Chancellor John Healey has set out the government's tax and spending plans in his Budget – the first since Andy Burnham became Prime Minister.
The industry has given a guarded but mainly positive response to the plans, albeit with the criticism that in many instances the Budget could have gone much further in its level of support for construction.
Some of the key points include:
- An extra £1bn for social and affordable housing in England, taking total funding for the 10-year programme to more than £40bn
- New scheme to help first-time buyers in England purchase a home, offering government-backed loans to households earning less than £110,000, or £140,000 inside London
- A new First Time Buyer ISA to be introduced from April 2029, to replace the Lifetime ISA and help people save a deposit for their first home
- Regional bodies and mayors in England to get greater powers over spending, starting with £285m next year for things like housing, transport and High Streets.
Allan Wilen, Economics Director at Glenigan, has welcomed several measures announced in the Budget, highlighting their potential impact on housing delivery, regional growth, data centre investment and defence-related construction opportunities.
“We welcome the focus on first-time buyers. Helping people with their deposits should bring more buyers into the market, which means faster completions and more developers opening new sites,” he said. “. In addition, the decision to defer building regulation changes for the remainder of this Parliament and to ease biodiversity requirements on brownfield developments will provide developers with greater certainty, enabling them to bring forward new projects.
“Fiscal rules might sound dry, but they are important for construction, so it was good to hear the commitment to fiscal discipline today. This should help protect capital funding, ease pressure on government borrowing costs and improve public services over time. Broader economic growth should follow, generating opportunities across government-funded construction sectors.
“Devolution needs money behind it. The Budget provides a funding roadmap, with mayors directly receiving a growing share of business rates and income tax revenues.
“The Data Centre Covenant announced by the Chancellor highlights the Government’s objective of securing 6GW of AI data centre capacity in the UK by 2030, while mitigating the impact on the UK’s electricity infrastructure, local communities and the environment.
“Acceleration in defence spending could open up opportunities for the construction industry. The Chancellor has a difficult balance to strike, though. More defence spending has to be paid for at a time when there is not much money to go around. So it was good to hear the commitment to fiscal discipline today.
“It is hard to say how much of this will reach construction. A large share will go on equipment rather than buildings. The construction element includes military housing, barracks and wider defence sites across the UK. Much of the existing estate needs improving. Better facilities will help the UK retain trained, skilled soldiers and other personnel in service.”
RIBA President Chris Williamson said it was a step towards delivering high-quality homes and supporting growth across the country.
“The Chancellor spoke of growth in every postcode, economic renewal, and new homes, delivered by councils and mayors across the country,” he explained.
“Additional investment in the Social and Affordable Homes Programme shows the government is serious about meeting housing need,” said Williamson.
Williamson said that shifting power, allocating new funding, and devolving accountability to elected mayors and strategic authorities across England, “will create opportunities for local areas to invest in the housing and infrastructure they really need.”
“Our proposal to reinstate city architects across the country would be a practical step towards ensuring the success of this agenda,” he added. “City architects increase strategic oversight of the built environment, generate economic value and improve wellbeing, while providing a high return on investment at the local level. This is an opportunity to fund this important measure.”
David Barnes, head of policy and public affairs at the Chartered Institute of Building (CIOB), said: “This Budget was an opportunity for the Government to set out how its ambitions for the built environment will translate into proper action through its devolution and local growth agenda.
“Devolution must mean more than a transfer of powers or a change in governance. It must give local leaders the resources, long-term certainty, and capacity to deliver tangible improvements, including in housing, infrastructure and construction skills. We look forward to reading the finer details in 'The Fiscal Devolution Roadmap' to understand how long-term funding will work.
“We welcome efforts to reduce red tape and make it easier for businesses to operate. However, changes to business administration need to save time and resources rather than add unnecessary additional burdens. The Government must commit to reviewing its proposed changes to understand the impact they have on already time- and resource-poor organisations such as those in construction. The cost of employing people remains a concern for construction businesses, particularly SMEs. If rising employment costs outweigh the benefits of regulatory reform, employers will have less scope to recruit, invest in training and take on apprentices.
“Addressing persistent skills shortages and bringing more people into construction must be central to the Government’s plans. We welcome the £15m funding announced for the Leeds College of Building as an investment in construction training and the skilled workforce the country needs. However, this must form part of a sustained commitment to construction education nationwide. Colleges across the country are offering essential training for the sector which would also greatly benefit from targeted investment.
