Introduction
A year has passed since the Labour Party’s general election victory, which it won with a decisive majority after over a decade in opposition. The new government campaigned on a mandate of economic growth and attracting international private sector investment to deliver infrastructure improvements.
In its first weeks, early policy moves emphasised partnering with investors on clean energy, accelerating project delivery, and shoring up the UK’s appeal to international capital. This political shift has defined the past year’s agenda, as the government pursued ambitious initiatives in planning, energy, and industrial policy to fulfil its growth-focused platform.
Planning Reform
Labour moved quickly on planning reform to unlock infrastructure delivery. A new Planning and Infrastructure Bill was introduced to modernise the system by simplifying consents for major projects and bolstering local authorities’ capacity, with an aim to remove longstanding bureaucratic hurdles.
Labour also lifted the ban on new onshore wind farms in its first week, signalling a more permissive approach to sustainable infrastructure in support of its growth agenda. The shift was further underlined by the government’s recent green light for Heathrow Airport’s third runway, in addition to positive signals for London City and Gatwick airports. For investors, reforms to the planning regime promise a clearer and faster path to project approvals and a more predictable investment landscape after years of planning delays. The finalised version of the bill is expected to come into law by the end of the summer.
Energy (REMA & Ofgem)
Energy policy in Labour’s first year has centred on market reform and regulatory oversight. The Review of Electricity Market Arrangements (REMA) – kicked off under the previous government – introduced significant uncertainty in the sector for investors. We were pleased to see the government’s decision earlier this month that they would not be proceeding with a zonal pricing model. GIIA had long cautioned that, if taken forward, zonal pricing would raise the cost of capital and ultimately deter investment.
Earlier this year, the government launched a call for evidence to review Ofgem’s remit and role in a rapidly evolving energy landscape. In its response, GIIA recognised the positive role that Ofgem has played and welcomed the review, stressing the need for greater regulatory clarity, long-term stability, and a shift away from short-term, reactive interventions.
We called for a more strategic and forward-looking regulatory approach that balances consumer protection with the need to unlock private capital for net-zero infrastructure. We also urged Ofgem to streamline responsibilities with other energy bodies, enhance its technical expertise, and prioritise consistent investment signals to ensure the UK remains globally competitive in attracting infrastructure investment.
Digital Infrastructure
Labour’s first year has brought continued momentum on digital infrastructure, with planning reform and policy support aimed at accelerating nationwide gigabit broadband and 5G coverage by 2030. The forthcoming Planning and Infrastructure Bill is expected to ease permitting for fibre and mobile infrastructure, including so-called “flexi-permits” and relaxed street-works regulation which would boost deployment speed. Private investment has already driven gigabit availability to over 85% of UK premises, with government initiatives like Project Gigabit sustaining this trajectory.
Meanwhile, data centres have emerged as a fast-growing area of infrastructure investment interest, driven by AI and cloud computing demand. Labour’s designation of data centres as Critical National Infrastructure (CNI) in 2024 made them eligible for fast-tracked approvals via Nationally Significant Infrastructure Project (NSIP) status marking a strategic policy shift to support capacity expansion. In GIIA’s biannual investor sentiment survey, hyperscale data centres consistently rank among the most attractive assets, offering long-term returns and increasingly recognised as core infrastructure within investor portfolios.
Industrial & Infrastructure Strategies
In June, Labour launched their Modern Industrial Strategy; a 10-year plan aimed at boosting business investment, creating skilled jobs, and making Britain “the best place to do business” by tackling structural barriers like high electricity costs and long waits for grid connections. Labour also formally established a £28 billion National Wealth Fund (consolidating the UK Infrastructure Bank and British Business Bank) to co-invest in priority sectors.
Also in June, the government’s publication of the UK’s first 10-Year Infrastructure Strategy marks a critical step toward ending short-termism and policy fragmentation. For too long, the absence of a unified strategy has limited pipeline visibility and undermined investor confidence in the UK market. GIIA has consistently advocated for a coherent, cross-departmental approach to infrastructure planning that delivers clarity, coordination, and long-term direction. This strategy now presents a pivotal opportunity to align public ambition with the private capital needed to deliver high-quality public infrastructure.
Water
The water sector has received renewed political attention during Labour’s first year in office, following growing public concern over environmental performance and regulatory effectiveness. In response, the government prioritised the findings of the Independent Review of the Water Industry in England and Wales, chaired by Sir Jon Cunliffe, a process initiated by Labour in October 2024.
The final report, published in July, set out a comprehensive blueprint for reform, calling for a fundamental “reset” of the sector. It contains 88 recommendations across seven themes, including regulatory structure, infrastructure planning, asset health, and corporate governance. Crucially, the report rejects calls for nationalisation, concluding there is no clear link between ownership model and performance, and instead focuses on making the current system investable, accountable, and fit for long-term challenges. Headline proposals include replacing Ofwat with a new integrated water regulator, introducing statutory resilience standards, overhauling the fragmented planning framework, and strengthening regulatory oversight of asset health and financial resilience. The report also calls for a new National Water Strategy to provide long-term direction and ensure that government policy clearly articulates the trade-offs facing the sector.
GIIA engaged extensively with the Commission throughout the review process and welcomed some of the final recommendations, particularly those aimed at restoring investor confidence and enabling long-term capital to support infrastructure renewal. As the government considers next steps, clarity on the specifics and implementation will be critical to ensure the sector remains investable and capable of delivering on environmental and service expectations.
Listen to our Talking Global Infrastructure podcast, ‘The future of UK water regulation: exploring Sir Jon Cunliffe’s recommendations,’ as Jon Phillips and Eleanor Mack, hosted by Simon Montague, unpack what lies ahead for UK water regulation.