The Builders Merchants Federation (BMF) raised its concerns about the impact of impending changes to Inheritance Tax and National Insurance contributions at its annual Parliamentary Reception.

Members of the House of Commons and the House of Lords attended the event, including Alison McGovern MP, Minister of State for Employment. They were told about the BMF’s initiatives to boost recruitment, skills and apprenticeships within the building materials sector. They also heard about the £862 million investment plans of BMF supplier members to scale up the manufacture and supply of the materials needed to meet the Government’s ambitious housing targets.

This positive news, however, came with a warning from BMF CEO John Newcomb. He said: “The BMF is investing half a million pounds in a major programme to promote Building Materials Careers, and we have just exceeded our target of 15,000 new apprenticeships by 2030, with members having already pledged 15,028. These initiatives will help to ensure that we have the best people in place to supply the materials required for a new generation of homes. 

“At the moment, however, many of our members have put a halt to recruitment and deferred planned training.  At a time when we should be investing in our people, this is a regrettable consequence of the substantial increase in National Insurance announced in the Budget and highlights the financial impact it will have on their business.”

Newcomb continued: “In addition, changes to inheritance tax, specifically Business Property Relief, could significantly impact the many private and family-owned businesses across our membership, which may now struggle to justify the long-term investments required to scale up the manufacture and supply of the materials needed to build 1.5 million new homes.”

Last December, the BMF wrote to the Prime Minister raising members’ concerns over the capping of Business Property Relief on Inheritance Tax and providing specific examples of the potential impact. Disappointingly, the response received from the Chancellor reiterated the Government’s belief that the changes strike the right balance between supporting innovation and entrepreneurship and raising the revenue needed to repair the public finances.

Evidence presented by the BMF and its members, along with family businesses across many other sectors, does not support this.  Independent economic modelling conducted by CBI Economics for Family Business UK suggests that far from raising revenue, the changes to BPR could result in a £1.25bn net fiscal loss to the Exchequer. More than 125,000 jobs are likely to be lost, and economic activity reduced by £9.4bn as family businesses reduce investment to cover a future inheritance tax bill.

Newcomb said: “Construction is critical to the UK economy, and everyone agrees that fresh impetus is needed to solve the country’s housing crisis. But the BMF will continue to act as a critical friend to government if we can see that a particular action will create more problems than it solves.

“Building 1.5 million new homes over the next five years requires a strong and stable building materials supply chain.  We have laid the groundwork to secure the skills and stock levels to help fulfil the Government’s housing ambitions, but this could be put at risk if the companies manufacturing and supplying these materials struggle to justify recruitment and investment.”