Key Takeaways from the King’s Speech 2026 for the Construction Industry, including planning reform, infrastructure investment, procurement, energy transition, and any other pertinent Bills or policy commitments. This article sets out the practical implications of the relevant legislation for construction businesses, developers, and supply chains.

On 13 May 2026, King Charles III delivered the State Opening of Parliament address, setting out 37 Bills announced across areas including national security, housing, energy, and economic reform. The speech contains several measures of direct and immediate relevance to the UK construction sector, including a proposed ban on retention payments.

The King’s Speech: Chapter 1

Key legislative announcements for construction

The Small Business Protections (Late Payments) Bill: A retention ban for construction

Perhaps the most transformative announcement for the construction supply chain is the Small Business Protections (Late Payments) Bill. This Bill introduces:

  • a mandatory 60-day maximum payment term for large firms paying smaller suppliers;
  • makes statutory interest at 8% above the Bank of England base rate non-negotiable in all commercial contracts; and
  • critically for the construction sector, proposes to ban the practice of deducting and withholding retention payments under the terms of construction contracts.

Retention is typically set at 3% to 5% of the contract sum withheld from each interim payment and can be a cash flow strain for subcontractors, who may lose retained sums through upstream insolvency or non-payment.

The Government consulted extensively on this measure between July and October 2025, receiving 867 responses, of which 238 came from the construction sector. A significant majority (87%) of respondents favoured reform with 53% indicating they could support either a ban or a protection mechanism. The Government has opted for an outright prohibition as a simpler legislative route.

Looking forward, the Government has confirmed it “will consult further with interested parties on the impact of this measure before taking a final decision on implementation” and will work with the Construction Leadership Council and construction clients to develop practical approaches to minimising defects, and with the financial services sector to develop the surety market. Consultation respondents mainly supported a 12 to 24-month transitional period for contractual adjustments, financial planning, stakeholder engagement, and the development of alternative assurance mechanisms, and the maximum payment term restrictions are not expected to commence before 2027.

For construction clients, the loss of retentions as a cash flow buffer will require fundamental changes to project financial modelling. Developers should expect to increase their requirement for performance bonds, parent company guarantees, and other forms of surety to replace the assurance that retentions currently provide.

For subcontractors and SMEs, the reforms should deliver a significant improvement in liquidity and working capital. With 38 businesses closing each day due to late payments across the UK economy, the legislation is designed to stop larger firms using their supply chains as “a source of free credit”.

Construction businesses at all tiers should begin reviewing their standard form contracts, payment processes, and risk management arrangements now, well in advance of the legislation taking effect. The interplay between the new measures and existing Construction Act payment mechanisms will also need careful attention as the Bill progresses through Parliament.

Building safety and remediation

A new Remediation Bill will accelerate the repair of high-risk buildings with unsafe cladding, nearly a decade after the Grenfell Tower tragedy. The Bill introduces a legal duty on responsible persons, such as freeholders, to identify, assess and remediate their buildings without delay, with sanctions including criminal prosecution for the most severe failures. High-rise residential buildings identified as needing external cladding remediation must have the work completed by the end of 2029, with all residential buildings taller than 11 metres to be completed by 2031. So far, only 35% of identified buildings have had cladding remediated since 2017, with regulators taking enforcement action at more than 800 buildings.

The Bill will also make construction product manufacturers pay towards remediation costs and allow developers and contractors who have already carried out remediation work to properly pursue those manufacturers, removing the technical legal barriers that have previously blocked such claims. A nationally consistent framework for how external wall assessments are carried out will be mandated, and a new register of all medium-rise buildings between 11 and 18 metres requiring remediation will be introduced. Where a responsible person fails to act, the Bill enables a third party (such as Homes England) to step in and carry out the remediation work itself.

Infrastructure and transport opportunities

Transport infrastructure construction opportunities featured prominently in the King’s Speech:

The Northern Powerhouse Rail Bill (a renamed version of the High Speed Rail (Crewe – Manchester) Bill) details a proposed rail route from Manchester to Millington via Manchester Airport, representing a significant pipeline for civil engineering and rail construction firms;

A Highways (Financing) Bill which will extend the regulated asset base model used for nuclear projects to new road schemes in England, potentially unlocking private capital for major road construction;

The Civil Aviation Bill which will create powers over airport take-off and landing slots, intended to support airport expansion and the construction activity that accompanies it.

Energy transition opportunities: The Energy Independence Bill legislates for reforms to speed up the construction of energy infrastructure and the deployment of renewable power. It will also introduce new energy efficiency requirements for rented homes, a measure likely to generate substantial retrofit work for the construction industry.

The separate Nuclear Regulation Bill intends to streamline the approvals process for new nuclear energy projects, with the Government seeking to encourage “a new era of British nuclear energy generation”.

The King’s Speech: Chapter 2

Modern methods of construction: The Regulating for Growth Bill will give regulators such as the Health and Safety Executive and the Environment Agency a statutory mandate to prioritise growth, and create “sandboxing powers” allowing businesses to test new products and technologies. For construction firms, this could reduce unnecessary risk aversion in regulatory decision-making and support investment in modern methods of construction.

The King’s Speech: Chapter 3

Practical implications for the construction industry: The King’s Speech 2026 presents a legislative programme of significant breadth and consequence for the UK construction industry. The proposed ban on retention payments and the 60-day payment cap will fundamentally reshape cash flow dynamics across the supply chain, demanding new approaches to contractual risk management and surety. Major infrastructure commitments in rail, highways, energy, and nuclear will sustain the project pipeline, whilst the Remediation Bill imposes pressing obligations and deadlines on building owners, developers, and product manufacturers alike. Construction businesses should act now by reviewing contracts, payment processes, and compliance frameworks to ensure they are prepared for the substantial regulatory changes ahead.

Source: https://www.hoganlovells.com/en/publications/the-kings-speech-2026-what-it-means-for-uk-construction.