Industry Calls for Construction Clarity in Autumn Budget

The Building Cost Information Service (BCIS) is urging the government to use October’s Autumn Budget to avoid adding to cost pressures facing construction businesses.

Construction firms have seen higher materials and fuel costs since the outbreak of the US-Iran war, and changes to fiscal policy could put further pressure on profit margins. If these costs are passed through to tender prices, they could have implications for project viability too.

Clarity Needed

BCIS also asked for greater clarity over infrastructure and housing investment to protect continuity of funding and prevent stop-start investment cycles.

It added that the government should deliver more detailed delivery schedules to enable project stakeholders to plan resources and investment more effectively.

The firm also appealed to the government to continue providing an increasingly granular infrastructure pipeline, whilst investing in resources at NISTA to support improvements in the dashboard, including more detailed procurement dates and workforce projections.

Dr David Crosthwaite, BCIS Chief Economist

Dr David Crosthwaite, BCIS Chief Economist, said: “The most valuable measure the Chancellor could deliver for construction would be a clear commitment to maintaining long-term investment in infrastructure and housing, alongside greater clarity and support around project delivery.

“While the government has outlined ambitious plans, businesses need confidence that schemes will move from policy announcements to construction sites.

“Major programmes present significant opportunities across the supply chain, but firms require a clearer understanding of delivery timescales, procurement routes and project funding mechanisms.

“Greater visibility will help contractors plan resources, while enabling clients to develop more realistic budgets and procurement strategies with confidence.”

Continued Investment

Higher employer National Insurance contributions and statutory wage thresholds can add to labour costs, influencing decisions around recruitment and workforce expansion.

BCIS commended the new Construction Jobs Plan and said continued investment in skills development and analysis is necessary for ensuring training and workforce planning are aligned with future industry need.

This is particularly important in specialist areas such as mechanical, electrical and plumbing services where capacity is often more restricted, it added.

Demand from sectors such as data centres is already adding to competition for specialist contractors. Where capacity is stretched, tender prices and projects costs may rise which could restrict viability.

BCIS also called for greater support to improve building condition, climate resilience and the reuse of empty or underused properties, as part of the government’s retrofit ambitions.

Dr Crosthwaite added: “Fuel and energy-intensive products continue to drive cost pressures across construction. Although labour cost inflation has moderated, employment-related costs remain a significant proportion of project costs and could increase if demand recovers or becomes more intensely concentrated in certain regions or sectors.

“Against a backdrop of weak demand and ongoing insolvency concerns, the priority should be improving productivity and supporting sustainable growth, rather than adding further cost pressures to businesses.”

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