Manufacturing & Supply chain

Manufacturing production increased in October for the first time in a year. Then, UK manufacturing showed further signs of recovery in November as output rose for a second successive month and new business levels steadied after more than a year of decline. (Sources: S&P Global UK Manufacturing PMI and The Manufacturer.)

However, a new report, released by The Manufacturer in partnership with Barclays, reveals that the UK manufacturing industry is facing a productivity gap compared to its international peers. Also from The Manufacturer, the 2025 Industrial Agility Assessment suggests industrial agility among UK manufacturers and distributors has fallen to its lowest level in five years.

ESG reporting in-house and across supply chains continues to loom large on the legal horizon.

The CMA has published guidance to supplement its Green Claims Code. The guidance covers business’ responsibilities in the face of complex supply chains, where different parties can hold the information needed to substantiate green claims.

EU regulatory developments and the circular economy

On 16 December 2025, the European Parliament adopted the final Omnibus I text reducing the regulatory burden for businesses by simplifying Corporate Sustainability Reporting Directive (CSRD) and Corporate Sustainability Due Diligence Directive (CSDDD) requirements. Key changes include raising the reporting threshold to over 1,000 employees and €450 million turnover, limiting due diligence to firms with over 5,000 employees/€1.5 billion turnover. Compliance is required by 2029.

The European Commission (EC) is consulting on the revision of the New Legislative Framework (NLF) for product legislation. The NLF is being revised to improve consumer safety, sustainability and fair competition, particularly in the context of the circular economy and digital transition.

In related news, EC is consulting on its proposed Circular Economy Act. The Act, set for adoption in 2026, focuses on enhancing e-waste recycling and boosting demand for secondary critical raw materials. It seeks to reduce reliance on imported resources, improve economic resilience, and support decarbonization. The UK government’s Circular Economy Strategy is currently awaited – one to watch.

Producer responsibility and plastics regulation

Amendments to the extended producer responsibility scheme for packaging waste (pEPR) in the UK came into force on 1 January 2026. The changes: enable the appointment of a producer responsibility organisation to support PackUK in running the scheme and foster closer producer involvement; enable producers to deduct tonnage of recycled food grade plastics packaging waste from their pEPR obligations where they have collected it directly from consumers and sent it for reprocessing in a closed loop recycling system; and improve operational efficiency and clarify producers’ obligations.

The EU’s Revised Waste Framework Directive introduces an extended producer responsibility (EPR) scheme for textiles placed on the EU market. It applies to a wide range of products including clothing, hats and footwear, and household textiles such as kitchen and bed linen, curtains and blankets. Non‑EU producers selling into the EU, including online, are in scope. The scheme shifts end‑of‑life costs, such as collection, sorting and recycling, to producers. Member States have 20 months from 16 October 2025 to transpose, so EPR schemes are expected to be operational across the EU by 2028.

Amid European institutional debate, the EU Deforestation Regulation (EUDR) looks set to be postponed again, with new proposed dates of 30 December 2026 for large and medium businesses and 30 June 2027 for micro and small businesses. For the latest on what’s happening, check out our recent briefing. EU Deforestation Regulation – Latest developments – Walker Morris

The Environmental Protection (Wet Wipes Containing Plastic) (England) Regulations 2025  will come into force in May 2027. They will make it an offence to supply single-use wet wipes containing plastic to consumers in England (with limited exemptions, such as pharmacies/medical settings and supply to businesses or local authorities). In Wales, the equivalent legislation will come into force on December 2026. Guidance for manufacturers, suppliers and retailers is expected. Manufacture of these products is not banned, but this could be on the horizon.

EU regulations to reduce microplastic pollution will largely apply from December 2027. They’ll be primarily targeted to economic operators handling over 5 tonnes of pellets in the EU and transport carriers. They will (non-exhaustively) require: risk management plans to prevent loss in packaging, loading and unloading; staff training on handling these materials; managing clean ups; handling and transport notifications; and certification and record keeping requirements. There’ll also be some (less burdensome) requirements for operators handling lower tonnages.

Also on the subject of plastics, talks to deliver a legally binding global plastics treaty broke down at the UN’s fifth Intergovernmental Negotiating Committee session in August 2025. Some states advocated mandatory limits on plastic production and use, while others preferred measures focused on waste management and recycling, so no consensus has yet been reached.

