Yesterday, chancellor Rachel Reeves announced the first Labour budget in nearly 15 years. Here, industry experts share their opinion, with some noting that the construction sector may not have received the level of support anticipated
The 2024 Autumn budget was laid out in full yesterday afternoon, covering aspects from HS2 to funding social housing.
However, there was a lack of mention or support for the construction sector specifically. Many industry experts have expressed mixed emotions about this:
Some express optimism at a “forward looking” budget
Iain McKenzie, CEO of The Guild of Property Professionals, said: “Today’s Budget showed very clearly that public services and fixing what is broken are the priorities.
“First-time buyers and renters remain largely unscathed by tax rises, as these tend to be people the Government has identified as ‘working people’. For those still saving for a deposit, any surprise tax hikes would have been a major hindrance to savings goals.
“A pledge to increase the amount of affordable houses available to buy is good news for renters looking to escape the costly rental market.”
Nathan Feddy, co-founder and chief executive of Manchester-based Vector Homes, said: “The Chancellor’s budget is a robust and forward-looking commitment to the UK’s construction and innovation sectors, particularly relevant to Manchester, where Vector is based.
“The decision to maintain R&D incentives and allocate an additional £20bn to research is invaluable. This funding ensures that the UK remains competitive on a global scale and fosters a strong environment for advancing construction technology, sustainable materials and other critical innovations.
“Equally impactful are the targeted reforms in the housebuilding sector, especially the additional funding for affordable and social housing, which addresses a pressing need.
“Simplifying and strengthening the planning system with more officers will help streamline project approvals, creating much-needed efficiency for companies working to deliver housing at scale and speed.
“This budget lays the groundwork for a more resilient housing market and empowers the UK’s construction tech ecosystem to bring advanced, cost-effective solutions to communities across the country.”
©iStock | Laurence Dutton
Louise Drew, partner and head of building communities at law firm, Shakespeare Martineau, said: “This Budget is a welcome breath of fresh air. With changes to Right to Buy, the introduction of a rent cap and a boost to the Affordable Homes Programme, the new government has proven it is not pandering for votes but actively creating sound policies to fix a neglected, broken system.
“It’s impossible to predict whether these changes will be enough to solve all the sector’s woes, but they are a positive start and focus on a long-term solution that is flexible to change, whilst still providing security, certainty and sustainability for the sector.
“This government seems to finally understand that any housing strategy must be designed to last longer than the average six-month lifespan of the average housing
minister under their predecessors. If this approach continues, the sector will thank them for it.”
Some experts view the budget as a “mixed bag”
Clive Docwra, Managing Director of McBains, said: “The sector will see today’s Budget as a mixed bag. Greater spending on infrastructure like major rail projects has the potential for a positive knock-on effect on a raft of construction sectors, beyond that of infrastructure itself.
“Increasing the affordable homes grant to local authorities and allowing them greater protection to keep 100% of receipts generated by Right to Buy sales will give councils a more reliable income stream to expand the number of homes being built which is good news for housebuilders.
“On the flip side, a number of our clients and industry colleagues say the increase in employers’ NIC contributions has the potential for a negative impact on wages and job creation at a time when skills shortages mean employers need to be paying competitive wages to attract entrants into the industry.
“We would have also liked to have seen an extension on the zero rate of VAT on installations of energy savings materials and would have also welcomed more energy-saving technologies and materials being brought into the scope of the relief to give an impetus to retrofitting.”
RIBA President Muyiwa Oki said: “Given the huge demand for housing, the £500 million top-up to the Affordable Homes Programme – as part of today’s Budget – is desperately needed.
“But this pocket-sized sum isn’t going to deliver a home for everybody who needs one, including the hundreds of thousands of people waiting for social housing. Alongside calling for next year’s Spending Review to boost the social housing pot, we urge the Government to consider its overall approach to funding social homes.
“This includes exploring different models that reduce the net cost of delivery, such as that outlined in our report, Foundations for the Future. Fundamentally, housebuilding needs to be more than a numbers game. Places must be well-designed, well-connected, inclusive and accessible, which means ensuring sufficient infrastructure is developed alongside new homes. That means building on today’s infrastructure announcements – because, ultimately, we must create places where people want to live.”
©iStock | ChrisHepburn
Richard Mussell, managing director of specialist surveying and construction consultancy, Rund, said: “In this Autumn Budget, the Chancellor has set the tone for growth towards building 1.5 million new homes over the next five years, albeit with caveats that I believe need to be addressed to ensure that investment is maximised.
“For affordable housing, the historic reduction in private new build housing has increased the pressure on housing associations to maintain the flow of affordable homes across the country.
“The package to deliver up to 5,000 new affordable social homes with £500 million in new funding for the Affordable Homes Programme is welcome, but I would have liked to have seen the announcement of more affordable lending options for housing associations and developers – especially to unlock more opportunities for joint ventures and encourage the much-needed development of new affordable, and for that matter private residential, property on the government’s recently announced £68m investment in brownfield site housing development. Rund sees firsthand the many challenges that Brownfield sites have, and funding alone cannot unlock disused brownfield sites.
“We urgently need the right construction skills and expertise to navigate a new influx of development on Brownfield sites and indeed the wider need for new build housing development through effective planning, development and delivery. As a lack of skilled workers in our sector remains a key issue, and the Chancellor’s reiteration today of its plans to hire 300 new planning officers in my opinion does little to address the true scale of the problem. We need to meet the skills shortage head on, and it is still to be seen what Skills England will achieve for our sector.
“It is important to remember that property and construction is resilient. When looking at the Budget through this lens, we as an industry can do more to extract the positives and navigate any challenges.”
