Spring Budget & What It Means For The Construction Industry...

The 2025 Spring budget was unveiled yesterday by the Chancellor Rachel Reeves and when it comes to its impact on the construction industry, it’s a mixed bag. We will be highlighting some of the key points that could potentially affect our industry...

How Will The Spring Budget Effect The Construction Industry?

Housing and Infrastructure

• £2 billion boost to the Affordable Homes Programme to support the construction of 1.3 million new homes by 2029/2030

• Planning reforms aimed at generating £6.8 billion in economic growth and accelerating housing developments

• £240 million allocated to build 7,200 homes in Barking and develop a new life sciences hub in Canary Wharf with 750 homes

• Establishment of the Euston Housing Delivery Group with £4 million to support 10,000 new homes

• Cambridge Biomedical Campus development backed with £10.2 million of funding, including £7.2 million for transport improvements

Workforce & Skills

• £600 million investment in construction training to train up to 60,000 new construction workers, helping to ease labour shortages

• £3 million fund to support local planning authorities, aiming to improve planning processes and reduce project delays

Green & Sustainable Construction

• £120 million for the Green Industries Growth Accelerator (GIGA) to support low-carbon manufacturing supply chains, benefitting sustainable construction

Taxation & Financial Measures

• Capital Gains Tax reduction from 28% to 24% on residential properties, which may encourage more property transactions and developments

• Removal of Stamp Duty Land Tax (SDLT) relief for multiple dwellings, potentially impacting developers

Wider Economic Factors

• The UK economy is projected to grow by 1% in 2025

• Inflation expected to average 3.2% this year

• The tax burden will rise to 37.7% of GDP by 2027, which may impact business costs

Construction Budget Summary

The 2025 Budget signals a strong push for housing and infrastructure, with billions in funding to support large-scale housing projects and improve planning processes. The investment in workforce training is a positive step in tackling skills shortages, ensuring a strong pipeline of workers to meet demand.

However, the removal of Stamp Duty Land Tax Relief and a higher tax burden could put pressure on developers. Welfare cuts may also affect consumer spending which could potentially impact housing demand.

Overall, this budget brings both opportunities and challenges for the construction industry. Companies that adapt to planning reforms, utilise available funding and invest in workforce development will be best placed for growth in the coming years.