Construction Industry Reacts to Autumn Budget 2026

Industry News

Chancellor John Healey said his Autumn Budget will aim to “steer us through the global economic storms” of today and “chart a new course for Britain in the years ahead”.

The Chancellor said that the Office for Budget Responsibility (OBR) expects the UK economy to grow by 1.3% this year, while the forecast for next year was downgraded to 1% in 2027 from 1.6% in March. Still, the trend is expected to improve from 2028 onwards.

He added that OBR pointed to the war in the Middle East as a key driver affecting today’s forecast, as higher oil and gas prices escalate inflation.

Taxes

The Budget saw future changes to self-assessed income tax announced, with the new system coming in 2029. This will see self-employed workers paying smaller, more regular payments rather than large bills that can sometimes be challenging to pay.

There will also be changes to taxes for business owners, with a more consistent tax policy for those taking money out of their firms.

For banks, surcharge they pay on their profits will rise in January from 3% to 6% for 15 months.

Wages and Pensions

The National Minimum Wage for both 18 to 20-year-olds and workers aged 21 years and over will rise by 3.9%

For low-income pensioners, the Chancellor announced a new tax-free allowance, meaning those with income up to the value of the full new State Pension will not pay income tax.

He also introduced a new policy of supporting self-employed workers through paid parental leave for the first time.

Housebuilding

In a boost for housebuilding firms, the Chancellor announced no further changes to building regulations, and cutting of biodiversity rules for brownfield sites. These changes aim to reduce the administrative headache that developers face when having to adapt to frequently changing regulations, while also encouraging the redevelopment of disused brownfield sites.

The government says it will provide an extra £1.5bn to deliver 10,000 homes across England, taking the total investment in the Social and Affordable Homes programme to more than £40bn in 10 years.

The Chancellor also pledged to help 70,000 households get onto the housing ladder, confirming £4.7bn for the new Your First Home equity loan scheme for first-time buyers. The scheme will provide 20% equity loans to first-time buyers who would not otherwise be in a position to purchase a residential property. Income caps will be set at £110,000 per household outside London and £140,000 inside London.

Skills & Training

The Chancellor confirmed that training costs for apprentices under 25-years-old will be fully funded for Small and Medium Enterprises (SMEs) from 2026.

This initiative sits within the new Youth Guarantee programme, backed by an additional £820 million over three years, designed to boost employment for young people and support upskilling.

Energy

To help households with the rising cost of energy, the Chancellor said households in council tax bands A to D will get a £100 Household Energy Payment from January 2027.

Local authorities in England will also get a share of £100m to provide additional support to households most acutely impacted by rising energy bills.

INDUSTRY REACTION

Housebuilders Left Waiting

The Construction Products Association (CPA) expressed disappointment at the Autumn Budget, warning that the measures announced by the Chancellor fall short of addressing the immediate pressures facing construction product manufacturers and the wider industry.

Noble Francis, Economics Director at the CPA

Noble Francis, Economics Director at the Construction Products Association, said: “The Autumn Budget was always expected to be focused on the Chancellor trying to be fiscally responsible and reassuring financial markets whilst trying to address household cost-of-living issues in uncertain times, than on the housebuilding and construction industry supply chains.

“The Chancellor did announce the details of the ‘Your First Home’ scheme, which will be critical in attempting to stop falls in housebuilding for a fifth consecutive year in 2027. However, it is extremely disappointing that the scheme will not start until April 2027, meaning many potential first-time buyers and housebuilders will just sit and wait until Spring next year at least, worsening the current downturn in housebuilding in the near-term.

“However, the Chancellor did announce measures to address the government’s rising cost burden on housebuilding, which has badly damaged site viability in recent years, through no further changes to building regulations during Parliament unless they are building safety-related and removing Biodiversity Net Gain requirements for small brownfield developments.

“In addition, the Chancellor announced a further £1.5 billion for the Social and Affordable Homes Programme to take it to over £40 billion over 10 years. However, in this case, delivery will be considerably more important than the total amount and we have seen no activity down on the ground from it so far and we are not expecting to until Q2 2027 at least.

“The Chancellor also re-announced the BICS scheme to help manufacturers with industrial electricity costs, starting next year, though backdated to this year but critically, it excludes many major manufacturers, particularly those reliant on gas rather than electricity. This is disappointing given that gas prices for many firms feeding into the house building and construction supply chains have risen by 300% in the last year.”

