The Spending Review 2025, in brief

[edit] Spending Review 2025

On 11 June 2025 Rachel Reeves, Chancellor of the Exchequer presented her spending review to Parliament. Below is a brief look at the changes that may have an impact on the construction industry, either directly or indirectly:

Housing: The government has allocated £39 billion over the next 10 years for social and affordable housing, which Ms Reeves described as the “biggest cash injection into social and affordable housing in 50 years”. An additional £10 billion will be provided through Homes England to unlock hundreds of thousands more homes. The review confirmed an allowance for social landlords to raise rents one percentage point above inflation.
Warms Homes: Reeves confirmed she will deliver the Labour manifesto pledge of a £13.2 billion fund to fix draughty homes and install heat pumps and solar panels. She framed this investment not just as an environmental measure but as a way to save people an average of £600 a year on energy bills.
Local amenities: A £350 million fund to support community facilities; parks, libraries, and swimming pools.
Energy: The government reaffirmed its commitment to nuclear power with a £30 billion investment. This includes £14.2 billion for the Sizewell C project and £2.5 billion for a new small modular reactor programme.
Science and technology: The chancellor pledged to keep Britain’s high-tech industries world-leading, with research and development funding rising to £22.6 billion a year. She also announced a £2 billion investment in "home-grown AI," highlighting its potential to tackle major challenges and create quality jobs.
Education and training: Major education investments include £2.3 billion annually for classroom repairs, £2.4 billion to rebuild 500 schools, £1.2 billion a year for training and apprenticeships, £370 million for school-based nurseries, and a £3.5 billion yearly increase to the core schools budget.
Transport: The chancellor announced £15.6 billion for new rail, tram, and bus networks in the West Midlands and the North. This includes a new rail line between Liverpool and Manchester. She also confirmed extended support for Transport for London, a fourfold rise in local transport grants, and the extension of the £3 bus fare cap to March 2027.
Justice: The government will invest £7 billion to fund 14,000 new prison places and £700 million annually to reform the probation system. An additional £2 billion will support the recruitment of 13,000 more police officers in England and Wales.
Devolved nations: Scotland has been allocated £52bn, Northern Ireland £20bn and Wales £23bn.
Asylum and border security: The chancellor announced an increase of up to £280 million per year for the new Border Security Command and pledged to end the use of hotels for housing asylum seekers by 2029. She said the reforms will reduce the asylum backlog, speed up appeals, and improve removals—saving £1 billion annually and resulting in a 1.4% overall reduction in Home Office spending by 2029.
NHS: The chancellor announced an extra £29 billion a year for the NHS, marking a 3% annual increase, with a nearly 50% boost to the NHS technology budget, including £10 billion to digitise the health system. While day-to-day spending will rise by 2.8%, capital expenditure will remain unchanged.

For full details and explanations visit: https://www.gov.uk/government/publications/spending-review-2025-document

[edit] Industry reactions

CIAT President Eddie Weir PCIAT, said:

"Across the UK, too many people are living in draughty homes, being priced out of their communities, or waiting for social housing. Too many of our schools and hospitals are creaking with age. Too many of our innovative businesses are constrained by lack of premises or good transport connections.

Chartered Architectural Technologists are passionate about delivering a high-quality built environment that enables families and communities to thrive. But for too long, a chronic lack of investment has seen us heading the wrong way.

Today's announcements signal a major shift in direction, with additional infrastructure spending of £39 billion for social and affordable homes, £10 billion for Homes England to crowd in public investment and £13.2 billion for the Warm Homes Plan, not to mention investments in school building, prison places, the NHS estate, and key transport links. Devolved Administrations will see settlements of £52 billion, £23 billion and £22 billion for Scotland, Wales, and Northern Ireland respectively.

But a lack of investment is not the only roadblock that the Spending Review has sought to remove. We urgently need more skilled professionals, and CIAT welcomes the commitment to delivering up to £1.2 billion per year to expand apprenticeships and training capacity in sectors such as the built environment.

Now, Government must work with the industry to ensure these investments deliver the skills we need, and to ensure that the planning and regulatory regimes drive rapid increases in delivery, without sacrificing quality.

There is still a long way to go to the 1.5 million new, high-quality homes and five million retrofits we so urgently need. But this Spending Review means that, for the first time in a long time, we can see the road in front of us. As the ancient proverb says, the journey of a thousand miles begins with a single step. This might just prove to be that step."

RIBA President, Muyiwa Oki said:

“With over a million households on social housing waiting lists, today’s long-term investment to deliver new homes is very welcome. This £39 billion 10-year settlement is a step towards delivering the homes we desperately need. However, ensuring that a significant proportion of new homes are for social rent is crucial.

