These changes are expected to result in a Gross Value Added (GVA) reduction of £14.8 billion between October 2024 and April 2030, an amount almost equivalent to the manufacture of motor vehicles in the UK (£15.7bn GVA).
Moreover, the changes will put 208,500 full-time equivalent (FTE) jobs at risk during this Parliament. For scale, there are approximately 204,000 people employed in construction in London.
The Government projects that the changes to BPR and APR will raise £1.4 billion over the term of this Parliament. However, CBI Economics analysis of the reduction in investment, economic activity and lower employment could instead produce a net fiscal loss to Government of £1.9 billion. Such is the extent of family ownership of businesses and farms, that the impact of this change will be felt across the country and by every sector of the economy. Agriculture and horticulture firms are expected to be most affected, with an average reduction in turnover of 11%, followed by real estate, accommodation and food services (9%), and construction (9%) – sectors which are not only economically significant but also vital to the UK’s prospects for long-term economic growth and security of food production. While the impacts of proposed changes to BPR and APR are expected to be felt across the UK, their severity varies significantly by region, posing particular risks to local economies where family businesses are major employers and investors. Survey findings indicate that the East of England, Yorkshire and the Humber, and the Midlands could see the steepest reductions in investment and turnover from BPR changes, while Scotland, the North West, and North East are forecast to experience the largest employment losses. For APR, the North East and Northern Ireland stand out as most exposed, with businesses expecting reductions in investment and turnover of more than 12%, and employment falling by more than 10% on average. Local modelling underscores the disproportionate impacts on certain communities. Areas such as Carlisle, Blyth and Ashington, Whitehaven and Workington, and parts of Cornwall and Aberdeenshire are projected to experience some of the largest declines in GVA and FTE jobs as a share of their local economies. Carlisle, for example, faces an estimated loss of 560 jobs. These findings highlight the critical role family-owned businesses play in local economies and the risk that policy changes could exacerbate regional inequalities – undermining efforts to boost economic resilience and level up prosperity across the UK. These findings highlight the need for an urgent review of the changes to BPR and APR to prevent unintended consequences for UK businesses. Furthermore, the Government must carefully consider the impacts to avoid compromising its number one mission of delivering sustained economic growth and improving living standards for working people.
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