A prominent group in the construction industry has cautioned the prime minister that recent measures announced in the budget could have a disastrous impact on family-owned companies within the sector, adding to the growing discontent among businesses towards the government since the end of October.
In a letter to Sir Keir Starmer obtained by Sky News, Steve Mulholland, CEO of the Construction Plant-hire Association (CPA), expressed concerns over the reforms to Business Property Relief (BPR) and Inheritance Tax put forth by Chancellor Rachel Reeves, stating that they have sparked anxieties among family-run businesses.
The changes to BPR, which are set to be implemented in 2026, will limit BPR to £1m and introduce a 20% tax on inherited business assets.
“As an organization, we have already received inquiries from worried family businesses regarding the implications of these changes and how they can continue to operate under these new regulations,” Mr. Mulholland wrote.
“To clarify, these are well-established, some cases, large family businesses known for their outstanding delivery and customer service.”
“In the words of a senior executive, ‘I question the purpose of continuing’.
“These changes will cause companies to postpone investment and hiring decisions, cast doubts on expansion plans, and create prolonged uncertainty and instability at a time when businesses are already struggling.”
The CPA represents 1,900 members, with Mr. Mulholland describing them as “the foundation of the construction industry, contributing around £14bn to the economy and supporting over 190,000 jobs”.
“The majority of these companies are family-owned businesses,” he informed Sir Keir.
“Our members play a crucial role in constructing the 1.5m new homes, a key priority for your government and a central pillar of your Plan for Change.”
His message to the PM comes after numerous complaints from private sector leaders regarding the impact of the October budget, the first under a Labour government in almost 15 years.
In particular, leaders in the hospitality and retail sectors have warned that the cumulative effects of increases to the National Living Wage and employers’ national insurance contributions will lead to price hikes, job cuts, and reduced investment.
“Only through renewed investment in new equipment, technologies, innovations, and people can your pledge to revitalize construction in Britain be fulfilled,” Mr. Mulholland stated.
“The October budget failed us in each of these areas.
“Looking ahead, the proposed changes to BPR as part of wider Inheritance Tax reform will have a significantly negative impact on small and medium-sized enterprises (20% of SMEs operate in construction) and family-run businesses – the backbone of construction plant-hire and the broader business communities across the UK.”
“In alignment with your government’s commitment to collaborate with businesses in policy-making, we urge you to reassess the practical implications and reality of these changes, conducting a thorough consultation with affected businesses.”
“We share a common vision of a thriving and stable economy built on sustainable business practices in every region of the UK.
“In their current form, your proposals will severely undermine the very companies that are essential for this progress, posing a lasting and harmful impact on the wider UK economy.”