With the final announcement of the budget yesterday, several construction industry bodies have put out their opinions on the measures
After a long wait, the Autumn Budget 2025 was announced by chancellor Rachel Reeves yesterday.
Several of the announcements will affect the construction industry, and industry leaders have shared how helpful or damaging these will be.
Brian Berry, chief executive of the Federation of Master Builders
“Today’s announcement on landfill tax reform is a big win for small house builders, saving them thousands on new build costs. Alongside this, making apprenticeship training for under-25s in SMEs free from paying in the co-investment sum when hiring under 25’s will be a boost, alongside much needed simplification of the apprenticeship application process.
“The £48m investment to boost planning capacity is further positive step. Local planning departments are under immense strain, and this funding will help unlock stalled housing projects, but this seems a small sum of money to fix a very big problem. A well-resourced planning system is essential if we are to meet housing targets, and SMEs must be at the heart of delivery. Supporting small builders to get spades in the ground will ensure Britain gets the high-quality homes communities need.
“However, the rise in minimum wage will squeeze bottom lines and the freeze in tax thresholds has the potential to push many builders into a higher tax bracket. It’s also disappointing to see the Chancellor miss the opportunity to back household energy upgrades of any kind, even rolling back on the ECO scheme. Upgrading homes will be vital to keep people warm in winter and cool in summer. This Budget offers welcome steps forward, but overall I can see many builders feeling underwhelmed.”
Eddie Tuttle, director of policy, research and external affairs at the Chartered Institute Of Building
“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.”
Ben Goodwin, director of policy & public affairs at the Civil Engineering Contractors Association
“Contractors will welcome the message in this Budget that infrastructure investment is central to the UK’s growth strategy.
“We are particularly pleased to see that Government has listened to industry, and decided not to go ahead with converging rates of Landfill Tax – a proposed reform that would have severely hamstrung the ability of CECA members to deliver projects cost-effectively.
“The decision not to go ahead with such a ruinous policy is a result of listening to industry, and for that we applaud the Government, in seeking to build consensus on building a better future for Britain.
“In the context of the UK’s fiscal position, infrastructure investment is not a luxury – it is the foundation for long-term growth. The Office for Budget Responsibility’s warning that UK productivity continues to lag behind international peers must be a wake-up call.
“Commitments on the Lower Thames Crossing, the Transpennine Route Upgrade, city-region transport and local roads will all support jobs, improve connectivity and boost productivity.
“But CECA members are still operating in what our latest Workload Trends Survey describes as a ‘two-speed’ industry, with energy and utilities holding up while roads, rail and other core sectors lag behind. The test of this Budget will be whether these high-level commitments translate rapidly into a visible, funded pipeline of deliverable projects.
“We need clear, stable investment programmes, backed by fair procurement models and a skills system that lets employers invest in the workforce needed to deliver.
“Infrastructure investment is the single most effective lever the Chancellor has to grow the economy sustainably – and the most cost-effective way of improving the lives of people across England, Scotland and Wales.
“The Government must turn the page on the period of uncertainty and froth that has characterised the weeks leading up to today’s Budget. Now is the time to get down to business, partner with industry, and drive the nation forward – by building a better future for businesses and communities, and a brighter future for UK plc.”
Neil Jefferson, chief executive of the Home Builders Federation
“It is encouraging that the Chancellor has listened to industry concerns and chosen not to impose the 3000% increase in Landfill Tax consulted on earlier in the year, but the revised measures still represent an increase in tax on development when the economics of home building are already challenged.
“Whilst the Government’s planning reforms have been very positive, ministers need to now acknowledge the worsening viability of new housing schemes as a result of new taxes, levies and policy costs.
The Budget also represents another missed opportunity to address the lack of support for potential home buyers, which, amidst a lack of affordable mortgage lending, is suppressing demand and preventing builders from increasing housing supply.
“If Government fails to address the viability and affordability constraints, its housing ambitions will become increasingly unachievable.”
Gavin Smart, chief executive of the Chartered Institute of Housing
“Today’s Budget contains welcome steps to tackle the cost-of-living challenge, with the removal of the two-child limit — which CIH has long called for — set to lift thousands of families out of poverty. This is an important milestone and a clear signal of the government’s commitment to supporting those facing the greatest hardship.
“However, without changes to the benefit cap and local housing allowance (LHA), too many families will still struggle to afford their rent or meet basic living costs. The benefit cap continues to restrict support for households most in need, while frozen LHA rates leave renters facing unmanageable shortfalls. Without action, these pressures risk undermining the positive impact of ending the two-child limit and could leave families facing rising arrears, overcrowding, and homelessness.
“With the need to boost supply more urgent than ever, we had hoped the government would confirm how social rent convergence will be reintroduced. We are pleased, however, to see a renewed commitment to this policy, as set out at the Spending Review. Rent convergence is vital to ensuring social landlords have the income required to maintain existing homes and build much-needed new ones. Delaying final confirmation until January creates uncertainty for providers already working to tight statutory rent-setting timelines and risks slowing progress.
“Clarity early in the new year — with a level set that enables meaningful convergence — will allow providers to plan confidently and bid into the Social and Affordable Homes Programme, supporting the government’s wider housebuilding ambitions.
“A significant missed opportunity in today’s Budget is the lack of support for critical supported housing schemes, which are becoming increasingly difficult to sustain. These services provide vital support to some of the most vulnerable people and prevent far higher costs falling on health, social care, and the justice system. Targeted investment would protect a sector that is essential to both prevention and long-term public service efficiency.
“On energy, we welcome the Chancellor’s recognition that direct action was needed to reduce bills after years of persistently high costs that have forced many into impossible choices. However, cutting billions of pounds previously allocated to making homes permanently warmer risks weakening the long-term solution to fuel poverty and putting supply chains and jobs at risk.
“We now need the government to publish its Warm Homes Plan, setting out how the £14.7bn in capital funding will be allocated, confirming future energy efficiency standards in both rented sectors, and taking further steps to make clean heating more affordable.
“In summary, we welcome the government’s recognition that affordable housing plays a central role in tackling the cost-of-living crisis. But new homes take time to deliver, and action is needed now. Strengthening the social security system, supporting essential supported housing, and providing long-term certainty for social landlords must all be part of a comprehensive approach to reduce poverty, improve affordability, and sustain a resilient housing sector.”
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