The construction industry has offered a cautious welcome to the Budget’s housing and heat pump measures, but warns that rising costs, delayed delivery and policy uncertainty could blunt their impact.
Builders' merchants, heating specialists and construction industry bodies have responded to the Autumn Budget with a mix of support and concern. Their reactions examine what its housing, energy and business measures mean for construction demand, operating costs, low-carbon heating and investment in skills, with a common emphasis on turning policy announcements into activity on the ground.
The reactions below explore that challenge through housing delivery, repair and improvement work, low-carbon heating, manufacturing and skills.
The Builders Merchants Federation welcomed the £4.7 billion Your First Home scheme and £1.5 billion of additional funding for the Social and Affordable Homes Programme, which it said would support 10,000 extra affordable homes.
The trade association also welcomed fuel and energy cost measures but warned that regulation, taxes and the latest 3.9% increase in the National Minimum Wage and National Living Wage were adding to employment costs.
John Newcomb, CEO, said: "As trailed in the national media beforehand, today's Budget had a ‘steady as you go' quality. While it included a number of helpful announcements, such as confirmation of Your First Home, increased funding for social housing, an extension of the Road Fuel Duty reduction, and a scheme to cut bills for intensive electricity users by up to 25%, much of it restated previously announced measures rather than introducing new ones.
"Employment costs are a real concern for many in our industry, particularly at a time when merchant sales are flatlining at best. The latest above inflation rises to both the National Minimum Wage and National Living Wage do not bode well for increased recruitment, particularly amongst young people in the lead-up to the long-awaited Alan Milburn Review on Young People & Work.
"The main policy content is being held back for the Prime Minister's 10-year Plan, which is due in December. What is really needed are policies that reduce the cost of doing business in the construction industry, encourage investment in people, skills and innovation, and make projects financially viable to undertake."
The test is activity in 2027
Ciaran Morton, Group Marketing Director at Lawsons, focused on builders' merchants and the repair, maintenance and improvement sector.
"Support for housing and infrastructure is welcome, but the benefits may take several years to arrive, while increases in employment and operating costs hit businesses immediately," he said.
"The test for us is simple, will these measures result in more homes being improved and more construction activity during 2027? The RMI sector needs confidence and lower borrowing costs. The Budget shouldn't be judged by the size of the announcements, but by whether it creates an environment in which businesses can invest, employ people and grow."
Smaller developers and retrofit
John Carter, CEO of STARK UK, said: "Clarity on Your First Home is good news for the industry. The sliding scale on developer contributions means the scheme will be just as accessible to the SMEs who take on smaller sites, as it is to the PLCs delivering new homes at scale.
"The 20,000 new homes that the Government is targeting through the scheme will boost demand across the supply chain and create work for tradespeople across the country.
"The Government has recognised that the cost of building a home is at a record high, so the commitment not to make major changes to building regulations is certainly welcome.
"However, the decision not to extend the zero rate of VAT on installing energy saving materials for retrofit is a missed opportunity to both bring down household energy bills and keep tradespeople in steady work. VAT relief on retrofit is something we have been calling for through our Let'sGetBritainBuildingNOW campaign, and we will continue to make that case to Government."
Regional markets and training
Daksh Gupta, CEO of Huws Gray, highlighted regional housing-market differences, developer confidence and training flexibility.
"The introduction of the Your First Home scheme is a welcome step towards stimulating demand for new housing, with the potential to provide a much-needed boost to the wider construction supply chain, including builders' merchants.
"However, its success will depend on ensuring the scheme reflects the different economic and housing market conditions across the country. As a national builders' merchant working closely with housebuilders, we recognise that supporting demand is only one part of the equation, and the scheme must also give developers the confidence and commercial incentive to bring forward new projects.
"Ultimately, the true measure of success will be whether this increased demand translates into more homes being built across the UK at a time when mortgage rates are four to five times higher than when previous schemed have been launched."
On training, Gupta added: "We welcome the increased focus this Government has placed on addressing the skills gap across construction, with there being a well-documented shortage of key roles as we scale up construction across the country.
"While the Government's policies around addressing NEETs and shortages in key construction trades are important, we continue to advocate for providing businesses with increased flexibility around their individual training and development programmes, for example investing Apprenticeship Levy funding in the areas where they need increased skills.
"With each business facing unique circumstances and challenges, providing this autonomy would provide a critical boost enabling operators to drive tailored professional development."
Tim Balcon, CEO, at CITB: "Today's Budget reaffirms the Government's commitment to the biggest transfer of power, funding and responsibility from Westminster in a generation, including greater local control over skills and a new local apprenticeship service.
