In politics, as in life, good intentions aren’t enough – it is outcomes that matter.
While Labour’s goal of building 1.5 million new homes and improving Britain’s infrastructure is commendable, their proposed changes to inheritance tax on top of the recent rise in National Insurance could undermine the very businesses needed to achieve these objectives.
At the heart of this is Business Property Relief (BPR) – a longstanding policy that allows family-run businesses to pass on assets, such as machinery, yards or farmland, without triggering punitive inheritance tax bills.
It’s not about exploiting loopholes. It’s about recognising that many of these businesses are asset-rich but cash-poor. They don’t hold their wealth in bank accounts. It’s tied up in diggers, scaffolding, tractors and depots – the tools they need to operate.
In construction, this relief is essential. Most plant-hire businesses, which supply the machinery that keeps housing and infrastructure projects moving, are small, family-owned firms that reinvest heavily in their equipment and workforce.
These are not firms sitting on cash. They are firms that survive on tight margins while bearing the full cost of recruiting, training, insurance and maintenance.
Labour’s plan to cap BPR would change all that. By making these assets subject to inheritance tax, many family businesses would face an impossible choice: either sell key parts of the company to pay the tax bill or shut down entirely.
Modelling by CBI Economics suggests that the impact could be devastating, with £9.4 billion wiped from the UK economy, a net loss to the Treasury of £1.26 billion by 2030 and more than 125,000 jobs at risk over the same period.
This would hit construction especially hard.
Confidence is fragile, investment is slowing, and the workforce is ageing. We can see this translating into stifled activity, with the latest S&P figures showing construction output has fallen for five consecutive months. In such an environment, the last thing firms need is a tax that penalises them for passing on the equipment they use to deliver growth.
It doesn’t have to be this way. Labour have already shown they are capable of executing U-turns – just look at the latest flip-flop on welfare. When reality bites, the Government listens. This is one policy that demands exactly that: an urgent rethink, before the changes decimate a vital industry.
If Labour are serious about delivering on their growth mission, that must include growing the businesses that build our homes, lay our tracks and keep the wheels of infrastructure turning.
We cannot build a better Britain by gutting the supply chain that does the building. Labour’s proposals may have been drawn up in Westminster, but their impact will be felt in every region and on every job site.
That’s not levelling up – that’s levelling down the very firms we rely on to build Britain’s future.
The Government has a choice: stick with a policy that sounds tough on paper but causes real damage in practice, or change course and deliver a future where family businesses are part of the solution, not collateral damage.
They’ve changed direction more than once. Why stop now?
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