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Published: 11/06/2025
BCIS’s chief economist has warned the ‘good news’ announced in today’s Spending Review could be undermined if construction capacity remains unstable.
Speaking on the Chancellor’s investment announcements, Dr David Crosthwaite confirmed funding for transport, nuclear and housing was welcome but said the government was gambling on the construction sector’s ability to deliver new work.
He said: ‘Confirmation of significant capital spending on fixed assets over the next decade is a relief, and the lever needed to unlock private sector investment.
‘The big question is, can construction actually deliver all of this investment? In the current climate, suspicion says probably not. Unless the supply position radically changes, the sector is ill-equipped to meet extra demand.’
Dr Crosthwaite concluded the treasury’s £14.2 billion investment in Sizewell C was a case in point.
‘The scheme will presumably use the same workforce currently delivering Hinkley Point C and while EDF energy has vast experience delivering nuclear plants in France, UK worker numbers are still well below pre-pandemic levels.
‘Costs will also no doubt escalate on a project of this duration. At first glance, the investment confirmed today looks a little light given the significant overspend on Hinkley.’
Today’s Spending Review confirmed an additional £39 billion injection in the Affordable Homes Programme while £10 billion was allocated to drive private sector investment in housebuilding.
Dr Crosthwaite said this would come as relief for the housing sector but did not confirm the feasibility of the government’s 1.5 million new homes target.
‘The government does not control housing supply. Housebuilders do. They are looking to maximise profit and therefore run a tight ship when it comes to maintaining the supply and pricing level of new homes.
‘Building 1.5 million homes is still a big if. More funding over 10 years is a contribution, not a guarantee of delivery.’
New funding for prisons and school building, maintenance and repair were also announced by the Chancellor.
Dr Crosthwaite said investment in fixed assets is long-awaited and brings the government one step closer to stimulating private sector interest and improving construction demand.
The government’s national infrastructure project pipeline is expected to follow the Spending Review announcements in the coming weeks and is pledged to be ‘investor-focused’.
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