The building materials industry reacts to Chancellor Rachel Reeves's statement to the House of Commons.

Reacting to the Budget, Builders Merchants Federation CEO John Newcomb, said: “Our concern is that this Budget represents the delivery of small incremental measures. We needed to see a jumpstart to get the sector moving.

"The Budget has not done enough to bridge the gulf between the Government’s ambition to build 1.5 million new homes by July 2029, and the state of today’s market. There’s a significant gap between what the Government has proposed and what is being achieved out on the ground.

“We have stated that without Government intervention it was going to be difficult to move out of a stagnant market, so it’s disappointing to see no incentives to help first time buyers and stimulate the housing market.

“The Government is adding headwinds, with issues such as the increases to the National Living Wage and National Minimum Wage, as well as the impact of the Extended Producer Responsibility for Packaging Waste, having a knock-on effect on investment and growth."

A major concern to BMF members and the wider economy is the Chancellor’s commitment to Inheritance Tax.

“A minor alteration has been made for spouses so that any unused £1 million allowance for the 100% rate of Business Property Relief will be transferable between spouses and civil partners, including if the first death was before 6 April 2026," added Newcomb.

“That will not change the position we hear across the industry that the changes in inheritance taxation could limit the future of the sector, with many private and family businesses across our membership reporting back that the impact of Business Property Relief will damage enterprise.

“The end result could be a scaling back of the operations at SME merchants, suppliers and even builders in light of the changes, and that will have a significant impact on the whole economy.”  

While the BMF feels the Budget lacks the ambition to boost economic growth and regional prosperity, it does welcome some moves made by the Chancellor.

Newcomb added: “There were positive outcomes in some areas of the Budget. That includes moves to create developments around train stations and other transport hotspots, which will support the earlier announcement of at least three New Towns in Bedfordshire, Leeds and Enfield this Parliament.

"The Chancellor’s announcement on Landfill Tax is also welcomed, as this is something the BMF, alongside other associations, petitioned for, with the Government now not proceeding with transitioning to a single rate of tax by 2030, and retaining the exemption for quarries with disposal permits. 

“The move to make training for under 25 apprenticeships completely free for SMEs is also a positive step. Co-investment payments that SMEs have had to pay now for apprentices under the age of 25 will be scrapped, and we support an extension of the temporary five pence Road Fuel Duty being cut for an extra five months, which offers a further fuel duty freeze.

“However, looking at the situation overall, the difference between what the Government says it will do and the implementation and delivery is a major concern.

“We are looking more at the detail, but the feeling is that more could have been done to get Britain building.”

 

David Young, Bradfords Building Supplies CEO, said: “Today’s Budget offers some positive signals for construction, particularly around housing ambition, skills and the transition to a lower-carbon economy. But it falls short of the reset the sector was hoping for. The real test will be how quickly planning is unblocked and investment flows into projects on the ground. Without faster, more predictable delivery, confidence will remain fragile.

"For Bradfords, the fundamentals haven’t changed: demand for warm, efficient, well-built homes across the South West is strong. Our customers want clarity and stability so they can plan, price and deliver work with confidence.

"While today’s measures provide some reassurance, the broader tax environment remains challenging. Frozen personal tax and employer NI thresholds, adjustments to corporation tax and staged fuel duty increases will add pressure to household budgets and business costs. These factors could influence spending decisions and margins across the supply chain, making predictability and cost-efficiency more critical than ever.

"That’s why we’re continuing to invest in our branches, our people and our product ranges – particularly in renewables, energy-efficient building materials and solutions that help projects run smoothly and profitably. We’ve also invested in our own fleet to improve efficiency and reduce emissions, ensuring we can deliver for customers reliably and sustainably. Our focus remains on supporting customers with practical, cost-effective ways to keep building and improving homes across the South West.

“The Chancellor’s commitment to apprenticeships is a welcome step. Making under-25 apprenticeship training free and allocating £820 million over three years signals genuine support for workforce development. However, businesses will want clarity on how funds are accessed and whether the scheme is flexible enough to meet sector-specific needs.”

