The construction industry has responded to Labour’s first budget in 14 years, with Rachel Reeves setting out her plans to raise an additional £40bn in tax – the highest level of increases ever announced in a Budget.
Brian Berry, chief executive of the FMB, commented: “The Budget was the first opportunity for the new Government to set out its long-term financial plans for the country. In challenging economic conditions, the Chancellor of the Exchequer delivered a mixed Budget with promising plans for the long-term future of the construction industry, however it is likely to present substantial challenges to firms managing their business finances. At a time when SME builders are needing a boost, they may, like many in the country, have to take a hit before they see things get better. The Chancellor’s decision to significantly increase employers’ National Insurance contributions will create major headaches for firms looking to take on staff at a time when the building industry in desperate need of new workers. However, it is good that the Chancellor has shielded small companies by increasing Employment Allowance, as is the rise in the Apprenticeship wage which will help increase the appeal of a career in construction for young people.”
Wayne Douglas, managing director of City & Country, said: “It is heartening to see a budget so jam packed with the promise of economic growth built on the shoulders of the housebuilding industry. Previous governments have tinkered around the edges with changes to stamp duty and Help to Buy, but we know there is a chronic issue that runs far deeper. Resourcing local councils with more planners and funding to unlock unused land is a vital first step, but the missing puzzle piece is how the government will give SMEs the tools and environment to deliver.”
Adrian Watts, CEO at Croudace Homes, said: “Starmer’s Labour government has been clear from day one that they want to deliver on housing, a staunch contrast to their predecessor, with housing ministers in recent years causing political unrest for our industry. Labour has stuck true to their word so far, wasting no time in ripping up archaic and restrictive planning regulations and supporting housebuilders, particularly SMEs, in their development programmes. Housebuilding is a vital cog within the country’s economy, and without the right support, this will have huge ramifications for economic growth. Given Labour’s new positioning as the ‘party of homeownership’, it’s disappointing that the Chancellor hasn’t announced new measures to support the next generation of homeowners, with a failure to introduce long-term incentives that address affordability issues young people face.”
Tom Dodson, chief operations officer at Better Green Living, commented: “With Government’s promise to commit £1.4bn into rebuilding schools, the need to look further at the sector as a whole is required to modernise and future proof some of our most significant buildings. Retrofitting presents an opportunity to protect and renovate schools and higher education buildings, bringing them up to be more energy efficient and less carbon intensive than building new. Without the support from the UK Government, this unfortunately isn’t feasible.”
Sarah Jones, chief executive at Anchor, said: “Housing is rightly a key priority for the Government; we welcome the additional funding for the Affordable Homes Programme and look forward to hearing more about the long-term plan in the new year. We believe that 10% of Homes England’s capital funding budgets should be for homes for older people, as this would support the 35% of older people who our research shows would consider downsizing, supporting them and freeing up housing capacity. We welcome the consultation on a new long-term social housing rent settlement. A settlement of more than five years is essential so that we can plan our investment in our existing properties and building more.”
Mark Perry, chief executive at VIVID commented: “Monday’s statement by the Secretary of State for Housing, Communities and Local Government and today’s budget, which confirm a £500m top-up for the existing Affordable Homes Programme amongst other items, will give greater certainty and support to the sector. If anything, these announcements indicate the Government understands the pressures the sector’s facing and we should take some comfort from this. Of course, having to wait for the outcome of the Spring Spending Review linked to the next Homes England AHP is not ideal given the Government’s ambitious housing target for this parliamentary term but in any event, it’s vital this future funding programme is significant and has flexibility.”
Michael Wynne, director of sustainable housebuilder Q New Homes, said: “Over £5bn has been pledged towards the Government’s housing plans. An increase in funding to build thousands of affordable homes and social housing is welcome news to many. However, it is critical that affordable housing is built with the latest technology in home insulation and energy efficiency so that the mission to tackle fuel poverty is also taken into account. A commitment for homes to be built with clean energy sources ensures that residents enjoy the lowest possible energy bills. £3.4bn will be used to kickstart the Warm Homes Plan that will transform 350,000 homes, with a particular focus on low-income and social homes. In the long-term, the property industry must be looking towards sustainable living when embarking on construction projects.”