Melanie Leech, Chief Executive, British Property Federation, said: “With no concessions on the overall business rates burden today’s announcements on this are just robbing Peter to pay Paul. However, the Chancellor has at least recognised the business rates system is broken and has signposted the direction towards a reformed system. In the meantime, recognition of the unsustainable burden on retail, leisure and hospitality sectors and measures to continue to support them are welcome, but alongside the employer tax increases announced don’t go far enough to provide our high streets with the protection they need today.
“Measures to support the delivery of more homes are welcome but the Chancellor knows that much more is needed if the Government is to deliver on its 1.5 million homes pledge. The promised housing strategy needs to be much bolder and go much further. This includes unlocking the billions of pounds of investment into the build-to-rent sector, so it is particularly disappointing that Rachel Reeves did not take the opportunity to reverse the previous Government’s decision to abolish multiple dwellings relief announced in Spring.”
A collection of modern British banknotes surrounding the HM Revenue & Customs heading on a UK Government tax form.
Dave Dargan, co-founder and CEO of Starship, said: “This budget marked a major test for the Chancellor, as she faced the challenge of ensuring future economic stability while addressing a large financial shortfall. At the same time, she was tasked with delivering a major manifesto promise to build 1.5m new homes during the government’s premiership. Sir Keir Starmer has been very clear about the urgent need to increase the UK’s housing stock, and this budget signalled its commitment to making good on that promise by investing £5bn. While targeted tax reforms, when invested in more sustainable housing developments, could provide long term economic benefits, I remain slightly cautious from a business owner’s perspective.
“Employer’s national insurance contributions are already the country’s second-largest revenue stream, so any increase is going to place additional pressure on employers operating in already challenging markets. I am concerned that this added burden may hinder growth, slow job creation, and reduce the likelihood of investment in key areas. The increase in capital gains tax by 24% collectively, for example, could disproportionately impact developers, which is counterproductive; as profit margins narrow, developers may be deterred from pursuing certain projects.
“That said, if these measures succeed in regenerating local communities and even paving the way for a more sustainable, zero-energy bill future, then this budget may prove to be less ‘painful’ than first imagined, though there’s no denying that I would have preferred to see this funded without increasing these taxes.”
Other industry experts expressed disappointment
Sean Keyes, CEO of Sutcliffe, said: “The array of tax-raising changes in today’s budget is somewhat worrying considering our tax burden already sits amongst one of the highest. For the business sector to participate and fund this government’s initiatives, it must be certain that the new, higher taxes will be used appropriately.
“Developers will also be impacted by the collective 24% increase in capital gains tax included in today’s announcement. Developers are less inclined to take on new projects or extend current ones when profit margins are constrained; though there’s no doubt that the government has shown a welcome desire in the months since the election to lift the major constraints on not only house building and achieving its 1.5m target by investing £5bn to deliver this programme, but other major infrastructure projects that could accelerate economic growth in alignment with today’s budget.”
©iStock | Ijubaphoto
Tom Allen, managing director at Signature London, said: “For the first Labour budget in 14 years, we see nothing but hot air for the construction industry. First construction’s omission in Labour’s new industrial strategy and now a series of measures that either ignore construction entirely or potentially suffocate firms already treading water in our sector. How can we get Britain building again without the construction industry?
“Investment and innovation in infrastructure is essential to build the strong economy the Chancellor has committed to delivering. Yet, a rise in ENIC is fundamentally a tax on growth for construction and these measures fail to recognise the impact it will have on cash flow particularly for medium sized businesses.
“From higher staffing costs and impacts on profit margins to broader pressure on budget planning and investment. The Chancellor may say that the hike will raise an extra £25bn per year to deliver strength and stability, but if half the firms that would benefit from an improved economy have been forced to downsize or shut down, what’s the point?
“In reality, these measures will do nothing but kill competition in our industry. What we really need is construction to be taken as a serious industry for growth that can directly contribute to economic stability, rather than it being shunned in all critical planning by our government. Only then can smart, targeted interventions and investments be made that deliver for our industry and for our country.”
Allan Wright, MD at Civils & Lintels, said: “When Labour failed to include construction within its industrial strategy earlier this month, I was not alone in expressing my surprise and frustration that the government’s early focus and commitment had seemingly lost momentum so quickly.
“The irrefutable fact that, in the intervening weeks, Labour has failed to respond meaningfully to the sector’s challenge alongside its further exclusion from today’s Budget speech, appears completely baffling.
“Clarity on the key issues should have come today. Instead, we’re left still asking when much-needed planning reform be delivered, and when the government will support young people on to the housing ladder.
“These areas could, and should, have all been addressed to provide the tangible detail and confidence that the construction and housebuilding sectors so desperately need in what currently remains a subdued market.
“I can only hope that sector dissatisfaction won’t go unheard for too much longer and that the government eventually recognises the vital role that construction plays in the buoyancy of UK plc.”
Simon Harbour, partner in building consultancy at Rapleys, said: “The construction and building sectors are suffering from an acute lack of talent at a time when it’s never been more needed – and that’s before the targeted 1.5m homes the Government has pledged are taken into consideration.
“The building industry – whether on site labourers or professional consultancy services are suffering a real squeeze on talent with young adults attracted to different university courses and homegrown construction talent lagging since Brexit saw an exodus of skilled Europeans. The Cladding and RAAC crises have highlighted more than ever the need for qualified building surveyors, yet the numbers aren’t there. Funding for apprenticeships is crucial, as well as greater communication of other building-related work – this needs to start before University level and proper attention to this is urgently needed for the Government to achieve its goals – such a shame this crucial part of the building puzzle was missing from the Budget.”
The post Industry reacts to 2024 Autumn budget appeared first on Planning, Building & Construction Today.
