Reaction to the Budget: Is it good news for Rail & Infrastructure?
Chancellor Rachel Reeves has delivered Labour’s first Budget in 14 years, focusing on plans to “support public services, restore public finances,” and “invest, invest, invest.” The Budget introduces significant changes, including a tax increase of £40 billion to address a reported “£22 million black hole” inherited from the previous Conservative Government.
For companies in the rail and infrastructure sector, this Budget has crucial implications. Although employees won’t face higher national insurance directly, employers will see their national insurance contributions rise by 1.2 percentage points, reaching 15% in April 2025. With labour costs set to increase, businesses need to assess the financial impact and adapt accordingly.
Investing in Rail & Infrastructure
Investments in infrastructure, especially transport, were highlighted as a key area of focus. Metro Mayors will receive an additional £200 million for local transport in 2025/2026, pushing total City Region Sustainable Transport Settlements to over £1.3 billion. Furthermore, a £13 billion capital investment in local transport, including improvements in rural and urban areas, promises to create opportunities for businesses involved in rail and infrastructure projects.
A 10-year infrastructure strategy will be developed by 2025, setting a long-term vision for the UK’s transport network. Rail companies should prepare to align their strategic goals with this future pipeline of investment, ensuring they are ready to contribute to and benefit from these projects.
Rail Projects and Investments
Rail-specific investments form a crucial part of the Chancellor’s announcement. The commitment to progress HS2 tunnelling to Euston, along with upgrades such as the TransPennine Route, East West Rail, and capacity enhancements at Manchester Victoria and Bradford Forster Square stations, are set to bolster regional and national connectivity. Electrification of the line between Wigan and Bolton was also confirmed, opening up further opportunities for infrastructure contractors.
The Railway Industry Association (RIA) praised these commitments, particularly the progress on HS2, a project that will enhance north-south rail capacity and drive economic growth. For companies in the rail recruitment and supply chain sectors, these projects offer potential new contracts and opportunities to partner with larger infrastructure firms.
Supporting Rail Industry Growth
For rail recruitment and infrastructure businesses, the message is clear: the Government's long-term commitment to rail investment offers significant opportunities. As the industry continues to expand and modernise, companies should position themselves to capitalise on the growing demand for skilled professionals in rail engineering, project management, and operations.
It’s also important to note that while the extension of the fuel duty freeze might benefit road transport, rail freight operators are calling for a level playing field. The ability to compete effectively with road haulage is critical for rail freight, and continued investment in rail infrastructure will help to unlock this potential.
The Bigger Picture for Rail and Infrastructure Recruitment
As the UK Government outlines its ambitious plans for long-term infrastructure development, recruitment firms specializing in rail and infrastructure have a unique opportunity to play a pivotal role. Whether by sourcing skilled talent for high-profile projects like HS2, or by providing expertise in areas such as project management, engineering, isolations and operations, the demand for talent will only increase.
“There are 3 key takeaways for rail and infrastructure contractors from this budget,” said KPI Rail Director Graham Piggott.
“Firstly, the bad news: there will be a double hit on the cost of labour for employers next year with the rise in employer NI contributions and the increase in the national living wage, which can have a ‘bump-up’ effect on higher wage bands.”
“Secondly, as the number of major projects and investments increases, competition for labour, particularly skilled people, will become fiercer, so businesses need to have a clear strategy in place to attract new people, retain existing talent and create strategic partnerships with recruitment experts.”
“Thirdly, the good news is that it appears on initial viewing that this Government will be pro-infrastructure investment. Given the parlous state of some of our transport networks, it didn’t really have any other option.”
If you’re a Network Rail or Highways Agency contractor looking for experienced people, contact Alan Clarke or Graham Piggott at KPI Rail & Infrastructure on 01942 597217 or info@kpiri.co.uk.
