The 2025 Autumn Budget delivers a complex mix of some opportunity but more pressure for employers across construction, infrastructure and other labour-intensive sectors.
On the positive side, the government has announced that apprenticeships for under-25s at SMEs will be fully funded – part of more than £1.5 billion made available over the Spending Review period to support employment and skills. This commitment offers a valuable boost to training capacity, helping smaller employers invest in a new generation of skilled workers at no cost – exactly the kind of incentives many in the sector have been calling for.
At the same time, the Budget delivers only limited short-term relief for existing businesses. The five-month fuel duty freeze offers some respite for firms with transport or plant fleets, and a three-year freeze on tax thresholds gives a degree of predictability for payroll planning.
However, these modest gains are overshadowed by substantial long-term cost pressures. The Budget confirms a £26 billion net rise in taxation by 2029–30. A freeze on employer NIC thresholds effectively increases labour costs as wages rise, and other measures – including removal of tax advantages for pension salary-sacrifice, higher taxes on dividends and savings, and reduced writing-down allowances – add further strain on low-margin and owner-managed businesses.
Significant increases to the National Minimum Wage will also raise wage bills. From April, the National Living Wage for those aged 21+ rises 4.1% to £12.71, 18–20-year-olds see an 8.5% increase to £10.85, and 16–17-year-olds and apprentices receive a 6% uplift to £8.00. While this supports workers, it further tightens labour cost pressures for employers already struggling with inflation and rising material costs.
Deborah Blackhurst, Director at Strategic Resourcing, commented:
“The new apprenticeship funding for under-25s is a welcome and much-needed measure – it offers SMEs a chance to invest in new talent. But the simultaneous rise in labour costs, heavier tax burden and growing financial pressure on businesses paint a stark reality. Construction has already accounted for one in six sector insolvencies last year. If costs continue to squeeze firms while demand for housing and infrastructure grows, there is a real risk the sector will struggle to attract, train and retain the workforce needed to deliver on the national housing and infrastructure ambitions.”