PFAs, product safety and industry scrutiny

PFAs or ‘forever chemicals’ are chemical substances used in the manufacture of various products, which persist in the environment and can be harmful to human health. On 16 October, the UK Chemical Reactions Conference advised UK businesses to start phasing out PFAs from their supply chains, to minimise the looming threat of US-style PFAs litigation. On 3 November the BBC reported that the Drinking Water Inspectorate has issued 23 enforcement notices to water companies over elevated levels of PFAs. UK regulatory reform in relation to PFAs and drinking water is likely on the horizon.

Also on PFAs, Veolia has announced a “major technological breakthrough” in the destruction of PFAs at hazardous waste incineration facilities. Its new patented technology virtually eliminates several targeted PFAs.

The Product Regulation and Metrology Act 2025 has received Royal Assent. It will provide a framework for reducing or mitigating risks posed by products. Manufacturers, importers and distributors will face increased scrutiny and regulation. Substantive provisions will come into force via secondary legislation on dates yet to be confirmed. One to watch.

The European Commission has published guidelines for businesses on the General Product Safety Regulation (GPSR) and for using the Safety Business Gateway under the GPSR.

Critical minerals, geopolitics and supply chain security

Trade controls, particularly from China, global supply chain disruptions, and escalating national security priorities are continuing to impact demand, sourcing and pricing of critical minerals and rare earth elements. The White House has announced a US/China deal under which controls on China’s rare earth exports to the US will be paused for a year. The US has also completed a flurry of deals with Japan, Malaysia, Thailand, Vietnam, Cambodia and Australia, which represent efforts to diversify access to rare earth minerals, and which aim to lock partners into trading with the US. An updated UK critical minerals strategy has now been published.

Reuters has reported (21 November 2025) that the critical minerals ‘war’ has now extended to include scrap metal. Current trade tensions and policy shifts mean that the EU, US, and China are competing for recycled aluminium as a strategic resource which is crucial for both green and defence industries.

Human rights, compliance and legal actions

The UK government has announced new measures to simplify imports from emerging economies.  The ‘Developing Countries Trading Scheme’ will make it easier for countries such as Nigeria, Sri Lanka, the Philippines, Bangladesh, and Cambodia to trade with the UK. It should particularly facilitate supply chains in clothing and electronics.

The UK and France have announced a new Industrial Strategy Partnership. It will prioritise technology, clean energy, and advanced manufacturing and will have a particular focus on securing critical minerals supply chains. 

Reuters has reported (26 January 2026) that Italy and Germany have pledged to work together to secure supply chains for raw materials vital to their economies.

Mining and refining companies have written to the European Commission, warning new rules aimed at limiting exposure to cobalt could decimate the industry and supply chains in the EU. That could result in greater dependence on the US and China for a material essential to everything from vehicles to defence strategy, and vital to the green, circular and digital transitions.

The government has announced that multiple sites across the UK have been identified for the construction of new factories to make munitions and military explosives to boost the UK’s warfighting readiness. The government has identified at least 13 sites for new munitions and energetics factories, aiming to boost warfighting readiness, create 1,000 jobs, and revive onshore production. Backed by £1.5 billion in defence investment, the plan includes building six factories this parliament and opening two new drone facilities.

Also on the subject of supply chain disruption, protestors are increasingly targeting critical national infrastructure and other large businesses – including food and defence manufacturers.

On 14 October 2025, the UK government published its letter to UK companies with urgent advice to ensure they are protected from cyber threats. It was sent following recent high profile cyber incidents and the National Cyber Security Centre’s (‘NCSC’) annual report, which revealed the UK is experiencing 4 “nationally significant” cyber attacks every week. Recommended steps include: making cyber risk a board-level priority; using the Cyber Governance Code of Practice; signing up to the NCSC’s Early Warning service; and checking cyber risk in supply chains (the government’s Cyber Essentials scheme is signposted as a certification for minimum cybersecurity measures).

We surveyed manufacturing leaders undergoing transformation, to find out:

• What transformation goals you’re prioritising
• The skills you need to achieve them
• Plans to boost productivity and automate processes
• Your views on PE and other funding sources.

