The Budget 2024 - What Does It Mean For The Building Industry?
But what was in it for the building industry, and how could it affect you?
· £500m for affordable home building
· National Insurance for employers up to 15% (from 13.8%)
· NI payable on workers’ earnings above £5,000 (down from £9,100)
· Fuel duty frozen – incentives for electric vehicles retained
· Legal minimum wage for over-21s up 6.7% to £12.21 per hour
· Minimum wage for apprentices increased to £7.55 per hour
· Stamp duty for second homes in England up from 2% to 5% immediately
The headline news was the government’s commitment to deliver up to 5,000 more social homes with £500m in new funding for the Affordable Homes Programme.
However, with small and medium-sized building firms responsible for less than 10% of new homes in the UK, how much of that new money will filter down?
Could the Budget lead to less work?
Perhaps more significant were the predictions that inflation will average 2.5% this year, rise slightly in 2025 and fall towards 2.0% in 2029.
While nothing like the 8% post-covid, rising material costs is one of the reasons homeowners delay building works.
Furthermore, the immediate rise in stamp duty on second homes in England and Northern Ireland from 3% to 5% makes it more expensive to purchase properties for rental or refurbishment, and could have a knock-on effect for the trade.
How the Budget could affect your bottom line
With almost 50% of the construction industry self-employed, even small changes can have a huge impact.
Raising the legal minimum wage is good news for many people (it’s up nearly 18% for first-year apprentices) but it’s small employers who may feel the pinch.
Meanwhile, it’s the big changes to employers’ National Insurance contributions that’s got everyone talking.
From April 2025, firms will need to pay NI on workers’ earning above £5,000 (down from £9,100) with the rate increasing from 13.8% to 15%.
Even with the cost of a pint set to fall by a penny, few tradespeople and building company owners will be raising a glass to that.
How we can help
“The Budget has created new challenges for the construction industry, and for our customers,” said Darren Price, Managing Director of Lords Group Trading Merchanting Division.
While there was one piece of good news about fuel duty, I’m concerned about the impact of the increases in minimum wage and NI contributions.
“Self-employed tradespeople and SMEs are the foundation of the building sector in the UK, and Lords will continue to do everything we can to support them with great service and expert advice, and a commitment to supply the widest range of products at the right price.”
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