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The Autumn Budget has drawn strong criticism from scaffolding, construction and housebuilding leaders, who warn that a combination of higher wage costs, frozen tax thresholds and new tax rises on business owners will increase pressure across the sector during a period of already weak output and tight labour supply.
Chancellor Rachel Reeves confirmed today a major package of tax increases alongside higher wage floors and new public-investment commitments. An early release of the Office for Budget Responsibility’s fiscal outlook shows weaker land supply, a deeper fall in new-build completions and continued pressure on rental supply.
NASC: “taxes, taxes and a bit more taxes”
Clive Dickin, chief executive of the National Access and Scaffolding Confederation (NASC), said the Budget “feels like taxes, taxes and a bit more taxes”, warning that the extended freeze on income tax thresholds risks discouraging lower-rate workers from moving confidently from benefits into employment.
He said the rise in the minimum wage would add cost pressure to scaffolding employers, particularly those bringing in new recruits and supporting them through essential entry-level training and qualifications. “This Budget leaves many unanswered questions,” he said.
Dickin welcomed the Government’s new Youth Employment Guarantee in principle, but said it lacks the detail needed for employers to plan. He added that NASC continues to press for greater flexibility in training bootcamps and remains focused on protecting the competency standards that underpin high-quality apprenticeships.
Dividend tax rise and EOT changes hit construction business owners
The Chancellor confirmed a rise of two percentage points on dividend, property and savings income from April 2026, pushing the ordinary dividend rate to 10.75 per cent and the upper rate to 35.75 per cent.
In a further move affecting construction SMEs, Reeves cut the Capital Gains Tax relief available on Employee Ownership Trust (EOT) sales from 100 per cent to 50 per cent with immediate effect. EOT transfers have become more common among contractors and specialist subcontractors as a succession route. The Treasury expects the measure to raise £3.5bn over six years.
Tax specialists say both changes will directly reduce post-tax income for directors and founders, especially in smaller scaffolding and construction firms where dividends form a central part of remuneration.
Labour cost increases draw sharp reaction
The National Living Wage will rise by 4.1 per cent to £12.71 an hour from April 2026, with further increases for younger workers and apprentices. Employment partner Philip Pepper described the rise as a “massive blow”, arguing that the combined effect of wage inflation, National Insurance adjustments and payroll compliance requirements will strain contractors’ budgets through 2026.
Engineering consultancy Sutcliffe said the Budget leaves firms being asked to deliver growth while absorbing sharply higher employment costs. Labour-intensive trades such as scaffolding are expected to feel the impact earlier and more acutely.
Buy-to-let sector under renewed pressure
Stuart Law, chief executive of Assetz Capital, said the Budget represents “another decisive step” in the decline of traditional buy-to-let. Higher taxes on property income, frozen thresholds and a tightening regulatory environment are expected to reduce landlord returns further.
The OBR forecasts continued rent increases as more small landlords exit the market. Law said renters should expect “sustained upward rent reviews” into the late 2020s as supply remains constrained.
New-build collapse highlights planning failures
The OBR analysis confirms a deeper drop in new-build completions than forecast earlier this year, with net additions expected to fall to around 215,000 in 2026–27. Law said the planning system remains slow, inconsistent and “risk-averse”, with under-resourced departments and political delays restricting the flow of development land.
He warned that even if demand strengthens, developers cannot accelerate delivery without a reliable supply of permissions.
Housing delivery forecast to rise, but industry doubts persist
The OBR expects housing delivery to exceed 300,000 net additions by 2029–30 as planning reforms take effect. Law said these projections depend on regulatory simplification for SME housebuilders, who remain constrained by fragmented requirements and slow decision-making.
“Smaller developers face delay after delay,” he said. “Without meaningful reform, these forecasts will not materialise.”
Construction labour shortages remain a structural barrier
The OBR highlights weak inward migration of skilled construction workers as a major constraint on output. Law said the workforce loss in recent years has become a “structural limit” that will restrict delivery even if planning reforms accelerate.
For scaffolding firms, tightening labour availability continues to push up day rates and slow project mobilisation.
Industry outlook
Construction leaders say the Budget increases financial pressure while leaving fundamental issues unresolved, including workforce shortages, delayed planning reform and uncertainty over the future of training pathways.
Scaffolding and access firms warn that higher labour costs, additional tax burdens and tight cashflow conditions risk suppressing investment and recruitment through 2026.
