The impact of the budget on the construction sector

Karen Wood, Stairways’ Joint Managing Director, Commercial, reflects on what the budget means for the construction sector.

The Autumn 2024 budget has not been warmly received by UK business on the whole, with many questioning how the Chancellor’s decisions will result in the economic growth she has promised, especially with employers bearing the weight of half of the £40bn in tax rises.

Companies in the construction sector are among those now grappling with the challenges it presents, chief among them the higher running costs presented by the hike in National Insurance Contributions (NICs) from 13.8% to 15%, and increased wage obligations with rises in the National Living Wage and National Minimum wage.

Positives for the Construction Sector

However, there are some positives to be drawn, for the construction sector in particular. A key area of focus for the new Labour government is ‘getting Britain building’, and they were quick to move on this ambition, announcing a new homes target of 1.5million over five years, and introducing planning reforms to take the brakes off housing development projects.
In turn, the budget has made further provisions to help revitalise the construction sector. For example, funding promises included £1.4 billion for the school rebuilding programme in the 2025-26 financial year, up £550m year on year, and £2.1billion to improve existing schools, a £300 million increase on this year. A pot of £5billion has been designated over the coming financial year to increase the housing supply, including £3bn additional support for SMEs and the build-to-rent sector, in the form of housing guarantee schemes.

A Mixed Picture

For Stairways, and other companies like us serving partners in the construction sector, this remains a curate’s egg of a budget. Clearly a change from the status quo was needed, and while it certainly delivers change, it hasn’t come without some pain – in the short term at the very least.

The lack of confidence shown in this budget by UK business of every stripe is worrying, especially given that the UK economy barely grew between July and September, growing by just 0.1% over the period and actually shrinking during September. However, while it may not support growth initially, I would still hope that it presents opportunity.

I strongly believe that the country’s SMEs will, as they have many times before, find paths forward to stabilise profits, seeking out areas of growth and improvement. To put it bluntly, we have no choice but to do so – that is how we survive.

Responding to the Challenges

Challenges are afoot, and our Senior Management Team has been reviewing how coming changes will impact our current business model. Stairways will step up, as it always has done over the past 35 years, driven by our commitment to continue to offer quality products, at competitive prices with an exceptional customer service delivery.
Resilience and adaptability will be key, and, given everything we have learned through the pandemic and since, we are equipped to respond to this budget, managing the impact, and seizing every opportunity it will bring down the line.