黑洞社区

The government鈥檚 first Budget has received a mixed reaction from the construction industry, with many firms welcoming funding boosts for more housing but others warning of the impact of tax rises on delivery.

Rachel Reeves outlined 拢40bn in tax rises this afternoon, including an increase in employers鈥� national insurance contributions by 1.2% to 15% from April 2025, and lifting the national living wage by 6.7% to 拢12.21 an hour.

But the chancellor also outlined 拢100bn in capital investment over the next five years, including 拢6.7bn for the Department for Education and a 拢3.1bn increase for the NHS capital budget.

Other commitments announced today included 拢5bn to deliver the government鈥檚 housing plans, 拢1bn to remove dangerous cladding, money to begin tunnelling to deliver HS2 to Euston, 拢3.4bn to 鈥渒ickstart鈥� the warm homes plan. 

Gleeds chair Richard Steer welcomed some elements of the Budget but said the announcements overall 鈥渄id little鈥� to persuade him that Labour are treating the industry鈥檚 challenges on training, retention, planning reform and net zero 鈥渨ith any more seriousness than the last government鈥�. 

鈥淭his was a budget designed to put election rhetoric into economic strategy,鈥� Steer said.

Chartered Institute of 黑洞社区 director of policy Eddie Tuttle agreed that increased funding for new infrastructure and housing was welcome but warned that the impact of Reeves鈥� tax hikes on SMEs could be 鈥渄evastating鈥�.

鈥淭oday鈥檚 Budget offers mixed news for the construction sector,鈥� he said. 鈥淣early a fifth of UK SMEs operate in construction and the cyclical, boom-bust nature of the sector, as well as recent economic hardships, have created a difficult environment for these businesses.鈥�

鈥淪MEs play a vital role in the delivery of new homes and infrastructure as well as the repair and maintenance of existing buildings. 

鈥淚ncreased tax rises without consistent monitoring of the impact they have on the health of crucial sectors, such as construction, run the risk of damaging the pivotal role SMEs play.鈥�

Tina Paillet, president of the Royal Institute of Chartered Surveyors, was more positive about the Budget, welcoming 鈥減ositive news鈥� for construction sectors including more funding for affordable housing while arguing tax changes would help secure 鈥渂adly needed鈥� new infrastructure.

鈥淲e hope government investment and changes in rules to attract new international investment will help boost confidence and encourage other players to seek opportunities,鈥� she added.

The focus on new infrastructure enabled by Reeves鈥� fiscal changes was also welcomed by Civil Engineering Contractors鈥� Association director of operations Marie-Claude Hemming and said it was a policy which the trade body had called for in recent weeks.

鈥淚t is right that the government maintains a strong commitment to controlling day-to-day spending while creating headroom to allow for investment in a long-term infrastructure programme to secure the economic and social wellbeing of UK plc,鈥� she said.

鈥淲e are particularly pleased to see the Chancellor make a commitment to rail upgrades such as the Transpennine upgrade, putting funding in place to link HS2 to Euston, and increased funding for local roads maintenance.鈥�

But Richard Risdon, managing director for UK and Europe at Mott MacDonald, said the biggest challenge in terms of delivering the government鈥檚 infrastructure ambitions remained a lack of skills.

鈥淏oosting funding for the schools rebuilding programme by 拢1.4bn to target rebuilding 500 schools is critical to creating the right environment for our young people to thrive,鈥� he said.

鈥淗owever, it will take time for that young talent to come through into our sector and we urgently need government to work with us on the skills issue.鈥�

Others warned about the unintended impact of the chancellor鈥檚 tax rises on the capacity of firms to hire new staff

Federation of Master Builders chief executive Brian Berry said the decision to significantly increase employers鈥� National Insurance contributions will 鈥渃reate major headaches for firms looking to take on new workers at a time when the building industry is in desperate need of new workers鈥�. 

However, he welcomed an increase in employment allowance and a rise in the apprenticeship wage as a helpful way to make the construction sector become a more appealing career choice for young people.

On retrofit policy, Berry welcomed a 拢3.2bn injection into the Warm Homes Plan as 鈥渃rucial to getting more SME building companies to enter the retrofit market鈥� and welcomed low-cost loans for SME housebuilders.

鈥淪MEs have a crucial role to play in plans to get Britain building again, and it is vital that the government does not lose sight of the challenges the sector continues to  face,鈥� Berry said.

The housing sector鈥檚 reaction to the budget was also mixed. Steve Turner, executive director at the Home Builders Federation, said the allocation of 拢47m to help unlock homes blocked by nutrient neutrality rules was 鈥渨elcome鈥�. However he said if prospective buyers could not access suitable mortgage finance then investment would be constrained. 

鈥淚t is the first time in 60 years there is no effective government support for home ownership and with younger households continuing to struggle to get on the housing ladder, the absence of assistance will hold back housing supply,鈥� he said.

RIBA president Muyiwa Oki said the Affordable Homes Programme top-up was 鈥渄esperately needed鈥� but a 鈥減ocket-sized sum鈥� compared with housing need.

鈥淎longside calling for next year鈥檚 Spending Review to boost the social housing pot, we urge the government to consider its overall approach to funding social homes,鈥� he said. 

鈥淭his includes exploring different models that reduce the net cost of delivery, such as that outlined in our report, Foundations for the Future.鈥�

Stevan Tennant, managing director for development at Ballymore, said it was 鈥渆ncouraging to see investment ringfenced for affordable housing鈥� but that the government needed to reconsider taxation measures to ensure the residential sector was incentivised.

鈥淭he cost of building affordable housing in London excluding land is significantly higher than the value Registered Housing Providers are willing (or able) to pay for these homes. This effectively means affordable housing becomes a tax on development, and there is no financial incentive for a developer to build affordable housing,鈥� he said. 

鈥淲e are in danger of being distracted by conversations about a myriad of other factors that may impact on housing delivery, but at the core of the issue is viability, the costs of home ownership and funding and how it can be used.鈥