CEO and Co-Founder of On The Tools, Lee Wilcox, said: “As the UK’s largest construction community, we hear from trades on site every day. This Budget is asking them to shoulder more risk at the very moment they need stability the most.

"Higher wage bills, increased National Insurance, and frozen tax thresholds all squeeze the brickies, sparkies and plumbers who already run on wafer-thin margins, and many will feel they are being taxed for simply keeping Britain’s infrastructure standing.

"There are, however, some important green shoots, particularly the £13 billion of flexible funding going to seven mayors across England. If those pots are used to back housing, retrofit, regeneration and local infrastructure, it could mean more work, faster decisions and a stronger skills pipeline for trades in every region. I’m pleased to see places like Birmingham and the wider Midlands right at the front of that queue.

"Another area of optimism is the £820 million youth guarantee and the wider focus on skills and apprenticeships. If that money genuinely reaches small firms and sole traders, not just the big players, it could finally help rebuild the talent pipeline and bring thousands of young people into sustainable careers in the trades. Couple that with ongoing demand in housing, repair, retrofit and energy efficiency, and there is a real opportunity to grow the industry, but only if the government stops treating tradespeople as an afterthought and starts designing policy around what actually happens on site

"What this Budget still fails to confront is that tradespeople are people first, in a sector with some of the highest suicide rates in the country. If the Government wants growth, it has to start by backing the trades properly. Not just in the Budget, but in the reality of life in every yard, every van and every site across the UK.”

 

Tim Balcon, Chief Executive of Construction Industry Training Board, said: “The money for the youth guarantee and funding to make apprenticeship training for people under-25 free for small and medium enterprises is welcome news, particularly considering recent Government figures show there are nearly a million young people not in employment, education, or training.  

“We need to get more people into construction – our research shows the UK will need over 47,000 additional workers in the industry every year to meet demand. It’s vital that employers have simpler and clearer pathways to engage in skills and training.

"This would be an excellent way to build on the Government’s £600 million construction skills package announced earlier this year, which aims to help young people transition into regular employment. Nonetheless, we need to ensure construction growth is stimulated and that we have clear pipelines of work, so that employers have the confidence to invest in skills. 

“By investing in skills, creating clear career pathways, and promoting the incredible opportunities construction offers, we can build a workforce ready for the future.” 

 

Garry Felgate, CEO of The MCS Foundation, said: “Today’s Budget is a partial step towards cutting the cost of electricity in Britain. However, doing so by ending funding for the Energy Company Obligation, which has supported low-income households to access affordable, secure, clean energy, is a devastating blow.

"This will also be damaging to the small-scale renewable energy industry – one of the UK’s fastest growing sectors and one whose continued growth the government should be supporting. Businesses need certainty, not a cliff-edge that could damage supply chains, stifle growth, and put countless jobs at risk.  

“While the end of this funding is deeply disappointing, the partial removing of social and environmental levies from the cost of electricity bills is a step in the right direction. This will help incentivise the switch to clean heat, further cut the cost of electricity, and have the greatest impact for the most vulnerable.  

“Despite speculation, the Boiler Upgrade Scheme was not impacted by today’s Budget. The BUS has helped tens of thousands of households across the UK access secure, clean heating and been integral to the record growth of the heat pump sector. Its continuation in its current form will be welcome news for consumers and industry alike, and provide much-needed confidence for installers across England and Wales.  

“We urge the Government to now provide details of how the gap left by ECO will be filled to ensure low-income households have access to the critical technologies that can both help deliver lower bills and tackle fuel poverty.

“While today’s efforts to cut the cost of electricity will be welcomed by many, there is more the Government must do to ensure everyone has access to clean, affordable energy and that heat pumps are always cheaper to run than fossil fuel boilers. Today’s progress must be built on by moving the cost of remaining levies off electricity bills.”

 

Worcester Bosch warns that the scrapping of Energy Company Obligation to save consumers £150 annually, will impact manufacturers' ability to avoid fines under the Clean Heat Market Mechanism. 

Martyn Bridges, Director of External Affairs, said: "ECO 4 started on the 1 April 2022 and continues until 31 March 2026. In that time, it has fully funded just under 39,000 heat pumps up until the end of September 2025, an average of around 1,000 appliances a month. 

