I spent the last week analyzing Rachel Reeves’ budget and its impact on construction hiring. The government is promising to build 1.5 million homes while simultaneously making it more expensive to hire the workers needed to build them.
The Math Doesn’t Add Up (And That’s the Problem)
The UK needs 230,000 additional construction workers to deliver the government’s 1.5 million homes pledge.
We have half a million fewer construction workers than in 2008. Construction’s share of the UK workforce has dropped to Great Depression levels.
One in three builders is over 50. The number of workers aged 16-24 has collapsed by more than 150,000 since 2008.
The pipeline is broken.
The Budget Creates a Hiring Paradox
Reeves announced two things that pull in opposite directions.
First, the cost increase: Employer National Insurance Contributions jumped from 13.8% to 15% starting from April 2025. For a labor-intensive industry, this hits hard.
One construction firm owner I spoke with put it bluntly: “We budgeted three new hires for Q1. The NI increase adds thousands per employee. We’re reconsidering everything.”
Second, the investment surge: Over £100 billion in public sector capital investment over five years. £5 billion specifically for housing. £50 billion toward infrastructure projects.
The government is creating massive demand while making it more expensive to meet that demand.
The UK Now Has the World’s Worst Hiring Slump
Fresh data shows the UK suffered the biggest global drop in year-on-year planned hiring. A 17 percentage point contraction following the budget.
After the employer cost increases, firms pivoted their hiring strategies. The gap between employers looking to hire versus cut jobs has narrowed significantly.
Construction firms continue to face high insolvency rates, with thousands collapsing in recent years.
The timing couldn’t be worse.
The Skills Gap Is Wider Than Anyone Admits
Over 35,000 construction job vacancies as of late 2024. Over half can’t be filled due to skills shortages—the highest rate of any sector.
The industry recruits approximately 200,000 people yearly, yet vacancies remain persistently high.
We’re not just short on bodies. We’re short on the right skills.
The £600 Million Question
Reeves announced £600 million in training investment to produce 60,000 more engineers, bricklayers, electricians, and carpenters by 2029. The package includes £100 million for technical excellence colleges and £40 million for foundation apprenticeships with a £2,000 employer retention incentive.
But the math doesn’t work. The Construction Industry Training Board forecasts we need 47,860 additional workers per year through 2029. That’s 1.8% of the 2024 workforce annually.
The government’s plan delivers 12,000 trained workers per year. We need 47,860. That’s a 35,860-worker gap—every single year.
What This Means for Construction Hiring
I see three things happening:
Wage pressure intensifies. Over 35,000 open positions and limited skilled workers drive salaries up. The National Living Wage increased 6.7%. Add the employer NI hike, and labor costs are climbing.
SMEs get squeezed. Larger firms can absorb the cost increases. Smaller construction companies face a brutal choice: raise prices and lose bids, or maintain margins and cut hiring.
The timeline extends. Those 1.5 million homes? The infrastructure projects? They take longer when you can’t find workers to build them.
The Real Story Nobody’s Telling
Construction projects started dropped significantly in Q3 compared to the preceding quarter. Major projects got delayed by the general election.
Now we have a budget that promises massive infrastructure investment while making it harder to hire the people needed to deliver that investment.
The workforce is projected to reach 2.75 million by 2029. That growth depends on training programs that won’t produce skilled workers for years.
This budget creates a gap between ambition and execution I haven’t seen in a decade.
The question isn’t whether the UK budget impacts construction hiring. The question is whether construction hiring can keep pace with what the budget demands.
Right now, the numbers say no.
If you’re in construction hiring, workforce planning, or project management, the next 12 months will test your resourcefulness. The firms that survive will be the ones who get creative—investing in retention, upskilling existing workers, and building partnerships with training providers now, not when the skills gap becomes a crisis.
Because by then, it’ll be too late.