Health Construction Projects Rebound – But Planning Gap Signals Future Uncertainty

After a subdued period, health construction projects have rebounded strongly in early 2025.

Project starts and contract awards both saw meaningful increases over the previous quarter, providing a much-needed boost to the sector. However, a steep decline in detailed planning approvals continues to raise concerns over the future development pipeline.

While short-term indicators show encouraging momentum, the longer-term outlook remains finely balanced, particularly with NHS development plans still pending ahead of the government’s 10-Year Plan for the Health Service.

Project Starts Recover Sharply

During the three months to April, health sector project starts rose by 87% compared to the previous quarter and now stand 12% higher than the same period last year. This surge marks a clear shift in near-term delivery activity and offers reassurance for construction teams mobilising across the UK.

Contract Awards Strengthen

Main contract awards increased by 7% compared to the preceding three months, signalling that more schemes are moving into the build phase. This bodes well for delivery teams in the short term and suggests an uptick in procurement activity by public health bodies.

However, the underlying trend remains mixed. While activity on site is growing, the development pipeline continues to weaken — a challenge that could impact future workloads.

Planning Approvals Continue to Decline

Detailed planning approvals fell by 9% quarter-on-quarter, and by a much sharper 60% compared to the same period last year. This prolonged decline reflects a degree of caution across NHS Trusts and private healthcare providers, with many projects awaiting the strategic direction expected from the government’s forthcoming 10-Year Plan.

This contraction in approvals creates a potential gap in the medium-term pipeline for health construction projects, particularly if funding delays or shifting political priorities persist.

Sector Breakdown: Hospitals Lead, Primary Care Grows

Three out of four segments within the health sector posted annual growth:

• Hospitals: The largest category, accounting for 47% of project starts, up 11% year-on-year to £689 million.
• Dental, Health & Veterinary Centres/Surgeries: Rose by 214% to £318 million.
• Nursing Homes & Hospices: Fell by 22%, totalling £153 million.

Types of Health Projects Started Three Months to April 2025

Source: Glenigan

Northern Ireland Leads

Northern Ireland was the most active region for health project starts, totalling £501 million, or 34% of the national value — a rise of 980% on the previous year. The standout contributor was the start of the new £389 million Children’s Hospital on the Royal Hospitals site, in Belfast (Pictured. Glenigan ID: 05489394).

On the approvals side:

• The South West led the country, accounting for 25% of all planning approvals, up 38% year-on-year.
• London experienced the sharpest growth, rising 700% to £49 million, representing 9% of the total value.

Regional Health Sector Planning Approvals May 2024 to April 2025

Source: Glenigan

Sector Outlook: Activity Rises Amid Structural Uncertainty

Looking ahead, the outlook for health construction projects is cautiously optimistic. Our last forecast, published in November 2024, projects a 1% increase in sector output in 2025, though this modest growth is contingent on the government’s forthcoming health strategy.

The decline in approvals since the general election reflects an atmosphere of political uncertainty and delayed decision-making across NHS Trusts. Until the long-awaited 10-Year Health Plan is unveiled this summer, many major developments remain in limbo.

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