The Chancellor Rachel Reeves has unveiled a Budget that she maintains takes the fair choices to deliver on the country’s priorities of cutting the cost of living, reducing NHS waiting lists and driving down our borrowing and debt.
Despite a decade of damage and historic underinvestment under the previous government which led to a £16 billion downgrade to productivity, the Chancellor was clear she was determined to defy the forecasts and break Britain out of its cycle of decline through stability, investment and reform.
Eddie Tuttle, Director of Policy, Research and External Affairs at CIOB, said: “We’re glad to hear there are no immediate rises planned to National Insurance and pension contributions, as well as business rates, which will provide consistency for the industry. However, it should still be noted the construction industry continues to face significant economic challenges and many companies, particularly Small and Medium-sized Enterprises (SMEs), face tough times.
“As a sector made primarily of SMEs (more than 99 per cent of the UK construction industry are SMEs), many companies are already struggling with rising costs and a dwindling workforce.
“In the 12 months to August 2025, almost 4,000 construction companies in England and Wales became insolvent, roughly 76 a week and the most of any industry.
“As we said in our October report, which focused on the industry’s capacity and capability challenge, Government and industry leaders must look beyond short-term fixes and explore longer-term solutions which aim to reduce volatility and shift the sector towards being more resilient. We believe having a wider view of the industry will allow for better policy that looks to harness the data the industry already produces and join the dots between the different government departments that cover construction.
“We also urge Government to take forward long-overdue VAT reform. Introducing VAT on demolition would help level the playing field between demolition-and-rebuild projects and retrofit. At present, retrofit work is subject to VAT while demolition is not, making the more sustainable option far less financially attractive.
“In addition, improving procurement practices must be a priority. We encourage the Government to promote procurement strategies that involve early engagement with local suppliers and create long-term collaboration within the supply chain. This would help build capacity across the industry, support SMEs and ultimately deliver better value and resilience in public projects.
“Finally, we welcome the Chancellor's acknowledgement of the need to improve the apprenticeship system for SMEs and we look forward to hearing more about how this scheme applies to the construction industry.”
Professor Noble Francis, CPA Economics Director said speculation in advance of the Autumn Budget had been at an all-time high and it couldn’t come quickly enough, if only to get rid of the uncertainty.
“The majority of the Budget was unsurprisingly focused on where the tax rises would be and how financial markets would react, rather than on capital investment, which was the focus of the government’s Spending Review earlier in the year,” said Prof Francis. “The Budget tax rises were backend-loaded towards the end of the parliament and not matched by spending cuts, which may be of concern to financial markets. However, on the positive side, the government did not make the same mistake as last year, when the burden fell largely on businesses through increases in employers’ National Insurance Contributions and lower the thresholds. However, it did announce an increase in the National Living Wage by 4.1% in April 2026, which means that it will have increased by 43% in the space of just five years.
“In terms of key policies directly affecting construction and product manufacturing, the government published its response to the Landfill Tax, stating that it will not proceed with transitioning to a single rate of Landfill Tax by 2030, though the lower rate will essentially double to £8.65 per tonne in 2026/27. In addition, the government said that the Energy Company Obligation (ECO) will end in March 2026 to reduce household energy bills in the near term, while simultaneously announcing an additional £1.5 billion in capital investment for the Warm Homes Plan. However, it did not state what the £1.5 billion would be used for, except to note that further details would be available in the Warm Homes Plan.”
Simon McWhirter, Chief Executive, UKGBC, was not so diplomatic.
“Cutting funding for insulation is bloody reckless, it will cost jobs and make Britain’s homes colder and more expensive to heat,” he said. “While we welcome the electricity levy reduction announcement, this progress is overshadowed by the damaging cut to the national insulation scheme.
“After claiming global leadership at COP30 last week, this move delivers the opposite at home. Cutting this funding, on Fuel Poverty Awareness Day, will destroy thousands of jobs, wipe out investor confidence, and leave low-income households colder and paying higher bills.”
Dr David Crosthwaite, chief economist at BCIS, said there was little in this Budget for the construction sector.
“Plus points include £900 million additional capital for the Lower Thames Crossing scheme, free training for under-25 apprentices for SMEs, and steadfastness on Spending Review investments in infrastructure and housing,” he explained.
“Yet the Chancellor’s celebration of the government’s planning overhaul to ‘get Britain building’ seemed misplaced.
“Construction output and housebuilding data tell another story – one of slow demand and a shrinking workforce.
“The Chancellor called private investment the lifeblood of economic growth. But as we found out first from the OBR’s leak, the threshold for employer National Insurance contributions (NICs) will freeze from 2028-29 and NICs will be charged on salary-sacrificed pension contributions.
“Will this government ever learn from the unintended consequences of its policies?
