Family-run construction firms deserved better from the budget: CPA

​​​​​​​Steve Mulholland believes that the Budget presented damaging tax reforms at a time when the industry needed certainty

Faced with anaemic growth, Labour’s Budget required to give businesses the confidence to deliver a real boost – and in construction, that is ultimately judged by whether it is now easier or harder for Britain to build, CPA’s CEO Steve Mulholland says.   

Much of the strain facing the sector stems from decisions taken in the last Budget, which introduced damaging tax reforms at a time when construction needed certainty.

He argues that this was Labour’s chance to put that right – yet instead it leaves the firms keeping the country moving, shouldering even more of the burden.

“By failing to reverse the inheritance tax changes and maintaining a punishing cost base, this Budget makes it harder – not easier – for the family-run firms vital to construction to build.”

Family-run firms make up 96% of the construction sector, according to Family Business UK. It is a capital-intensive industry, meaning many businesses are asset-rich but cash-poor.

In plant-hire, especially the sector the Construction Plant-hire Association represents, firms hold a whole host of machinery and equipment, including small tools, excavators, temporary power and cranes on their balance sheets, required to build the infrastructure and buildings essential to society: essential kit, but not cash reserves.

“That is precisely why Business Property Relief (BPR) has been so important. It prevents families from being forced to break up or sell off parts of their business to meet an inheritance tax bill,” Mulholland maintains.

“Last year’s decision to weaken BPR has already caused severe damage, and Labour’s refusal to reverse those changes in this Budget compounds that error.”

As many as 80% of CPA members fear BPR changes put passing their business to the next generation at risk, while 76% say investment in new equipment will fall, and 66% expect cuts to staff and apprenticeships.

“For a sector worth £14 billion to the UK economy and supporting 191,000 jobs, this is not a marginal issue – it is a critical risk. You cannot deliver 1.5 million homes or a modernised national infrastructure while undermining the businesses that supply 85% of the country’s construction machinery,” he concludes.