Spending Review 2025: A Transformational Moment for Construction and Housing

The UK Government’s Spending Review 2025 (SR25) has set out an ambitious multi-year plan that places the built environment at the heart of the country’s economic and social agenda. With an additional £120 billion in capital investment compared to the Spring Budget 2024, SR25 lays out a comprehensive vision for infrastructure, housing, energy, and skills through to the end of the decade.

At the core of the announcement is a £39 billion, 10-year Affordable Homes Programme aimed at delivering 1.5 million new homes, supported by a further £4.8 billion to encourage private investment in housing. For the construction sector, this signals a clear commitment to long-term certainty and delivery scale. The funding is expected to accelerate housebuilding, stimulate market confidence, and support wider regeneration initiatives.

Transport and energy infrastructure also received significant boosts. £15.6 billion will be allocated to the Transport for City Regions settlements, empowering metro mayors to drive local regeneration and connectivity. In the energy space, SR25 confirms £14.2 billion for the Sizewell C nuclear plant, alongside support for Small Modular Reactors and Carbon Capture and Storage – key moves towards a low-carbon future.

The government’s £13.2 billion Warm Homes Plan, described as the largest energy efficiency commitment in a generation, will focus on upgrading homes to cut fuel poverty and reduce emissions. The policy is expected to stimulate demand for retrofit expertise and low-carbon materials, supporting a more sustainable construction economy.

Beyond physical infrastructure, the Spending Review includes a £22.6 billion annual commitment to research and development by 2029–30, as well as major investment in education, digital infrastructure, and planning reform. A new £3.25 billion Transformation Fund will drive public sector efficiency, while devolution and planning reforms aim to unblock development bottlenecks.

While challenges remain around skills, planning capacity and delivery frameworks, the direction is clear: SR25 offers the sector the long-term visibility and investment pipeline it has long called for. If implemented effectively, the review has the potential to reshape the UK’s built environment, placing construction at the centre of growth, resilience, and climate leadership.

Don’t miss our extended coverage and expert insight in Issue 18.7 of Design & Build UK – out soon.