The construction sector has given its take on Labour’s first budget in 14 years, with Chancellor of the Exchequer Rachel Reeves announcing employer national insurance contributions increases and a freeze on fuel duty among some other major decisions.
The Chancellor has announced that businesses national insurance contributions will increase from 13.8% to 15% and the threshold it is paid at will drop from £9,100 to £5,000.
The employment allowance will also rise next year from £5,000 to £10,500, meaning 865,000 employers won’t pay any national insurance next year, according to the Chancellor.
The government will also spend £5 billion on housing, including increasing the amount of affordable housing as well as hiring more planning officers to increase housebuilding. Additionally, £1 billion will go towards removing dangerous cladding next year.
Reeves also announced £3.4 billion to go towards upgrading homes to make them warmer and save on energy bills.
Lastly, fuel duty will freeze for another year and maintain the previous government’s 5p cut.
Industry thoughts
wienberberger UK
Rachel Hughes, marketing director of wienerberger UK, said: “The Labour government’s Autumn Budget sets the stage for a shift towards sustainable construction in the UK. Focusing on decarbonisation, it outlines a roadmap addressing environmental concerns and opening new avenues for innovation and growth in construction. At wienerberger UK & Ireland, we view these announcements with optimism and support, aligning with our commitment to advancing sustainable construction practices.
“The announcement of additional funding for the Affordable Homes Programme underscores the UK government’s dedication to addressing the profound housing crisis. This commitment, part of a broader strategy to invest over £5 billion in housing supply, is poised to deliver up to 33,000 new homes nationwide. Crucially, the initiative targets the creation of 5,000 additional affordable social homes, a vital step towards increasing accessibility to safe and affordable housing for those in need.
“The introduction of a five-year social housing rent settlement further enhances the sector by providing financial stability and promoting long-term planning. The reduction in Right to Buy discounts also aims to preserve existing council housing stock, ensuring its availability for future generations. This multi-faceted approach, which wienerberger supports, reflects a strategic move to rebuild Britain’s housing landscape, fostering community stability and economic growth. With the housing strategy set to expand further in the spring, the focus remains on delivering the largest increase in social and affordable housing seen in a generation, backed by new policy mechanisms and significant financial investments.”
CITB
Tim Balcon, chief Executive of the Construction Industry Training Board (CITB), said: “The Government’s continued support for the construction industry through increased investment in the Affordable Homes Programme and the commitment to infrastructure delivery is welcome.
“Our research shows that under the Government’s homebuilding plans, up to an additional 152,000 workers will need to be found, and this doesn’t include the quarter of a million additional construction workers we need to meet all forecasted construction demand through to 2028. The homebuilding and infrastructure delivery challenges can’t be addressed without evolving and improving the skills system as a whole – for example, improving the pipeline of workers and ensuring a shared understanding of competence between industry, Government, and CITB is defined. This is why CITB has been working collaboratively and at pace with the Government and industry to develop interventions to meet the construction workforce skills needs to deliver its homebuilding ambitions.
“A strong pipeline of apprentices and construction workers is required to build the millions of homes we need, and key to achieving the Government’s ambitions is to get the right skills policies in place. It is essential that the new Growth and Skills Levy drive up construction apprenticeship numbers that have declined under the Apprenticeship Levy. Last year CITB helped over 29,000 apprentices during their courses.
“However, apprenticeships aren’t the only route into a career in construction, and we need to ensure we’re making all the available pathways into the industry clear and accessible for people, including upskilling and identifying transferable skills from other industries. We’re ready to work with Government, industry, and training providers to ensure that the coordinated reforms are put in place to drive sustained growth in the construction industry.”
BMF
John Newcomb, CEO of the Builders Merchants Federation, said: “We fully expected this to be a difficult budget for our members, with many of the revenue raising measures flagged in advance.
“The majority of our merchant members are classified as SMEs, with over 70% having an annual turnover below £12.5m. While there was one piece of good news relating to fuel duty, this is far outweighed by the increases in minimum wage and national insurance contributions. Our members will be hugely impacted by these extra costs which will immediately come off their bottom line.
“This is extremely disappointing at a time when we are seeking to increase recruitment and skills in the building materials sector. Skills which will be essential if we are to fulfil the additional product demand to deliver 1.5 million new homes, which the government has pledged, but provided little detail as to how they plan to achieve this target.
“As always, the devil is in the detail. We need to get Britain building. The sooner we start seeing details of how the government plans to achieve their housing target, the better.”
LRWA
The Labour Chancellor, Rachel Reeves has also pledged £1.4 billion to rebuild more than 500 schools, as well as £2.1 billion for school maintenance. This is a 19% increase of spend in the Department for Education’s capital budget.
In response, Sarah Spink, chief executive of the Liquid Roofing and Waterproofing Association (LRWA), said: “This much-needed investment is vital to help those schools impacted by Reinforced Autoclaved Aerated Concrete (RAAC).”
“It will have a direct and hopefully positive impact on the roofing sector, and in particular, liquid applied waterproofing membranes as they are often specified in education refurbishment.”
Sarah concluded: “Our job now in the roofing sector is to continue to help educate and inform specifiers of the benefits of liquid applied membranes as the UK government tackles the RAAC crisis. A secure roof over our children’s heads is not just a structural necessity, but a foundational element for their education and future.”
BCIS
Dr David Crosthwaite, chief economist at BCIS, said: “Reeves announced £100 billion in capital spending over the next five-years with the mantra “invest, invest, invest” but I’m not convinced this is a budget for growth.
“There are conflicting announcements, and as it stands the investment outlined in the Budget is unlikely to make a material difference to the construction sector and “get Britain building again” – a stated aim of the Government.
“I was hoping for something a little more radical, but perhaps that will come in the Spending Review next spring.
“We really need the Government to invest in fixed capital programmes that will actually “get Britain building again” and drive wider economic growth. Four months in and this feels like a missed opportunity for the new Government.
“The Government did announce spending on construction projects, such as schools, social housing and transport to name a few.
“However, it still remains unclear how the Government intends to meet its self-imposed target of building 1.5 million homes over the life of the Parliament, without tackling the existing skills shortage.
“The resurrection of the HS2 link from Old Oak Common to Euston is a positive move, but we need more commitment to other infrastructure projects in the pipeline with the Lower Thames Crossing project a prime example.”
FMB
Brian Berry, chief executive of the Federation of Master Builders (FMB), commented: “The Budget was the first opportunity for the new Government to set out its long-term financial plans for the country. In challenging economic conditions, the Chancellor of the Exchequer delivered a mixed Budget with promising plans for the long-term future of the construction industry, however it is likely to present substantial challenges to firms managing their business finances. At a time when SME builders are needing a boost, they may, like many in the country, have to take a hit before they see things get better.
“The Chancellor’s decision to significantly increase employers’ National Insurance contributions will create major headaches for firms looking to take on staff at a time when the building industry is in desperate need of new workers. However, it is good that the Chancellor has shielded small companies by increasing Employment Allowance, as is the rise in the Apprenticeship wage which will help increase the appeal of a career in construction for young people. Capital Gains increases may also hit builders looking to sell off their companies when they look to retire.”
Brian concluded: “The FMB has been calling for more details of the Government’s plans to improve the energy efficiency of the UK’s homes, a key pledge in Labour’s election manifesto. The announcement of £3.2bn to fund the Warm Homes Plan will be crucial to getting more SME building companies to enter the retrofit market.
“The announcement of additional support for SME house builders to access low-cost loans is also welcome, and alongside the announcements on housebuilding made in recent months, offers hope for the future. SMEs 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.”
