NFRC Warns Budget Intensifies Employment Cost Pressures on SME Roofers

From April, the National Living Wage will rise by 4.1% to £12.71 per hour for workers aged 21 and over.

The minimum wage for 18–20-year-olds will increase by 8.5% to £10.85, while rates for 16–17-year-olds and apprentices will rise by 6% to £8 per hour.

NFRC says it recognises the importance of improving living standards and attraction to the roofing and cladding industry. However, repeated wage increases, national insurance increases, and looming employment law reforms all reduce the ability of small and medium-sized roofing firms to recruit and grow at the rate needed to meet ambitious housing and infrastructure targets.

Employment Cost Pressures

James Talman, Group CEO of NFRC, said, “Our members want to pay fair wages and offer rewarding careers, but this Budget has announced more costs for employers at a time when margins are already tight. With NIC increases still being absorbed and the employment rights bill on the horizon, these wage rises will make taking on new staff even more difficult.”

NFRC’s latest Q2 State of the Roofing Industry Report found that 76% of responding members cited the cost of employment as a challenge facing their business, while 52% pointed to recruitment difficulties. The report also found that tender prices are being squeezed, further tightening headroom to take on more staff.

The impact of these costs is clear, says NFRC. The same report found that skilled labour shortages were impacting the amount of work businesses could take on for 65% of responding NFRC members.

NFRC adds, “the Budget confirmed that training for under-25 apprentices will be made free for SMEs. We estimate this will save our members £550 per apprentice.

NFRC welcomes this direction of travel but cautions that the measure alone will not unlock the scale of workforce growth required to meet the Government’s housing, infrastructure and net zero ambitions.

Free Apprenticeship Training for SMEs

Talman added, “Free apprenticeship training for SMEs is a positive and welcome step, and one we have long called for. But it will not, on its own, deliver the workforce growth the country urgently needs. Rising apprentice wages, alongside rising employment taxes and regulatory burdens, mean many firms simply cannot afford to take on more young people, however willing they may be.”

Local Skills Improvement Plans

Another positive announcement was the confirmation of £13bn of flexible funding for seven mayors, which they can invest in skills support.

“As NFRC engages in the development of the second iteration of the Local Skills Improvement Plans, we are encouraged by the government’s recognition of the power of local initiatives to address skills concerns, but this must be truly employer and demand led if we are to see real change.”

Landfill Tax

NFRC welcomes the decision to halt plans to converge the two rates of landfill tax. We are also reassured by the doubling of fiscal headroom to £21.7 billion, which we hope will provide the stability businesses need to plan for the future.

Commitments to increased investment in infrastructure, energy and housing are positive; however, record-high tax burdens and downgraded growth forecasts risk undermining the impact of these ambitions on the wider construction sector.

NFRC will be immediately consulting with members on the impact of the budget to gather a wider picture of the impact of these announcements.

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