Published - 27th November 2025
With the Office of Budget Responsibility leaking the news ahead of the official announcement, it’s fair to say that there were very few surprises in this week’s Budget! Our joint managing director, Kirsty Scott, has been taking a close a look at what the Budget means for the construction sector.
The construction sector was once again watching the Chancellor Rachel Reeves’ Budget closely to see if there were any gifts tucked away for our industry, but those hoping for big boosts to the sector were set to be disappointed. In amongst the so-called ‘mansion tax’ and changes to ISA rules, there were a few measures that will have made the construction industry pay attention – for good and for bad.
The Budget confirmed that funds have been set aside for several construction and infrastructure projects, including restating that the Sizewell C levy will come into force to pay for the construction of the nuclear energy facility in Suffolk.
There is also money allocated to completing the Lower Thames Crossing, set to be the UK’s largest road tunnel, with an additional £891 million pumped into the project. With an overall projected cost of £9 billion, the project is set to begin work in 2026.
Elsewhere, £20 million is set aside for a sports quarter in Peterborough and £16 million for a science centre in Darlington.
The issue grabbing many of the headlines in the Budget is the increase in minimum wage, from £12.21 per hour to £12.71 per hour for workers over 21, and from £10 to £10.85 per hour for those aged 18-20. Much like this year’s national insurance increase, this will likely disproportionately affect the construction sector, making life more difficult for smaller subcontractors and tradespeople in particular.
The freeze in national insurance and income tax thresholds up to 2028 will also see more people move into higher bands over time, which will impact on smaller companies further. With some 870,000 SMEs operating in the construction sector, this could have a negative ‘trickle up’ effect as smaller businesses start to struggle.
Thankfully it’s not all bad news for SMEs: the Chancellor also scrapped fees for apprentices aged up to 25 for smaller and medium sized businesses, encouraging those companies to take on and train up more apprentices in a move that will certainly have an impact for the construction sector, where apprenticeships are seen as playing a vital role in closing the skills gap.
The government clearly remains committed to devolution, with further measures introduced to put power in the hands of the regional mayoral authorities, including our own West Yorkshire Combined authority.
In all, £13 billion in flexible funding will be devolved to regional leaders in areas including West Yorkshire, Greater Manchester, West Midlands, Liverpool City Region, North East, South Yorkshire, and the Greater London Authority. These funds will be allocated by the regional authorities to address issues such as skills, infrastructure, and supporting local businesses.
What’s more, on our own doorstop in Leeds, it is interesting to note that an agreed proportion of our business rates will be retained by Leeds City Council to benefit our local area, thanks to the creation of the Leeds City Fund. This agreement will stand for the next 25 years.
As a business owner in a devolved authority, I hope this means that those who truly understand their regions will invest wisely in projects that will generate wealth and improve quality of life.
For the wider construction sector, only time will tell whether the Budget will have a lasting negative or positive effect. But as Building Magazine notes – the reaction so far has been mixed.
Harris »