Views on the impact of the chancellor’s capital investment plans from professionals in construction, property and architecture
The construction and housing sectors have broadly welcomed many of the investment commitments made by the chancellor Rachel Reeves, as she promised to “deliver Britain’s renewal” by allocating the £113bn she has set aside for capital projects in her spending review.
However, some expressed disappointment that London has lost out as the government seeks to appeal to other parts of the country, in what could be seen as Labour’s version of past levelling up attempts by the Conservatives.
Meanwhile, others pointed to workforce shortages as a major barrier to achieving the government’s stated ambitions.
Other spending review stories
>> Housing and infrastructure emerge as big winners as Reeves divides up £113bn in spending review
>> Reeves to announce £39bn Affordable Homes Programme and 10-year social housing rent settlement
Alasdair Reisner, chief executive of the Civil Engineering Contractors Association (CECA), said: “Today’s announcements show that the government is serious about its growth agenda and will press ahead with targeted investments that deliver results while facing fiscal realities head on.
“The spending review confirms the government’s ambitions to confront decades of underinvestment in infrastructure.
“In part this will be achieved by the chancellor’s decision to rewrite Treasury spending rules to prioritise economic growth in all parts of the UK – a rebalancing of the economy that CECA has long campaigned for.
“The capital investment announced by the chancellor offers a once-in-a-generation opportunity to revitalise UK infrastructure sector, reinvigorate its supply chains, and create thousands of highly skilled, high-paying jobs.”
Patricia Moore, UK managing director at Turner & Townsend, said: “Since the general election was called a year ago, there has been a sense of the pause button being pressed. The results of the spending review announced today bring a certain level of clarity around the priority areas which government is backing to drive economic growth.
“From funding for nuclear power and carbon capture to creating a defence industrial superpower, and improving transport connectivity to unlock growth in all parts of the country, construction will be central to achieving the government’s aims to renew our prosperity and security.
“However, the big numbers on spending mean little without concrete plans underpinning their delivery. We now need the upcoming infrastructure strategy and modern industrial strategy to provide the long-term visibility and certainty of pipeline to build confidence for investors and get the right capabilities and resource in place.
“What we must see from these strategies is a joined-up approach to investment and enablers – and to supporting construction as the sector on which successful delivery will rely.
“Part of this has to be a concerted effort to build new and diverse skillsets. We want the government to work with our industry – a fundamental growth enabler – to ensure the welcome £1.2bn in funding for high-skilled training, for example, supports the modernisation of construction’s workforce, in particular its digital skills.
“The government has set out its stall on funding. We now need the strategy behind it to achieve the promise of economic revival.”
Andrew Reynolds, chief executive of RLB UK, said: “The increase in defence spending may be in response to greater global geopolitical uncertainty […] but what it does do is put some spending in the UK regions – all of which have historically fared well for defence spending and consequently benefit the regional construction sectors.
“As should the £29bn allocated for healthcare which, with its 3% annual increase, will be distributed across the country.
“The infrastructure investment, which includes projects such as Sizewell C nuclear power plant and a new generation of small modular reactors, should drive the net zero agenda and could power the equivalent of six million cleaner energy homes, which can only be good news for all.”
RICS chief executive Justin Young said: “This is a significant and welcome announcement from the government. For too long, the housing sector has lacked the long-term certainty needed to plan and deliver at scale.
“The RICS has consistently called for an increase in public investment to match the ambition of building 1.5 million homes, and this 10-year programme does just that. The RICS also welcomes the focus on developing the energy infrastructure required to support energy security and grid decarbonisation, supporting economic growth.
“Importantly, this commitment provides the clarity and confidence that local authorities and the wider built environment sector need to get construction started and to invest in the people, skills and materials that will make this ambition possible.
“We now need to ensure this ambition translates into action, with the right enabling conditions in place from a well-resourced planning system to a skilled workforce.”
Simon McWhirter, chief executive of the UK Green Building Council, praised the chancellor for standing by the government’s commitment to the £13.2bn Warm Homes Plan, describing it as “an essential commitment to lowering energy bills, tackling fuel poverty, and improving energy security.”
But he called for the funding to be “backed by a robust national retrofit strategy that empowers local authority delivery and supports households to make energy-saving improvements” and said investment should be “much closer to £60bn over 10 years”.
Eoghan O’Lionaird, chief executive of Wates Group said: “Today’s announcements are beneficial for the construction industry, and we are pleased to see the government deliver on its commitment to publish a 10-year infrastructure strategy, thereby providing valuable long-term direction and certainty.
“This welcome commitment allows us to make major decisions around staffing and investment, matters of fundamental importance for our long-term strategy.
“It is also crucial in supporting investment in new technologies and the training of skilled workers - both of which will be essential to delivering the next generation of critical national infrastructure.”
John Dickie, chief executive of BusinessLDN, a business advocacy group for London, complained that the capital had been “short-changed” in the spending review.
“While the certainty provided by a four-year funding deal for Transport for London is welcome, the lack of certainty around delivering shovel-ready projects like the DLR to Thamesmead and Bakerloo line extension that could accelerate growth, create new jobs and open up sites for tens of thousands of new homes is baffling,” he said.
“The significant boost to investment in affordable housing and a long-term rent settlement will go some way towards tackling the housing crisis. But it remains to be seen how much of that money will flow to London, where the housing crisis is most acute. Poverty in London after housing costs remains the highest in the country.
