What Does the Autumn 2024 Budget Mean for the Construction Sector?
Image Credit: Carbon Brief
The Autumn 2024 Budget has introduced some pivotal measures to stabilise public finances, promote sustainability, and stimulate growth across the construction sector. This year’s Budget seems to be a proactive response to address lingering economic challenges while bolstering capital investment.
Funding commitments, regulatory adjustments, and policy shifts that align with goals for Net Zero in the UK and the Build to Rent scheme are all framed within a broader vision to boost long-term resilience and competitiveness.
How Capital Investment Might Boost Infrastructure and Growth in the 2024 Budget
One of the central themes in the 2024 budget is the bolstering of capital investment aimed at revitalising UK infrastructure. The government has committed over £100 billion in public sector capital investment over the next five years. This is on top of an additional £13 billion earmarked for the coming year, increasing the total departmental capital spending to £131 billion for 2025-26.
Such a clear focus on capital investment could hold promising implications for the construction industry. It might signal opportunities for infrastructure-related projects across housing, transportation, and energy.
Government support for capital investment could encourage private investment.
This may contribute as much as £0.30 for every £1 of public sector spending, based on projections from the Office for Budget Responsibility (OBR). This framework would stimulate private capital flows into the construction sector, facilitating more robust project funding and broader employment opportunities, driving productivity and sector growth.
Net Zero UK Commitments and Sustainable Construction
As part of the government’s green agenda, the 2024 budget sets out policies targeting development, particularly under the Net Zero UK initiative. The construction sector will play a crucial role in achieving these targets through sustainable building practices, energy-efficient construction, and modernisation initiatives.
Larger investments in green technology and a new regulatory framework will support businesses in transitioning toward low-carbon operations. This policy shift encourages construction firms to adapt to eco-friendly practices by prioritising energy-efficient materials and adopting sustainable techniques across projects.
To incentivise compliance, the government has introduced fiscal support for sustainable infrastructure.
Expanded incentives for green technology and support for low-carbon construction initiatives are being rolled out to allow construction firms to contribute to the UK’s ambitious Net Zero goals while maintaining financial viability. Integrating environmentally friendly processes will not only align with the nation’s sustainability targets but also enhance the construction sector’s competitiveness as clients increasingly value eco-conscious business practices.
Addressing the Build-to-Rent Market
The Build-to-Rent (BTR) sector has seen growth as a potential alternative to traditional home ownership, and it got a boost under the 2024 Budget; plans were announced to facilitate the delivery of 1.5 million homes across the UK. This commitment shows the government’s recognition of the sector’s role in providing quality, affordable housing, especially for younger demographics and urban populations.
The Budget outlines targeted incentives to foster BTR developments.
Such incentives could reduce development costs and speed up project timelines. The introduction of supportive tax regimes, streamlined planning processes, and revised zoning policies is expected to bring down barriers for construction firms engaged in BTR projects. Not only will this hopefully make BTR projects more feasible for developers, but it should also increase housing stock and provide a steady pipeline of new rental properties.
Fiscal Rules and Infrastructure Spending Reforms in the 2024 Budget
The Autumn budget introduces new fiscal rules designed to ensure sustainable public finances. Balancing the books is something that’s been core to Labour’s messaging since the early days of their 2024 General Election campaign.
These rules include a stability mandate, ensuring day-to-day spending is met by revenues, and an investment rule, capping public sector financial liabilities as a percentage of GDP. Together, these rules provide a stable fiscal environment, which is critical for construction firms planning long-term projects.
The government aims to provide certainty to sectors reliant on stable public investment.
The aim is to achieve this by committing to one major fiscal event each year and setting five-year capital budgets that will be extended biannually. This framework avoids the ‘cliff edges’ often associated with shorter planning horizons, giving construction firms greater financial stability and enabling them to secure financing and engage in forward planning.
Changes to National Insurance Contributions and Business Rates
The Chancellor announced a 1.2% increase in Employer National Insurance Contributions (NICs), raising the rate from 13.8% to 15% as of April 2024. This increase will affect labour costs, particularly in labour-intensive industries like construction. The Budget offsets some of this impact by expanding the Employment Allowance from £5,000 to £10,500, allowing businesses to mitigate some of the additional NIC burden.
Workforce Initiatives to Strengthen the Sector
The 2024 Budget recognises the need for a skilled workforce to support the growing demands of the construction sector. By investing in upskilling and creating new training opportunities, the government aims to build a sustainable and robust pipeline of talent.
This includes support for construction apprenticeships, funding for skills academies, and incentives for businesses to provide on-the-job training in specialised construction fields like sustainable building methods and advanced engineering.
A skilled workforce is absolutely pivotal for the construction sector.
If the demands posed by increased capital investment, the Build to Rent market and the drive towards Net Zero are to be met, having the right talent on hand is crucial. The workforce initiatives aim to mitigate skills shortages, support employment, and equip workers with the capabilities required to deliver on large-scale, complex projects. The sector can then more readily deliver high-quality, sustainable infrastructure projects that align with the government’s policy priorities.
Ready to Unlock the Potential of the 2024 Budget?
One clear message from the Autumn Budget is that having the right talent is crucial for success. For over 50 years, ITS Construction has been a specialist recruitment partner for the UK’s construction industry, matching skilled professionals with leading contractors and developers across different specialisms.
We focus on creating equal opportunities in recruitment, ensuring the best candidate meets your needs. Get in touch with us today to find the talent to drive your project forward.
