Chancellor Rachel Reeves’ 2025 Autumn Budget and the Office for Budget Responsibility’s (OBR) latest Economic and Fiscal Outlook have come at a pivotal moment for the UK’s built environment. With high public debt, rising operational costs, and continued pressure to meet national climate targets, organisations across both the public and private sectors are rethinking how they invest in their buildings.
The OBR’s message is clear: capital spending remains high, but every pound must now demonstrate value-for-money and clear delivery confidence. Within this context, refurbishment, retrofit, and decarbonisation continue to represent some of the most cost-effective and strategically important ways to upgrade the UK’s ageing estate.
Willmott Dixon Interiors are experts in refurbishment, retrofit, and decarbonisation, helping organisations get more from their existing buildings. Here’s our view on what the OBR outlook means for estates and capital planning across sectors.
Key Takeaways
- A tight fiscal backdrop makes refurbishment, retrofit, and decarbonisation the most cost-effective way to upgrade estates, with the OBR confirming that essential capital investment will continue despite restricted budgets.
- Net-zero remains a government priority, with £59bn committed to energy and decarbonisation programmes, accelerating demand for energy efficiency measures, M&E upgrades, heat decarbonisation, and fabric improvements across all sectors.
- High borrowing costs and scrutiny on value-for-money increase the attractiveness of retrofit-first solutions. Lower capital cost, reduced embodied carbon, and quicker programmes make refurbishment and reuse the preferred option for many estates.
- Stronger business cases are now essential. Early optioneering, whole-life value assessment, carbon modelling, and clear deliverability evidence are increasingly required to secure funding and approvals.
- Across commercial, public sector, education and healthcare settings, modernising existing buildings is becoming the dominant response to financial, operational and carbon pressure
Continued Support for Essential Capital Investment
The OBR highlights slower productivity growth, high borrowing costs and reduced fiscal headroom. Despite this, the Government has protected high levels of departmental capital spending, with over £120 bn more allocated for capital investment over the Spending Review period compared with previous plans.
For customers, this means:
- Refurbishment and estate improvement schemes remain viable
- New-build will face greater scrutiny and longer approval cycles
- Maximising the value of existing assets is increasingly the preferred strategy
This shift strengthens the case for adaptive reuse, modernisation and carbon-focused building upgrades.
Net-Zero Funding & Retrofit Focus
The Government’s 2025 Spending Review allocates £59 bn over five years to net-zero–related spending, as noted by the OBR. This includes a wide range of programmes spanning:
- energy efficiency measures
- M&E system upgrades
- heat decarbonisation
- building fabric improvements
- modern control systems and low-carbon technologies
While the funding is broad, it confirms continued long-term commitment to carbon reduction, and signals that energy and carbon performance will remain high on departmental agendas.
Retrofit continues to offer one of the fastest and most cost-effective routes to meaningful carbon reduction, while improving comfort, resilience and operational efficiency.
High Borrowing Costs Favour Refurbishment
With debt-interest spending elevated and construction inflation still exerting pressure, new-build schemes now carry increased financial risk and longer payback periods. By contrast, refurbishment and repurposing offer:
- lower capital cost
- reduced embodied carbon
- shorter programmes
- improved value for money
- less operational disruption
Across sectors, organisations are choosing to modernise or adapt their existing assets rather than replace them.
Early Engagement Key for Value-for-Money
Tighter public finances mean business cases must be more robust. Customers increasingly require:
- early optioneering and feasibility
- detailed cost and programme certainty
- whole-life value assessment
- carbon modelling
- clear deliverability evidence
Early engagement with project partners is becoming essential. Our transparent, collaborative approach helps customers develop fundable, deliverable and resilient schemes.
Sector-Specific Impacts of the Autumn Budget
Commercial & Workplace
Demand is shifting towards retrofit-first approaches, Cat A/B refurbishments, energy improvements and space reconfiguration to support productivity and wellbeing.
Public Sector
Government departments are focusing on repurposing and improving their existing estate, with an emphasis on safety, compliance, energy reduction and modernisation.
Education
Schools, colleges and universities are prioritising energy performance, carbon reduction and upgraded learning environments.
Healthcare
Major refurbishment projects continue to take precedence over new-build for most NHS organisations. Backlog maintenance, mechanical and electrical upgrades, and decarbonisation remain the biggest drivers of investment.
How Willmott Dixon Interiors Can Support You
Willmott Dixon Interiors help organisations plan and deliver projects that create better-performing, more sustainable and more efficient buildings. Our expertise covers:
- refurbishment and reconfiguration
- deep retrofit and decarbonisation
- M&E upgrades and replacement
- live-environment delivery
- design and cost certainty
- complex programme management
- national supply chain partnerships
Whether you’re planning a compliance upgrade, energy improvement, estate transformation, or full building refurbishment, we can help you take the next step with confidence.
If you’re exploring what the 2025 Autumn Budget or OBR forecasts mean for your estate, or planning a refurbishment, retrofit, or decarbonisation project, we’d be happy to support you. Contact us today for more information.