The Chancellor of the Exchequer Rachel Reeves recently delivered the first Labour budget in 14 years, which was met with mixed results from the construction industry. Although the government have set themselves lofty targets to get Britain building again, many find the budget to be lacking the support they were hoping for. 

Richard Beresford, Chief Executive of the National Federation of Builders (NFB), said:  “The 2024 Budget was always going to be challenging due to the ongoing £22 billion black hole narrative. Nevertheless, it is positive to see the suspected fuel duty rise did not happen, especially as the construction industry is already paying considerably higher fuel costs after the last government cut their access to red diesel. 

We also welcome the £5 billion funding boost for affordable housing, commitment allowing councils to retain 100% of Right to Buy receipts and, the £3.4 billion for retrofitting. 

However, the Government’s target to deliver 1.5 million homes is now at a considerable risk due to the increase in Employer National Insurance contributions. This announcement will hinder the industry’s ability to take on and train new staff and support the next generation of skilled workers. While some may point to planning reforms as the solution, those reforms have not yet been implemented, and it will take years before new projects avail of them.”

Eddie Tuttle, Director of Policy, Research and Public Affairs at CIOB, said: “Today’s Budget offers mixed news for the construction sector. Increased funding for new infrastructure is welcome – as is the continued emphasis put on housing – but higher taxes, like increased employer National Insurance contributions, are likely to increase financial strains on the SMEs that are so vital to the industry and its supply chain.  

 “Nearly 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. So far in 2024, they have accounted for 20 per cent of business insolvencies and alarmingly, around 11,000 firms have collapsed since 2022.  

“While we understand the need to build up public finances and reorder the fiscal rules to channel greater investment, the impact of increased costs on construction SMEs could be devastating. SMEs play a vital role in the delivery of new homes and infrastructure as well as the repair and maintenance of existing buildings. 

“Increased 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. We urge ongoing government consultation with bodies like CIOB to monitor these impacts on the sector. 

“We welcome the Government’s plans to introduce the Warm Homes Plan, which was a key feature in the Labour Party’s election manifesto and includes a promise of £3.4 billion for energy efficiency measures. We hope policymakers will consult with the construction industry on how the grant funding will be targeted, to avoid repeating previous mistakes in other upgrade schemes. 

 “Finally, building safety remains a critical concern for the construction industry, so we were pleased funding for dangerous cladding remediation was acknowledged as part of the Budget, particularly in the wake of the second phase of the report into the tragedy at Grenfell Tower.”

Lee Parkinson, chief executive of Efficiency North, said: “The budget today has confirmed what we had been anticipated in the press this week, and we’re pleased to see renewed focus in the social housing sector after years of neglect.

“It’s encouraging to hear that the government has pledged to invest £5bn to deliver its plans on housing next year, including a £3.1bn increase in investment for the Affordable Homes Programme. We have seen the impact a lack of funding can have and it’s crucial that access to safe and secure housing is affordable for all. This further investment will go some way to combat this, but I fear it could be too little too late given the scale of the challenge. There were 1.29 million households on local authority waiting lists in March 2023, the highest figure since 2014, and building 5,000 new homes next year will not go far enough to meeting this demand. 

“Additionally, there was a lack of detail on how the government is going to deliver on its commitment to get Britain building again. Hundreds of additional planning officers were mentioned but no roadmap to achieve this, which raises questions about the feasibility.

“Before the budget, utilising graduates in these roles was mentioned but that is a short-sighted approach. Construction insolvency is at an all-time high according to Insolvency Service so the likelihood of every business being able to see every graduate through their additional training to completion is low. Investing in flexi-job apprenticeships safeguard the government’s investment into training as it offers the adaptability the industry needs during turbulent times. This can also be replicated across every aspect of the supply chain – from bricklayers to surveyors making it a far more sustainable approach. 

“Furthermore, more planning officers will not bridge the acute funding gaps that registered providers have in making affordable home schemes viable, more money is required to make brownfield sites viable and provide the homes in the hearts of communities rather than in edge of town, suburban villages.

“While we support any efforts to get Britain building again and increase the supply of homes more needs to be done if we are to see the progress that is so vital. Rachel Reeves failed to address the sector’s most key challenges including how we’re supposed to build 1.5m new homes without more skilled workers, an overhaul of the planning process and better land availability in areas people want to live. 

“The government’s pledges are aligned with our goals but the sector needs robust investment and a clear roadmap if we are to see any meaningful change.”