Invest, invest, invest: what the Autumn Statement means for the construction industry
Article posted on: 1 November 2024
“The only way to drive economic growth is to invest, invest, invest.” So began Rachel Reeves in her inaugural Autumn Statement – the first Budget delivered by a female Chancellor of the Exchequer in history. Chris Acton, CEO, shares his thoughts on what this means for the construction industry.
In short, the Chancellor committed to restoring economic stability; increasing investment and infrastructure; working with devolved governments and mayors to develop local growth plans; creating Skills England, and refining our industrial strategy.
The government aims to make the changes needed to deliver sustained, long-term growth. This includes long-gestating planning reforms, the development of a 10-year infrastructure strategy and the establishment of Skills England to train the right people.
All of this to ‘rebuild Britain’, in the Chancellor’s words. But what does this mean for the construction industry – the very businesses that do the building and which will deliver the change needed?
At Clancy, we’re working with our clients to implement innovative engineering solutions that improve lives today and for future generations. Let’s take a look at the shared themes in the statement that affect our clients and the industry in which we operate.
Housing and planning reform
Creating 1.5 million new homes was central to this announcement, and indeed Labour’s manifesto promises. With £5bn in government investment in housing pledged in total, including the £500m uplift to the Affordable Homes Programme to support the ‘desperate lack of affordable housing’, the wheels are certainly in motion.
However, the road is not without a few bumps. The proposed changes to the National Planning Policy Framework – which are imperative if we are to make it easier to get spades in the ground and bring to life this house building vision – are already well-documented.
It was good to see in this announcement that our bottlenecked planning system will receive £46m of additional funding to support recruitment of ‘hundreds’ of new planning officers into local authorities, alongside a promise to further digitise local government to streamline processes.
The Office for Budget Responsibility (OBR) notes that this much-needed investment in planning reform ‘may enable greater delivery of new housing and infrastructure projects, which would boost the associated investment flows, as well as increasing productivity over the longer term.’
Only time will tell, but it seems to be a move in the right direction – especially when it comes to infrastructure, another major target for fiscal stimulus by the new Chancellor.
Improving infrastructure
We will only see true economic growth, create more prosperous opportunities for people and improve health and wellbeing in our communities, if we invest in our outdated infrastructure, especially across the North of England.
A raft of transport upgrades aim to better connect towns and cities UK-wide. Local transport spending for Metro Mayors will rise in 2025/26 to £1.3bn, with £650m for local transport in regions outside of combined authorities.
The Chancellor has budgeted for the TransPennine Route Upgrade between York and Manchester, laying the groundwork for Northern Powerhouse Rail plans. Light railways were also considered, with Sheffield’s Supertram and the West Yorkshire Mass Transit system earmarked for financial support. Local roads will also benefit from a £1.6bn maintenance package.
Our (quite literally) crumbling schools and hospitals will also receive investment, with £1bn to carry out critical NHS maintenance, repairs and upgrades and £6.7bn in capital investment for the Department of Education.
This includes £1.4bn to rebuild schools in the greatest need, predominantly those affected by the RAAC scandal, which is something we’ve been helping our clients navigate particularly over the last 18-months. The rebuilding of 100 schools will begin in England over the next year, amounting to 518 schools overall through the programme.
A supply chain of highly specialised contractors will be required to conduct this vital investment in our public services in the coming years, providing ample opportunity for the industry.
As a business with long established studios in both Manchester and Birmingham, the news that the government is introducing the first integrated settlements for Greater Manchester and the West Midlands Combined Authorities from 2025-26 is hugely encouraging. Simplifying devolved funding and giving mayors greater control over spending should have tangible, positive impacts on local communities.
If that funding can be more effectively channelled into regional infrastructure across England, the opportunities for local construction companies in the supply chain could be vast. We could see a wealth of new industry collaboration as a result.
The construction industry skills shortage
Of course, none of these plans for housing and infrastructure can happen without the right people to deliver them. That’s why we look forward to seeing the impact of Skills England, the government’s new quango for addressing the challenges associated with the overly complex skills agenda.
Skills England aims to bring higher and further education systems closer together and join up decision-making on a cross-industry basis.
Our industry faces an urgent skills shortage: the Construction Industry Training Board estimates a need for 152,000 more workers to meet housing targets, and the Northern Housing Consortium has identified 77,000 green jobs to be unlocked to enable the decarbonisation of homes in the North following their ‘Warm Homes, Green Jobs’ research. The Home Builders Federation also highlights that one in five builders is over 50, highlighting the lack of fresh talent in the sector.
A dedicated platform for skills investment and development has been needed for some time. We hope that Skills England works closely with the construction industry to turn policies and plans into decisive action that helps us to invest in the people who will make the most ambitious parts of this Budget a reality.
In all, the Chancellor’s commitment to long-term forecasting, investment and fiscal responsibility comes at a pivotal time for the country and our burgeoning industries.
This Autumn Statement lays encouraging foundations for growth that the construction industry wants and needs.
Let’s get this right: by investing in the next generation who will enable us to transform our infrastructure, our public services and communities for good.
Chris Acton, CEO