The UK’s building sector has issued a stark warning ahead of the Spring Statement, saying trading conditions are now on a par with – or worse than – the aftermath of the 2008 financial crash.
Industry leaders say rising insolvencies, falling sales and fragile confidence threaten Labour’s flagship pledge to deliver 1.5 million homes during this Parliament.
With the Chancellor expected to prioritise growth and housing, attention is turning to whether policy will help build houses or hinder the sector even further.
BMF: 'Trading conditions 'worse than 2008'
The Builders Merchants Federation (BMF) says the construction supply chain is experiencing one of its toughest periods in decades.
In the past 12 months alone, 24 BMF members, representing £242 million in turnover and more than 1,000 jobs, have entered insolvency, with a further five firms going into administration. The Federation says the number of failures in 2025 is almost equal to the combined total of the previous four years.
Latest figures from the Builders Merchant Building Index (BMBI) show like-for-like sales values fell 2.5% in December compared with the same month in 2024, underscoring weakening demand across both new build and repair, maintenance and improvement (RMI) markets.
BMF chief executive John Newcomb said there are “no green shoots on the horizon” and warned that ministers are delivering rhetoric but not the practical measures needed to stimulate activity. Regional chairs across England and Scotland echoed the concerns, describing confidence as “extremely fragile” and the slowdown as more subtle - and potentially more dangerous – than the 2008 crash.
Labour shortage threatens delivery
Alongside weakening demand, workforce capacity is emerging as a critical constraint.
According to industry forecasts, the UK requires more than 200,000 additional construction workers over the next five years to meet projected housing need. However, apprenticeship starts and completions remain well below required levels.
Fix Radio presenter Clive Holland warned that the apprenticeship pipeline “simply isn’t scaling fast enough”. Evidence submitted to Parliament by the Federation of Master Builders shows construction SMEs train around two-thirds of apprentices, with micro-businesses alone responsible for nearly half.
Yet SMEs – once responsible for around 40% of new homes but now delivering closer to 10% – are facing mounting viability pressures from planning delays, rising costs and late payments.
Fix Radio’s audience insight suggests many trades are already operating at full stretch, regularly turning away work due to labour shortages and subcontractor availability, pointing to a supply-side constraint rather than a lack of demand.
The 1.5m homes target under scrutiny
At the centre of the debate is Labour’s commitment to build 1.5 million homes in England over the course of this Parliament – an average of roughly 300,000 homes per year.
Latest official completions data show annual housing output remains below that level, meaning delivery would need to accelerate significantly to meet the pledge. Industry leaders argue that without faster planning reform, buyer incentives and support for SME builders, the target risks becoming “a headline rather than a delivery plan”.
While the Government has signalled reforms to streamline planning permission applications and unlock land, supply chain leaders say equal attention must be paid to labour supply, SME viability and material production - particularly given that more than 75% of building materials are manufactured in the UK.
What could the Spring Statement deliver?
With the Spring Statement expected to focus heavily on growth, the construction sector is calling for:
- Incentives for first-time buyers to stimulate transactions
- Accelerated planning reform
- Measures to ease SME cash flow and late payment pressures
- Apprenticeship and skills funding reform
- Certainty around taxation and employment costs
There is speculation that the Chancellor could announce targeted housing stimulus or planning delivery measures, though industry leaders caution that incremental adjustments will not be enough to shift sentiment.
As one regional chair put it, construction is “the sector that does the heavy lifting for the UK economy”. If the Spring Statement fails to restore confidence across the supply chain, the warning from builders’ merchants is clear, the 1.5 million homes ambition will be increasingly difficult to realise.