“Increasing the cost of doing business is likely to be inflationary. Higher costs will inevitably be passed on, placing further upward pressure on tender prices and reducing firms' ability to hire. This could pile on more friction at a time when construction activity is already fragile. The above-inflation rise in the minimum wage for young people is also not as shiny as it sounds. It assumes that economic conditions are conducive for businesses to increase recruitment. That's not currently the case, as evidenced by the high unemployment rate.
“For construction, already faced with chronic labour gaps and rocky investor confidence, this Budget might create more issues than it solves.”
RICS recognises the significant challenges facing the Government and the need for a difficult financial balancing act.
RICS welcomes the continued commitment to major infrastructure projects and skills across the country. The announcement of free training for all apprentices up to the age of 25 at SMEs will help young people to gain critical experience including in the built and natural environment sector. This should help expand the surveying pipeline.
The government’s continued commitment to improving the business rates system is necessary, but meaningful and wholesale reform is still needed. Business rates must be reflective of a modern economy, and those that require physical assets should only pay a fair and proportionate share of the burden.
Scrapping the Energy Company Obligation (ECO) scheme with no prospect of an alternative mechanism has the potential to hamper the country’s ambition to tackle the UK’s retrofit burden. We must catalyse a market for retrofitting our existing homes to meet net emissions targets and create the high-paying jobs of the future.
Recent RICS research* highlights the potential risk of the application of National Insurance at a rate of 2% to landlord income. The findings indicate that these tax changes could encourage landlords to reconsider their investment in the market. This could have a knock-on effect of increased costs to tenants.
As the industry leader in valuation, RICS will ensure that surveyors’ expertise supports the fair implementation of the High Value Council Tax Surcharge.
RICS Chief Executive, Justin Young, said: “The Government faces many challenges, and RICS recognises the difficult balancing act it must play. There are positive moves, such as new support for apprentices under the age of 25, which should hopefully expand the pipeline of new talent into the surveying profession. It is encouraging that the Government is prioritising necessary reforms to the business rates system, and we are committed to supporting this effort through our members’ expertise.
“Whilst these changes are welcome, there are several measures which may weaken the housing market, such as raising tax on dividends, property, and savings income by 2%. Furthermore, it seems that commitments to sustainability are weakening. RICS is working with the Government to mitigate these effects and help it deliver its objectives.”
Stephen Phipson CBE, CEO of Make UK, said: “Given the difficult economic circumstances the Chancellor faced, as well as the intense speculation, this was a case of two steps forward one step back for manufacturers.
"On the upside, companies will welcome the decision to expand capital allowances for leased equipment and greater investment in Apprenticeships for SMEs. Funding for skills, business support and infrastructure, targeted at the Regional Mayors, will also help support growth. The Chancellor should also be commended for her personal intervention to kick start the consultation on the business energy support scheme which is vital if we are to address the UK’s eye watering and uncompetitive industrial energy prices.
"On the downside, however, restricting tax relief on salary sacrifice and, a further increase in the National Living Wage mean that manufacturers are again facing greater barriers to successful recruitment and retention of skilled staff. The electric vehicle road tax will also potentially hinder their adoption and damage an automotive sector already facing a challenge to meet its EV targets.
"The Government came to power promising that growth was going to be its number one mission and, while it was dealt poor cards, we have yet to see any significant upswing in our economic performance and productivity. It is the private sector that will provide this growth and create high value, high skill jobs and, while the industrial strategy was a major signal of intent, we need to see a much stronger focus on delivery.”
Yselkla Farmer, CEO of BEAMA, the trade body for manufacturers of electrical equipment, said: "We welcome the Government’s focus upon driving down energy bills for UK households, but further measures are needed to ensure that we are creating a sustainable energy system by supporting investment from consumers and businesses with credible, delivery-focused policies that bring the public along with us.
"With much still to do to achieve Clean Power by 2030 and a need to accelerate progress towards the Net Zero 2050 requirement, now is not the time to introduce uncertainty. The scrapping of the Energy Company Obligation and other domestic electricity levies will deliver immediate savings to energy bills. However, without a clear policy on how this essential funding will be replaced within the twice-delayed Warm Homes Plan, the Budget has added further policy confusion as we work towards Clean Power 2030.
"Manufacturers need policy consistency over time and tangible delivery plans to encourage investment, and Government should understand this investment cannot appear overnight. Businesses also continue to struggle with energy and hiring costs which have not been materially improved by today’s Budget.
"Our members enthusiastically welcomed the action plans for Clean Power, Industrial Strategy and Green Jobs, demonstrating the positive sentiment that Government can set. But manufacturers quickly need a clear and consistent policy to ensure short term relief is followed by long term improvements that will bring benefits to consumers for decades to come.
"Our members have consistently supported policies to reduce electricity costs as a top priority to help consumers and encourage investment in energy saving technologies. As such the bill savings announced in today’s Budget are welcome a short-term measure.
