The Chartered Institute of Building (CIOB) has welcomed the chancellor’s decision not to raise national insurance, pension contributions or business rates in yesterday’s budget.
However, the institute also noted that the construction industry, particularly SMEs, still faces significant economic challenges.
“As a sector made primarily of SMEs (more than 99% of the UK construction industry are SMEs), many companies are already struggling with rising costs and a dwindling workforce,” said Eddie Tuttle, director of policy, research and external affairs at CIOB.
“In the 12 months to August 2025, almost 4,000 construction companies in England and Wales became insolvent, roughly 76 a week and the most of any industry.”
Research published by CIOB in October showed that government and industry must look beyond short-term fixes and explore longer-term solutions to reduce volatility and make the sector more resilient.
Tuttle added: “We believe having a wider view of the industry will allow for better policy that looks to harness the data the industry already produces and join the dots between the different government departments that cover construction.”
“Many SMEs are already struggling with rising costs and a dwindling workforce.”
VAT reforms
CIOB also urged the government to move forward with “long-overdue” reform of VAT and prioritise the improvement of procurement practices.
“Introducing VAT on demolition would help level the playing field between demolition-and-rebuild projects and retrofit,” said Tuttle. “At present, retrofit work is subject to VAT while demolition is not, making the more sustainable option far less financially attractive.”
The government is also encouraged to adopt procurement policies that engage local suppliers early and foster long‑term supply chain collaboration.
Tuttle added: “This would help build capacity across the industry, support SMEs and ultimately deliver better value and resilience in public projects.”