“Finally, attracting more people into construction is only part of the challenge. We must also ensure construction offers progression opportunities, with clear financial incentives for workers to develop their skills and move into more senior roles. Building a skilled workforce is essential to delivering the UK’s housing and infrastructure ambitions and that skilled workforce must be made up of people of all career levels.”
Usman Yaqub, CIAT President, said: "CIAT strongly supports measures to reform energy pricing, by removing standing charge and implementing a new cost control framework, so that households that invest in energy efficiency or clean heating measures are not penalised with higher costs.
"We also welcome measures to invest in local communities, including through lower council borrowing rates, VAT relief on land sold to social housing providers and the allocation of a further £1.5 billion for the Social and Affordable Housing Programme, as well as devolution of tax and spending powers to local leaders over the longer term.
"Yet these steps fall far short of what is needed to deliver the council housing revolution promised by the Prime Minister.
"Meanwhile, the Chancellor's efforts to unlock housing delivery fail to get to the root of the housing supply crisis and are likely to have significant unintended consequences.
"Excluding all brownfield development up to 1.5 hectares in size from Biodiversity Net Gain (BNG) requirements risks fatally undermining the burgeoning nature recovery marketplace. And it does nothing to support the SME developments least able to compete in the housing market, which already benefitted from the BNG small sites' exemption.
"Similarly, committing to no major changes to Building Regulations, except where these are safety critical, reduces the government’s capacity to tackle those regulations which do not protect the public, but continue to stifle high-quality development.
"And, most alarming, the Chancellor has sought to smuggle through a £1 billion cut to the Warm Homes Plan to fund defence, even though climate mitigation and adaptation are fundamental pillars of the UK’s national security.
"The Chancellor has sought to offer ‘breathing space for today and fresh hope for the future’. Today’s budget falls far short of this ambition."
Neil Jefferson, Chief Executive of the Home Builders Federation (HBF), says: “We welcome the Your First Home scheme to support first-time buyers of new-build homes. A lack of effective demand has been one of the major barriers to increasing housing supply, and addressing it would lead to more much-needed homes, jobs and investment. We await full details on house price caps and the other scheme parameters as we consider the likely impact that the intervention will have on investment in new homes and future housing delivery.”
On the BNG exemption for brownfield, Jefferson added: “We welcome any moves to reduce the considerable regulatory and policy cost burden on house building, albeit this move will have a limited impact and benefit a relatively small number of urban sites.”
Richard Beresford, Chief Executive of the National Federation of Builders (NFB), said: “The Autumn 2026 Budget is one of carrots, not rabbits and this approach is how governments create healthy business environments. The choice to reward risk taking founders, investors and families is one example of that and we hope this marks a trend where Chancellors reject the temptation to announce self-serving headlines and continue focusing on serving the nation.
“Acknowledgements that disproportionate and over-burdensome policies, such as grid connections, Building Regulations and Biodiversity Net Gain, are growth-inhibitors is welcome, but the budget has not given construction much direct relief. Instead, it has increased the cost of running a business
“Looking forward, we have some concerns that pathways in energy and employment will introduce knock on costs, for example in energy and employment, and we will be speaking to Treasury about them. Ultimately, no investment is possible when the construction industry is too small or fragile to deliver the built environment that job creators need to succeed.”
Brian Berry, Chief Executive of the FMB, commented: “It was a budget of many small measures, but it’s uncertain whether they will add up to drive a bigger change in the construction industry. Most small building companies do the best for their workforce but will be concerned about additional labour costs. For small building firms operating on tight margins, a further increase will be difficult to absorb. The Government needs to avoid a situation in which well-intentioned pay policy reduces the capacity of SMEs to grow. The ‘Your First Home’ scheme to help first time buyers could strengthen demand for new homes but has a minor impact on smaller house builders. If the Government wants more regional growth, it must ensure local SME house builders can share in the opportunities created by any increase in housing demand.
“Extending the fuel duty freeze will offer some stability to builders, and the decision not to increase Capital Gains Tax avoids adding further uncertainty. However, this Budget appears to miss important opportunities to cut VAT on energy-efficiency improvements and give small builders the confidence to invest in green skills and apprenticeships. Many small building firms will continue to face difficult decisions about recruitment, training, and future growth, without significantly more government support.”
