The November 2025 Budget: What it Means for UK Construction

The Chancellor has delivered the Autumn Budget 2025, and as always, the construction sector is keenly watching to understand the implications for our pipeline, people, and profits.

At Approach Personnel, we've analysed the key announcements to give construction firms a clear outlook on how today's choices will shape the industry over the coming years.

The Investment Landscape: Public Sector Spend and Devolved Power

A core theme of this Budget is a commitment to infrastructure and devolution, which should provide a stable project pipeline for the sector.

• Major Infrastructure Commitment: The Chancellor has reaffirmed funding for large-scale, long-term projects, including a significant commitment of £900 million for the Lower Thames Crossing. This is a crucial signal of stability for major civil engineering projects.

• Regional Devolution of Funding: A substantial £13 billion in flexible funding will be devolved to regional leaders in seven Mayoral Strategic Authorities (including Greater Manchester, West Midlands, and the Greater London Authority) from 2026-27 to 2029-30. This gives local leaders control over a single pot for skills, infrastructure, and business support. Construction firms must engage with these regional authorities to understand their localised priorities and secure contracts. This shift will favour firms with a strong regional presence and local supply chains.

• Targeted Regional Projects: Specific funding for new projects, like a science centre in Darlington and a sports quarter in Peterborough, points to opportunities for local and medium-sized contractors in these areas.

Housing and Property: A Mixed Outlook

While housing targets remain ambitious, a new property tax measure could dampen buyer confidence, affecting the volume of new builds.

• New 'Mansion Tax': A high-value council tax surcharge is being introduced for properties valued at £2 million or more from 2028. This move, while targeting a small segment, can potentially cool activity in the higher-end residential market, impacting specialist builders and luxury developers.

• Industry Sentiment Warning: Ahead of the Budget, the Construction Products Association (CPA) warned that tax rises could negatively impact homebuyer confidence, which is already suffering from uncertainty. Construction firms focused on housebuilding must remain flexible and monitor the market closely for signs of slowdown in demand.

The People Challenge: Skills and Wages

The Budget contains measures that will affect the cost of employment and offer opportunities to address the sector’s persistent skills gap.

• Increased Labour Costs: The National Living Wage and National Minimum Wage for 18-20 year olds are set to rise. While this boosts low-paid workers, it will directly increase operational costs for businesses relying on these salary bands. Firms need to model these higher wage bills into future tenders and contracts.

• Skills Investment Focus: Crucially, training for under 25 apprenticeships will be made free for small and medium-sized businesses (SMEs). This is a significant win for construction SMEs, lowering the barrier to entry for taking on and training young talent. Construction firms should urgently explore leveraging this change to build their future workforce and address the skills deficit.

Tax, Compliance, and Finance

While Corporation Tax remains untouched, other tax-raising measures and compliance crackdowns will be felt across the business.

• Corporation Tax: Rates will remain at 25%, providing an element of stability for business planning.

• Tax Threshold Freezes: Personal and employer National Insurance contribution thresholds will be frozen for an extended period, which is forecast to raise significant revenue. This fiscal drag will affect the disposable income of your employees and increase employer contributions over time.

• Construction Industry Scheme (CIS) Crackdown: Rules for the CIS are set to be tightened with a renewed focus on tackling fraud and increasing compliance.Mandate for Firms: Firms must ensure their internal processes and paperwork are impeccable and fully compliant to avoid significant penalties from HMRC's bolstered enforcement teams.

• Landfill Tax Exemption Retained: The tax exemption for backfilling quarries will be retained, helping to keep a low-cost alternative to landfill open and avoiding a potentially costly tax rise for site clearance and waste management.

Approach Personnel’s Key Takeaways for Construction Firms

The November 2025 Budget is a story of devolved opportunity and rising operational costs for the construction sector.

1. Focus on Regional Devolution: Actively monitor and engage with Mayoral Strategic Authorities. The £13 billion fund means the future pipeline for infrastructure and skills is now a local conversation.

2. Harness the Skills Incentive: The free apprenticeships for under 25s for SMEs is an immediate, high-value opportunity to invest in your workforce without the previous financial burden. Start planning your apprenticeship intake now.

3. Stress-Test Your Financials: Account for rising minimum wages and the impact of fiscal drag on employee income in your tender cost models. Ensure your CIS compliance is watertight to mitigate the risk of HMRC penalties.

The government is committed to "getting spades in the ground," but successful firms will be those that adapt swiftly to the shift in how projects are funded, manage rising labour costs, and aggressively tackle the skills crisis using the new available incentives.

Need help scaling your workforce to meet the new regional infrastructure demands, or finding high-quality apprentices?

Contact Approach Personnel today to discuss your recruitment needs and how we can connect you with the talent ready for the next phase of UK construction. enquiries@approachpersonnel.co.uk