𝓤𝓷𝓲𝓽𝓮𝓭 𝓝𝓮𝔀𝓼

Rachel Reeves faces a stark ultimatum from the construction industry over fuel costs that risks undermining Labour’s homes target. The Construction Plant-hire Association (CPA) has warned ministers must go further or risk hollowing out the vital supply chain needed for Labour’s housing and infrastructure ambitions.

In a letter to the Chancellor and accompanying press release, the CPA said Labour’s fuel duty freeze provides only short-term relief for firms already under severe strain. It fails to address the “perfect storm” of rising National Insurance, wage pressures, inheritance tax reforms and soaring fuel and energy bills, just as the Government demands faster delivery on homes and major projects.

The sector is worth £14billion to the UK economy and supports more than 191,500 jobs. It is one of Britain’s most capital-intensive industries, generating £218 for the wider economy for every £100 it produces.

More than 95% of CPA members are SMEs, many family-run businesses investing heavily in apprenticeships and equipment.

Recent CPA survey findings highlight intensifying pressures. More than three-quarters (76%) of firms say recent tax changes have reduced confidence to invest, 42% are pessimistic about the next 12 months, and 66% cite energy costs as one of their most acute challenges.

To prevent further damage, the CPA is calling for two temporary measures: a 12-month reduction in fuel duty for commercial and off-road diesel used in construction and plant-hire, and temporary removal of VAT at the pump for fuel-intensive SMEs in construction, logistics and agriculture.

Similar interventions have been introduced in Ireland, France and Germany. The CPA warned Britain risks becoming “the outlier” if ministers fail to act.

Steven Mulholland, CPA chief executive, said: “Rising fuel and energy costs represent a further blow that a significant number of firms will not survive. For a capital-intensive, fuel-dependent sector, there is no easy substitution and no margin left to absorb what is coming.

Mr Mulholland added: “The consequences of inaction reach well beyond our industry and directly into the living standards Labour was elected to improve.

“Inaction risks worsening housing affordability, suppressing regional growth and hollowing out the supply chain capacity Britain will need for years to come.

“Britain cannot improve living standards, modernise its infrastructure or solve the housing crisis without a strong and confident construction supply chain behind it.”

Ms Reeves and Prime Minister Sir Keir Starmer are under growing pressure. Elected on a pledge to build 1.5 million homes in five years, Labour’s ambitions are now threatened by its own tax decisions, including April’s changes to Business Property Relief capping relief on assets above £1 million at 50%.

With public frustration mounting over slow housing progress and stagnant growth, any collapse in construction capacity could quickly become a serious political problem for the government.

The intervention underscores the mounting strain on SMEs powering Britain’s building sites and the urgent need for targeted relief to keep Labour’s flagship plans on track.