Angela Rayner humiliated as builders warn her house building plan will fail

Angela Rayner has been issued a warning over her housing plans (Image: Getty)

Angela Rayner has been warned that taxes imposed by her own government could impede Labour's house building plan.

Ministers want to build 1.5million homes by the end of the decade.

But Rachel Reeves' tax raising Budget presented by the Chancellor of the Exchequer in October is said to have killed off confidence among developers.

Neil Jefferson, chief executive of the Home Builders Federation lobby group, told The Telegraph that businesses were refusing to ramp up housebuilding because the “economic and policy climate does not yet feel particularly pro-development”.

He also warned that Ms Reeves’ decision to increase National Insurance contributions for employers has significantly increased costs for smaller developers.

Rachel Reeves announced tax rises in October (Image: Getty)

This has sparked fears that some could be tipped into administration.

In addition, critics have blasted a £3.4billion tax on new residential projects. The Government plans to invest revenue from this in its ‘Warm Homes Plan’ over the next three years, which is focused on improving household energy efficiency and combatting fuel poverty.

The levy will be a “hammer blow” for many housebuilders, Mr Jefferson said.

He added: “Small and medium-sized businesses in particular are really struggling.

"On top of all the other taxes and bureaucratic costs that the smaller builders already pay, another tax, on builders who in the main will never have built anything higher than a semi-detached house, seems disproportionate.

Labour wants to build more than a million more homes (Image: Getty)

“If you’ve not got functioning SME elements of the housebuilding market, that puts even more pressure on the larger companies to try and deliver. And the capacity of the industry will be reduced even further.”

Mr Jefferson also said: “Housing supply is currently not increasing because of the environment within which housebuilders are operating.

”[If ministers] are going to get anywhere near 1.5m and address the challenging operating environment, they’ve got to pull other levers and quickly, because housebuilding takes time to turn around and to deliver significant increases.”

He added that the industry would immediately respond to a pro-development policy environment, and cited the example of how, between 2012 and 2020, the number of homes built annually rose from 120,000 to 240,000.