Housing and Training Wins in Spending Review – Industry Responds

THE GOVERNMENT has published its Spending Review 2025 (SR25) today, setting out Rachel Reeves, the Chancellor of the Exchequer’s plans and departmental budgets for day‑to‑day spending until 2028‑29, and until 2029‑30 for capital investment.

Spending Review

For the construction industry, headline increases announced in the Spending Review are:

Education and Training

Training and apprenticeships funding of £1.2bn a year will support over a million young people.

R&D funding to be raised to “a record high” of over £22bn per year by the end of 2029.

£2bn goes to the government’s AI Action Plan, which is part of “training and upskilling our young people”.

Housebuilding

A new Affordable Homes Programme will get an investment of £39bn over the next 10 years. A further £10bn of capital investment in affordable homes was announced for Homes England to help attract more private sector funding.

Retrofit

The £13.2bn funding for the Warm Homes Plan was confirmed. This supports retrofit of social housing with energy efficiency measures such as insulation solar panels.

Transport

Real-term reductions in budgets are planned for Transport with and 8.6% reduction in funding for High speed 2 (HS2). However, the Liverpool-Manchester Northern Powerhouse Rail scheme will be going ahead – but under the Infrastructure Strategy, due to be published next week.

Birmingham’s metro extension, and extensions in Tyne and Wear and Stockport, as well as backing for Doncaster Airport, were all already announced.

Additional funding was announced of £2.5bn for the continuance of East-West rail connecting Oxford and Cambridge. Railways in Wales get £445m over 10 years. A third runway at Heathrow is reaffirmed.

Education and Healthcare Buildings

For the NHS, the capital spending budget is increased by £2.3bn in real terms every year to 2029-30 to invest in new technology, hospitals and primary care. £2.4bn each year will fund building or rebuilding of 500 schools.

Energy Building

Saying it was the “biggest rollout of nuclear power for half a century”, the Chancellor announced £30bn for nuclear, which includes £14.2bn for building the Sizewell C nuclear plant for the next four years.

Funding for an Aberdeenshire carbon capture project was confirmed.

In total departmental budgets grow by 2.3% across the next four years, with some departments facing budget reductions. Headline increases go to the NHS and Defence.

INDUSTRY RESPONSE

Positive News

Tim Balcon, CITB CEO, said: “We support the Government’s commitment to getting Britain building again. Over £110bn announced for infrastructure projects like Sizewell C, a fresh £39bn affordable homes funding settlement, and £13bn for upgrading millions of homes with improved insultation all translates to a buoyant construction industry. In total, there’s positive news to the tune of about £165bn for the industry.”

Rule Change

Gareth Belsham, Director of Bloom Building Consultancy, commented: “The Chancellor has made a subtle but important change to the rules relating to the way Homes England is funded. The Chancellor wants to unlock a further £10bn for Homes England, and her announcement revealed that much of this funding will need to come from the private sector.

“The idea of social housing as a private investment class – offering reliable, government-supported returns – could be a compelling one for investors and developers looking for an investment shielded from the conventional property price cycle.

“While the announcement is in part a way to insulate the Government from criticism that it is ‘spending now to pay later’, it’s also an acknowledgement that all forms of funding will be required if it is to have any hope of hitting its target of getting 1.5 million new homes built in England during this Parliament.”

Turning Point

Daniel Austin, CEO and Co-Founder at ASK Partners, said: “The Chancellor’s commitment of £39bn to affordable and social housing is a long-overdue but hugely welcome intervention. This funding, if deployed effectively, could mark a turning point in tackling the UK’s deep-rooted housing crisis. Crucially, investment must now be matched by urgent planning reform, proper resourcing of local authorities, and meaningful support for SME housebuilders.”

Funding Matches Ambition

Justin Young, RICS CEO, added: “RICS has consistently called for an increase in public investment to match the ambition of building 1.5 million homes, and this 10-year programme does just that.

“RICS also welcomes the focus on developing the energy infrastructure required to support energy security and grid decarbonisation, supporting economic growth.

“Importantly, this commitment provides the clarity and confidence that local authorities and the wider built environment sector need to get construction started and to invest in the people, skills and materials that will make this ambition possible.”

Put SME Builders at Heart

Brian Berry, Chief Executive of the FMB, commented: “The Chancellor’s commitment to social housing needs an accompanying delivery strategy that puts SME builders at its heart. Small, local firms are uniquely positioned to unlock the potential of overlooked small sites, deliver high-quality homes, and boost local economies. By working in partnership with housing associations, SMEs can also help tackle the industry’s skills gap by training and employing people in their own communities.

“It is also pleasing to see £1.2bn investment in apprenticeships and training, but … today’s announcement simply doesn’t go far enough. It’s also disappointing that, once again, no progress has been made on the Government’s flagship commitment at last year’s General Election to retrofit 5 million homes. … If we are to meet our net-zero goals, a comprehensive retrofit strategy is essential. SME builders are ready to deliver, but they need direction, support.”

Finally Some Good News

Dr David Crosthwaite, Chief Economist at BCIS, said: “As the dust settles on the much-anticipated Spending Review, there’s finally some good news for construction. Confirmation of significant capital spending on fixed assets over the next decade is a relief, and the lever needed to unlock private sector investment.

“The big question is, can construction actually deliver all of this investment? In the current climate, suspicion says probably not. Unless the supply position radically changes, the sector is ill-equipped to meet extra demand.

“The housing sector is no doubt breathing a collective sigh of relief at the £39 billion injection in the Affordable Homes Programme, and the £10 billion assigned for crowding in private investments. The government has veered well off course on its new homes target so new funding brings further room for manoeuvre.

“That said, the government does not control housing supply. Housebuilders do. They are looking to maximise profit and therefore run a tight ship when it comes to maintaining the supply and pricing level of new homes.

“Building 1.5 million homes is still a big if. More funding over 10 years is a contribution, not a guarantee of delivery.”

Long-Term Vision is Essential

John Wilkinson, Chief Operating Officer at BAM UK & Ireland, commented: “As an industry, we contribute £142 billion to the UK economy and employ millions of people. We welcome the Government’s £39 billion housing boost and any investment that supports thriving communities, generates jobs, drives economic growth, and safeguards our future energy supply.

“However, the housing boom must not be viewed in isolation. To be successful, it must be underpinned by supporting infrastructure, including healthcare, education, and modern connectivity. These elements are essential for creating thriving communities.

“The Government’s commitment to investing in improved connectivity and local transport is vital for economic growth and job creation. To maximise impact, it’s essential that this commitment is underpinned by a long-term vision, planning 10 to 20 years ahead. Providing certainty and stability will enable the sector to invest in innovation and in its workforce.”

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