The year we’re meant to feel richer – but hiring tells another story

Keir Starmer’s new year message promised that 2026 is the year we’ll start to feel richer. He acknowledged our frustrations and expressed confidence that the country’s decline will be reversed. But before anyone gets too excited, he reminded us with his trademark pained expression that “renewal is not an overnight job”.

Optimism alone won’t fix the structural issues holding back growth and jobs. If you struggled to find inspiration or vision in the prime minister’s statements, you’re not alone.

Aecom’s Market Forecast highlights economic uncertainty and market shifts despite construction’s resilience, relative to other sectors over the past 12 months. Still, there are glimmers of hope: the Office for Budget Responsibility predicts 1.4% economic growth in 2026, and the Budget reaffirmed capital investment pledges – though the agonisingly long run-up to the chancellor’s fiscal event slowed momentum.

Less encouraging is the jobs market snapshot. Hiring activity fell sharply at the end of 2025, with December seeing the steepest drop in permanent hires since August. Redundancies and fewer opportunities are swelling candidate availability, according to KPMG and the Recruitment and Employment Confederation. Temporary roles are faring slightly better, as short-term contracts allow firms to take on less risk.

Even if the economy ticks up, employers remain uneasy about the Employment Rights Act

Employers cite rising costs and weak confidence as reasons for holding back on recruitment – or even cutting staff. Arup, for example, spent £20m on redundancies worldwide last year. Logistics, defence, and engineering are bucking the trend, with the Midlands emerging as a bright spot.

Sector data paints a mixed picture: permanent construction roles saw a sharper fall in demand than engineering, which recorded the softest decline. Temporary vacancies in both sectors also dropped in December. Meanwhile, skills shortages persist in some areas, driving up salaries for roles such as quantity surveyors and mechanical and electrical engineers – though increases are below the long-term average. Temporary wages rose marginally.

So, what’s next? Analysts expect these trends to continue in the near term, with CEOs waiting for signs of broader recovery before reopening the hiring taps. Even if the economy ticks up, employers remain uneasy about the Employment Rights Act, which received royal assent last month. While a compromise was reached on a six-month qualifying period for unfair dismissal, concerns linger over guaranteed-hours contracts and rules for temporary workers – changes that could reshape hiring decisions.

Many fear stricter rules on temporary working arrangements will backfire, hurting workers as much as employers. The hope is that as the details are worked out through the secondary legislation phase, more compromise can be reached.

If Starmer wants 2026 to feel richer, easing hiring fears with a pragmatic approach to the Employment Rights Act is essential.

Tempsford is a warning

Tempsford, a one‑road Bedfordshire village framed by fields and the Wheatsheaf pub, has become the unlikely test case for the government’s promise to supercharge housebuilding. In theory, everything’s aligned: the A1 and East Coast Main Line run north–south, new east–west routes are in play, and the prospect of a station for East West Rail that could anchor a truly sustainable settlement. In practice, the story so far is fragmented, opaque and slow.

Let’s start with the ambition. Tempsford has been flagged by the New Towns Task Force as a “unique opportunity” with potential for 40,000 homes. Urban & Civic holds options on significant land, suggesting assembly could be straightforward.

On paper, it’s a dream site: connectivity, scale and the chance to do planning “infrastructure first”. In reality, nothing’s definite

On paper, it’s a dream site: connectivity, scale and the chance to do planning “infrastructure first”. In reality, nothing’s definite; the government has not formally selected Tempsford, leaving locals and industry in limbo.

Governance and process are already sapping momentum. Officials say they must complete a programme‑wide Strategic Environmental Assessment before anything can move decisively, and that they’re busy modelling economics, funding and delivery vehicles ahead of consultation and selections “in spring”.

Those steps are legally prudent – no one wants judicial review – but they are also time‑consuming. When timelines and responsibilities are vague, projects stall. Multiply that scenario across a dozen prospective new towns and you begin to see how the whole endeavour could become hostage to process.

Another risk for Tempsford is it becomes a commuter dormitory. To avoid that fate planners must intentionally wire it into high‑value employment – with land, transport and skills policy aligned. If the government can’t demonstrate that model here, in one of its “promising” sites, why should anyone believe it can scale into a wider new towns programme that will have the momentum to survive beyond this parliament?  

Chloë McCulloch is the editor of Building