Building on budgets – the Spring Statement’s impact on the construction sector

Written by Ian Hall, Framework Lead (NWCH) and Amelia Wyatt, Assistant Framework Manager (NWCH)

The Spring Budget is here… Prefaced with a nod to global uncertainty and including controversial directives such as cuts to welfare and disability payments, the implications of the spring budget on the construction sector have perhaps been drowned out by the furore of it all.

The government has not been shy about making ‘difficult decisions’ to plug an inherited ‘£20billion black hole’. The Autumn Budget announcement, back in October, announced significant increases to Employers NI Contributions – a bitter pill for businesses to swallow, for the construction sector, was only slightly sweetened by Labour’s promise to ‘Build, build, build’.

With no significant funding announced for housebuilding in October, the Spring Budget has been awaited with cautious interest. At last, we have some clarity on what ‘Build, build, build’ entails.

This time around, Chancellor Rachel Reeves made it clear that her directives would focus on growth, also ensuring Britain’s security and prosperity were prioritised by increasing capital spend by a further £13 billion by 2029 to support housing, infrastructure and defence.

House building investment

The Labour Government has been clear in its ambition to build 1.5m new homes in this parliament. Described as ‘a down payment’ on this pledge, Chancellor Rachel Reeves announced a £2 billion boost to the Affordable Homes Programme for 2026-27, to support the delivery of 18,000 affordable and social homes; this is expected to be well received by SME housing providers who stand to benefit from this share of funds.

The stimulation in housebuilding is further supported by recent reforms in the Planning and Infrastructure Bill, namely delegating planning decisions to officers, establishing national development priorities, and promoting construction on underused land. Planning reforms alone are projected to deliver an additional 170,000 homes by 2029-30, contributing 0.2% to GDP. The OBR have predicted housebuilding will accelerate to 305,000 homes a year by the end of the forecast period, delivering a total of around 1.3m new homes over the next five years – a 40-year house building high.

Addressing skills shortages

To address the skills shortage in the construction sector, the government has allocated £625 million to train up to 60,000 new construction workers, and support employers to invest in training. This directive has been well received by the construction sector, which has been struggling with a skills gap in recent years. Qualified workers are needed if the sector is to have the capacity to deliver on Labour’s plans, and support the demand for housing and infrastructure projects, while implementing new technologies and innovation. The announcement of 10 new technical excellence colleges specialised in construction, in every region of England, has also been welcomed.

Defence

Few were surprised by the announced increase in defence spending – an additional £2.2 billion for MoD in 2025-26. Whilst there is a significant focus on technology and equipment, there are implications for UK real estate. The Spring statement highlighted that ‘capitalising on the opportunity presented by the buy-back of the MOD service families housing stock, it will refurbish the defence estate and provide military families with the homes they deserve’.

Overall, the construction sector has reacted well to the plans and opportunities outlined in the Spring budget, however we can’t overlook that there are economic challenges ahead, and other uncertainties in the construction sector.