Five themes that are shaping the future for infrastructure in the UK

By Chris Scudamore, UK Leader for Capital Projects & Infrastructure, PwC

Over the period since the new UK Government came into office in July 2024, infrastructure has been squarely in the political and media spotlight. And the early months of 2025 have seen interest and activity rise to a peak. Which makes it a good time to step back, assess the state of play, and draw out the themes shaping the future of our nation’s infrastructure.

So, what has stood out for me? Top of the list is the intense engagement by government with parties along the entire infrastructure supply chain, including investors. This exchange of ideas and perspectives has been hugely positive, and it’s been fascinating to be part of it. The overarching objective is clear: to unlock investment in UK infrastructure to drive economic growth – and no stone is being left unturned in pursuit of this goal.

An especially encouraging sign has been the flurry of activity already underway in year one of the new administration. The major initiatives range from the publication of the Planning & Infrastructure Bill, to housing policy announcements targeting 1.5 million new homes, to announcements on multiple specific projects like the third runway at Heathrow, the Oxford-Cambridge Arc, the planned Lower Thames Crossing, the expansion of Luton Airport, and more.

So far, so positive. But while the heightened engagement has boosted expectations across the infrastructure supply chain, significant risks remain. Foremost among these is the danger that the shifting and uncertain global economic and political landscape could constrain the Government’s ability to fund new projects. This is the delicate balancing act that HM Treasury needs to pull off as the 10-year Infrastructure Strategy is set, alongside the new Industrial Strategy and the Spending Review.

Mapping out the forces at play

This is the backdrop to the upsurge of interest and scrutiny around UK infrastructure in early 2025. And in my conversations and discussions during this time, I’ve seen five themes come to the fore. Together, these will determine the long-term future for our infrastructure and – by extension – for our nation. Here they are.

• Resetting of strategy and institutions: In committing to a pipeline of projects and revamping the institutions overseeing its delivery, the Government is looking to combine economic growth with social and net zero outcomes. The 10-Year Infrastructure Strategy will – for the first time – set out the Government’s intentions over a longer time horizon, thereby bringing greater certainty both to investors and the project delivery supply chain. A key step in early April was the establishment of the National Infrastructure and Service Transformation Authority (NISTA), charged with getting to grips with delays to infrastructure delivery and restoring the confidence of businesses to invest. NISTA will combine the strategy-setting remit from the National Infrastructure Commission (NIC) with the assurance capability from the Infrastructure and Projects Authority (IPA). But to fulfil its mandate successfully, it will need to work out how to catalyse a step-change in the delivery of the nation's infrastructure projects, through actions including intervening on critical cross-cutting issues.
• A focus on key sectors – decarbonisation, digital, and defence: While many types of infrastructure will play important roles, three are especially prominent – each involving potential trade-offs between different priorities that the Government will have to consider. First, decarbonisation and the energy transition towards net zero, which remains a top priority despite funding pressures and geopolitical shifts. The big question here is the extent to which the public are willing to foot the bill directly for energy transition- and decarbonisation-related costs: there’s an ongoing requirement to balance affordability, net zero ambitions, and the security/resilience of supply. Second, digital infrastructure in general and data centres in particular, which will be instrumental in catalysing and maintaining growth, but will require enormous amounts of power. Third, defence infrastructure, an overriding national priority that has risen rapidly up the agenda in light of developments both to the east and the west of the UK, but which is intensifying the squeeze on other government spending.
• Catalysing private capital: With public funding for infrastructure set to be constrained, the search is on for ways to bridge the gap. Vital factors in finding a solution include both the investment attractiveness of infrastructure inbound to the UK – which has historically been impacted by issues like uncoordinated delivery and regulatory/policy uncertainty – and the various public-private partnership (PPP) and  private finance models deployed. While the actions the Government is taking to set a long-term infrastructure strategy and remove obstacles to project delivery represent very much a step in the right direction for investor appetite, there’ll also be a need to consider fundamentals like tax and investment incentives. Additionally, many investors and institutions want to see that the existing portfolio of private finance contracts for the likes of hospitals and schools, many of which are now approaching their full term, are closed out in a fair and reasonable manner. This will have a significant impact on investors’ appetite to contribute finance to future government projects. And when it comes to which private finance models will be used for social infrastructure, there’s no new magic formula: it’s more a case of applying existing models in smarter ways. Models such as the MIM (Mutual Investment Model) deployed in Wales are good examples of this approach. Overall, if the appetite is there to deliver new infrastructure projects to drive growth, but government funding is restricted as anticipated, there will be a need for some form of ‘blended finance’ approach. There’s more to come on Public/Private Finance, as we will shortly be releasing some research on this topic.   
• Industry and delivery transformation: Even the best thought-out strategy will fail if the capabilities and resources to deliver it are lacking. So, alongside formulating the national industrial and infrastructure strategies, it’s vital to focus on building the capacity and skills needed to deliver the proposed projects on time, on budget and to the required standards. The Government is seeking to pump-prime this capacity, including by investing £600m in training up to 60,000 engineers and construction workers by 2029. An equally vital enabler for transforming delivery will be a sharp escalation in the industry’s adoption of technology and use of AI. Compared to others sectors, construction remains a laggard in terms of technology take-up – and raising its game in this area will be key to reinventing delivery to be more efficient, while also gaining greater assurance over delivery time and cost. Meanwhile, a further – overarching – requirement is the need to scale up delivery capabilities, with increased capital investment plans across energy transmission and distribution, as well as in the water sector following decades of under investment.
• Infrastructure resilience: For obvious reasons, the ability of the UK’s Critical National Infrastructure to ride out shocks has recently come under renewed scrutiny, with attention also focusing on the knock-on effects of resilience failures on the wider economy. The direct linkage between infrastructure resilience and growth was underlined in the Government’s cyber security and resilience policy statement in April 2025, setting the stage for new legislation. What’s key is ensuring that infrastructure is prepared for resilience threats, plans accordingly, and can respond when needed.

