Director Nicola Hodkinson says changes to employers’ NI and the minimum wage will not help the skills crisis
Nicola Hodkinson is not happy.This April brings a double whammy of costs for contractors, with increases in both employer national insurance contributions and the minimum wage.
In her first Budget announcement last October, chancellor Rachel Reeves revealed a 1.2 percentage point increase in employers’ national insurance (NI) contributions from 6 April, and the salary threshold at which employers start paying will drop from £9,100 to £5,000.
“Too much of the industry relies on self-employed workers, which stifles the development of the next generation”
Nicola Hodkinson, Seddon
Meanwhile, employers will have to increase the minimum wage for 16-17 year olds and apprentices by 18 per cent, and for other workers by 6.7 per cent.
This “affects all our apprentices, which are 11 per cent of our [construction] workforce”, says Hodkinson, co-owner and director of contractor Seddon Group. It will have a “huge” impact on overheads and acts as a disincentive to take on more apprentices, she adds.
“These measures are a slap in the face for large employers,” Hodkinson says. “When you’re competing against labour-only contractors who don’t have the overheads of employing staff, it becomes a significant challenge.
“When you’re pricing jobs nine months before you get on site, on schemes that have two years to run out, and you have to put in your labour costs – it’s not good.”
Marginal pains
Seddon ranked 100th in the CN100 2024 ranking of top contractors, slipping from 74th the year before, as other firms overtook it in turnover. However, Seddon returned to profit, which it attributed to tighter cost control and greater selectivity in bidding for new long-term contracts.
Group turnover rose by 4.4 per cent from £153.9m in the 2022 calendar year to £160.7m the year after. This generated a pre-tax profit of £1.6m compared with a loss of £13m the year before, and a margin of 1 per cent – half the CN100 average.
“We cannot carry on with such tight margins. If we can’t make money… we can’t do skills… We have to have profit. It can’t be a dirty word”
Nicola Hodkinson
In Hodkinson’s opinion, low margins reflect how contractors often race to the bottom on price in order to win business. “We cannot carry on with such tight margins in such a high-risk environment,” she says.“If we [as a sector] can’t make money, we can’t do research and development, we can’t do skills, we can’t take the apprentices on. We have to have profit. It can’t be a dirty word.”
Seddon faces other headwinds familiar to the sector, such as uncertainty around public sector projects. “When funding decisions are delayed, it doesn’t just stall projects; it forces us to expend more resources to keep things moving,” she says. “That’s a burden many companies struggle to bear.”
In her view, growth must be carefully calibrated and not based on the pursuit of revenue for its own sake. “Growth for us isn’t about chasing bigger numbers; it’s about securing the right projects with the right clients,” she says. In practice, this means avoiding projects with unrealistic pricing that could lead to financial strain and high-stress work environments for employees.
Public-sector frameworks are important for Seddon. For instance, the firm is involved in Pagabo’s £1bn framework, Fusion21’s £125m decorating framework and an £8bn framework from Procure Partnerships.
Last year, the Bolton-based contractor also won a place on frameworks from the North West Construction Hub, the Communities and Housing Investment Consortium and Efficiency North.
“A lot of the national public sector frameworks are renewing in 2025. Our bid team isn’t going to have much time off over the next 12 months,” Hodkinson says.
Still, she expresses uncertainty over how pledges of more government cash post-Budget will translate into tangible opportunities for construction firms. “There’s potential for us to secure a fair share of this investment, but it will take time for these funding announcements to filter through as work for contractors,” she says.
Hodkinson is also concerned about the construction sector’s structural weaknesses in workforce development. “Too much of the industry relies on self-employed workers, which stifles the development of the next generation,” she says.
The result is a sector that struggles to scale up when demand surges, Hodkinson argues. “Without significant incentives to hire apprentices – especially when costs are rising due to wage hikes – this problem will persist.”
Training frustration
Hodkinson is also frustrated with the state of training. “The CITB [Construction Industry Training Board] has been around for decades, yet we’re still facing a skills crisis,” she says. “I do quite a lot of work with them but they’re not making a difference.”
She proposes that funds currently allocated to the CITB could be redirected to more effective training programmes within companies.
Hodkinson calls for higher for state subsidies for apprenticeships to offset the initial costs borne by employers. “If the government could invest £10,000 per apprentice over two years, we’d
see a real shift. It worked during Covid, and it could work again.”
While Hodkinson does not downplay the sector’s challenges, her outlook is far from pessimistic.
Seddon has secured about 85 per cent of its order book for the coming year, which she sees as a positive foundation for growth. Thanks to a mix of frameworks and short-term contracts, parts of the group – such as Seddon’s painting and maintenance division – can operate with short turnaround times of four to eight weeks.
This agility has been key in helping the contractor to fill gaps in its pipeline and maintain steady progress, even as the market fluctuates.
“We’ve positioned ourselves as a responsible employer and partner, and that’s our strength,” she says. “We’re not just reacting to market pressures; we’re shaping our response to ensure we thrive in the long term.”
