Chancellor Rachel Reeves gave her Spring Statement today, with a restrained but optimistic eye to the future
In her opening remarks for the 2025 Spring Statement, Reeves admitted that the “global economy has become more uncertain” with the war in Ukraine and conflict in Gaza continuing, which many are also taking as a nod to the chaotic start to the second Trump administration.
After taking a customary potshot at the mini-budget of 2022, Reeves laid out the rest of her directives for the UK, including the controversial cuts to disability support and welfare that have already been lambasted by many sitting Labour MPs.
As international tensions rise, many will be unsuprised to see an increase in defence spending, funded largely by reducing international aid funds and money saved from the scrapping of NHS England.
What did the 2025 Spring Statement say about construction?
The OBR have predicted that that housebuilding will reach a 40-year high, hitting 305,000 homes a year by the end of the forecast period. This would deliver 1.3m homes over the next five years, close to the manifesto promise of 1.5m within this parliament.
A construction training package would train 60,000 workers to build homes, as well as an additional investment of £2bn in social and affordable housing announced yesterday.
Industry reactions were positive, if hesitant
Chris Ball, UK & Ireland president, AtkinsRéalis said: “The Spring Statement confirmed the fiscal realities and tough choices facing the UK, but it also reinforces the need to forge ahead with plans that would unlock economic growth across the country.
“It’s encouraging to see the Chancellor repeat her commitment to increase capital spending on infrastructure. The UK urgently needs to upgrade its ageing infrastructure and deliver systems, networks and built environments fit for the future. This place-based growth will benefit communities and boost opportunities across the country, and it can be achieved by mobilising public and private investment alongside reforms to the planning system.
“The additional £2bn funding for affordable homes will help to deliver on the Government’s housing targets, but it could also drive immediate growth by increasing the share of funds for scalable SME housing providers who can grow capacity and invest in innovative manufacturing methods to speed up delivery of high quality, low carbon, affordable homes across the country.
“Recent announcements on vital infrastructure projects such as Lower Thames Crossing and airport expansion at Heathrow and Gatwick all send a positive message to industry: as we await the publication of a long term project pipeline within the 10 Year Infrastructure Strategy, we also stand ready to contribute to the models, plans and discussions needed to realise the potential for growth and deliver value for money.”
In response to the Chancellor’s 2025 Spring Statement, the BPI chief executive Melanie Leech said: “Against an uncertain economic backdrop the Chancellor has doubled down on the commitment to ‘back the builders’, with the OBR forecasting 1.3m homes could be delivered by 2029/30 and planning reforms could be a significant driver of GDP growth. This message will be welcomed by the industry, as will the commitments to maintain capital spending on infrastructure and day-to-day Government spending alongside new funding to support construction skills.
“However, we would have liked the Chancellor to unlock even more investment in the context of Regulating for Growth. Delays caused by the Building Safety Regulator are still blocking new home delivery, pension funds need to be allowed to invest more in UK property, and further planning reform is needed to make it easier for institutional money to fund more social and purpose-built private rented homes. We need the whole industry to be firing on all cylinders, including our under-resourced planning departments. That means 3000 more planners rather than the 300 that have been pledged and we would urge Government to consider how its Transformation Fund can be used to enhance skills and capacity.”
Robbie Blackhurst, chair at the Centre for Construction Best Practice: “Chancellor Rachel Reeves’ 2025 Spring Statement on March 26th built on the foundations laid in her Autumn budget, focusing on housing, infrastructure, and sustainability. While the ambitions are clear, these targets will remain out of reach unless the built environment sector receives relief from the financial pressures weighing it down.
“The £3.4bn levy on new homes, designed to fund building safety remediation after Grenfell, raises serious concerns. While the intention is clear, this levy will hit developers hard—especially SMEs who are already struggling with rising material costs and regulatory pressures. If mishandled, this levy could delay projects, halt developments, or leave sites abandoned, worsening the housing shortage.