But money alone isn’t enough. Alongside these positive measures, we need radical change to enable local authorities to build and retain social housing stock. As such, we urge the government to pilot new models for the delivery of social housing, like the one outlined in our report, Foundations for the Future.

Good transport links, easy access to public services, and green spaces are also vitally important to creating places where people want to live. Today’s settlement for transport infrastructure is therefore welcome.

Architects are uniquely placed to help turn the government’s ambitions for growth and renewal into reality. But if we are to deliver high-quality, energy efficient buildings and places which are adaptable and resilient, we need a pipeline of talent. Ensuring the profession is diverse and competent for generations to come requires funding for architectural education and apprenticeships.

We are ready to work with the government to help deliver its plan for growth by improving the built environment across the country. Today’s announcement brings us closer to that shared goal.”

Brian Berry, Chief Executive of the Federation of Master Builders, said:

"The Chancellor’s commitment to social housing needs an accompanying delivery strategy that puts SME builders at its heart. Small, local firms are uniquely positioned to unlock the potential of overlooked small sites, deliver high-quality homes, and boost local economies. By working in partnership with housing associations, SMEs can also help tackle the industry’s skills gap by training and employing people in their own communities.

"It is also pleasing to see £1.2bn investment in apprenticeships and training, but we know from the Construction Industry Training Board (CITB) that the UK will need more than a quarter of a million more workers entering the industry by 2028 if the Government is serious about meeting its 1.5 million new homes target. Today’s announcement simply doesn’t go far enough. It’s also disappointing that, once again, no progress has been made on the Government’s flagship commitment at last year’s General Election to retrofit 5 million homes.

"The UK’s housing stock is amongst the oldest and least energy-efficient in Europe. If we are to meet our net-zero goals, a comprehensive retrofit strategy is essential. SME builders are ready to deliver, but they need direction, support, and for the Government to follow through on its pledge."

Tim Balcon, CEO of the Construction Industry Training Board (CITB), commented:

“We support the government’s commitment to getting Britain building again. Over £110 billion announced for infrastructure projects like Sizewell C, a fresh £39 billion affordable homes funding settlement, and £13 billion for upgrading millions of homes with improved insultation all translates to a buoyant construction industry. In total, there’s positive news to the tune of about £165 billion for the industry.

“Of course, we need the skills on the ground to deliver these ambitions. To improve understanding of retrofit work, we’re supporting the development of a Repair, Maintenance and Improvement (RMI) Sector Skills Plan, which aims to identify the specific skills needs and requirements across various occupations within the RMI sector. We’re investing £3.8 million in the plan to develop tailored strategies, projects and interventions that address the unique needs of the sector.

“Similarly, at the beginning of this year, we launched the Sizewell C Skills Charter in partnership with Sizewell C, ECITB, Suffolk County Council, and East Suffolk Council. This was a commitment from all parties to working with training providers to support local recruitment and skills development that will have a lasting positive impact on employment and productivity in the area.

“Earlier this year, the Government announced a £600 million construction skills package, £32 million of which is investment from CITB to deliver increased industry placements. Back in November, we announced a £40 million commitment to support the creation of Homebuilding Skills Hubs. I genuinely believe this is a once-in-a-generation chance to us to recruit and train our workforce – equipping more people with the skills they urgently need now and in the future.”

Simon Ayers MBE, Chief Executive Officer of TrustMark, said:

“TrustMark is pleased to hear the announcement in today’s Spending Review to fully meet the Government’s Warm Homes Plan commitment to upgrade homes through energy efficiency measures, alongside installing heat pumps and other low-carbon technologies, such as solar panels and batteries. We look forward to continuing to collaborate with the Government and industry to deliver these commitments to support thousands of households in the months and years ahead.”

Construction Products Association Director Noble Francis said:

""Clearly, it was a challenging Spending Review for the Chancellor, given that the government is keen on sticking to its fiscal rule, but it was positive that the government announced £39 billion for social and affordable housing over the next ten years. This provides much-needed certainty and investment in housing over the long term, as well as a structural uplift to social and affordable house building. However, given that the vast majority of housing in the UK is private, affordability remains the most significant constraint to house building in the short-term, and the lack of a policy to enable demand for first-time buyers remains a great concern. There was also certainty of funding for transport and flood defences in particular over the Spending Review period to 2029/30, and we also eagerly anticipate government’s upcoming 10-year infrastructure strategy, which will be critical to give the whole supply chain the confidence to invest in the skills, capacity and innovative methods to deliver it.

Now that government has provided the certainty of funding over the Spending Review period, to 2029/30, what will be critical is to see delivery on the ground that matches its announcements.

Whilst there was positive focus on housing, infrastructure and resilience, there was a lack of much-needed policies to help UK manufacturing on energy prices, and it will be essential that the government’s upcoming Industrial Strategy addresses this, as competitiveness is vital for the future of the UK’s foundation sectors."