Some Welcome Measures

Paul Turner, NHBC CEO

Paul Turner, Chief Executive Officer, National House Building Council, commented: “We welcome the inclusion of several measures announced in today’s Budget.

“The introduction of the Your First Home equity loan scheme is a positive step towards helping more people onto the housing ladder. Supporting first-time buyers is essential to stimulating demand and giving housebuilders the confidence to invest in new developments.

“We also welcome the commitment to avoid major changes to building regulations during this Parliament. Greater regulatory stability will give house builders much-needed certainty, allowing them to plan ahead, invest with confidence and focus on delivering high-quality homes.

“News that government has added £1.5bn to the Social and Affordable Homes Programme (SAHP) in the Budget is great news for the sector, given how oversubscribed the first round of bidding was earlier in the year. The wider industry is stretched, with demand for affordable housing at record levels and NHBC’s Q3 registration figures showing the pipeline of new homes continues to shrink. With new home registrations down 13% year on year, this kind of intervention is essential.

“The removal of biodiversity net gain requirements for brownfield sites is another welcome measure today that could help unlock development on land that has previously been difficult to bring forward, supporting regeneration and the delivery of much-needed new homes.

“However, while these measures are encouraging, there is still a significant challenge ahead. Delivering more quality homes requires not only the right policy environment but also a skilled workforce capable of building them to the highest standards. We must skill up if we want to build up. Continued investment in construction skills and apprenticeships will be critical if we are to increase housing supply without compromising quality.”

Infrastructure Pipeline is Critical

John Wilkinson, COO at BAM UK & Ireland

John Wilkinson, Chief Operating Officer at BAM UK & Ireland, said: “The UK has an infrastructure pipeline worth £718 billion, representing an enormous opportunity for economic growth. Funding announcements must be matched by clear delivery plans. A reliable pipeline gives businesses the confidence to recruit, train and invest, turning national ambitions into jobs and opportunities across the country.

“We see first-hand the difference infrastructure investment can make, from renewable energy connections capable of powering millions of homes to new schools, healthcare facilities and transport links, connecting vital parts of the UK. Planning and funding infrastructure as a connected system is essential to unlocking its full economic and social value. Delivering new homes, for example, must go hand in hand with the schools, healthcare, transport and utilities that make communities work.

“That certainty is also critical to addressing the construction sector’s workforce challenge. With the construction industry needing an average of 41,200 additional workers every year to 2030, businesses need the confidence to invest in apprenticeships, training and long-term careers. A reliable pipeline of work will help construction invest in the people and capacity needed to deliver it.

“We must also look beyond what we build to how we build it. Infrastructure investment should create lasting value for communities and the environment, with community benefit and nature recovery considered from the outset rather than treated as an afterthought.

“The real measure of this Budget will be what gets built, not just what gets announced. Government and industry must work together to turn investment into lasting economic growth, that build stronger communities and a better environment for future generations.”

Minor Impact for SME Builders

Brian Berry, CEO of FMB

Brian Berry, Chief Executive of the FMB, commented: “It was a budget of many small measures, but it’s uncertain whether they will add up to drive a bigger change in the construction industry. Most small building companies do the best for their workforce but will be concerned about additional labour costs. For small building firms operating on tight margins, a further increase will be difficult to absorb. The Government needs to avoid a situation in which well-intentioned pay policy reduces the capacity of SMEs to grow.

“The ‘Your First Home’ scheme to help first time buyers could strengthen demand for new homes but has a minor impact on smaller housebuilders. If the Government wants more regional growth, it must ensure local SME house builders can share in the opportunities created by any increase in housing demand.”

Positive Step for Energy

Ashley Dickson, Interim MD GB & Ireland, VELUX

Ashley Dickson, Interim Managing Director, Great Britain and Ireland, VELUX: “Energy bills support is very welcome, and with extreme weather not going away, there’s an opportunity to build on it with homes that work in every season. A holistic approach, with insulation, shading and ventilation working together helps homes stay comfortable and healthy all year round. The recently announced Warm Homes Plan, with cooling and heating measures for the most vulnerable homes, is a positive step in that direction.

“Our research shows 44% of UK adults avoid ventilating their home in winter to save energy, while external shutters with efficient roof windows can cut peak indoor temperatures by up to 5°C. The UK doesn’t have to choose between a warm winter and a bearable summer, and building shading and ventilation into every upgrade, alongside insulation, is how we get there.”