Latest news with #ConstructionPlant-hireAssociation
Yahoo
29-07-2025
- Business
- Yahoo
SME Construction data casts doubt on UK ability to hit 1.5 million homes
The number of struggling construction firms has risen further despite heavy pressure on the sector to deliver hundreds of thousands of new homes. The number of firms in critical distress – a measure of firms nearing bankruptcy – rose 15.8 per cent in the second quarter of 2025, according to Begbies Traynor, while the number of construction firms in critical and significant financial distress topped charts in the first quarter, at 6,830 and 97,603 firms respectively. 'SMEs are grappling with a range of cost pressures, including strict environmental regulations and burdensome taxes on employers. These cost pressures are making it increasingly harder – not easier – to build,' Steven Mulholland, CEO of the Construction Plant-hire Association (CPA), said. The industry was the slowest growing sector of the UK economy in the first quarter of 2025, and total construction output stagnated in this period – ending three consecutive quarters of growth as activity across real estate softened. 'Employer National Insurance hikes have already hit jobs and investment. Now, looming changes to Business Property Relief risk being the final blow – threatening 200,000 jobs and £15 billion to the economy, and punishing the very firms Britain needs to deliver growth, infrastructure and homes,' Mulholland added. 'Without urgent reform, we won't just miss housing targets – we'll lose the wider supply chain capable of building the vital infrastructure Britain needs,' he said. Construction firms in 'a difficult position' Kelly Boorman, National Head of Construction at RSM UK, has warned that the combination of high financial distress in the industry and the government's housing push puts the sector in a tough place. The government has pledged billions to support housebuilders, something which has been largely helped by the industry, but Boorman warned business could fall into an 'overtrading trap'. 'There's the risk [they]… take on more work than their supply chains and operational capacity can support,' Boorman said. 'Mandatory housing targets and expectations to commit to large infrastructure projects could result in businesses being unable to meet demand, despite the government's commitment to investment, training and pipeline visibility,' she added. Experts have warned that there are still significant planning and delivery challenges that developers are facing alongside cost pressures, including skills shortages – despite recent investments – wage inflation, raw materials shortages and inflation.
Yahoo
23-02-2025
- Business
- Yahoo
The ‘perfect storm' worsening Britain's housing crisis
Angela Rayner's homebuilding targets are under threat from soaring inflation and the Chancellor's National Insurance raid, experts have warned. Labour has pledged to build more than one million homes every year to tackle Britain's housing crisis, but a surprise jump in inflation to 3pc this week has thrown the plans into further doubt amid an ongoing slowdown in new construction. Experts said the issue was being further compounded by the Government's National Insurance raid which will send labour costs spiralling. Steve Mulholland, chief executive of the Construction Plant-hire Association, which represents firms that lend equipment for use on building sites, said higher inflation added to a 'perfect storm' stopping houses being built. 'It's just not helpful at all. The economy is not going and housebuilding targets will fall short, there is a skill shortage in the sector as its confidence is at a real low ebb because of the October Budget. 'The rise in inflation has a cost implication on material and people. It is a perfect storm. The rise in National Insurance is going to hit employers in the pocket. People are not recruiting how they would like to because of all these costs coming down the line.' He added: 'The 1.5 million homes they are going to fall short of, we definitely know that there are still over one million of these homes to build and given we are eight months into their term of office, they are going to fall short of that.' Housebuilding has already plunged to the lowest level in a year in a setback for Labour's promise to deliver 1.5 million new homes this Parliament. Residential construction activity slumped for the fourth month in a row in January, according to the S&P Global UK construction purchasing managers index (PMI). The survey's reading of activity dropped from 47.6 in December to 44.9 last month. Any figure below 50 indicates contraction, meaning the slump in the sector deepened January's figure was the weakest in 12 months. But a raft of fresh economic pressures mean the situation is unlikely to improve. Inflation jumped to a 10-month high in January, with the consumer price index rising from 2.5pc in December to 3pc, according to figures released on Wednesday. It marked yet another blow to Rachel Reeves, who has seen borrowing costs soar and business confidence plummet in the wake of her record £40bn tax raid last year. Soaring inflation has also poured cold water on hopes of another interest rate cut from the Bank of England next month. As a result, mortgage rates are likely to stay higher for longer which is, in turn, putting off first-time buyers. Experts cautioned that such weak demand was threatening to derail Ms Rayner's ramp-up plans for housebuilding. Richard Donnell, executive director at property website Zoopla, said: 'We've got weaker demand from first-time buyers and weaker demand from affordable housing [builders]. Housebuilders would like to build more homes but there's nothing really improving. 'At the end of the day, there is still a financial hurdle of affordability and a lot depends on how the Government financially backs up the great work that has happened on planning reform. 'Three things would make things easier for housebuilders: if the base rate fell, and mortgage rates fell, and the Government were to provide more money for affordable housing,' he added. Steve Turner, executive director of industry body the House Builders Federation, said: 'There's a number of constraints facing the industry and at the minute housing supply is still flatlining and that's down to major issues including increasing regulatory costs, but primarily it's down to demand because people can't get mortgages.' He added inflation posed to further extinguish demand amongst house buyers. 'If it does have an impact on interest rates that could suppress demand still further and its mortgage availability and deposit affordability that is the main issue at the moment,' he said. A government spokesman said: 'We delivered a once-in-a-Parliament Budget to wipe the slate clean and deliver the stability businesses need to invest and grow, while protecting working people's payslips from higher taxes. 'Now we are going further and faster to kickstart economic growth and raise living standards, including cutting red tape and overhauling the planning system to help deliver 1.5 million new homes as part of our Plan for Change.' Broaden your horizons with award-winning British journalism. Try The Telegraph free for 1 month with unlimited access to our award-winning website, exclusive app, money-saving offers and more.
