Budget Reaction: The Budget Keeps Builders Stuck in the Mud
Chancellor of the Exchequer, Rachel Reeves delivered her second budget, unveiling an array of tax measures. Most importantly, she did not go ahead with the unviable landfill tax increase of 3,015%, instead implementing a smaller uplift. Ultimately, the biggest cost of the Budget was the increased cost to hiring, especially for firms hiring young people.
Richard Beresford, Chief Executive of the National Federation of Builders (NFB), said: “Construction feared the worst from the budget, particularly on landfill tax. While we were heard on this proposal, lower rate landfill tax, or ‘muckaway’, will still more than double in price. Furthermore, businesses who employ directly, take on apprentices, or who choose to decarbonise their vehicle fleets, will be throwing their arms up in frustration.
“There was nothing on stamp duty land tax rebates for the most efficient homes, no cancelling of the Building Safety Levy and not a murmur on Help to Buy, all of which means industry will remain in the mud.
“Death by a thousand taxes has already killed off many businesses, with insolvency rates still high within the construction industry. The Government must therefore redouble its effort to make projects more certain for investors, while helping the construction businesses who deliver them become more viable. Planning reform is one place which will help industry, and we can only assume that as they were omitted from the budget, they have been saved for the housing secretary, Steve Reed.”
Some of the most important parts of the budget for builders includes:
• The landfill tax will not converge to a single rate as previously proposed, but the lower rate will be uplifted with the same multiplier as the standard rate. So, for 2026-27, the lower rate will be £8.65 per tonne and the standard rate will be £130.75.
• Public bodies will be provided with grants to remediate land where landfill tax is an ‘unaffordable blocker’.
• £48 million of additional funding being allocated to boost capacity in the planning system, which will increase recruitment across the planning system to 1,400 by the end of this Parliament.
• A ‘High Value Council Tax Surcharge’ on properties in England that are worth £2m or more, from 2028-29.
• Relief for retail, hospitality and leisure (RHL) buildings will be funded by the most expensive properties
One of the most pressing issues is the increase to the minimum wage. It will impact firms that hire younger workers and apprentices the most, as they receive the largest increases in pay.
Rico Wojtulewicz, Head of Policy and Market Insight and the NFB, said: “The landfill tax proposal was an existential threat to the construction industry, dampening investment and growth. We are therefore delighted that the Government engaged so openly and diligently with industry to scrap their proposals. It was a real partnership.
The lower rate landfill tax will double for 2026-27 financial year, which will a challenge, but we hope the next steps are for the Government to work with industry on analysing waste licensing and regulations so that that lower rated material can be reused on site, on other projects or stored for re-use. If we want a circular economy, we need a regulatory environment to enable it.”
