The principal source of speculation over the past few weeks was how Rachel Reeves would balance the books and address debt without spooking the markets, preserving the UK’s fragile and modest GDP growth.
Initially, this was meant to be supplementary to last year’s flagship budget. However, it has arrived at a critical time for the UK public sector, with fiscal pressures remaining despite inflation easing off.
This new budget can be used to inform an organisation’s wider bidding strategy, as, by understanding its implications, businesses can begin to understand the potential implications to their future pipeline.
We highlight the sectors and volumes which are most likely to grow in the coming year, and how bidders can prepare to ensure the best chance of success.
What was announced as part of the budget?
An increase in taxes was on everyone’s mind as the budget neared, and the budget did deliver a mix of tax increases and targeted spending to stabilise public finances. Key measures within the budget included:
- Extending the freeze to income tax thresholds until 2030–31 which will generate an additional £7.6 billion in income tax until 2030
- New levies imposed such as the EV mileage charge, where electric vehicles were previously exempt, from April 2028
- Reforms to capital taxation such as reducing write-down allowances, capital gains tax relief and council tax surcharges to high-value properties.
In spending terms, the government has expanded funding for energy efficiency and warm homes programmes, major transport schemes and special educational needs and disabilities (SEND) provision.
The government has also committed to appointing Procurement Innovation Champions in each department, whose roles will be to promote and drive the adoption and implementation of new and innovative solutions throughout the procurement process. Whilst still in its infancy, these roles could in time begin to change the cultural landscape of public sector procurement as increased emphasis/weighting is placed on engaging with organisations who offer innovative solutions across contract life cycles.
Which sectors will be impacted by the 2025 budget?
Critically, the budget also highlighted several key areas and projects which will benefit from enhanced public sector spend. The most notable instances are outlined below.
SEND
Recently, Executive Compass have covered the increase in ADHD and autism assessment tenders observed over the past year, which is part of SEND provision. The number of children with education, health and care plans (EHCPs) has doubled since 2015, and the Dedicated Schools Grant (DSG) received by local authorities is now at crisis levels as councils struggle to cover the costs of rising high-needs, coupled with funding pressures such as teacher pay rises not covered by current budgets.
Consequently, the central government has committed to absorbing SEND costs within departmental budgets from 2028–29. In accordance with this, increased spend is likely to encompass:
- Construction of special school expansions, extensions and building refurbishments – including disabled adaptations to educational buildings
- Enhanced and special needs transport to and from schools, which we have also observed an increase in similar to assessment services
- SEND assessment and diagnostic services to alleviate pressure on NHS services.
The government has indicated a white paper around SEND is due early next year and will likely trigger a wave of new programmes.
Decarbonisation and retrofit
For the second year running, decarbonisation efforts remain high on the government’s agenda. Capital investment includes the warm homes and energy-efficiency programme and will include the following workstreams:
- Whole house retrofit programmes led by local authorities and procurement organisations, such as NEPO
- New and expanded schemes for external and internal wall insulation, other fabric improvements, and heat pumps/low-carbon heating measures – i.e. individual workstreams
- Accompanying professional services, including retrofit assessment and coordination, project management, surveying and employer’s agent.
Capital works and spending
Despite departments typically underspending allocations for capital works, the government has added several capital spending projects to plans, increasing next year’s budget by £3.3 billion in 2026–27. In addition to the Lower Thames Crossing project delivered by National Highways, additional spend may include:
- Civil engineering and construction works packages across the UK
- Design and assessment services including environmental assessments, feasibility studies and enabling works services
- Digital infrastructure and data systems in line with increased funding for AI and construction of data centres.
We have observed an increase in highways tenders over the past several weeks, most notable among these being National Highways SDF 2, with PSQ stage closing earlier in the week.
What should bidder organisations do next?
With cognisance of the above, bidders should adapt their strategies accordingly in the coming months by:
- Monitoring upcoming opportunities using free-to-use government portal Find a Tender and Contracts Finder. These allow you to filter opportunities by date, region and industry/sector – making them an integral part of identifying and vetting upcoming tenders
- Observing government outlets for additional information and publications which may impact major programmes – for instance, the upcoming SEND white paper or any retrofit/decarbonisation policy statements
- Attending pre-market engagements and activities hosted by contracting authorities which may provide insight into the opportunity itself and allow you to formalise your bid pipeline.
As thought leaders within the bid and tender writing sector, Executive Compass will continue to monitor public spend and its impacts on the tender process.
To find out more about our bid services, contact us today for a free 30-minute consultation, either via telephone or info@executivecompass.co.uk.