If last year was summarised by the reaction to Kwasi Kwarteng's mini-budget, this year has been about the response to Rachel Reeves’ pre-budget statements. Despite a big leap of optimism following the Labour election win, this appeared only to last a few weeks before the Chancellor warned of tough decisions and confidence ebbed away.
Once the budget finally arrived, the damage had already been done and projects were delayed or cancelled. Although big tax increases were announced, thankfully for architecture, future investments in construction gave a more balanced outlook to the industry and with lower interest rates and inflation, there are reasons to be hopeful for a better 2025. The latest forecast from Glenigan predicts that “construction starts are set to bounce back over the next two years, driven by a combination of increased private sector confidence and public investment.”
2024, however, has been another tough year for architecture studios. Planning delays, undercutting of fees, the collapse of ISG and rising build costs have all made the last year a challenging time to make architecture profitable. One of Labour’s key pledges was to reform planning laws and appoint 300 additional planning officers to unblock a system that has stalled numerous projects. However, these changes will take time—time that many firms cannot afford as they also grapple with the new Building Safety Act. At a moment when architectural fees should be rising to account for increasing costs, they are instead being squeezed by intense market competition.
Thankfully for architectural employees, one of the rising costs for practices has been salaries. We were delighted to receive a record 2,696 responses to our annual survey during September and October which showed salaries of architectural staff in practice increased by an average of 3.5% compared to last year. This was around double the rate of inflation at the time of the survey and also greatly improved on the 2023 figure of 1.3%.
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