The Chancellor of the Exchequer Rachel Reeves gave her Spring Statement today, with the construction industry talked up as the key pillar in delivering economic growth for the UK, so we’ve taken a look at a few of the main headlines that have come out of it, and what they might mean for your building firm.
1. 60,000 new construction workers – is it enough?
Earlier this week the Government announced more than £600m of funding over the next 4 years, to help train up to 60,000 more skilled construction workers – bricklayers, electricians and carpenters.
The Government taking steps to address the construction skills crisis will be welcome news to builders across the UK, with the FMB’s State of Trade Survey for Q4 2024 showing 45% of our members have had jobs affected by a lack of skilled tradespeople – 42% of members told us that the skills crisis has caused delays to projects, while in some cases this is even leading to cancellations.
However, the Construction Industry Training Board's (CITB) figures indicate that this week’s announcement doesn’t go far enough, as it’s estimated that we will need at least 250,000 more construction workers by 2028 to even get close to the Government's targets of building 1.5 million new homes.
It seems there’s plenty more work to be done.
2. A 0.2% increase to GDP – builders are the backbone of the economy
Builders are going to have a key role to play in kickstarting the UK economy, and some of today’s figures announced by the Chancellor in her Spring Statement demonstrate the immense potential of the industry.
One of the most interesting parts of the Rachel Reeves’ speech was the news that the Office for Budgetary Responsibility (OBR) have estimated that housebuilding is set to add 0.2% to the UK economy by 2030, worth an estimated £6.8 billion, rising to £15.1 billion over the next 10 years – 0.4% of GDP
We’re crossing our fingers that this will be the moment where the Government decides to double down on its proposals and give the nation’s builders the support they need to deliver for the whole of the UK.
3. 1.3 million homes estimated – down, but is it now realistic?
Keen viewers will have spotted Rachel Reeves explain projections suggesting that the Government are on course to build 1.3 million homes by the end of the current Parliament.
This number is down on the 1.5 million homes targeted following the election. The FMB has always felt that this was an unrealistic target, and today’s statement suggests that the Government are dialling back expectations, and that they may have gone too far previously – and if targets are down, what does this mean for their economic growth projections?
But is that new number now realistic? We still have serious reservations. Plans to tackle the skills crisis do not go far enough, these goals will simply not be deliverable without a focus on diversifying the housing market from a small number of volume housebuilders; and ensuring changes to planning policy actually deliver for small builders
4. What is the role for SMEs going to be in 2025 and beyond?
This brings us on to the Chancellor’s plans to boost affordable and social housing numbers. In the past SMEs have found themselves cut out of larger projects, and this is simply not going to be sustainable.
Figures released last week for planning applications in 2024, published by the Government show worrying signs that, despite the push to boost house building rates, permissions granted to small sites of 9 units or fewer are down, demonstrating the smallest house builders are struggling to get homes delivered.
In the 1980’s 40% of all new homes in Britain were delivered by SMEs. But estimates today now suggest that number may even be as low as 9%. The Housing Minister Matthew Pennycook has spoken in the past about the need to diversify the housing market. The current situation, where pretty much all of the UK’s homes are built by a tiny number of large-scale developers is simply not sustainable.
We need to see more support offered to SMEs to help you navigate the planning system, and gain access to more small sites that the volume builders simply can’t access. Today was a missed opportunity to get SMEs involved.
5. No announcement on retrofitting in the Spring Statement
Finally, further announcements on retrofitting were missing from the Spring Statement. In the build up to the election, the Labour Party were very vocal on their Warm Homes Plan to retrofit 5 million more homes with energy efficient upgrades.
In the UK currently there are currently 8 million lofts that need insulating, 5 million uninsulated cavity walls, and 20 million uninsulated floors that need upgrading. However, since the election, the Government seem to have gone quiet on these plans, with very limited updates provided on progress.
Retrofitting our homes is essential to meeting our 2050 Net Zero targets - emissions from residential buildings account for a 20% of all greenhouse gas emissions in the UK, and SME Construction has a crucial role to play in delivering better insulation, heat pumps, solar panel installations, and other environmentally friendly technologies.
Today was yet another missed opportunity for retrofitting. We will continue to fight to make sure the issue gets the recognition it deserves.
Discover how FMB is working to fix planning, skills and housebuilding on our campaign pages.
