Weekly planning news

Sharp drop in construction activity threatens local housing targets

July 2025 saw the steepest fall in UK construction activity in five years, according to the latest S&P Global UK Construction Purchasing Managers’ Index (PMI).¹ The headline index plunged to 44.3 from 48.8 in June, signalling a broad contraction across civil engineering, residential building, and commercial construction.

Civil engineering suffered the biggest blow, while residential construction continues to slow sharply as housebuilding stalls. Commercial projects have been somewhat more resilient but still face decline, with an increasing focus on cost certainty and value in approvals.

This marks the seventh straight month of shrinking new business for the sector. Contractors cite a combination of fewer tender opportunities, site delays, low client confidence, and rising subcontractor costs as key challenges. Despite a slight lift in optimism since June, the overall outlook remains cautious. Many firms are cutting staff and scaling back on materials purchases in preparation for ongoing difficulties.

For councils tasked with meeting government housing targets - including the ambitious goal of 1.5 million new homes by the end of this parliamentary term - these trends pose a serious challenge. Although planning reforms and £39 billion of social housing funding are underway, the sector continues to wrestle with labour shortages, rising costs, and economic uncertainty.

Some analysts have noted early signs of material price stabilisation and are hopeful that lower interest rates and planning reforms may provide some relief. However, geopolitical and financial uncertainty continues to weigh heavily on industry confidence.

Interestingly, our recent Planning Application Index² reported a significant increase in planning applications submitted in Q2 2025 compared to the same period last year. While this suggests strong intent from developers and applicants, experts were quick to warn that this doesn’t necessarily translate into faster delivery, given the broader pressures slowing construction on the ground.

Housing consents plunge 50% across councils, despite application rise

New data from the BDS Housebuilders Quarterly Report³ has revealed a stark 50% fall in housing consents between Q4 2024 and Q2 2025, underscoring the mounting pressures on housing delivery. This sharp decline is a clear sign that, despite policy efforts and funding commitments, planning approvals continue to face delays and disruption.

The report tracks housing activity across large-scale private housebuilders, public sector schemes, and investment-led developments. It highlights a 15% quarter-on-quarter fall in total consents for Q2 2025 alone. Notably, while overall approvals dropped, the mix of housing types shifted - with traditional houses making up 70% of all recorded consents, up from 65% in the previous quarter. In real terms, this accounted for approximately 1,700 housing consents, although their market share slipped from 6% in Q1 to 5% in Q2, reflecting the broader reduction in total volumes.

Regionally, the South East remains the most active area, recording over 8,000 private housing consents and more than 350 for public housing. Meanwhile, the East of England also saw notable activity in the ‘other’ category - including investment-backed or non-traditional builds - with over 1,500 consents granted.

The rise in planning applications highlighted in our recent Planning Application Index reflects strong intent from developers and applicants eager to advance new projects. However, industry experts caution that this surge may not translate into immediate delivery on the ground.

A range of external pressures continues to act as a brake on delivery progress - including rising material and labour costs, workforce shortages, and tightening regulations.

Plans submitted for UK’s largest battery storage facility – find out where

Plans have been submitted for what would become the UK's largest battery energy storage facility, proposed by renewable energy company Grenergy. The 450MW system is earmarked for development at the Neston Park Estate near Corsham, Wiltshire, and is designed to store excess energy from solar and wind power to support the national grid. If approved, the facility could supply enough electricity to power one million homes for an hour - five times the number of homes in Wiltshire.

The proposed site would house 108 shipping container-sized battery units, an electricity substation, and supporting infrastructure including fencing, lighting, and CCTV towers. Grenergy hopes to begin construction in 2026 and complete the project by the end of 2027. The development would surpass the current largest facility, Lakeside Energy Park in North Yorkshire, which has a 100MW capacity.

The council reforms that could supercharge housing delivery - are your councils ready?

The Local Government Chronicle⁴ recently highlighted a new report from the Good Growth Foundation⁵ that makes a compelling case for reforming planning powers to speed up housing delivery. At the heart of the report is a simple but powerful idea: empowering local council officers to approve planning applications directly, rather than relying on lengthy external processes, could unlock significant new housing supply.

Among the key recommendations, the report suggests:

• Giving council officers greater authority to approve applications without needing to escalate to higher tiers of approval.
• Removing the existing cap that limits housing consents to 500 homes under Nationally Significant Infrastructure Projects (NSIPs).

The potential impact of these reforms is substantial. The Good Growth Foundation estimates that such changes could result in an additional 229,000 to 280,000 new homes being built over the next four years alone. Beyond just housing numbers, this boost could also create £4.7 to £5.7 billion in fiscal headroom by 2029-30—funds that could be reinvested in vital community infrastructure and public services.

With housing delivery a critical issue for local authorities and communities alike, these proposed reforms offer a clear pathway to cut red tape, accelerate approvals, and support sustainable growth.

1. https://www.pmi.spglobal.com/Public/Home/PressRelease/59d4dbfe4d2048148bb40ec8e09e228a#:~:text=Posting%2044.3%20in%20July%2C%20down,start%20of%20the%20third%20quarter.
2. https://www.terraquest.co.uk/news-and-insights/q2-planning-application-index-2025
3. https://www.pbctoday.co.uk/news/planning-construction-news/housebuilders-quarterly-report-q2-2025-shows-further-decline-planning-consents/153793/#:~:text=The%20BDS%20Housebuilders%20Quarterly%20Report,%2C%20national%2C%20and%20county%20levels.
4. https://www.localgov.co.uk/Planning-reform-proposals-could-deliver-thousands-of-new-homes/62794
5. https://www.goodgrowthfoundation.co.uk/rapid-reforms