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
RICS CEO, Justin Young, said: “We are glad the Chancellor has announced a number of measures RICS have been advocating for to support housebuilding, skills development and businesses.
“The announcement by the government of an additional £2bn investment to build 18,000 new social homes is an enormous boost for the sector. Alongside ongoing reforms to planning, this should provide increased confidence for housebuilders across the country. According to RICS data, the gap between housing demand and supply continues to widen, so these new social homes will prove vital for supporting new supply and crucially housing the most vulnerable.
“The £600m of additional funding for construction sector skills is a decisive investment in the UK’s built environment. This should help secure the next generation of construction sector workers and professionals as we look to tackle the challenge of an aging workforce alongside acute labour and skills shortages. If this can be combined with a new GCSE for the Built Environment in England, we can drive fresh talent to take up the new opportunities afforded by this investment.
“We are pleased the government will publish plans for much needed business rates reform later this year – hopefully creating a fairer system for businesses as they face increasing financial pressure.
“Given that the country currently faces deep economic challenges, these measures are certainly positive news for the built environment. While this isn’t everything on our list of asks, this is certainly a step forward. We look forward to continuing our conversation with the government as it seeks to transform the built environment.”
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.”
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, said: “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.”
“Construction is finally being recognised as a key economic driver”
Eddie Tuttle, director of policy, external affairs and research at CIOB, said: “We’re pleased construction is finally being recognised as a key economic driver and welcome this substantial investment.
“Having continuously called for government to develop a long-term plan to improve the pipeline of people entering the construction sector, we are encouraged by the latest plans to address the ongoing skills shortage by increasing funding for educational and workplace training through an injection of £600m over the next four years.
“However, it will take several years for the thousands of workers the Government is planning to recruit to be trained to a competent standard and ready to work, so the plans are unlikely to have an immediate impact on the industry’s capacity to build the 1.5m homes the Government is committed to. The impact of the increased funding will not come to fruition until this parliamentary period is coming to an end, so while we very much welcome the plans, we question if this will enable the Government to meet its ambitious housing targets.
“Our research into young people’s perceptions of construction careers, published in March, found two thirds (68%) of young people aged between 16 and 24 hold a positive view of construction careers and around a third (31%) would consider working in the construction sector. However, almost half (47%) said information about it was not included in the careers advice they received whilst in education.
“Therefore, vital consideration should be given to how construction career opportunities are promoted to young people if we are to get more of them taking up the training places the Government is planning to create. Construction is a career that has something for everyone. Without proper communication of the varied opportunities within the industry, additional funding towards construction careers will go to waste.
“We were pleased to learn of plans for the new Teacher Industry Exchange Scheme to encourage industry experts into further education roles to ensure their valuable skills and knowledge are passed on the next generation. High quality training experiences are vital if we are to tackle the large drop-out rates in construction, and thought must be given to ensuring jobs are available for those completing courses.
“Finally, we welcome the creation of the Construction Skills Mission Board and look forward to hearing more about how it will function. CIOB alone has access to 50,000 members with a variety of expertise in construction. Without the views of those who work for or run their own construction business, we risk the mission board failing to develop the targeted policy solutions needed to address the skills gap in both the short and long term. We urge the Government to set up clear communication channels between the mission board and professional bodies like CIOB.”
The CPA’s statement reads: “With the impact of the Autumn Budget still fresh in people’s minds, we were not expecting much from today’s Spring Statement that would be directly relevant to UK construction, manufacturing or distribution. The focus of the Chancellor’s Spring Statement was always likely to be on ‘difficult decisions’ regarding the pressure on government finances and increased defence spending in the light of greater global uncertainty and risks. As the onus was on the government to stick to its fiscal rule, the options were to either increase taxes or cut spending, and the Chancellor focused on reducing day-to-day government spending across the civil service and social care to ensure that capital expenditure was broadly maintained from the Autumn Budget, which is positive.
“Another positive is that the Spring Statement included an additional £2bn in social and affordable housing in 2026‑27, which acts as a bridge to long‑term investment into social and affordable housing through to the government’s Spending Review in June. In addition, amongst an additional £2.2bn for the Ministry of Defence, there will be an allocation to secure better homes for military families. The government also reiterated that it is committing £625m in England over four years to enhance existing training routes, ensure a sustainable flow of skilled construction workers, and support employers in investing in training, with the aim of delivering up to 60,000 additional skilled construction workers during this Parliament.
