How was the budget for you? If you are in housebuilding, health or education then you will be looking forward to the next 12 months or so with relish. Health and education will get cash injections above the rate outlined in Gordon Brown's last three-year plan or comprehensive spending review. Even though most of Brown's windfall is likely go on staff and equipment, at least some of the hundreds of millions will filter through to the construction industry.
Housebuilders managed to hold on to zero VAT rating for new homes, despite tough lobbying from the Construction Confederation. The construction industry's super trade association wanted tax harmonising across new-build, and the repair and maintenance markets, arguing that a level playing field would discourage rogue builders. With such conflicting views, the relationship between the Construction Confederation and the House Builders Federation, one of its member trade associations, must now be straining.
It is surprising that a government so determined to improve overall living standards should persist with an inflationary penalty on keeping property in good condition, at the same time enhancing the bogus appeal of the cowboy builders.
Red-tape burdens
The Chancellor should also take note of the rising tide of resentment in the industry over the imposition of yet more regulations. These are generating even more unproductive charges that fall upon a marginal industry least able to withstand them.
Mr Brown speaks with enthusiasm about the prospects for growth, but contractors are becoming increasingly alarmed about the rise in burdens on businesses where current margins are no more than 2.5%. One major contractor calculates that the Working Time Regulations are costing his business £300 000 a year in addition to annual costs of paternity leave. As if that were not enough, the increased costs imposed by the Construction Industry Scheme are going to be substantial - estimated by some at £800m. Thus another piece of good news from the Budget is that the tax scheme is being reviewed by a consultative forum with the aim of producing a provisional report by June. The worry, however, is that such an expensive and complex piece of tax machinery should have been introduced in the first place. It runs counter to the classic principles that should govern tax administration.
Order, please
To quote the chairman of the Construction Confederation, the Construction Industry Scheme remains little short of chaotic, and is imposing intolerable strains on construction companies. In answer to the industry's protests, some of the worst aspects of this tax nightmare are being eased. But as the secretary of the industry's joint taxation committee said after the Budget, the short term measures announced in February do little to help the smaller traders struggling around the country showing their CIS6 certificates.
An increase in stamp duty to 3% for house sales of more than £250 000 and 4% for sales of more than £500 000 could mean a slight hiccup in housebuilding in London and the south-east.
At last there is some solace for roadbuilders: £250m has been ringfenced for roads and other public transport such as a new spur on the Docklands Light Railway to London City airport. This though has been tempered with a hefty £1.60 per tonne aggregates tax, to be passed on to you by aggregates producers and builders merchants.
It seems that the prices of the most popular aggregates will rise by £3 per tonne because producers say the least popular stones will not bear the budget levy. So it may be worthwhile to start explaining this rise to your clients, as ultimately, it will be hoped that they will bear the extra cost.
Source
Construction Manager