Places for People’s chief impact officer John Greaves said: “Labour continues to demonstrate its commitment to reversing decades of decline in affordable housing and we stand ready to help this Government bring transformative change to Communities. An injection of £500m to the current Affordable Homes Programme is a vital boost and in line with what we have been calling for all summer through our Time To Build campaign. But the UK needs sustained national investment in affordable housing to truly drive up supply, boost the economy and ease strain on the welfare system. Today’s landmark investment for Scotland now must be spent in its Affordable Housing Supply Programme, while parliament’s long-term housing strategy next Spring must set out further plans to get Britain building.”
Craig Robertson, director at environmental building services consultancy Wallace Whittle, said: “Any additional funding is welcome but you have to put it in context of the ambitions the Government has already announced. It wants to build 1.5 million homes in the next five years, and we’re already a good few months into this Government’s tenure. New homes don’t just spring out of the ground, which means that additional £5bn is going to have to work pretty hard. The missing piece of the puzzle is the housing strategy announced in the summer by Angela Rayner – if the Government can make it easier to access brownfield funding, get new developments to clear planning more quickly, and get the buy-in of industry, then they might have a fighting chance to making some progress.”
Andy Hill OBE, chief executive of The Hill Group commented: “Labour has made a promising start, but it’s crucial they maintain strong momentum and keep their foot firmly on the accelerator. My concern is that they’ve entered the race too cautiously, and without a sense of urgency, their target of 1.5 million homes is at risk due to a slow start. Delaying critical decisions on affordable housing funding in the next term until the spring is a disappointment and risks feeling like yet another setback for the industry to step up delivery. That said, the additional £500m for affordable homes in the current programme is an extremely positive step. This funding will allow stalled projects to resume, providing a boost to developments. However, the housing market typically grows from the ground up, and support for first-time buyers is essential for driving market momentum.”
Don Mclean, CEO of IES commented: “The budget’s lack of focus on green investment for buildings is a missed opportunity. It overlooks the potential for job creation, energy cost savings, and technological innovation that could stem from a robust green building initiative. Investing in the decarbonisation of the built environment is not just an environmental imperative – it’s an economic one. By neglecting this sector, we risk falling behind in the global race towards sustainable development and missing out on the economic benefits that come with being a leader in green technology and practices.”
James Dickens, managing director of Birmingham-based housebuilder Wavensmere Homes, said: “The economic cost of Reeves’ ‘balancing the books’ first Budget will be felt by the pockets of all those looking to move onto or up the property ladder, and by the housebuilders vying to deliver energy-efficient new homes. The £500m fund for an initial 5,000 extra council houses is certainly needed. However, Angela Rayner’s broader ‘£1bn council housing revolution’ could play into the hands of the increasingly powerful land-rich PLC housebuilders. Meanwhile, planning and pre-construction issues continue to negatively affect the supply of new homes, with as few as 135,000 expected to be built this year. Constructing 300,000 new homes per year remains a pipedream! The Chancellor and the Deputy Prime Minister should be finding ways to assist housebuilders with delivering the Future Homes Standard and Biodiversity Net Gain legislation, to counteract the cost burden being passed onto the consumer.”
Richard Risdon, managing director for UK and Europe at Mott MacDonald said: “Today’s confirmation on the changing of the fiscal rules, which could free up significant funding for major projects, shows that the government has recognised that growth is not possible without investment in infrastructure. The benefits extend to more than creating a firmer pipeline of work for us as an industry – the new assets it funds will deliver a better outcome for society too. The plans set out by Sir Keir Starmer for a mission led government are key to achieving net zero but can only be delivered in the timescales planned through consistent investment in infrastructure. Hearing the government’s commitment to progress HS2 from Birmingham to Euston demonstrates their understanding of the role of connectivity in delivering economic growth and opportunities. Nonetheless, the biggest challenge to realising these infrastructure investment plans is still the people. We urgently need government to work with us on the skills issue. I welcome the further commitment to Skills England in the Budget as we cannot build this vital infrastructure without the right people.”