Interested in our findings? Access here

Human rights, forced labour and supply chain obligations

The UK government has published its response to the UK Joint Committee on Human Rights inquiry into forced labour in international supply chains. The inquiry recommended reform to the current legal framework, including strengthening the reporting duty in Section 54 of the Modern Slavery Act 2015 (MSA) and legislating for mandatory human rights due diligence, an import ban on goods linked to forced labour, and a new duty to prevent forced labour in supply chains. The government response refers throughout to its ongoing review into the UK’s approach to responsible business conduct, which forms part of its Trade Strategy. The government notes that it is considering how to strengthen the Section 54 regime, but that “significant long-term reform will take time”. It also refers to the Transparency in Supply Chains statutory guidance which calls on businesses to go beyond the requirements of the MSA in their pursuit of eliminating modern slavery from their supply chains. Businesses will have to await the outcome of the ongoing review into responsible business conduct and the National Baseline Assessment on implementation of the UN Guiding Principles on Business and Human Rights for any clarification of legislative reform.

In related news, The Independent Anti-Slavery Commissioner has proposed model drafting for a Forced Labour and Human Rights Bill to introduce: human rights supply chain due diligence requirements; a forced labour products ban; and annual human rights compliance reporting in the UK, replacing section 54 of the Modern Slavery Act 2015.

The EC has sent a third request for information to online marketplace Shein. The Commission suspects that Shein’s business practices may pose risk to consumers across the EU and has asked Shein to provide information on how it prevents minors from being exposed to age-inappropriate content on its platform, and how it prevents listing and sale of illegal products. In the UK, the Business and Trade Committee is continuing its investigations into Shein’s business practices and supplier agreements. In related news, the European Parliament called for decisive action to address the sale of illegal and unsafe products via online marketplaces.

The largest environmental pollution action ever pursued in the UK is being brought in relation to alleged pollution in the rivers Wye, Lugg, Usk and related tributaries. The agricultural food producer and water company defendants are accused of causing: ‘private nuisance’ by having materially contributed to pollution in the Wye catchment; ‘public nuisance’, having endangered the health, safety and comfort of the public and the environment, and obstruction of the right to use the river Wye; and ‘negligence’, through breach of “a duty of care to prevent, contain and clean-up the pollution”, and a “duty of care not to cause pollution damage by bio solids and by sewage discharge into the rivers”.

The claim also alleges that discharge of solid particles has affected water quality and settled on the riverbed, amounting to ‘trespass’; and that the unlawful deposit of manure and biosolids on agricultural land breaches section 73(6) of the Environmental Protection Act 1990.

Two recent cases were prosecuted for dangerous levels of dust within manufacturing businesses. In both cases, dust was found to be coating the floor and other surfaces, despite previous interventions from the Health and Safety Executive.

The Employment Rights Act 2025 is making sweeping changes to UK employment law. Keep updated on the changes, by timeline format or topic, in our ERA tracker.

Logistics

Industry news

Savills has published its January 2026 Big Shed Briefing. It demonstrates improved performance through 2025, but a falling development pipeline.

Greenwashing complaints and enforcement are hitting the logistics sector. 21 airlines have agreed to change their practices on environmental claims to ensure that they aren’t misleading. Contact us for advice on greenwashing and how to protect your business. In related news, the ICC published a new version of its Framework for Responsible Environmental Marketing Communications.

The Autumn 2025 budget confirmed that the government will bring in a new pay-per-mile Electric Vehicle Excise Duty for electric and plug-in hybrid cars, with effect from April 2028. There will also be £100m to support councils in increasing the amount of electric vehicle charging points; £100m for EV charging infrastructure; and the government will consult on a new permitted development right for EV charging. In related news, a review of the cost of public EV charging is expected to report by Q3 2026.

The National Energy System Operator (NESO) has published its transitional Regional Energy Strategic Plan (tRESP)  to inform investment in electricity distribution networks for the 2028–33 price control period. It’s described as a first step towards improving and coordinating energy infrastructure planning at a local level, ahead of the development of a full Regional Energy Strategic Plan from late 2026. Forecast energy needs for transport form an important part of the tRESP’s regional energy mapping, with logistics-related energy demand being typically concentrated around ports, freeports, major freight corridors, business parks, industrial estates and logistics hubs.

The expansion of Heathrow Airport is due to be fast-tracked. The government has launched a review of the Airports National Policy Statement (ANPS) to pave the way for a third runway. The revised ANPS is set to be published for consultation in the summer of 2026.

Decarbonisation

The government has announced funding of £43 million for green aviation projects. It will be allocated via a series of competitions, due to be launched in February, to support research and development projects targeted to net zero delivery.