Factoring in the impacts of US tariff policies

In recent weeks, these five themes have been overlaid by a cross-cutting development: the imposition of trade tariff surcharges by the Trump administration in the US. While the situation has been changing rapidly, it’s one that cannot be ignored – and it’s already possible to identify some likely knock-on effects. An area that stands to experience particularly profound impacts is infrastructure supply chains, which became fragmented during Covid 19 and following Brexit. Now the tariff hikes proposed by the US, and possible countermeasures by other countries including the UK, could increase the price and reduce the availability of materials like steel, cement, fuel and chemicals, and of components such as parts and equipment. 

In light of these effects, continued reliance on complex, integrated, multi-country supply chains combined with just-in-time delivery to sites appears increasingly risky, meaning companies in all sectors may look to localise their supply chains. While the precise effects are as uncertain as the tariff measures themselves, what’s clear is that supply chain resilience cannot – and should not – be taken for granted, and that developers should seek to onshore their supply chains wherever possible, with a view to ensuring security of supply and predictable prices. They should also consider building up inventories to manage any availability problems. These actions come at a cost, but have the effect of reducing risk – thereby playing to two vital components in the three-part risk/price/quality dynamic. Ongoing volatility in macroeconomic variables such as inflation, borrowing rates and foreign currency exchange rates may also impact project costs.

Growth at the core

Whatever happens with US tariffs, I believe the five themes I’ve called out will remain central to the UK’s efforts to build and sustain an infrastructure base fit for the future. The common thread? Investing in infrastructure to enable growth. So far, the signs are good. Government has engaged. It has bold plans. And progress will benefit from stability in policy.

But it won’t be plain sailing. The tight economic outlook and international political challenges may hamper the Government’s ability to back UK infrastructure in monetary terms beyond the commitments already made. This makes the role of NISTA all the more important in overseeing progress, driving delivery and providing assurance.

The mission facing us all? To ensure that infrastructure investment does ultimately unlock growth for the UK, by transforming economic outcomes through world-class delivery. Whatever the headwinds, it’s a national challenge we can’t afford to shirk.

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Additional References:

https://www.pwc.co.uk/industries/framework-for-growth.html

https://www.pwc.co.uk/industries/energy-utilities-and-resources/insights/energy-survey.html