Welcome to 2011. I hope it will be a successful year for you, your family and your business.
Crystal ball gazing is always dangerous but there are a few things of which we can be certain for the year ahead. The most immediate of those is the VAT rise which came in to effect this month. Last year, the FMB published research by Experian which estimated that the VAT rise is likely to cut demand by about two percent and lead to the loss of 7,500 jobs directly linked to the housing RM&I market and a further 15,500 in the wider economy as a result of the knock-on effects. Only time will tell if these forecast are accurate but the Government seems at risk of scoring an own goal with this increase.
FMB IDENTIFIES BARRIERS TO GROWTH
On a more positive note the Government has identified construction as one of the key sectors in which barriers to growth need to be reduced. Following the publication of a joint Treasury / Department for Business Report on 30 November 2010, the FMB was asked to identify the key points that must be addressed in our sector. As usual we were given plenty of time to respond with our submission required within seven days. Sterling work by Peter O’Connell in our External Affairs Department meant that a suitable paper was ready on time.
The key points were:
- The Government to rationalise the VAT rules and rates around the installation of energy efficient projects to increase their use and thereby incentivise retrofitting of the existing housing stock, drive the creation of the green economy, and reduce carbon emissions
- The Government to allow domestic RM&I projects with sufficient energy efficiency improvement measures to apply the reduced rate of VAT to the labour element of the entire project to incentivise retrofi tting of the existing housing stock, drive the creation of the green economy, and reduce carbon emissions
- The Government to reinstate business rate relief on empty commercial property to help encourage regeneration and reletting of vacant property and remove the incentive to demolish buildings to avoid the tax liability
- The Government to abandon the Community Infrastructure Levy and develop the single tariff concept with industry to reduce the total burden on the house building industry over the spending review period
- The Government to drop its proposal to remove the cap on planning fees to prevent an increase in the total burden on the house building industry over the spending review period
- The Government to ensure that the definition of zero carbon is technically deliverable, financially viable, and does not demand the design of housing which is likely to be unacceptable to local communities to protect housing delivery
- The Government to place a legal duty on local authorities to ensure that the overall impact of local tax and planning policies does not make developments unviable to protect housing delivery
- The Government to ensure that local authorities undertake any planned reviews of housing delivery within defi ned time scales, within a back stop time limit, and based on robust, independent assessment of housing requirements to assist housing delivery
- The Government to ensure that an effective system for regional and sub regional integrated planning solutions is quickly implemented to replace RSS to assist housing delivery
- The Government to ensure adoption of PAS 91 for all public sector construction procurement to reduce bureaucratic burdens on industry and facilitate greater SME access to public sector contracts.
The FMB will be pushing on all these points in the coming months to ensure that the construction industry, and particularly our part of it, really is an engine for growth in the years ahead.