"However, while the Government has announced an additional £1.5bn capital spending to the Warm Homes Plan pot, industry will want to receive clarity as soon as possible on how this will be raised and spent following the scrappage of the Energy Company Obligation (ECO).
"Uncertainty remains over the publication of the delayed Warm Homes Plan, Future Homes Standard, and longer term structural changes to electricity prices. These policies are a great opportunity to stimulate consumer and business investment, economic growth, and accelerated decarbonisation.
"We will be supporting the Government to accelerate policy development and decisions to boost industry confidence and press ahead with developing an energy system fit for the present and future."
NFRC (National Federation of Roofing Contractors) warns that today’s Autumn Budget could further intensify the already severe cost pressures facing SME roofing businesses, as increases to the National Living Wage and apprentice wages are signalled for the future.
From April, the National Living Wage will rise by 4.1% to £12.71 per hour for workers aged 21 and over. The minimum wage for 18–20-year-olds will increase by 8.5% to £10.85, while rates for 16–17-year-olds and apprentices will rise by 6% to £8 per hour.
NFRC recognises the importance of improving living standards and attraction to our industry, however, repeated wage increases, National Insurance increases, and looming employment law reforms all reduce the ability of small and medium-sized roofing firms to recruit and grow at the rate needed to meet ambitious housing and infrastructure targets.
James Talman, Group CEO of NFRC, said, “Our Members want to pay fair wages and offer rewarding careers, but this Budget has announced more costs for employers at a time when margins are already tight. With NIC increases still being absorbed and the employment rights bill on the horizon, these wage rises will make taking on new staff even more difficult.”
NFRC’s latest Summer State of the Roofing Industry Report found that 76% of responding Members cited the cost of employment as a challenge facing their business, while 52% pointed to recruitment difficulties. The report also found that tender prices are being squeezed, further tightening headroom to take on much-needed people.
The impact of these costs is clear. The same report found that skilled labour shortages were impacting the amount of work businesses could take on for 65% of responding Members.
Positively, the Budget confirmed that training for under-25 apprentices will be made free for SMEs. We estimate this will save our Members £550 per apprentice. NFRC welcomes this direction of travel but cautions that the measure alone will not unlock the scale of workforce growth required to meet the Government’s housing, infrastructure and net zero ambitions.
Talman added, “Free apprenticeship training for SMEs is a positive and welcome step, and one we have long called for. But it will not, on its own, deliver the workforce growth the country urgently needs. Rising apprentice wages, alongside rising employment taxes and regulatory burdens, mean many firms simply cannot afford to take on more young people, however willing they may be.”
Another positive announcement was the confirmation of £13bn of flexible funding for seven mayors, which they can invest in skills support.
“As NFRC engages in the development of the second iteration of the Local Skills Improvement Plans, we are encouraged by the government’s recognition of the power of local initiatives to address skills concerns, but this must be truly employer and demand led if we are to see real change.”
NFRC welcomes the decision to halt plans to converge the two rates of landfill tax. We are also reassured by the doubling of fiscal headroom to £21.7 billion, which we hope will provide the stability businesses need to plan for the future. Commitments to increased investment in infrastructure, energy and housing are positive; however, record-high tax burdens and downgraded growth forecasts risk undermining the impact of these ambitions on the wider construction sector.
NFRC will immediately be consulting with Members on the impact of the budget to gather a wider picture of the impact of these announcements.
The Royal Town Planning Institute (RTPI) commends the significant funding announced in today’s Autumn budget but urges that long-term investment is key to building capacity and supporting the government’s growth agenda.
The chancellor has pledged £48 million additional funding to boost capacity in the planning system. This includes additional investment to recruit an extra 350 planners in England by expanding the Pathways to Planning graduate scheme and creating a new Planning Careers Hub to retain and retrain mid-career professionals.
The funding will take the total number of recruitments across the planning system to 1,400 by the end of this Parliament.The investment comes at a critical time for the planning system, as findings from the RTPI’s State of the Profession 2025 report show that one in five of planners across the UK expect to leave the profession within the next three years.
Dr Victoria Hills, Chief Executive of the RTPI, said: “Today’s Autumn Budget marks a watershed moment for the English planning system. This commitment has the potential to turn the tide on years of severe disinvestment, helping to keep experienced planners in the system and bring through the next generation. It’s a clear signal that planning is being treated as the critical public service it is.
“The new funding is not just a boost for local authorities, it is an acknowledgement that planners are vital to driving the government’s growth agenda and economic productivity.”
Robbie Calvert, Head of Policy and Public Affairs at the RTPI, said: “We wholly welcome the government’s investment despite the difficult fiscal environment. We now look forward to working with government and Higher Education Institutions to ensure this investment is sustained and directed where it’s needed most – the workforce of the future – and equip them with the skills, digital tools, well-being support and, most importantly a clear and strong sense of purpose.”