Telegraph
23-02-2025
- Business
- Telegraph
How Rachel Reeves undermined Angela Rayner's building blitz
Angela Rayner's homebuilding targets are under threat from soaring inflation and the Chancellor's National Insurance raid, experts have warned. Labour has pledged to build more than one million homes every year to tackle Britain's housing crisis, but a surprise jump in inflation to 3pc this week has thrown the plans into further doubt amid an ongoing slowdown in new construction. Experts said the issue was being further compounded by the Government's National Insurance raid which will send labour costs spiralling. Steve Mulholland, chief executive of the Construction Plant-hire Association, which represents firms that lend equipment for use on building sites, said higher inflation added to a 'perfect storm' stopping houses being built. 'It's just not helpful at all. The economy is not going and housebuilding targets will fall short, there is a skill shortage in the sector as its confidence is at a real low ebb because of the October Budget. 'The rise in inflation has a cost implication on material and people. It is a perfect storm. The rise in National Insurance is going to hit employers in the pocket. People are not recruiting how they would like to because of all these costs coming down the line.' He added: 'The 1.5 million homes they are going to fall short of, we definitely know that there are still over one million of these homes to build and given we are eight months into their term of office, they are going to fall short of that.' Housebuilding has already plunged to the lowest level in a year in a setback for Labour's promise to deliver 1.5 million new homes this Parliament. Residential construction activity slumped for the fourth month in a row in January, according to the S&P Global UK construction purchasing managers index (PMI). The survey's reading of activity dropped from 47.6 in December to 44.9 last month. Any figure below 50 indicates contraction, meaning the slump in the sector deepened January's figure was the weakest in 12 months. But a raft of fresh economic pressures mean the situation is unlikely to improve. Inflation jumped to a 10-month high in January, with the consumer price index rising from 2.5pc in December to 3pc, according to figures released on Wednesday. It marked yet another blow to Rachel Reeves, who has seen borrowing costs soar and business confidence plummet in the wake of her record £40bn tax raid last year. Soaring inflation has also poured cold water on hopes of another interest rate cut from the Bank of England next month. As a result, mortgage rates are likely to stay higher for longer which is, in turn, putting off first-time buyers. Experts cautioned that such weak demand was threatening to derail Ms Rayner's ramp-up plans for housebuilding. Richard Donnell, executive director at property website Zoopla, said: 'We've got weaker demand from first-time buyers and weaker demand from affordable housing [builders]. Housebuilders would like to build more homes but there's nothing really improving. 'At the end of the day, there is still a financial hurdle of affordability and a lot depends on how the Government financially backs up the great work that has happened on planning reform. 'Three things would make things easier for housebuilders: if the base rate fell, and mortgage rates fell, and the Government were to provide more money for affordable housing,' he added. Steve Turner, executive director of industry body the House Builders Federation, said: 'There's a number of constraints facing the industry and at the minute housing supply is still flatlining and that's down to major issues including increasing regulatory costs, but primarily it's down to demand because people can't get mortgages.' He added inflation posed to further extinguish demand amongst house buyers. 'If it does have an impact on interest rates that could suppress demand still further and its mortgage availability and deposit affordability that is the main issue at the moment,' he said. A government spokesman said: 'We delivered a once-in-a-Parliament Budget to wipe the slate clean and deliver the stability businesses need to invest and grow, while protecting working people's payslips from higher taxes. 'Now we are going further and faster to kickstart economic growth and raise living standards, including cutting red tape and overhauling the planning system to help deliver 1.5 million new homes as part of our Plan for Change.'