"The priority for construction is ensuring that investment translates into a stronger workforce. This is an opportunity to meet construction's workforce needs by linking new investment in local social housing, infrastructure and growth to the skills people need for lasting careers. The Construction Jobs Plan unites industry, mayors and training providers to help employers invest more in people and skills.
"The sector needs 41,000 additional workers every year. Clear regional work pipelines will give employers the confidence to invest. Devolution must help employers build a highly skilled workforce and enable people to thrive throughout their careers. CITB is working through the Construction Skills Missions Board to deliver this. We will respond to the Millburn review and White Paper when published in 2027."
Low-carbon heating: finance and policy certainty
Dan Marsden, Director of Renewables at Wolseley Group, welcomed additional consumer support but called for revised installation targets. He highlighted the lack of confirmation that 0% VAT on energy saving materials would continue beyond 2027 and the £400 million Boiler Upgrade Scheme funding cap. He also outlined investment in logistics and installer training.
Marsden said: "It's encouraging to see additional support for consumers to cover the cost of heat pumps with the new loan scheme announced yesterday.
"However, with no confirmation of extending 0% VAT on energy saving materials beyond 2027, and a Boiler Upgrade Scheme funding cap at £400 million minus inflation, we call on government to confirm its revised renewables installation targets to give businesses and installers renewed investment confidence.
"Wolseley has invested significantly in supporting installers and customers with the transition to renewables. This includes transforming our supply chain and logistics network to deliver renewables at the pace and scale needed to decarbonise homes across the country, as well as supporting the future workforce with comprehensive training packages.
"We are laying the groundwork for a thriving renewables industry across the UK and stand ready to further our investment with stable, long-term policy framework. We hope the Government will soon outline how it will continue to support the industry to grow."
Skills and system performance
Peter Tse, Engineering Solutions Director at BSRIA, welcomed the Warm Homes Loan Scheme as a response to the upfront cost of heat pumps.
BSRIA argued that affordable finance could stimulate demand in existing homes, where installation expense and disruption remain barriers. However, it stressed that market growth must be accompanied by systems that are properly designed, installed and commissioned.
BSRIA cited approximately 52,000 heat pumps installed in existing UK homes in 2025, up seven per cent on the previous year, attributing the figures to the Climate Change Committee. Its own market intelligence reported approximately 3.5 million hydronic heat pumps sold globally in 2025, representing growth of four per cent, compared with almost 13 million boilers. It presented these figures as an indication of the scale of the transition still required.
It also welcomed the extension of VAT relief on household electricity bills, linking lower running costs to the attractiveness of heat pumps. But concerns about reduced funding for the wider Warm Homes Plan led it to argue that new finance should complement, rather than replace, existing support. Long-term policy certainty, financial incentives, installer skills and reliable system performance were central to its response.
Support for a self-sustaining market
Ed Thomas, Head of Government and External Affairs at Worcester Bosch, welcomed the Warm Homes Loan Scheme, the continuation of the Boiler Upgrade Scheme and the commitment to reduce energy costs. He said these developments would support growth in a UK heat pump market that remained relatively small.
Worcester Bosch emphasised matching the right heating technology to the customer, supported by trusted advice and genuine choice. Heat pumps form part of its wider technology portfolio, and Thomas said the company would launch a new product later in 2026.
Funding and installation targets must align
Jeff House, External Affairs and Policy Director at Baxi, welcomed the focus on energy costs and household living costs but questioned future Boiler Upgrade Scheme funding.
Comparing the Budget with earlier Warm Homes Plan commitments, he estimated that the scheme's overall budget for 2027–30 appeared to have fallen by more than £750 million. He described this as around 100,000 fewer funded heat pump installations at the current £7,500 grant level.
House distinguished immediate scheme continuity from the loss of its planned expansion. In his assessment, funding would become broadly flat for the remainder of the decade, while domestic retrofit growth remained slow and significant volume gains might instead come from new-build homes.
House highlighted a potential disconnect between funding, discussions of a target of 450,000 heat pump installations a year by 2030, and the consultation on the Clean Heat Market Mechanism. He said the consultation envisaged increasing manufacturer obligations around that target, raising questions about whether policy ambitions matched the support available.
Construction supply chains: costs and low carbon materials
Dr David Crosthwaite, Chief Economist at BCIS, welcomed support for social and affordable housing but questioned whether the Budget went far enough to address the costs faced by private housebuilders. He characterised the pledge to consider more proportionate regulation as a weak compromise, particularly alongside the commitment to avoid major changes to Building Regulations for the rest of the Parliament.
