, potentially shifting emphasis towards city-regional delivery models. Other candidates may take different approaches.
Two jobs, not one
The sector will be watching two appointments in September. The identity of the next Chancellor matters as much as the next Prime Minister for construction. Capital budgets, Homes England funding, infrastructure investment and the fiscal framework within which development viability is assessed are all Treasury decisions. A change at Number 11 is potentially as significant as a change at Number 10.
What should the sector do in the meantime?
For quantity surveyors, project teams and businesses across the supply chain, the practical answer is to continue planning against current policy commitments while building in contingency for potential change. The planning reforms already enacted are unlikely to be reversed. The affordable housing funding already committed provides some pipeline certainty.
But on the bigger questions, including the trajectory of interest rates, the full effect of the Iran conflict on costs, and the priorities of the next government, answers may not come for another couple of months. If Burnham is the only candidate to come forward, the contest could be resolved quickly and a new Prime Minister in post well ahead of September, though he has also not ruled out calling a general election, which would introduce a different and potentially longer period of uncertainty altogether. For a sector already contending with viability pressures and weaker housing delivery, uncertainty can have a paralysing effect. It tends to delay investment decisions, slow procurement activity and push project starts further into the future, with the consequential uplift in costs.
The ambition to deliver homes, upgrade infrastructure and decarbonise the built environment won’t disappear with a change of leadership. Whether the next Prime Minister and Chancellor will have both the political will and the economic conditions to convert that ambition into activity on site is the question the sector will spend the summer trying to answer. Until then, the greater risk may not be what the next government does, but how much activity is delayed while the industry waits to find out.
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(1) GOV.UK – Statistical data set Live tables on housing supply: indicators of new supply – here