A High Court decision to dismiss a legal challenge against the expansion of Luton airport has clarified aspects of the Finch Supreme Court ruling on Scope 3 downstream GHG emissions. In the Luton airport case, the airport’s position was that Finch decision doesn’t require assessment of indirect GHG emissions in circumstances where either (a) there is insufficient information on which to make a reasonable assessment, or (b) where it is possible to make a judgment, the effects are not significant. The High Court agreed. The decision will be welcomed for its suggestion that, provided decision-makers properly consider environmental and scientific evidence against appropriate benchmarks, and explain their reasoning, there is a reasonable margin of discretion in how they assess Scope 3 GHG emissions. (See also our Construction and development section below, for post-Finch planning news.)

The government has published the outcome of its technical consultation on the UK carbon border adjustment mechanism (CBAM). CBAM will apply from 1 January 2027, initially covering direct emissions only with indirect emissions delayed until 2029 at the earliest. Draft secondary legislation and HMRC guidance are expected before 2027.

The European Council has adopted a regulation to simplify the Carbon Border Adjustment Mechanism (CBAM). It’s designed to ease administrative burdens and reduce compliance costs. Notably, there’s a new de minimis threshold exempting importers from CBAM obligations for up to 50 tons annually.

Road/rail strategy and freight infrastructure

The Office of Rail and Road (ORR) could face a crackdown following a government announcement that it will be the first regulator to be assessed against simplification and streamlining goals under the Regulation Action Plan.

The government has introduced the Railways Bill to establish Great British Railways (GBR) as a new state-owned company responsible for running and coordinating the whole network, including infrastructure and passenger services.

The government has launched its Northern Powerhouse Rail plans (14 January 2026), as part of a new Northern Growth Strategy. Logistics UK welcomed the project, saying it “establishes a clear and deliverable plan for greater rail capacity”.

Network Rail has launched a new property development company, Platform4, to accelerate regeneration and housebuilding on brownfield rail land across England and Wales.

The government has announced £7.3bn in capital funding for local highway maintenance over a four‑year period from 2026–27 to 2029–30. The funding will be distributed regionally and tied to new transparency requirements.

The government has announced £10 million for electric vehicle (EV) charging along the Strategic Road Network. The funding is for technology which will allow EV charging devices to operate without large grid connections or even off-grid.

A consortium believes it may be able to deliver wireless charging while electric vehicles are on the move at motorway speeds. The development is currently under testing at Gustave Eiffel University.

The European Commission has published its transport package, which includes a Sustainable Transport Investment Plan (STIP) focusing on renewable and low-carbon fuels for aviation and waterborne transport.

Construction and development

The Planning and Infrastructure Act 2025 entered into law on 18 December 2025. The government has said the Act “will remove blockages and delays in the planning system, accelerating the construction of tens of thousands of new homes across every region. In addition, it will get dozens of new roads, railway lines, windfarms, and key critical infrastructure built quicker – all while securing a win-win for the environment and the economy.” Government guidance giving an overview of the Act can be found here.

On 16 December the government launched a consultation on a revamped National Planning Policy Framework. The press release is here. The consultation closes on 10 March. Proposals non-exhaustively include: a rules-based ‘yes’ by default for planning on suitably located proposals; promotion of urban/suburban higher-density redevelopment, upward extensions, and infill schemes; reduced complexity in areas like energy efficiency and Biodiversity Net Gain; BNG revisions for small/brownfield sites; facilitation of mineral extraction; vision-led transport planning; policy changes in relation to data centres and on-site generation; and more.

The Supreme Court’s judgment in Providence v Hexagon is an important one for the construction industry. Click here for our article on this high profile case.

Natural England has announced that it is preparing 23 Environmental Delivery Plans, 16 relating to nutrient pollution (including one relating to the Somerset Levels) and 7 relating to great crested newts, a regularly quoted hindrance to development.

The government has published a revised Environmental Improvement Plan, designed to restore nature, improve environmental quality and security, build a circular economy, and make nature easier for everyone to access

As part of its updated Environmental Improvement Plan (EIP) 2025, published 1 December, the UK government has announced its first-ever comprehensive plan to manage and reduce the risks from per- and polyfluoroalkyl substances (PFAS), also known as ‘forever chemicals’. A full ‘PFAS Plan’ is expected in 2026.

