Autumn 2024 Budget: What Construction, Engineering, and Manufacturing SMEs Need to Know
ULS Autumn 2024 Budget: What Construction, Engineering, and Manufacturing SMEs Need to Know
The Autumn 2024 Budget brings new opportunities and a few challenges for SMEs in construction, engineering, and manufacturing. With increased investment in public infrastructure, support for green initiatives, and a push to address labour shortages, this budget promises a lot for smaller businesses. Let’s break down the most important parts of the budget for SMEs and how it could impact your business in the coming years.
Boosted Investment in Infrastructure and Public Projects
One of the standout announcements in this budget is the commitment of over £100 billion in public investment over the next five years, targeting transport, housing, and R&D. This is a big deal for SMEs across construction and engineering, with more potential projects on the horizon.
More Work for Local Projects
With new road and rail projects aimed at improving connectivity, the budget aims to create opportunities for regional businesses to get involved in these initiatives. This may mean more work across local transport and community infrastructure, with a focus on giving SMEs a fair chance at winning these contracts. However, the government is also focusing heavily on value-for-money, so efficiency and timely project delivery will be key to winning these bids.
Construction Today highlights that this funding surge offers a chance for smaller construction firms to compete in public projects, provided they can navigate stricter budget management and compliance standards.
Housing Targets and Development Support
The government’s ambitious target to deliver 1.5 million new homes by 2030 could keep construction firms busy for years. New incentives aim to help smaller developers take on more projects, including grants to reduce upfront costs. If you’re a small developer or work in construction, this could mean a steady pipeline of projects that offer growth and stability.
The Challenge of Keeping Up with Demand
While these housing targets are promising, they come with their own challenges. Labour shortages, supply chain costs, and increased competition from larger companies might make it harder for some SMEs to scale quickly. According to the Office for Budget Responsibility (OBR), supply chain issues and labour shortages could impact project timelines, making planning and efficiency more crucial than ever.
New Tax Rules and Business Relief
This budget includes several tax changes that will affect SMEs. Here are a few of the main points to consider:
Corporate Tax Stability
The government has set a corporate tax cap at 25%, which should provide predictability for business owners looking to invest in the next few years. With the new Corporate Tax Roadmap, the government is offering some clarity to small and medium businesses considering major investments in technology, machinery, and growth. For smaller businesses, this stability could make budgeting easier and encourage long-term planning.
Employer National Insurance Contributions (NICs) Increase
From April 2025, employers will see an increase in National Insurance Contributions by 1.2 percentage points. For small businesses with several employees, this could add up. To offset this, the government has raised the Employment Allowance to £10,500, which provides some relief for qualifying SMEs. For those with large teams, however, balancing the benefits of this allowance against rising costs will be essential for effective financial planning.
Construction News advises SMEs to take advantage of this increased allowance to help offset NIC costs and look at how these expenses may impact hiring and growth in the coming years.
Going Green: Support for Sustainable Practices
The budget focuses on helping businesses transition to greener practices, which is great news for SMEs in the construction and manufacturing sectors. New green funding, primarily driven by the Energy Profits Levy, will support companies that want to adopt sustainable technologies and methods.
Grants and Tax Breaks for Green Initiatives
For SMEs interested in lowering their carbon footprint, the government has extended the 100% First-Year Allowance for zero-emission vehicles and EV charge points. This means you can deduct the cost of these investments from your profits in the first year, which is a valuable incentive if you’re planning to green your fleet or upgrade equipment. This initiative aligns with the construction industry’s broader move toward sustainability, encouraging businesses of all sizes to adopt eco-friendly practices.
Construction Today sees this as a positive step toward reducing emissions and believes it could offer significant savings for SMEs committed to green improvements.
Tackling Labour Shortages and Skills Development
Labour shortages have been a significant issue for SMEs in the construction and engineering sectors. Recognising this, the government is launching a new agency, Skills England, to identify skill gaps and help train more workers in fields critical to the UK economy. For small and medium businesses struggling to find skilled labour, this initiative could be a game-changer.
What Skills England Could Mean for SMEs
Skills England aims to improve vocational training and apprenticeship programs to increase the number of qualified workers. This could help SMEs fill critical roles and reduce dependence on more costly contract labour. If successful, this program may create a larger, more readily available workforce for key trades, making it easier for SMEs to expand and meet growing demand.
Construction News notes that this initiative, if well-executed, could bridge the skills gap and help SMEs secure a more stable workforce. However, close collaboration with industry bodies will be crucial for ensuring that training programs meet actual industry demands.
A Cautious but Steady Approach to Spending
The government is prioritising fiscal responsibility with two new rules: the Stability Rule, which aims for a balanced budget by 2029-30, and the Investment Rule, which targets a reduction in national debt. This conservative approach to spending may mean that projects will be selected carefully, with the government favouring those that offer clear economic benefits.
What This Means for Public Project Funding
While this approach could lead to fewer, more selective projects, it’s likely that essential infrastructure projects will still go forward, given their economic impact. SMEs who can demonstrate efficiency, cost-effectiveness, and value-for-money may have a better chance of securing contracts. According to the OBR, this approach is expected to support a modest GDP growth rate of about 2.0% by 2025, offering gradual improvement without excessive risk.
Construction Today points out that this approach is prudent but stresses the importance of SMEs being agile and efficient to benefit from these carefully selected opportunities.
Finding the Opportunities in a Challenging Environment
The Autumn 2024 Budget could be considered a balanced one, aiming to stimulate growth without overextending public finances. For SMEs in construction, engineering, and manufacturing, there are substantial opportunities—particularly in infrastructure projects, green incentives, and workforce training. However, businesses will need to be prepared to adapt to higher tax and labour costs, and they’ll need to be more efficient to take advantage of public funding opportunities.
At Ultimate Lifting Solutions, we see these budget changes as a chance for growth and innovation. By staying informed and agile, SMEs in our sector can find valuable opportunities to expand, adopt sustainable practices, and improve workforce resilience. With careful planning, businesses of all sizes can turn these budget announcements into real, long-term benefits.