A leading construction industry body has warned the Prime Minister that the measures unveiled in the Budget would “fatally harm” the sector’s family businesses, worsening the corporate backlash the Government has faced since late October.
In a letter to Sir Keir Starmer seen by Sky News, Steve Mulholland, chief executive of the Construction Plant-hire Association (CPA), said the commercial property relief and inheritance tax reforms unveiled by Rachel Reeves, the chancellor, had raised “very real concerns”. (among) family businesses.”
The BPR changes involve reforms, due to be implemented in 2026, which will cap BPR at £1 million and introduce a 20% levy on inherited business assets.
“As an association, we have already had to field questions from family businesses concerned about what these changes mean and how they can continue to operate according to these plans,” Mulholland wrote.
“To be clear, in some cases these are large, well-established family businesses with exceptional reputations for delivery and customer service.
“In the words of one senior executive, ‘I wonder what the point is in continuing.’
“These changes will cause businesses to postpone investment and hiring decisions, expansion plans will be called into question, with prolonged uncertainty and instability at a time when businesses cannot afford it.”
The CPA has 1,900 members, which Mr Mulholland describes as “the backbone of the construction sector, worth some £14 billion to the economy and supporting more than 190,000 jobs”.
“The vast majority of these businesses are family businesses,” he told Sir Keir.
“Our members have a key role to play in building 1.5 million new homes, which is a priority for your government and a key pillar of your plan for change.”
His warning to the Prime Minister comes after weeks of complaints from private sector bosses about the impact of October’s budget, the first by a Labor government in almost 15 years.
Hospitality and retail chiefs in particular have warned that the cumulative impact of increases in the national living wage and employers’ national insurance contributions will force them to raise prices and cut jobs and investment.
“Your commitment to enabling Britain to build back again can only be delivered through renewed investment in new equipment, technology, innovation and people,” Mr Mulholland wrote.
“The October budget failed us on each of these levels.
“Going forward, proposed changes to the BPR as part of wider inheritance tax reform will have a massive and detrimental impact on SMEs (20% of SMEs work in construction) and family businesses – the the backbone of construction plant hire, and the wider business communities across the UK.
“In line with your government’s commitment to co-designing policies with business, we call on you to reassess what these changes will mean in practice and reality, with extensive consultation with affected businesses.
“We share the same vision of a stable and growing economy, based on sustainable business practices applied in every region of the UK.
“In their current form, your proposals will fatally damage the very businesses that are supposed to underpin this work, risking a lasting and damaging impact on the UK economy as a whole. »