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The Federation of Master Builders, (FMB), is not convinced that Gordon Brown's Budget is as good as it seems for the smaller firms in the construction industry. On the one hand the cuts in Corporation Tax and better first year Capital Allowances are welcome but many businesses are not back to acceptable profit levels. On the other hand hikes in fuel costs for necessary transport and the impending rise in Landfill Tax on active waste is likely to negate any advantages gained.
Brian Tierney, FMB's National President, said:
"At first glance Gordon Brown's message is encouraging as it implies that everyone is a winner. While all businesses need stimulating, initial calculations show that the change in the rate of employer's National Insurance contributions will raise costs and the increase in Landfill Tax is particularly damaging. Most of the waste deriving especially from refurbishment work is a mixture of inert and active waste. So FMB members will have to pay the active rate for each load. Skip costs could rise by as much as £30 and probably more because of the higher price of diesel. The latter will also increase the cost of materials."
Ian Davis, FMB's Director General, added:
"The FMB sector of the construction industry, and this is borne out by recent FMB State of Trade Surveys, has not yet turned the corner in economic terms. Enquiries are slowing down and, following the Budget, building costs and prices to customers will move upward. This will happen before firms can enjoy any of the Company Tax improvements which rely on profitability. For construction, the positive elements are likely to be outweighed by the negative ones."
Last modified: 04 February 1999.
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