Those operating within the built environment may have noticed an increasing focus on PFAs pollution in land and water. Regulatory reform is on the horizon. In addition, Wyre Council is conducting the country’s first ever multi-agency PFAS-related contaminated land investigation, with results due to be published in early 2026. Commentators are anticipating that results could prompt a variety of environmental remediation, enforcement and litigation action, as well as PFAS contamination investigations elsewhere. North Yorkshire Council has confirmed that regulatory and groundwater investigations are also ongoing in relation to PFAS pollution in High Bentham. The issue is definitely one to watch.

RICS has published a global professional standard for the responsible use of AI in surveying. The standard will take effect on 9 March 2026. It sets mandatory requirements and best practices to govern AI use in valuation, construction, infrastructure, and land surveying. Property businesses should undertake a risk analysis; review and update policies, practices, and terms; and educate staff, accordingly.

AI uptake is increasing across the built environment – particular within construction and development. In our recent article, we look at how you can capitalise on the efficiencies and competitive advantages AI can offer, whilst managing legal and operational risk.

The Planning Inspectorate has completed the national rollout of its new digital appeals service. Local planning authorities will now be able to manage planning appeals online.

Infrastructure developers have welcomed the Treasury’s announcement it will work with the judiciary to speed up judicial reviews when nationally important infrastructure projects are challenged.

The government has launched a new tool that would enable planners to locate development in the most sustainable locations. The new Connectivity Tool covers the whole of England and Wales and combines transport and land use data to generate a connectivity score. The tool is free of charge to all public sector bodies across England and Wales but is currently only available to people working in local or central government who have been granted access to it.

The Guardian reported on 14 Oct 2025 that climate breakdown is making many areas uninsurable. New analysis from the insurance industry reveals that large swathes of housing and commercial property are at risk of devastating floods, storms and rising sea levels, with some homes, businesses and even towns potentially having to be abandoned. Densely populated areas including London, Manchester and parts of north-east England, are likely to be worst hit, but Tenbury Wells in Worcestershire has already become the first in the country to find that its public buildings are uninsurable.

Quintain City Park Gate Birmingham v Sec of State for Transport concerns compensation for compulsory purchase in relation to part of the new HS2 station site. As part of the process for calculating compensation, a site owner can apply to the local planning authority for a ‘certificate of appropriate alternative development’ (CAAD). A CAAD enables the site owner to demonstrate the development value of a site, which it can use in negotiations for compensation. In this case, the parties disagreed over the application of policies relating to the height and massing of the proposed buildings, the total size of floor area, and the requirements for affordable housing within the development and conditions relating to phased development. The Tribunal recognised that there could not be one correct CAAD, but a range of possible alternatives. The reasoning will be helpful for anyone dealing with compulsory purchase and valuation.

We’ve reported previously that the High Court and Court of Appeal had found, in C G Fry v Secretary of State for Levelling Up, that government rules aiming to mitigate the impact of nutrient pollution on protected waterways apply to the final discharge of planning conditions as well as earlier consenting stages. The developer in that case appealed to the Supreme Court to question whether nutrient neutrality rules apply to developments that received planning permission before the introduction of Natural England’s guidance on the issue in 2020. The Supreme Court has now given judgment for the developer…

Whilst the Supreme Court held that the Court of Appeal was correct in its interpretation of the Habitats Regulations, it considered the effect of a grant of outline planning permission, the impact of a policy adopted by the government, and a change of scientific advice bearing on that policy. The council and the inspector in this case had relied on new scientific advice given by Natural England in 2020 to revisit matters which had been approved prior to that, at the outline stage. The Supreme Court therefore confirmed it was not open to the council or the inspector to refuse to discharge the sub-conditions, thereby effectively preventing development, on the basis of ‘new’ nutrient neutrality rules.

Last year’s landmark Supreme Court ruling in Finch confirmed that applications for major developments should consider all significant direct and indirect greenhouse gas emissions. However, a recent review of 35 post-Finch proposed intensive farming developments across the UK found that planning applications routinely ignored or downplayed emissions. Planning applications made/approved without the necessary emissions information and analysis will be open to legal challenge.

People in logistics

The Employment Rights Act 2025 is making sweeping changes to UK employment law.  Keep updated on the changes, by timeline format or topic, in our ERA tracker.

The government has announced a £725 million package of reforms to the apprenticeship system to help tackle youth unemployment and drive economic growth.

The UK Material Handling Association has published a paper with advice on how to improve the safety of warehouse operations.