“However, the Office for Budget Responsibility (OBR), which produces the independent economic forecasts accompanying the Chancellor’s Spring Statement, now forecasts that house building in the UK over the five-year parliament will be 1.3m net additional dwellings, which would approximate to around 1.0m net additional dwellings for England. As the government’s target is 1.5m net additional dwellings over the 5-year parliament in England (as housing and house building policy in Scotland, Wales and Northern Ireland is devolved), the government will fail to meet its target by around 50%. However, this is in line with the CPA’s forecasts, and the CPA has been highlighting this to its members since the new government took office last year.”
Director of operations for the Civil Engineering Contractors Association (CECA), Marie-Claude Hemming, said: “We welcome the UK Government’s decision to go further in kickstarting economic growth through capital spending and the ambitious programme of upskilling the construction industry announced earlier this week.
“However, the benefits of infrastructure – and the rewarding and high-paid jobs infrastructure delivery creates – will only be fully realised once industry can get spades in the ground on projects.
“We call on the Government to work with industry to identify pinch-points in project delivery that are slowing the progress of schemes to market, to ensure that businesses and communities can see the real-world impact the provision of world-class infrastructure can have without delay.
“We strongly support the Government’s focus on infrastructure as a driver for growth and look forward to working with CECA members and all other stakeholders to ensure that the UK economy is stronger, more resilient, and not only creates good jobs in our sector, but makes a real difference to the lived experience of people across all parts of England, Scotland and Wales.”
“The government will struggle to meet its target of building 1.5m homes without significant investment in social and affordable homes”
Rachael Williamson, CIH interim director of policy, communications and public affairs, said: “We welcome the confirmation of the £2bn top up to the Affordable Homes Programme at the Spring Statement, as well as the £20m set aside to support the delivery of community-led housing and the £625m boost to the construction workforce. These measures are both necessary and important, and show the government is continuing to take positive steps towards our shared ambitions on housing.
“However, the Office for Budget Responsibility’s analysis shows that the government will struggle to meet its target of building 1.5m homes without significant investment in social and affordable homes.* As we look towards the Spending Review in June, it is vital that government continues its work to develop a long-term successor to the Affordable Homes Programme that prioritises homes for social rent, and delivers the level of funding that is required to tackle soaring levels of homelessness.
“Beyond housing, we share the concern of charities and consumer groups that cutting benefits will place more people into hardship. Housing costs remain high, especially for private renters, and next week energy bills will rise again. The cost of living continues to be a persistent challenge for those who have the least, and we need to see more support delivered through the welfare system for those who need it, not less.”
Robbie Calvert, RTPI head of policy and public affairs, said: “Planning reforms are at the heart of the Government’s growth plan. The acknowledgement from the Office for Budget Responsibility that planning will be central to increasing the UK’s economic activity over the coming years is encouraging.
“But, while reforms are important, more could be unlocked by investing in planning itself. Our research has found that planning reform and increased housing development could miss out on over £70bn in additional value by not investing in planning. We won’t achieve the economic growth this country desperately needs if we don’t significantly invest in the planning system.
“Beyond this forecast, there will be additional ambitions for planning services resulting from the implementation of the Affordable Housing Programme, the Planning and Infrastructure Bill and local government reform.
“Planning consents can’t do this alone, we need to ensure that the entire construction industry is geared up to deliver on this scale.”
“We need continued investment, not cuts”
Brian Berry, chief executive of the FMB, said: “Rachel Reeves has tasked builders with delivering economic growth according to today’s Spring Statement. This week’s injection of funding to train 60,000 new construction workers is welcome, but the Construction Industry Training Board (CITB) estimate we will need 250,000 more construction workers by 2028 to even get close to the Government’s targets. The numbers of workers don’t go far enough and the announcement of 1.3m new homes by the end of this Parliament, seems to be a clear indication the original target was a step too far.
“The Chancellor pointed to OBR figures showing that house building stands to add 0.2% to the UK economy by 2029-30, worth an additional £6.8bn, with that rising 0.4% by 2035 worth £15.1bn to the UK economy. Builders have an essential role to play in kickstarting the UK economy, and today’s figures demonstrate the immense potential of the industry. Now, more than ever, we need to see the Government support the nation’s SME house builders, so that homes can be delivered by a healthy market, and not just a few companies at the top of the tree.”
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.”