"As these appliances were all eligible to be counted towards the target quota that manufacturers have to meet to avoid fines under the CHMM, then these targets need re-appraising. Removing on average 12,000 funded heat pumps from the market would potentially result in fines in excess of £6 million for manufacturers as they cannot meet their quotas."

 

However, Daikin welcomed the Government’s plan to reduce energy bills for consumers.

Hamid Salimi, Residential Product Manager, Daikin UK, said: "Bringing down the cost of electricity will undoubtedly ease the cost-of-living crisis. This will make low-carbon heating and cooling more affordable and encourage households and businesses to make the switch.”

Confirmation that the full £13.2 billion investment for the Warm Homes Plan will continue, including BUS, is a step in the right direction, according to Wolseley Group. 

Dan Marsden, Director of Renewables, said: "While we eagerly await the publication of the Warm Homes Plan in full, this confirmation provides a positive signal to the wider renewables industry. 

"The reduction in electricity bills for consumers announced today is also welcome. By moving Renewables Obligation costs, renewables such as heat pumps will be more cost-effective for consumers, encouraging them to switch from more traditional heating systems. 

"High quality heat pump installations will also enable consumers to capitalise on these energy bill savings further. Through Renewables Centre, installers can access technical, administrative, and MCS support which unlocks the BUS grant. Helping drive successful installs. 

"Both Renewables Centre and Wolseley believe the Warm Homes Plan can unlock investment to accelerate the renewables transition by setting a clear, long-term implementation timeline for policy schemes, regulations, and the technologies underpinning homes decarbonisation."

Steven Timberlake, VP for Northern Europe, at Infios: “It’s disappointing that once again the engine room of the UK economy has been left out of the conversation. Logistics and supply chain operations are what keep Britain’s trade, industry and everyday commerce moving – yet today’s budget makes no meaningful acknowledgement of that reality. There remains a stark and growing gap between the Government’s growth ambitions and the practical, on-the-ground challenges of moving goods in the year ahead.”

“Supply chains are being pushed to their limits. Businesses are grappling with acute skills shortages, legacy systems that slow productivity, and a trading environment that grows more complex and costly by the month. Resilience doesn’t happen by accident — it requires intentional investment and forward-thinking policy.

"In the months ahead, we need to see serious measures: from supported investment that help firms adopt AI and modernise operations, to expanded skills funding, to targeted tax relief that reduces the cost of keeping Britain’s goods flowing. Without this, the UK risks undermining its own economic ambitions before they even get off the ground.”

 

Federation of Master Builders welcomed the decisions to pull back on the landfill tax, £48 million to boost planning capacity, and free apprenticeship training for under-25s in SMEs.

However, the previously announced wage rises will hit small business squeezed bottom lines and the lack of action on domestic retrofit and dropping of ECO scheme leaves a gap in how the country will upgrade it's old housing stock.

Brian Berry, Chief Executive, said: “Today’s announcement on landfill tax reform is a big win for small house builders, saving them thousands on new build costs. Alongside this, making apprenticeship training for under-25s in SMEs free from paying in the co-investment sum when hiring under 25's will be a boost, alongside much needed simplification of the apprenticeship application process.

"The £48 million investment to boost planning capacity is further positive step. Local planning departments are under immense strain, and this funding will help unlock stalled housing projects, but this seems a small sum of money to fix a very big problem.

"A well-resourced planning system is essential if we are to meet housing targets, and SMEs must be at the heart of delivery. Supporting small builders to get spades in the ground will ensure Britain gets the high-quality homes communities need.”

Berry concluded: “However, the rise in minimum wage will squeeze bottom lines and the freeze in tax thresholds has the potential to push many builders into a higher tax bracket. It's also disappointing to see the Chancellor miss the opportunity to back household energy upgrades of any kind, even rolling back on the ECO scheme.

"Upgrading homes will be vital to keep people warm in winter and cool in summer. This Budget offers welcome steps forward, but overall I can see many builders feeling underwhelmed." 