“The government’s 10-year infrastructure strategy that includes funding for long-term sustainability projects is welcomed, but there’s cautious optimism in the air about how this money will be used. Without clear action and robust plans, this could be just another announcement that fails to deliver results on the ground.
“The built environment sector is one of the largest employers, though the rise in National Insurance Contributions (NICs) to 15% is set to place further strain on our sector which needs to attract just under 251,500 workers by 2028 to maintain its current state – not to mention delivering long-term government ambitions.
“Main contractors, subcontractors and material suppliers will feel the pinch of these increased costs, which could stifle the appetite to recruit and undermine the government’s “Get Britain Building” initiative through industry-invested skills hubs.
“Labour’s election pledges aimed at housing reform and supporting construction growth are now facing the reality of new taxes and rising costs. For the sector to thrive, the government must balance spending pressures with real support, understanding and investment in the built environment.
“The sector’s future depends on the government’s ability to deliver on its promises—only then can we tackle housing shortages, meet government targets and build a sustainable future.”
“We need continued investment, not cuts”
Sean Keyes, CEO, Sutcliffe commented: “If Rachel Reeves’ announced public spending cuts hit planned infrastructure projects, then this is bad news for the construction industry. We need continued investment, not cuts, to fix housing shortages and boost the economy. What’s needed now is stability and clarity to help us chart a clear path forward as uncertainty deters developers from taking even the slightest risk and expanding their project portfolios, reducing the future housing stock. For that reason, I welcome Rachel Reeves’ announcement of an additional £2bn for social housing, aimed at softening the blow of today’s spending cuts, as well as the additional £20m housing package announced by Housing and Planning Minister, Matthew Pennycock.
“This funding is set to deliver 18,000 social homes, contributing to Labour’s broader ambition of building 1.5m homes by the end of the parliamentary term. While there’s no doubt that this move is a vital step towards addressing urgent housing needs, I remain skeptical about whether these targets can truly be met. That said, the idea that prosperity can be achieved through higher taxation in the future is fundamentally flawed. An escalating tax burden will stifle innovation and ultimately impede economic growth. The national insurance increases are a tax on employing people which will be felt by all businesses and will discourage growth by taking money out of their cash reserves.
“Addressing this issue is crucial to protecting the country’s business landscape—something I believe this statement merely touches on without truly confronting.”
Dave Seed, managing director, Qube Residential said: “Despite the government’s commitment to a single budget each year to provide much-needed stability, today’s spring statement announced by Rachel Reeves, while not a proper budget, highlights the government’s continuous promise of growth, even though it aims to achieve this by making spending cuts and tax increases. The public spending cuts announced today will almost certainly impact the broader economy, further slowing the already sluggish housing market as confidence continues to decline. Uncertainty discourages landlords and even developers from expanding portfolios, limiting the rental housing stock.
“That said, I support Rachel Reeves’ announcement of an additional £2bn for affordable housing. This funding is set to deliver 18,000 social homes, though it’s undoubtedly aimed at softening the blow of today’s spending cuts. However, these sudden cuts could still discourage both current and prospective investors, impacting long-term housing supply and market stability. Developers and landlords may find some comfort in this pro-growth stance, but many will likely remain hesitant to make any major moves after today’s announcement which was meant to provide reassurance.”
Clive Docwra, managing director of McBains, said: “Given the fragility of the economy and the need to provide a growth stimulus, there was little new in today’s statement to cheer the construction sector, given that much, such as the apprenticeships reforms, had been previously announced.
“On the plus side, the £2.2bn defence spending boost will have benefits for a number of construction firms operating in the sector. But we would have also liked to have seen some encouragement to give investors and developers increased confidence to commit to housebuilding projects which could help deliver the government’s target.
“The OBR projection that the government’s planning reforms will lead to housebuilding reaching a 40-year high is one thing, but whether it means the government will actually hit its ambitious target is another, because we need to achieve numbers not seen since the 1950s.”
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