Nearly 4,000 businesses have collapsed, and experts warn Labour’s policies are pushing companies to the brink—but is this the full story?
In a stark warning to Chancellor Rachel Reeves, industry leaders have sounded the alarm over the rising tide of business insolvencies, with nearly 4,000 companies going under in the past year. But here’s where it gets controversial: while Reeves aims to tackle the housing crisis with ambitious reforms, critics argue her policies are inadvertently fueling the very decline they seek to reverse.
Steven Mulholland, CEO of the Construction Plant-hire Association, has been particularly vocal. He claims Labour’s approach is leaving family-run firms 'staring down the barrel' of financial ruin. According to Mulholland, the construction sector—which accounted for 16.4% of all insolvencies in England and Wales in 2025—is a 'warning light flashing red.' This isn’t just a statistic; it represents thousands of lost jobs, apprenticeships, and opportunities in communities across the country.
And this is the part most people miss: Mulholland points to a perfect storm of rising fixed costs, tax uncertainty, and a sharp decline in work streams. Project starts are down 20%, main contract awards have dropped 32%, and planning approvals have fallen 22%. Against this backdrop, Labour’s plans to increase employer national insurance and implement changes to inheritance tax and Business Property Relief in April could spell disaster for many firms.
A survey of Mulholland’s association members reveals that 80% of family-run businesses fear these changes will jeopardize succession and family transfers. 'Piling further costs and uncertainty onto these businesses won’t drive growth,' Mulholland warns. 'It will make a bad situation worse, pushing more firms under and putting jobs, projects, and housing targets at risk.'
Reeves, however, paints a different picture. In December, she argued that Labour’s reforms would 'back the builders, not the blockers,' unlocking investment and making it easier to build 1.5 million new homes. The government has also unveiled measures to streamline development, including a default 'yes' to suitable homes around rail stations and fast-tracking schemes that meet high design standards. Ministers claim these changes will particularly benefit SME builders, allowing them to construct higher-density housing on smaller, under-used sites.
But is this enough to offset the concerns? While the government’s plans aim to simplify the building process, critics like Mulholland argue they fail to address the root causes of the sector’s struggles. The introduction of a 'medium site' category for 10 to 49 homes, for example, is a step in the right direction, but will it be enough to prevent further insolvencies?
Here’s the thought-provoking question: Can Labour’s ambitious housing targets be achieved without first stabilizing the businesses tasked with building them? Or are these policies setting the stage for further decline? Let us know your thoughts in the comments—this debate is far from over.
