What Does The 2025 Budget Mean for Construction?
The recently announced 2025 budget by Chancellor Rachel Reeves has caused a mixed reaction throughout the construction industry. The widely anticipated announcement offers both fresh hope and new challenges across the industry. Here at John Burke Associates, in this month’s blog, we consider what the budget means for our clients and ourselves.
Landfill tax stability offers certainty.
Starting with the positives, the U-turn on the landfill tax reform has come as a big relief to many in the industry. The Government confirms it will not proceed with the proposed landfill-tax reform. This means that the convergence of the standard and lower rates is abandoned. Therefore, the standard rate remains £126.15 per tonne, while inert waste stays at £4.05 per tonne. This is a welcome decision, preventing additional disposal costs and supporting predictable project forecasting.
Infrastructure Funding and Regional Development
The government has pledged major investment in infrastructure, with £890 million for the Lower Thames Crossing. This strengthens national transport resilience and supports long-term economic growth. With additional regional allocations for projects, such a £20 million for the Peterborough Sports Quarter. This signals a continued support for local regeneration and, in turn, an increased stability in the project pipeline within the construction sector.
Skills Investment and Apprenticeships
The 2025 Budget also introduces funding for training and work placements for 18–21-year-olds. This means there will be more apprenticeship opportunities available, providing a broader entry-level talent pipeline. The commitment to make apprenticeships free for under-25s in SMEs represents a significant change. Recruitment is a long-standing challenge within the construction industry. As such, new skills and more encouragement at the entry level can only be positive.
Wage costs and operational pressures
While the decision to invest more in entry-level employment is undoubtedly a positive one, it is sullied by the decision to increase the minimum wage. The National Living Wage for adults aged 21 and over rises by 4.1% to £12.71 per hour. Rates for 18–20-year-olds increase by 8.5% to £10.85 per hour. We do not dismiss the national cost of living crisis by any means. However, this increase may not be as beneficial to workers as it seems. With the income and national insurance tax thresholds remaining frozen, this wage increase could push many into higher tax brackets. In turn, this creates a higher wage bill for the project and resulting in less disposable income for the workers.
How can we support your project?
The rise in wage costs places new pressure on contractors, developers and public-sector clients. As RICS Chartered Surveyors, Building Surveyors and Clerks of Works, John Burke Associates supports clients by strengthening cost control, programme efficiency and project assurance. Our services help mitigate the financial impact of wage inflation while maintaining quality and compliance. Speak to our friendly team today to find out more about how we can help you.