The Chancellor promised a Budget to “get spades in the ground and cranes in the sky”. But for the construction sector, the announcements raised more questions than confidence.
Despite months of speculation, the measures fell short of what’s needed to unlock real investment in the built environment. Economic growth remains sluggish. Inflation is still high. Public sector debt is rising. And the market response? Flat. Gilt yields barely moved, a clear sign that investors were unconvinced.
No new barriers, but no bold steps either
With increases to the minimum wage adding to the cost burden of Employers’ National Insurance and changes to pension rules on the horizon, the Budget did little to improve conditions for businesses.
The apprenticeship levy still applies to large employers, missing an opportunity to tackle construction’s skills shortage. Frozen tax thresholds mean the UK’s tax burden is heading for a record high. That could have knock-on effects for workforce mobility, consumer demand, and business confidence.
In key sectors, the signals were mixed. The government has previously reaffirmed its commitment to the New Hospital Programme, and this was joined by an announcement of 250 new health centres. While welcome, details remain light. How much is genuinely new funding?
Private finance could play a critical role in delivering these facilities. The recent launch of the National Infrastructure and Service Transformation Authority (NISTA), along with references to new PPP models in the Ten-Year Infrastructure Strategy, suggest this may be the direction of travel. But without clarity on structure, risk, and return, private capital will remain on the sidelines.
Big ambitions, limited detail
There was some progress. Nuclear received a funding boost, and the 2025 Nuclear Regulatory Review could help accelerate delivery and reduce costs – if it delivers the transparency and agility needed.
But other strategic areas were overlooked. The Budget said little about digital infrastructure, despite soaring demand for data centres and rising global competition for investment. No incentives, no tax breaks, no clear plan.
Housing continues to face tough headwinds. Planning reforms may help in the long term, but inflation and interest rates are still making viability difficult. Innovative models like build-to-rent are gaining traction. And with creative thinking, there are still market opportunities. But wider growth will depend on improved borrowing conditions.
Looking ahead: reasons for cautious optimism
If inflation eases and interest rates follow, conditions could improve. Investments in transport, energy, and social infrastructure should also move from planning to delivery. With Government debt as a proportion of GDP close to record levels however, the broader fiscal outlook remains volatile.
But a sudden surge in activity could stretch the market. Years of underinvestment in skills and training mean capacity is thin. Shortages and inflationary pressure may challenge programme and cost certainty.
That said, with the right strategy in place, organisations can still progress their construction plans.
Strong cost control. Smart procurement. Clear risk management. That’s how to build with confidence.
The Budget didn’t deliver the spark the sector hoped for. But with clarity, collaboration, and commercial discipline, construction can still lead the UK’s next phase of growth.