The chancellor’s blind spot? A Budget that ignores Britain’s building potential

While we pore over the details of the chancellor’s Budget and what it means for businesses, one thing was abundantly clear on Wednesday: the focus for Number 11 has been on balancing the books.

But the government came into power with a mandate not just to manage the economy, but to boost it. The chancellor may have reiterated that growth is the engine through which Labour’s broader ambitions will be delivered, yet there is a risk of all this talk appearing as just that – talk.

Admittedly, over the past year, we have seen positive signs of the government’s desire for growth. The Spending Review earlier in the year set out the government’s priorities and direction of travel, which was welcome. However, the emphasis must now shift from simply planning for growth to making it a reality. And that needs to happen quickly.

A long-term growth plan, or a sticking plaster?

From planning reforms to get spades in the ground more quickly, to capital investment in vital transport and energy infrastructure, defence and manufacturing, and the Industrial Strategy’s eight foundational sector (IS-8), has been evident recognition over this year of construction’s role in fuelling growth.

“Build, baby, build” has been the instruction. Although this Budget has been light on big-ticket announcements, the chancellor did nod to important infrastructure investments – including new funding for the Lower Thames Crossing, alongside the backing for nuclear at Sizewell and at Wylfa, and for the DLR extension to Thamesmead.

All these plans rely on a construction sector on stable footing, with capacity ready to be deployed across a range of competing programmes. This simply is not the reality we are in

However, all these plans rely on a construction sector on stable footing, with capacity ready to be deployed across a range of competing programmes. This simply is not the reality we are in.

The latest figures show our industry is shedding its workers at the fastest rate in five years. The lingering impacts of the pandemic, an aging workforce and a tight labour market have continued to exacerbate long-standing skills shortages and costs of employment. At the same time, a challenging few years of inflation, high interest rates and supply chain disruption have squeezed already thin margins across the sector, increasing insolvencies and further chipping away at capacity.

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The tax raising measures and wage increases set out in the Budget aim to curb inflation and the cost of living. But they may well exacerbate the challenges facing construction, as businesses struggle to maintain profitability and invest.

This should raise alarm bells for government. With various major programmes in the pipeline – and many set to come online at a similar time in 2027 – growing competition for resource is likely to drive higher inflation across construction. This means the variety of tax funds being raised in this Budget will not go as far as they need to.

Enabling private enterprise to support public ambition

We are a resilient and adaptable sector and have survived plenty of trying economic times. But to ensure these increased taxes are spent well and have a positive impact on taxpayers, Number 10 must place a greater focus on our industry.

To ensure these increased taxes are spent well and have a positive impact on taxpayers, Number 10 must place a greater focus on our industry

As construction’s biggest client, government has a unique role to play in restoring confidence in the sector – in providing a visible, consistent and coordinated pipeline of work to enable the creation of jobs and investment in the skills needed to build our way to growth.

We need to see more from Skills England’s construction skills taskforce, for example, to direct the development of the right capacity and capabilities across our industry, in line with the government’s aims.

Private investment may be the “lifeblood of economic growth”, but we need reliable, coherent policy and stable public spending to unlock it.

For construction’s part, we have to hold firm in our own investment in our capabilities – attracting and training new skills, making use of digital technologies to improve productivity, and fostering innovation. This is not just about being match fit to deliver on the current government’s goals – it is also crucial to the long-term future of our sector. Once lost, capacity takes a long time to build back so drawing the purse strings in now with the hope of easier times in years to come would be a fool’s errand.

Growth is the solution to many of our country’s current financial, political and social issues. While Wednesday’s Budget may not have offered the financial stimulus many will have been hoping for, we must all, across the public and private sector, concentrate now on delivery – on putting plans into action.

With the current parliament already nearing a quarter of the way through its tenure, time is ticking to make sure voters feel the benefits of increased taxes before they head to the polls.

Patricia Moore, UK managing director, Turner & Townsend