King’s Speech offers encouraging signs for construction

Plans to nationalise the steel industry, accelerate road building and tackle late payments to SMEs were among the measures in the King’s Speech with implications for the construction sector.

In his address to the House of Lords, the King reiterated the government’s intention to safeguard domestic steel production, following an announcement made earlier in the week by the Prime Minister.

The move would see British Steel brought into full public ownership after the government took control of the company’s Scunthorpe steelworks last year.

Questions have since been raised about the potential cost of nationalising the firm, with the Department for Business and Trade reporting expenditure of £377 million between April 2025 and January 2026 to keep the Scunthorpe site operational.

BCIS chief economist Dr David Crosthwaite said nationalising British Steel could help support the UK’s long-term steelmaking capacity, but warned there may also be implications for construction costs and project margins.

‘During a period of weak demand and muted investment appetite, any increase in steel prices caused by protectionist measures or supply constraints could place additional financial pressure on firms across the construction supply chain,’ he said.

Several transport-related bills announced in the King’s Speech are intended to support infrastructure delivery.

The proposed Highways (Financing) Bill would extend funding models already used in the nuclear and water sectors to highways construction.

This includes the Regulated Asset Base model, which has been used on Thames Tideway and is expected to be used on Sizewell C, as part of plans to attract private finance for the Lower Thames Crossing.

The Northern Powerhouse Rail Bill is also expected to set out proposals for a new route between Manchester and Millington. The bill revises elements of the previous High Speed Rail (Crewe-Manchester) Bill, which originally authorised construction of that section of HS2.

The King’s Speech also included plans to address late payments across UK supply chains.

The proposed Small Business Protections (Late Payments) Bill is expected to give the Small Business Commissioner powers to investigate payment practices, adjudicate disputes and issue fines for persistent offenders.

Dr Crosthwaite said the measures could support financial resilience across supply chains, while noting that payment practices are only one factor affecting insolvency risk in construction.

‘The government’s proposed reforms represent a positive step towards improving payment discipline,’ he said.

‘However, insolvency risk in construction is typically driven by a combination of factors. Alongside cashflow pressures, firms continue to operate with tight margins, cost volatility and exposure to project-specific risks, as well as higher employment and business costs.’

Dr Crosthwaite added that measures linked to domestic energy generation and infrastructure investment could support the government’s wider 10-year Infrastructure Strategy.

‘Several of the measures outlined in the King’s Speech have the potential to support long-term construction activity, particularly those linked to infrastructure investment, transport connectivity and domestic energy generation,’ he said.

‘The key issue will be how quickly these policies translate into deliverable projects and sustained market confidence. While the commitment to major infrastructure and payment reform is encouraging, the sector continues to face significant challenges from cost volatility, low demand and constrained margins.

‘A stable pipeline of investment, combined with improved payment practices, will be important for improving resilience and supporting growth across construction.’

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