“The onus is now on the upcoming 10-year infrastructure strategy and the industrial strategy to fill in the blanks as well as ensuring that London has the tools it needs to play its full part in the growth mission through further devolution.”
A spokesperson for High Speed Rail Group said it welcomed the project’s four-year funding settlement: “This sort of funding agreement creates the platform from which HS2 and its suppliers can carry out the much needed ‘reset’ of the project and bring clarity on both anticipated costs and programme.
“With this certainty in place, the supply chain will now work with HS2 Ltd to drive the productivity improvements the project needs and the government reasonably demands.
“Rightly, this spending review has focused on the funding needed to get the Euston-Birmingham section of the project back on track. Alongside the reset of this element of the programme, we must now work to define what is needed between Birmingham-Crewe to avoid creating Britain’s biggest bottleneck in this section of the national railway.”
On the affordable housing announcments, Kate Henderson, chief executive of the National Housing Federation, described the funding and rent settlement as a “transformational package for social housing” that will “deliver the right conditions for a decade of renewal and growth”.
She added: “This is the most ambitious Affordable Homes Programme in decades and, alongside long-term certainty on rents, will kickstart a generational boost in the delivery of new social homes.”
Rachael Williamson, director of policy, communications and external affairs at Chartered Institute of Housing, said the announcement “shows the power of the sector’s collective voice”.
She said: “It may not be all that we asked for in our spending review submission, but it’s nearly double the annual funding of the previous programme. And, if focused on social rent, it could have a transformational impact – helping thousands of families without a safe and secure home.”
Muyiwa Oki, the RIBA president, said: “With over a million households on social housing waiting lists, today’s long-term investment to deliver new homes is very welcome. This £39bn 10-year settlement is a step towards delivering the homes we desperately need.
“However, ensuring that a significant proportion of new homes are for social rent is crucial. Good transport links, easy access to public services and green spaces are also vitally important to creating places where people want to live. Today’s settlement for transport infrastructure is therefore welcome.”
Longer term Dr Lee Elliott, head of global occupier research at Knight Frank, sounded a note of caution: “The headline commitments – from Sizewell C to urban rail upgrades – send a clear signal on growth and national renewal. Defence contractors, infrastructure firms and clean tech players will see opportunity in the detail.
“But, with day-to-day departmental budgets rising just 1.2% in real terms, tax policy left hanging, and a volatile global environment defined by trade tensions and supply chain fragility, the long game remains uncertain. Delivery risk, payment delays and fiscal tightrope-walking could blunt private sector confidence.
“The government is betting big – but business knows the balance sheet still bites.”
Nik Potter, associate, commercial research at Knight Frank, said: “The strong focus on defence, housing, energy and infrastructure is set to drive continued growth in real estate investment opportunities across the UK. Regional markets were also in focus throughout the spending review, with these markets currently attracting heightened interest from real estate investors, moving beyond the traditional focus on London.
”Cross-border capital flows into these regions surged by 39.1% in Q1 2025 alone, extending a positive trend that began in mid-2024. Strikingly, if London were excluded, the UK would now rank as the third most attractive destination globally for commercial real estate investment – ahead of major markets like France, Australia and Japan.”
On workforce capacity, Kelly Boorman, partner and head of construction at RSM UK, said: “Today’s announcement demonstrates the government’s ongoing commitment to housebuilding as a driver of economic growth, with £39bn outlined in affordable and social housing over the next 10 years. While this investment is intended to support the government’s target of 1.5 million homes by 2030, we know less than a third of real estate businesses feel this target is achievable, with workforce shortages cited as a key barrier.
“Although Skills England and the Plan for Change will go some way to address these labour gaps, bolstered by further investment of £1.2bn per year in training and apprenticeships by 2029, the industry still has concerns about delivery with an ageing workforce and no funding available to enhance technology and attract the next generation of workers.”
Spending review at a glance
- £39bn for a new 10-year Affordable Homes Programme
- An additional £10bn for financial investments, including to be delivered through Homes England “to crowd in private investment”
- £14.2bn for a new nuclear power station Sizewell C
- £2.5bn confirmed for Small Modular Reactors as part of its industrial strategy to be published this summer
- Providing £15.6 in total by 2031-32 for the elected mayors of some of England’s largest city regions to invest in local transport plus £2.3bn investment in local transport grant
- Multi-year settlement for Transport for London totalling £2.2bn
- £3.5bn for the Transpennine Route Upgrade between Manchester and Leeds
- £2.5bn to deliver East West Rail “unlocking the potential of the Oxford to Cambridge Growth Corridor”
- A 10-year rent settlement under which annual rents increase by CPI plus 1%
- £7bn of infrastructure funding for a “once-in-a-generation” renewal of military accommodation
- A consultation on re-introducing rent convergence
- £2.5bn in low interest loans for social housing providers to boost their development capacity
- £950m of investment for the fourth round of the Local Authority Housing Fund
- Protecting spending on tackling homelessness and rough sleeping, and providing £100m, including from the Transformation Fund, for early interventions to prevent homelessness
- Establishing a new local growth fund for specific mayoral city regions in the North and Midlands
- Investing in up to 350 deprived communities across the UK, to “fund interventions including community cohesion, regeneration and improving the public realm”.
- Resource budget for MHCLG to fall 1.4% between 2025/26 and 2028/29
- Savings identified through the Treasury’s zero based review include cutting communications and marketing spending by 70%
- MHCLG has identified £50m of technical efficiencies by 2028-29, to be delivered through workforce and digital reform
No comments yet