What the UK’s autumn budget tells us about the year ahead

What did the UK autumn budget tell us about the year ahead? Professional Support Lawyer Sarah Steed and Paralegal James Hancock at UK law firm Burges Salmon discuss.

The Chancellor’s decision to maintain £120bn in capital investment for housing, transport and infrastructure aims to ensure a steady pipeline of projects, including urban regeneration and energy efficiency upgrades in 2026 and beyond. These offer significant opportunities for developers, contractors and consultants, particularly in sustainable construction and green technology.

For example, the Chancellor renewed commitment to infrastructure investment, as well as £13bn in devolved funding for regional infrastructure and skills. While large-scale projects carry inherent delivery, overrun and cost-escalation risks, the industry hopes to see these funds deployed effectively and efficiently so that these investments sustain workloads in the sector.

In energy, the budget aimed to support net-zero and energy security goals, with backing for nuclear projects such as Sizewell C and the UK’s first small modular reactors with Rolls-Royce, alongside ongoing support for renewables and grid upgrades. This was shown by the Warm Homes Plan announcement in January. It promises £15bn of public investment to support energy performance improvements to UK housing stock; up to five million homes could benefit from solar panels, batteries, heat pumps and insulation that can cut energy bills. The announcement states it is “a plan for all types of households, with targeted interventions for those on low incomes; upgrades for social housing; new protections for renters; and a universal offer for all households to upgrade homes if, and when, they want to”. It was broadly welcomed by the industry, with a caveat about the need to invest in skills and training.

Daniel Redfern at roof specialists Marley notes: “The roofing sector will be central to the successful delivery of the Warm Homes Plan, with solar panels acknowledged to be a primary technology solution. However, it’s now important that there is an increased focus on upskilling the existing workforce, as well as attracting new talent to ensure we have the workforce in place to implement the plan at scale, both on retrofit projects and new builds.”

Employment, recruitment and retention

Consequently, the budget’s offer of free apprenticeship training for under-25s at SMEs was positively received. While some industry bodies warned that short courses might dilute standards and fail to address core barriers to apprenticeship uptake, it’s a positive move to address the major and persistent problems with recruitment and retention in the sector.

While increases to the National Living Wage (NLW) could also help mitigate the recruitment and retention problems, no one in the industry will be blind to the cost pressures. With the National Insurance rise still in recent memory, the rise in the NLW has been described as a significant challenge to already tight margins. Whether this will lead to project repricing, constrained recruitment and increased insolvency – or whether those fears are exaggerated – remains to be seen.

Planning reforms and funding

Overhaul of the planning system has been a long-standing focus of this government, and this budget allocated £48m of new funding for local planning authorities to enable them to recruit 350 extra planners. This aims to tackle recruitment and retention issues by extending the Pathways to Planning Graduate Scheme and creating a new planning careers hub. The government also says it is working with judges to reform the way that planning cases are dealt with and the speed with which they are heard. It is hoped that this will help accelerate approvals for housing and commercial projects, with the Office for Budget Responsibility (OBR) projecting annual net additions to UK housing stock rising from around 215,000 in 2026–27 to 305,000 by 2029–30, largely due to the reforms to the planning system.

However, the OBR warns that the benefits of planning reforms will take time to materialise, with most housebuilding growth expected after 2027. Short-term risks include a dip in housing supply, potential delays from new environmental safeguards in planning legislation, and the prospect of reduced public capital spending after 2027–28. Rising construction costs and interest rates also threaten project viability. Effective implementation and management of planning changes will be crucial to realising the budget’s ambitions.

Landfill tax reforms were abandoned

Fears had been building about the plans to reform the two-tier landfill system, which may have threatened housing targets and significant infrastructure projects. Heathrow Airport, for example, had projected huge cost increases if plans had materialised. The government decided not to follow through with that plan and the retention of the existing system was broadly welcomed. The tax exemption for filling in quarries remains, which will come as a relief to housebuilders who rely on that cheaper alternative to landfill.

Disputes and risk management

The autumn budget, while not directly addressing dispute resolution, introduced policies that shape the risk landscape for construction and engineering. Sustained public investment and efforts to stabilise the economy are expected to create a more predictable environment, reducing project disruptions that often lead to disputes. Measures to enhance fairness, such as a £2.3bn HMRC compliance package targeting fraud in the Construction Industry Scheme (CIS), should support honest contractors and reduce rogue activity. Business rates relief and a stable corporation tax regime may encourage investment, potentially resulting in fewer distressed projects and contentious situations. As planning reforms take effect, a decline in lengthy appeals and judicial reviews is anticipated.

However, increased HMRC scrutiny, new CIS and off-payroll rules, and broader tax changes will heighten compliance demands and could trigger more disputes over employment status, VAT or payment practices. Rising payroll costs and a higher NLW may squeeze margins, leading to more claims under fixed-price contracts. Future public spending cuts, stricter planning requirements and the complexity of large infrastructure projects also pose risks of disputes and litigation. Robust contract management and early dispute avoidance will be essential to balance growth opportunities with prudent risk management.

The persistent problems in the industry of supply chain constraints, labour shortages, inflation, higher taxes and interest rates may inevitably continue to challenge the industry, impacting investment and confidence. Regulatory challenges, particularly in the field of building safety, will not be quickly resolved. However, the government’s commitment to training and skills, infrastructure investment, planning reform and clean energy initiatives was welcomed by the construction and engineering sector. To see the budget’s effects, we’ll all just have to see how 2026 plays out. 

For more, visit burges-salmon.com
Read the Warm Homes Plan here.

Image credit | Simon Dawson