Daniel Austin, CEO and co-founder at ASK Partners, said: “Following today’s Budget, there is good news for property developers. The promise of £5bn of investment for new homes contained within today’s announcement will be warmly welcomed. Increased supply should buoy the market and level out values; a plus for first time buyers, who conversely will be hit by the new lower stamp duty thresholds. Further, it was encouraging to hear specific reference of help being offered to SME housebuilders, who can unlock smaller projects to revitalise towns and cities, and the help for cities such as Cambridge to meet its potential as an area rife for property development amidst key life sciences campus developments, and the homes needed for the workers this attracts.”
Lawrence Turner, director at Boyer commented: “The housing market remains an important driver of growth for the UK economy and so it was quite right that the planning and development was prioritised in today’s Budget. The announcement of a £500m housing package as part of the Affordable Homes Programme is very welcome. This initiative reflects a much-needed commitment to increasing social housing by introducing measures to reduce Right to Buy discounts; and allowing councils to retain 100% of receipts generated from these sales to reinvest in social housing. It was encouraging to see a greater investment in local planning authorities (LPAs) who have been grappling with decreased resources and expertise since the austerity years. Addressing the construction industry’s persistent skills shortage is much needed to ensure/very welcome in ensuring the Government’s housing targets are achievable in practice, not just on paper. We very much welcome the additional £3bn of support for SMEs and the Build to Rent (BTR) sector, in the form of housing guarantee schemes.”
Tom Pike, director of planning at Lanpro said: “The planning and development sector has been stifled by uncertainty for far too many years. This has resulted in a housing crisis, general malaise in the industry and missed opportunities for the wider UK economy. Despite an initial rush of activity by the new government, the time taken to respond to the NPPF consultation had added to the uncertainty for planning and development. So we are pleased that today’s Budget contained measures that will help to turn that around. We welcome the announcement of new £500m funding for the Affordable Homes Programme. Recently many housing associations have reduced their development programmes and expenditure on Section 106 homes due to regulatory and cost pressures. I welcome the Chancellor’s support to SME housebuilders. Fewer than 10% of new homes are built by SME housebuilders today, compared with 40% 40 years ago, and the impact on housing delivery is clear. Labour’s ambitious plans for housebuilding can only materialise if small-scale developers are seen as part of the solution.”
Andrew Carpenter, CEO of the STA commented: “The significant boost for the UK’s affordable homes programme, increasing this to £3.1bn, along with £3bn worth of guarantees to increase the supply of homes and support the country’s smaller housebuilders is welcome news indeed and the structural timber sector is poised to support delivery of these plans. We applaud the focus on social housing, as well as the recognition that planning can be an obstacle in housing growth. The news that the Government will set out to recruit hundreds more planning officers should go a long way to alleviating that issue. Overall, this is a good starting point from which the industry can move forwards, but we would urge the Government not to miss the huge opportunity that is presented by aligning housebuilding ambitions with the country’s pressing environmental challenges. With such high targets, achieving this rapid upscaling while also meeting net zero obligations will require a fundamental change in how we build, the materials we use, and the way we attract new people into the construction industry.”
CPRE chief executive Roger Mortlock said: “Rural England has suffered from chronic underinvestment for many years, yet research by the Rural Coalition demonstrates the transformative potential of our rural economy. We are delighted that the chancellor has set a budget of £3.1 billion to deliver affordable housing. So-called ‘affordable’ housing is often far beyond the means of most people, however. Affordability should be defined in line with average local incomes, rather than as 80% of market value, as is currently the case. When the average price of a house in rural England is more than 16 times the average rural salary, so-called ‘affordable’ homes are often anything but. £3bn of support and guarantees for small housebuilders is excellent news for an industry that is dominated by a few profit-hungry giants. At current rates of construction, it would take almost a century to clear social housing waiting lists in rural parts of the country. Investing money from Right-to-Buy in more social housing is a welcome step in the right direction.”
Nathan Emerson, CEO of Propertymark provides commented: “The UK Government has taken its first steps in delivering a range of measures that look to provide more affordable and safe homes for the nation, in which we desperately need with a growing population. However, what we now need to look out for are the crucial plans that underpin all of these proposals as without the correct infrastructure, these targets will not be delivered in a sustainable and socially responsible way.”
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.”