Revived capital investment programmes in hospitals and infrastructure set to increase construction activity

The healthcare sector has been undergoing a transitional but improving period. Sector-specific forecasts highlight that the healthcare construction market is improving despite earlier delays caused by post-election policy reviews and NHS reprioritisation. Construction activity is down in 2025, but this is expected to reverse thanks to a more stable policy environment and long-term funding commitments.

The sector is projecting marginal growth in 2026, and accelerating in 2027, predominately due to the revived New Hospital Programme (NHP) and wider capital investment pipelines.

The NHS now also benefits from a multi-year capital settlement extending to 2029/30, providing substantial investment across spending reviews. This includes dedicated allocations for:

• estate safety and RAAC remediation

• diagnostics and elective recovery

• mental health and community services

• digital transformation.

In summary the sector is positioned for renewed and accelerating growth through 2026/27, supported by strong government capital commitments, multi-year funding certainty, major hospital programmes entering delivery phases, significant repair, maintenance and modernisation backlogs, and growing demand for new digital-ready, net zero-aligned healthcare infrastructure.

While operational challenges remain, the medium-term pipeline is robust, project confidence is improving, and the sector is likely to remain a central pillar of UK public sector construction growth.