Most of the media and online discussion before the Spring Statement understandably focused on rumours about benefits cuts and tax changes.
Yet, while the full impact on individual departments will be outlined in the upcoming Spending Review, today’s Spring Statement includes changes to departmental budgets that could create opportunities for several parts of the supply chain.
Overall, the Spring Statement outlines an additional £13bn in capital spending over this Parliament to drive growth through investments in infrastructure, housing, and defence innovation. This is in addition to the £100bn capital spending increase announced in the Autumn Budget.
We take a closer look at the sectors receiving investment, including Defence, Housing, and Highways, and the supply chain areas most likely to benefit.
🛡️| Defence
Recent geo-political shifts inevitably meant that Defence would be a key recipient of new funding in the Spring Statement. The Ministry of Defence (MoD) will receive an extra £2.2bn next year, rising to £6.4bn by 2027, as part of a push to increase NATO-qualifying defence spending to 2.5% of GDP by 2027, with a long-term goal of 3%.
A new UK Defence Innovation (UKDI) department will launch in July with a remit to hasten procurement and drive innovation. Initially launching with a £400m budget, increasing over time, at least 10% of this budget will be allocated to novel technologies like uncrewed systems, AI, and directed energy weapons, creating significant opportunities for specialist suppliers in this area.
New procurement reforms were also announced to speed up contracting. Major platforms (e.g. tanks, frigates) should see procurement times drop from six to two years, while modular upgrades will be cut from three years to one. Rapid commercial projects, such as drones and software, will target three-month cycles. In addition, SMEs will have better access to MoD contracts in an effort to inject speed and drive innovation.
More detail on how this spend will be allocated will be revealed in the forthcoming Strategic Defence Review and Defence Industrial Strategy, although the Spring Statement outlined that som monies will be used to rebuild stockpiles and munitions, and refurbishing the defence estate including military homes – a potential boon to suppliers in the Buildings space.
🏠 | Housing
To support its ambition of building 1.5m homes, the government will invest an additional £2bn in social and affordable housing in 2026-27, expected to deliver up to 18,000 new homes and unlock development in cities like Manchester and Liverpool. Further details on long-term housing investment will be announced in June’s Spending Review.
To complement this, the government is launching a construction skills package to train up to 60,000 workers this Parliament, with £625m over four years to boost training routes and employer investment. This includes £100m for 35,000 skills bootcamp places, £40m for 10,000 Construction Foundation Apprenticeships, and £165m to expand construction courses. Additionally, £100m will fund 10 Technical Excellence Colleges across England, creating opportunities in construction, ongoing facilities management, and a range of procurement areas.
Finally, an £80m capital fund will help construction employers deliver tailored training, while previously announced planning reforms are expected to drive growth across both the construction sector and the wider economy.
🚧 | Highways
The Government has committed £4.8bn to the Strategic Road Network in 2025-26, including £1.3bn for road renewals and £1.6bn for local road maintenance.
An additional £500m will be added to councils’ road maintenance budgets, with some funding contingent on demonstrated progress. The Local Government Association’s Transport Spokesperson said this funding “will help start to address the previously ever-growing backlog of local road repairs, which now stands at nearly £17bn.”
🧑🔧| Benefits, Health and Employment
The Government will invest in additional employment, health, and skills support from 2026-27 to help people start or stay in work, scaling up to £1bn a year by 2029-30.
This will provide support to those receiving out-of-work benefits with a work-limiting health condition, creating opportunities for suppliers to deliver the necessary training and health services.
💡 | Tech-driven cost savings
The Spring Statement announces a £3.25bn transformation fund to improve government efficiency using AI and digital technology, in line with the AI Opportunities Action Plan, creating significant opportunities for technology providers.
This includes £25m to reform the children’s social care system by recruiting 400 new fostering households, £8m for offender management technology, and £42m for three AI exemplars to reduce bureaucracy.
The government now aims for one in ten civil servants to be digital professionals by 2030, creating training opportunities, and it aims to save £2.2bn on back-office functions by 2029-30, benefiting digital and AI suppliers.
💰| Revenue collection
The government is investing £100m over the next five years to recruit 500 additional HMRC compliance staff, building on the 5,000 announced in the Autumn Budget, while £114m will fund the recruitment of 600 new HMRC Debt Management staff.
These new staff will require recruitment and training, plus systems to support their deployment, potentially creating opportunities for suppliers in these areas.
Additionally, £87m will be invested over the next five years to strengthen HMRC’s partnerships with private sector debt collection agencies.
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