 

National Federation of Roofing Contractors believes that the Budget could further intensify the already severe cost pressures facing SME roofing businesses, as increases to the National Living Wage and apprentice wages are signalled for the future. 

From April, the National Living Wage will rise by 4.1% to £12.71 per hour for workers aged 21 and over. The minimum wage for 18–20-year-olds will increase by 8.5% to £10.85, while rates for 16–17-year-olds and apprentices will rise by 6% to £8 per hour. 

NFRC recognises the importance of improving living standards and attraction to our industry, however, repeated wage increases, National Insurance increases, and looming employment law reforms all reduce the ability of small and medium-sized roofing firms to recruit and grow at the rate needed to meet ambitious housing and infrastructure targets. 

James Talman, Group CEO, said, “Our Members want to pay fair wages and offer rewarding careers, but this Budget has announced more costs for employers at a time when margins are already tight. With NIC increases still being absorbed and the employment rights bill on the horizon, these wage rises will make taking on new staff even more difficult.” 

NFRC’s latest Summer State of the Roofing Industry Report saw 76% of members citing the cost of employment as a challenge facing their business, while 52% pointed to recruitment difficulties. The report also found that tender prices are being squeezed, further tightening headroom to take on much-needed people. The same report found that skilled labour shortages were impacting the amount of work businesses could take on for 65% of members.  

Positively, the Budget confirmed that training for under-25 apprentices will be made free for SMEs. NFRC estimate this will save members £550 per apprentice. NFRC welcomes this direction of travel but cautions that the measure alone will not unlock the scale of workforce growth required to meet the government’s housing, infrastructure and net zero ambitions. 

Talman added: “Free apprenticeship training for SMEs is a positive and welcome step, and one we have long called for. But it will not, on its own, deliver the workforce growth the country urgently needs. Rising apprentice wages, alongside rising employment taxes and regulatory burdens, mean many firms simply cannot afford to take on more young people, however willing they may be.” 

Another positive announcement was the confirmation of £13 billion of flexible funding for seven mayors, which they can invest in skills support.  

“As NFRC engages in the development of the second iteration of the Local Skills Improvement Plans, we are encouraged by the Government’s recognition of the power of local initiatives to address skills concerns, but this must be truly employer and demand led if we are to see real change.” 

NFRC also welcomes the decision to halt plans to converge the two rates of landfill tax. We are also reassured by the doubling of fiscal headroom to £21.7 billion, which we hope will provide the stability businesses need to plan for the future.

Commitments to increased investment in infrastructure, energy and housing are positive; however, record-high tax burdens and downgraded growth forecasts risk undermining the impact of these ambitions on the wider construction sector. 

NFRC will immediately be consulting with members on the impact of the budget to gather a wider picture of the impact of these announcements. 

 

For the Building Cost Information Service there’s little in the Budget for the construction sector.

Dr David Crosthwaite, Chief Economist, said: "Plus points include £900 million additional capital for the Lower Thames Crossing scheme, free training for under-25 apprentices for SMEs, and steadfastness on Spending Review investments in infrastructure and housing.

"Yet the Chancellor’s celebration of the Government’s planning overhaul to ‘get Britain building’ seemed misplaced. Construction output and housebuilding data tell another story – one of slow demand and a shrinking workforce. 

"The Chancellor called private investment the lifeblood of economic growth. But as we found out first from the Office for Budget Responsibility's leak, the threshold for employer National Insurance contributions will freeze from 2028-29 and NICs will be charged on salary-sacrificed pension contributions."

Dr David Crosthwaite asked will this Government ever learn from the unintended consequences of its policies?

"Increasing the cost of doing business is likely to be inflationary," he said. "Higher costs will inevitably be passed on, placing further upward pressure on tender prices and reducing firms' ability to hire. This could pile on more friction at a time when construction activity is already fragile. 

"The above-inflation rise in the minimum wage for young people is also not as shiny as it sounds. It assumes that economic conditions are conducive for businesses to increase recruitment. That's not currently the case, as evidenced by the high unemployment rate.

"For construction, already faced with chronic labour gaps and rocky investor confidence, this Budget might create more issues than it solves."