King’s Speech 2026: key implications for the construction sector

The government’s legislative programme for the new parliamentary session was unveiled on 13 May 2026, when King Charles III addressed both Houses of Parliament at the State Opening.

With 37 bills announced across areas spanning national security, housing, energy and economic reform, the King’s Speech contained a number of measures with far-reaching consequences for the construction industry.

Below, we set out the developments most relevant to our clients operating in the sector and explain what steps ought to be taken now.

Overhauling payment practices in the supply chain

The Small Business Protections (Late Payments) Bill, formally introduced to parliament on 19 May 2026 as the Commercial Payments Bill [HL], is set to deliver the most significant reform to payment practices in the construction industry in over 25 years.

The headline measure for the sector is a proposed outright ban on the deduction and withholding of retention payments under construction contracts. Retentions have long been a contentious feature of the industry, tying up working capital and exposing subcontractors to the risk of losing retained sums entirely when a party further up the chain becomes insolvent.

Alongside the retention ban, the Bill will impose a 60-day cap on payment terms for larger businesses paying smaller suppliers and will make statutory interest at 8% above the Bank of England base rate a mandatory, non-excludable term in all commercial contracts. The Small Business Commissioner will also gain new enforcement powers, including the ability to investigate payment practices, adjudicate disputes and levy fines against persistent late payers.

The Bill will also introduce restrictions on the timescale for serving pay less notices under construction contracts, requiring that such notices are served no later than seven days before the final date for payment.

The government has indicated that further consultation on implementation will take place and the payment term restrictions aren’t expected to commence before 2027. Nevertheless, construction businesses shouldn’t wait. Now is the time to audit existing contracts, identify clauses that rely on retentions as a risk management tool and begin considering alternatives.

The availability and cost of substitutes such as performance bonds, default retention bonds and parent company guarantees will be a key concern. The government has acknowledged the need to develop a larger and more sophisticated surety market to support the sector if retentions are no longer available as a means of mitigating risk. The interaction between these new measures and the existing payment framework under the Housing Grants, Construction and Regeneration Act 1996 will also require careful analysis as the Bill progresses through parliament.

Accelerating building safety remediation

The proposed Remediation Bill represents a decisive shift from policy guidance to statutory enforcement in the ongoing effort to address unsafe cladding. The Bill will impose a legal duty on responsible persons, principally freeholders, to identify, assess and remediate buildings with defective cladding, backed by the threat of criminal prosecution, unlimited fines and imprisonment for non-compliance. Buildings over 18 metres must be remediated by the end of 2029, with all residential buildings above 11 metres to follow by 2031.

A particularly significant provision is the removal of technical legal barriers that have historically prevented developers and contractors from pursuing construction product manufacturers for their share of remediation costs. This opens a new front of potential claims and will likely increase dispute activity in the short term.

The Bill will also mandate a nationally consistent approach to external wall assessments and introduce a register of medium-rise buildings between 11 and 18 metres that require remediation. Where a responsible person fails to act, a backstop mechanism will allow a third party, such as Homes England, to step in and carry out the works directly.

Building owners, developers and product manufacturers should review their exposure under the existing Building Safety Act 2022 regime alongside these incoming obligations. The capacity challenges facing the sector, including skills shortages in façade remediation and stretched supply chains, remain significant practical considerations.

A substantial infrastructure pipeline

The King’s Speech confirmed major commitments to transport and energy infrastructure that will sustain demand across the construction sector. The Northern Powerhouse Rail Bill provides statutory backing for a new rail route from Manchester to Millington via Manchester Airport, forming part of a £45bn investment programme to transform intercity rail across the North of England.

The Highways (Financing) Bill introduces a Regulated Asset Base funding model, already used on the Thames Tideway Tunnel and Sizewell C, to attract private capital for major road schemes, with the Lower Thames Crossing expected to be the first project delivered under this framework.

On the energy side, the Energy Independence Bill provides for accelerated deployment of renewable power and new energy efficiency requirements for rented homes, the latter of which is expected to generate a substantial volume of retrofit work. The Nuclear Regulation Bill will streamline regulatory approvals for new nuclear projects, further broadening the construction opportunity.

What this means for our clients

The breadth of the legislative programme demands early and proactive engagement. We would encourage clients to review their standard form contracts and payment processes now, well ahead of the retention ban and payment reforms taking effect.

Those with interests in residential buildings above 11 metres should assess their obligations under the incoming Remediation Bill and consider how these interact with the existing building safety regime.

Finally, the infrastructure and energy bills present significant tendering and investment opportunities that merit close monitoring as they progress through parliament.

Our construction and real estate team is ready to assist you in navigating these changes.