Growth plans do little for the here and now

Chancellor Rachel Reeves has set out the government’s ambitious plans to drive economic growth. John Cowie looks at the details. In a speech delivered at Siemens Healthineers in Oxfordshire, Chancellor Rachel Reeves set out the government’s ambitious plans to drive economic growth, focusing on investment, infrastructure, planning reform, and skills development. For small and medium-sized enterprises (SMEs) in the construction and home improvement sector, her proposals could have significant implications both positive and challenging.

While the government’s commitment to economic growth is welcome, there are concerns about whether the measures announced will translate into tangible benefits for businesses already facing rising costs, skill shortages, and an uncertain regulatory landscape.

Investment in emerging industries and green infrastructure – One of the key takeaways from Reeves’ speech was the government’s commitment to investing in industries that support the UK’s green transition. She announced a £65 million investment in Connected Kerb to expand the electric vehicle (EV) charging network and a £28 million equity investment in Cornish Metals to support domestic supplies of raw materials for renewable technologies. For the construction and home improvement sector, these investments signal an opportunity. As the UK transitions towards net zero, demand for sustainable construction materials and energy-efficient home upgrades will likely increase. Businesses specialising in EV infrastructure, green retrofitting, insulation, and renewable energy installations stand to benefit. However, the lack of specific incentives for SMEs in this sector raises concerns about how much of this funding will trickle down to smaller players rather than benefiting larger corporations.

A mixed bag for the construction sector – A major point in Reeves’ speech was her commitment to reforming the planning system, which has long been seen as a barrier to growth in the construction industry. She pledged to make the economic benefits of development a key factor in planning decisions, unblock stalled projects, and prioritise brownfield and grey belt land for housing.

For home improvement and construction SMEs, this could bring much-needed relief. A more efficient planning process could speed up approvals for housing developments, increasing demand for tradespeople, suppliers, and home improvement businesses.

However, the reforms also face criticism. The UK’s planning system is notoriously complex, and previous governments have made similar promises without delivering meaningful change. There are concerns that while prioritising economic benefits may accelerate some projects, it could also sideline environmental and community concerns, leading to resistance from local councils and residents. Additionally, without strong commitments to affordable housing, there is a risk that new developments may focus on high-end properties rather than addressing the UK’s broader housing shortage. This could limit opportunities for smaller construction firms that typically work on mid-range and social housing projects.

Skills development: a critical issue for SMEs – A major challenge facing the construction and home improvement sector is the ongoing skills shortage. Reeves announced the creation of Skills England, an initiative designed to enhance workforce development and address economic inactivity. By investing in education and training, the government hopes to ensure businesses have access to a skilled workforce. For SMEs, this is a step in the right direction. Many small firms struggle to find qualified workers, with shortages in skilled trades such as bricklaying, carpentry, and plumbing affecting project timelines and profitability. If Skills England delivers meaningful training opportunities, it could ease this pressure and provide businesses with the talent needed to meet demand.

However, industry leaders have expressed scepticism. Previous government-backed skills initiatives have often failed to align with industry needs, with training programs not adequately preparing workers for real-world job requirements. The government will need to work closely with businesses to ensure that Skills England delivers practical, industry-relevant training that SMEs can actually benefit from.

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Taxation and cost pressures – One of the more contentious aspects of Reeves’ plans is the government’s approach to taxation and business costs. The Chancellor confirmed changes to employers National Insurance contributions and capital gains tax, measures designed to raise revenue for public services. For small construction firms already dealing with rising material costs, supply chain disruptions, and inflation, any increase in employment taxes could further strain budgets. The lack of targeted tax relief for SMEs, particularly in sectors like construction that rely on a flexible workforce, has been a major point of criticism. Some industry voices argue that instead of increasing business costs, the government should be offering tax incentives for sustainable building projects and home energy efficiency improvements.

A lack of immediate solutions? While Reeves speech laid out a broad vision for economic growth, some critics argue that it lacked immediate solutions to the pressing challenges facing SMEs. The construction and home improvement sector, in particular, is grappling with rising interest rates, volatile material costs, and regulatory uncertainty. The speech did not address the concerns of smaller businesses about delayed payments from contractors, a long-standing issue that affects cash flow and business stability. Nor did it offer concrete measures to help SMEs navigate upcoming regulatory changes, such as new sustainability requirements in the building industry.

Opportunity or missed potential? Chancellor Rachel Reeves speech outlines ambitious plans to drive economic growth, with a strong focus on investment, infrastructure, and planning reform. For SMEs in the construction and home improvement sector, there are clear opportunities particularly in green construction, housing developments, and infrastructure projects.

 However, there are gaps in her proposals that raise concerns. Without clear strategies to address immediate cost pressures, skills shortages, and planning bottlenecks, SMEs may not see tangible benefits in the short term. The success of these plans will depend on how quickly they are implemented and whether SMEs rather than just large corporations are prioritized in funding and regulatory reforms.

 For business owners in the sector, staying informed and actively engaging with policy changes will be crucial. While there are opportunities ahead, the industry will be watching closely to see whether the government delivers real support for the SMEs that drive the UK’s economic engine.