BCIS welcomed Your First Home and exemptions from biodiversity net gain requirements for certain residential brownfield sites. Its central distinction was between providing clarity over future rules and reducing the cumulative cost of development: certainty alone would not resolve the financial pressures on sites.
Crosthwaite argued that private developers remained critical to housing supply even if the Government had moved away from its 1.5 million homes target. Their activity also supported affordable housing delivery and demand for domestic manufacturers. Continued pressure on private housebuilding therefore had consequences for manufacturing output and local economic growth, not just developers.
On fuel duty, BCIS described the confirmed freeze as a small but welcome win for construction. Crosthwaite linked its importance to the industry's reliance on haulage, plant and on-site working, against a backdrop of conflict-driven inflation. He cited provisional BCIS data showing a 42.5% annual increase in road diesel, or DERV, costs in civil and related specialist engineering in September 2026. The freeze would avoid adding to the burden, he argued, rather than reduce existing costs.
Housing and embodied carbon
Timber Development UK welcomed the renewed housebuilding commitment. Its response cited an additional £1.5 billion for the Social and Affordable Housing Programme, taking the Government's total council-housing commitment to £40 billion, alongside cheaper borrowing for councils, changes to brownfield biodiversity requirements and VAT-free land sales to social housing providers.
TDUK also noted the pledge to avoid major changes to building regulations during the Parliament except were safety critical. It welcomed the £4.7 billion Your First Home equity loan scheme and plans to replace the Lifetime ISA with a First-Time Buyer ISA. Its principal argument, however, was that housing policy should address how homes are built as well as how many are delivered.
Chief Executive David Hopkins called for immediate activity in an industry facing closures and redundancies. He argued that timber frame and engineered timber systems could support faster, more efficient delivery, particularly in social and affordable housing. TDUK presented sustainably sourced timber as a renewable material that stores carbon absorbed during tree growth and can reduce embodied carbon when substituted for more carbon-intensive materials.
Hopkins said the UK timber supply chain already had the knowledge, products and expertise to help deliver homes at scale. He sought additional incentives for developments demonstrating lower embodied carbon, particularly those using sustainably sourced timber. Such support, he argued, would stimulate demand and strengthen confidence to invest, linking housing ambitions more closely to net zero commitments.
TDUK also highlighted investment measures: maintaining full expensing for eligible assets and increasing the main-rate first-year allowance from 40% to 50% for other qualifying investment. It identified potential opportunities for manufacturers and processors investing in machinery, facilities and technologies to improve productivity and expand capacity.
Immediate pressures and delayed delivery
The Construction Products Association expressed disappointment that the Budget did not sufficiently address immediate pressures on manufacturers and the wider industry.
Economics Director Noble Francis said its emphasis on fiscal responsibility, financial-market reassurance and household living costs had been expected, rather than a focus on housebuilding supply chains.
Francis regarded Your First Home as important to efforts to prevent a fifth consecutive annual fall in housebuilding in 2027. However, he criticised its April 2027 start, warning that prospective buyers and housebuilders could postpone decisions and deepen the near-term downturn. He welcomed the building-regulations commitment and removal of Biodiversity Net Gain requirements for small brownfield developments as responses to damaged site viability.
The CPA also welcomed additional affordable-housing funding but emphasised delivery over headline totals. Francis said it had seen no activity on the ground from the programme and did not expect any until at least the second quarter of 2027.
Francis criticised the scope of the re-announced BICS electricity-cost scheme, due to start in 2027 but backdated to 2026. He said it excluded many major manufacturers, particularly those dependent on gas, and cited gas-price increases of 300% over the previous year for many construction supply-chain firms.
Regional investment and construction careers
David Young, CEO of Bradfords Building Supplies, offered a more positive assessment. Speaking for a Southwest-based business, he welcomed additional regional powers and funding, linking the region's prospects to entrepreneurship, skilled trades and long-term investment.
Young saw housing, planning reform and infrastructure commitments as a welcome signal that could unlock stalled projects and benefit communities needing more homes. Although costs and market conditions remained challenging, he argued that a stable policy environment could help merchants, builders and tradespeople plan ahead rather than simply manage immediate pressures.
Young also welcomed the prospect of further detail on measures to bring young people into work and training. He said support for construction careers, apprenticeships and technical education would strengthen the sector.
Bradfords continued to attract, train and develop people across the Southwest, reflecting its view that investment in the workforce mattered as much as investment in products, branches and technology.
