In his November 2023 Autumn Statement, Chancellor Jeremy Hunt delivered a package of measures aimed at stabilising the economy while supporting working households — moves that will have a direct impact on the construction industry.

One of the most headline-grabbing announcements was a substantial increase to the National Living Wage (NLW):

• From April 1, 2024, the NLW for workers aged 23 and over rises to £11.00 per hour — a 9.8% increase, the largest single uplift since the introduction of the NLW.
• Other minimum wage bands (for younger workers and apprentices) were similarly increased by 9–10%.
   

The move was positioned as part of a broader strategy to support living standards in an environment of high inflation and cost-of-living pressures.

In addition to wage changes, the Chancellor confirmed that:

• Income tax thresholds would remain frozen until at least 2028, meaning more individuals will gradually drift into higher tax bands ("fiscal drag").
• Corporation tax remains at 25% for companies with profits over £250,000.
• The full expensing regime — allowing businesses to immediately deduct capital investment costs — was extended indefinitely for qualifying plant, machinery, and technology.

There were no direct changes to the Construction Industry Scheme (CIS) rules, VAT construction reverse charge, or IR35/off-payroll rules.

However, funding allocations for infrastructure projects and skills programmes were enhanced, offering potential indirect benefits to construction contractors.

Why This Matters to Construction Clients

The almost 10% rise in the National Living Wage will increase labour costs across construction projects — especially at the lower-skilled end of the workforce where minimum pay rates are common.

Practical implications include:

• Budget adjustments: Project bids and ongoing contract pricing must factor in higher wage bills from April 2024.
• Supply chain pressures: Subcontractors reliant on lower-wage operatives may seek rate increases to maintain margins.
• Wider wage inflation: Even workers currently above minimum wage levels may push for increases to maintain pay differentials.
• Tax planning considerations: With frozen thresholds and rising wages, more workers will move into higher tax brackets, impacting net pay and possibly creating employee relations challenges.
• Investment opportunities: The extension of full expensing gives construction firms an incentive to invest in new plant, machinery, and technology, boosting productivity and competitiveness.
   

Ultimately, while the Autumn Statement did not introduce complex new compliance challenges, the wage cost impact is real and immediate for construction firms reliant on skilled and unskilled labour.