British housebuilders are facing mounting pressure as ministers prepare to unveil a new £3 billion tax hike, mere days after Chancellor Rachel Reeves assured business leaders there would be no additional taxation following October’s budget.
The anticipated Building Safety Levy, expected to be announced this week, aims to address the remediation of Grenfell-style cladding on buildings between 11 and 18 metres in height. Industry sources indicate the levy will be calculated as a percentage of new development sales values, potentially hampering construction rates across the country.
The timing of this new measure has sparked significant concern within the sector, particularly as business confidence has plummeted to its lowest levels since the pandemic. The Institute of Directors’ recent survey highlights the deteriorating economic backdrop as the primary concern for business leaders, with employment taxes now superseding worker shortages as the second most pressing issue.
The construction industry’s frustration stems from the existing 4 per cent corporation tax surcharge implemented in 2020 for fire safety defects. Of the £5.1 billion raised through this initiative, only £2.3 billion has been utilised, while the government lacks precise data on the number of buildings requiring remediation.
Shadow Business Secretary Andrew Griffith has described the situation as demonstrating “a catastrophic loss of business confidence.” The IoD’s chief economist, Anna Leach, suggests the budget has undermined the private sector’s capacity to invest in businesses and workforce development.
The Housing Department maintains its commitment to accelerating remediation efforts, emphasising that numerous residents continue to live in properties with unsafe cladding. The government pledges to outline its remediation acceleration plan shortly, building upon existing collaborations with mayors and industry partners to identify unsafe buildings.
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