The UK construction sector has been talking a lot about Chancellor Rachel Reeves’ first budget since her party’s election victory—and with good reason. It’s a bit of a mixed bag for SMEs in construction.
Here are the highlights that matter most to small and medium-sized contractors, plus a few ideas on how to navigate the changes.
Employers’ National Insurance Going Up
What’s changing?
Employers’ National Insurance is rising from 13.8% to 15%. Many industry voices warn this could make it harder for SMEs to bring on new staff—or even keep existing teams at current levels.
What can you do?
- Review your hiring plans and factor in higher NI costs before making any recruitment decisions.
- Check if you qualify for increased Employment Allowance, which might offset some of the extra expense.
Big Push on Building Safety
What’s changing?
An extra £1 billion has been earmarked for removing dangerous cladding. After the second Grenfell report, building safety is top of mind, and the government’s stepping in with more support.
What can you do?
- If you offer cladding replacement or fire safety services, prepare your teams now—there may be an uptick in projects.
- Keep an eye on any new guidelines or contracts tied to cladding remediation initiatives.
More Money for Affordable Homes
What’s changing?
The Affordable Homes Programme gets a funding boost, potentially translating into new opportunities for smaller contractors.
What can you do?
- Network with local authorities and housing associations. Even modest-scale affordable housing jobs can lead to a steady pipeline of work.
- Factor in rising National Insurance contributions when bidding on these projects, so your pricing stays competitive but sustainable.
A Skills and Hiring Crunch
What’s changing?
From the Construction Industry Training Board (CITB) to the Federation of Master Builders (FMB), everyone’s concerned about finding enough skilled workers. Meanwhile, a higher National Living Wage (up 6.7%) combined with increased NI could put a squeeze on your hiring budget.
What can you do?
- Explore apprenticeship incentives. Government support can offset the cost of training new staff.
- Consider upskilling existing employees—it often costs less than recruiting externally.
Infrastructure Funding—But With Some Caveats
What’s changing?
HS2 is still pushing forward into London, and the government is planning additional infrastructure investments. However, critics say the budget doesn’t fully address the industry’s training, retention, or net zero challenges.
What can you do?
- Stay on the lookout for smaller subcontracting opportunities on bigger infrastructure projects.
- Make plans to equip your team with the right training or certifications to bid on these jobs.
