What does the Spring Statement mean for the industry?
The chancellor delivered the much-anticipated Spring Statement speech earlier this week. Here is a summary of the key points and the construction industry’s reactions.
What were the key points?
Firstly, the Office for Budget Responsibility (OBR) has halved the UK growth forecast from 2% to 1% for 2025, though forecasts for 2026 and 2027 are more positive, at 1.9% and 1.8% respectively. The government’s budget is expected to move into surplus by 2027/28 and disposable income per person is expected to grow, by an average of around 0.5% per year.
Welfare cuts and changes to the universal credit were announced. The OBR has estimated the new welfare savings package will save £4.8bn, but there are concerns it will mean more people being pushed into poverty.
The UK’s defence industry is a top priority for the government. It expects to spend 2.5% of GDP on defence by 2027, partly funded by international aid cuts and the scrapping of NHS England. Some of the money allocated to the Ministry of Defence is expected to go towards upgrading and refurbishing parts of the MoD estate, something which could benefit the construction industry. The infrastructure sector will also receive an extra £2bn.
The chancellor said planning reforms will see house building reach a more than 40-year high by 2030. OBR has forecast that the government is on track to add around 1.3 million dwellings to Britain’s stock of homes in the UK over the next five years. This is positive, though this is 200,000 fewer than were promised in Labour’s manifesto. An additional £2bn will also be invested in social and affordable housing.
Finally, the government will launch a construction skills package to train up to 60,000 workers to build the homes needed.
How has the industry reacted?
Construction News focused on the construction skills funding package, with documents released in connection with the speech showing that the package is actually £145m more than the £600m skills boost previously announced. This is of course good news, however, the training will take time and there is concern it has come too late to meet the targets.
Building Magazine highlighted another positive, namely that the construction industry was spared from spending cuts. Instead the government is boosting capital investment in public sector projects by a further £13bn over the next five years to “drive forward the economy”.
The Builders Merchants Federation (BMF) said builders’ merchants welcome the additional £2bn boost for affordable housing, and that the sector is preparing to deliver government targets by upscaling the manufacture and supply of materials to building sites, as well as recruiting staff with the right talent and skills.
The Construction Products Association (CPA) reacted positively to the news that no further cuts to capital expenditure were made, as well as the additional £2bn investment in social and affordable housing in 2026-27 and the mention of homes for military families within the MoD additional funding pot. However, it pointed out that the government is still expected to fail to meet its target for new housebuilding by around 50%, in line with the CPA’s previous forecasts.
Finally, the PBC Today has gathered further industry reactions in a longer article, and followed it up with separate articles on each announcement, as well as on yesterday’s announcement of the creation of a new taskforce to tackle blockers to housing on public land, including land belonging to the MoD and Network Rail.
