Boost ahead for health sector construction

Construction activity in the health sector remains muted, but there are signs of an imminent recovery earlier in the pipeline.

According to Glenigan project intelligence, the value of health sector construction starts at an underlying level (below £100 million) fell by 54% in the first quarter of this year, while detailed planning approvals rose by 8%.

Work with planning approval and coming up ranges from a £32 million new building at the Guy’s and St Thomas’ Orthopaedic Centre of Excellence in London due to start in May (Project ID: 20447816) to the £100 million Whitechapel Life Sciences Cluster at Tower Hamlets in East London, where a start is due in September (Pictured, Project ID: 15411493).

Regional spread

The government made additional funds available from April 2026 and separated capital spending from current spending to kick-start health projects. NHS trusts appear to be getting ready to get schemes onto site.

Glenigan data points to strong growth in planning approvals in six regions in the latest quarter. The largest was in the East Midlands with a 270% increase in the first three months of 2026, while approvals rose by 204% in the South East and 178% in the North West.

In the East Midlands, there are 91 health schemes at an underlying level that are due to start construction in the next 12 months. These range from a £12 million extension to Leicester Royal Infirmary (Project ID: 25395908) to a £60 million minor works framework for United Lincolnshire Hospitals NHS Trust (Project ID: 25252953)

In the South East, there are 202 approved health schemes due to start in the forthcoming year, including a £50 million building at Wycombe General Hospital (Project ID: 26004954).

There are 128 approved health projects in the North West expected to begin construction in the next 12 months, such as a £13.8 million inpatient ward at Stepping Hill Hospital in Stockport (Project ID: 23327864).

Major works

Major works are also coming on stream with the first phase of the government’s ambitious hospital building programme due to begin this year (Project ID: 19342017). Ten contractors have been appointed to the £37 billion Hospital 2.0 Alliance Framework (Project ID: 25071359), including Laing O’Rourke, which has won the most health work over the last 12 months.

Top 10 health contractors – April 2025 to March 2026

The Hospital 2.0 Alliance Framework will run from this year until 2038 and be used for the £8.9 billion first phase, comprising 16 hospital schemes.

Appointment of contractors from the framework is imminent on schemes from a £1.5 billion redevelopment of Leighton Hospital in Cheshire (Project ID: 23175377) to a £950 million new, purpose-built acute hospital adjacent to the existing James Paget University Hospital in Norfolk (Project ID: 20397019).

Designs of the hospitals, which are being standardised to single-bed wards, are currently being finalised, and Members of Parliament have expressed concern that any delays or cost overruns due to the new designs may delay the second wave due to funding.

Seven hospitals in the later phases of the programme have been affected by problems with Reinforced Autoclaved Aerated Concrete (RAAC) and will remain in use until at least 2032-33. This will create opportunities as £1 billion has been set aside to safeguard those buildings.

Significant prospects

While some challenges may appear further out, in the short term, the health sector has significant short-term prospects.