Welcome to 2009. I hope that you had a good break and that you’re ready for what is likely to be a very challenging year ahead.
Clearly all of us hope that the bleak economic forecasts of recent weeks are proved wrong and that activity will rapidly recover across the construction industry. There is obviously no shortage of work that needs to be done, with millions of new homes still needed over the next decade, and the substantial refurbishment which is essential to many existing ones. It remains to be seen whether the measures announced by the Government to encourage spending will succeed, but we all need to remind consumers that spending on property will always be a good long-term investment.
The FMB is doing everything it can to highlight the economic, social and environmental benefits of rapid recovery in the building sector. As we’ve reported in this and recent issues of Master Builder we have taken our messages to the people who can really make decisions. My meeting with the Prime Minister at the end of November was just one of opportunities we have had to highlight the contribution that Britain’s builders can make.
Protect extra funding for refurbishment
We need to make sure that as workload recovers, business goes to legitimate builders rather be lost to the hidden economy. In discussions with Government officials over recent weeks I’ve made clear that safeguards must be put in place to make sure that extra funding put into housing refurbishment is protected to ensure that it is spent on work undertaken by legitimate builders. I’m hearing stories from many parts of the country of increasing concern that unskilled builders are getting hold of improvement monies and delivering unacceptable standards of work. I suspect that many are also evading taxes.
My fears were confirmed when I read a new report a couple of days ago. In early December the House of Commons Public Accounts Committee highlighted the scale of the hidden economy and the frankly dismal performance of the authorities in dealing with it. Obviously not all the evasion investigated by the Committee was in the building sector but the preamble to the report makes clear that some selfstyled builders and decorators are among the most frequent offenders. The Committee was alarmed at how Government seemed unable even to make a robust estimate of the scale of the problem but put its own value of £2 billion on the tax lost each year. Despite this enormous sum just £41 million was spent in 2006-07 on countering this fraud.
Although some 30,000 hidden economy cases are detected each year, the Committee says this represents a detection rate of just 1.5 percent so the chances of getting caught are very low. It also found that while penalties of up to the full value of the tax evaded can be imposed, the average penalty imposed was just three percent. Incredibly, prosecutions are taken out against only two offenders for every 1000 detected. Given those odds it is clear why so many cowboys in the industry think that tax evasion is a risk worth taking.
Rest assured that the FMB will continue to argue for measures that help quality builders and highlight the dangers of initiatives that only benefit those who choose to operate in the hidden economy.