Never underestimate what construction can achieve

I’m an optimist at heart. Most of the construction folk I meet are too. Commercially focused and practically minded, bosses in this sector tend to be confident they will find a way forward no matter how tricky the terrain.

I still hold to that view, but events do keep piling up and even the most determined optimists are being sorely tested right now. Donald Trump’s overwhelming presidential election victory in the US last week is front of mind, unleashing a fresh round of geopolitical uncertainty and the prospect of substantial tariffs hitting the global economy.

Back on home turf we are still absorbing the consequences of the Budget, and in particular that national insurance contribution double-whammy which landed a 1.2 percentage point rise on top of lowering of the threshold to £5,000. Many bosses will have priced in the percentage rise, but the threshold change they would probably not have seen coming, and firms will now feel the impact directly on their bottom line.

Knock-on effects depend on the size and profitability of your firm but smaller organisations do tend to be disproportionately affected by labour cost increases. Bosses at big firms say they are also going to feel the squeeze with their wage bills now set to increase by millions of pounds a year in some cases. These are not figures that had been discussed when Labour was cosying up to big businesses pre-election; any honeymoon period for the new government is well and truly over.

The fact is that this industry is also full of successful companies, delivering impressive projects and finding new ways of working

I’ve heard a range of grumblings so far, all the way from an outraged “if this government wants growth, it’s got a funny way of showing it” to the more sanguine “taxes are more than I’d like but we’ve just got to suck it up”.

The reality on the ground for many businesses is that expansion plans get scaled back or put on hold, job creation takes a hit, investment generally slows and some of the pain is passed on to customers in the form of price rises.

Just this week the brickmaker Forterra warned that the price of its bricks will go up in 2025 as a direct consequence of the Budget hiking up its cost base.

This sort of inflationary pressure is likely be accompanied by a delay in reducing the cost of borrowing, none of which bodes well for construction projects (to say nothing of the consequences to the public debt).

But is this only half the story? The Budget – by raising the tax burden by £40bn a year and increasing spending by £70bn – addressed some big holes in our public finances. This can be seen as simply the first step: there is more to come with many government investment decisions and reforms not due until next year.

Critics seized on the underwhelming growth forecasts from the Office for Budget Responsibility, but as Noble Francis pointed out to Building, those projections are based on existing government policy. Still awaited are: planning reforms outlined in the National Planning Policy Framework, the spring spending review, the new housing strategy and the infrastructure plan being developed by the new National Infrastructure and Service Transformation Authority.

So zooming out to a sector view, let’s just consider what construction has in its favour. We now have a UK government with a clear mandate for five years that has made it a priority to build homes, schools and infrastructure. We don’t have all the details yet but we do have a direction of travel that should benefit construction firms.

And, if we stick with that positive mindset, now is the time for the sector to demonstrate the value of future capital investment to the country if it is spent wisely. We are most definitely not in an era of plenty, so it is incumbent on construction firms to prove they can deliver projects efficiently, cut out waste and contribute to long-term economic growth.

An uplifting reminder of the talent we produce in this country can be found in our 40 Under 40 list of up-and-coming professionals

We know the reputation for being slow to adopt new technology and improve productivity, and the worryingly high insolvency rate in the sector. But the fact is that this industry is also full of successful companies, delivering impressive projects and finding new ways of working. You only have to look at the Building Awards shortlist to see the breadth and depth of quality in construction at the moment.

Another uplifting reminder of the talent we produce in this country can be found in our 40 Under 40 list of up-and-coming professionals. Over several months Building has been compiling the personal stories of rising stars who will lead this sector in the decades to come.

>> Read more: 40 under 40: meet the brightest and best of construction’s next generation

They are all ambitious high achievers but what also comes across is a deep commitment to having a beneficial impact on society. There is a real pride in the projects they deliver and a recognition that from the early stages of your career you can be a role model on the issues you care about, such as sustainability, inclusivity and mental health.

Politicians – at home and abroad – will continue to frustrate and at times dismay us. But we should always remember the potential of the people working in this industry to make a difference. That’s a good reason to stay determinedly positive.

Chloë McCulloch is the editor of Building