An expert has urged Rachel Reeves to rethink the impact of her policies as he fears Angela Rayner’s target of seeing 1.5million new homes built will not be met as a result. Steven Mulholland, CEO of the Construction Plant-hire Association (CPA), blames the increase to employers’ national insurance contributions and upcoming changes to business property, announced by the Chancellor, and red tape.
He said: “The latest S&P construction data, marking a fourth consecutive month of falling output, is a hammer blow to the industry – and should set alarm bells ringing. This slowdown isn’t just cyclical – it’s being driven by government-induced cost pressures that are making it harder and more expensive to build, stifling demand and stalling delivery. National Insurance hikes, looming changes to Business Property Relief and rigid environmental policies are piling pressure on the very businesses generating employment and growth, making it harder to deliver the vital infrastructure Britain needs.”
Mr Mulholland added: “If Labour does not want to fall even further behind on their ambition to build 1.5 million new homes, it must urgently rethink the impact of these policies, because without supporting the firms and supply chains needed to complete them, those homes simply won’t get built.”
The Government has announced it will reduce the rate of business property relief available from 100% to 50% in all circumstances for shares designated as “not listed” on the markets of recognised stock exchanges.
Ministers insist the majority of estates claiming business property relief in 2026 to 2027 are expected to be unaffected by these reforms.
S&P Global UK stated in its latest report: “Construction activity decreased for the fourth consecutive month as rising business uncertainty led to delayed decisionmaking on new projects.
“The latest survey indicated further declines in total order books and cutbacks to staffing numbers. Output growth projections nonetheless edged up to the highest since December 2024.
“At 46.6 in April, the headline S&P Global UK Construction Purchasing Managers’ Index (PMI) – a seasonally adjusted index tracking changes in total industry activity – remained below the 50.0 no-change value, but was up slightly from 46.4 in March and signalled the slowest decline in output levels for three months.”
However, experts also noted: “Residential work showed a degree of resilience in April, with the rate of contraction easing to the least marked in 2025 to date (index at 47.1).
“Moreover, the latest reduction in activity was the slowest seen across the three sub-categories of construction work.”
It comes as councils are expected to start using a new AI tool to digitise old planning documents and cut backlogs as part of Labour’s drive to build new houses.
Ministers hope the tool will help boost efficiency and prevent errors in record-keeping by turning blurry maps and handwritten notes into “machine-readable, shareable data”.
Overall, the government says it plans to cut red tape and givr councils new powers to seize land to speed up building as part of its flagship Planning and Infrastructure Bill.
