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Despite indications that the economy is improving, overall, expectations of increased orders have not materialised, reports the Federation of Master Builders. The FMB's State of Trade Survey for the second quarter of 1999 shows that the total construction workload is marginally lower than that of the first quarter. It also reported that in addition to low orders, Britain's builders are concerned about the impact of new tax changes and the continued attraction of the VAT-free black market to homeowners.
The survey found clear contrasts between not only regions but also between general builders and specialists. Whilst workloads have increased in London, the Eastern Counties and the Yorkshire and Trent Region they have declined elsewhere, most markedly in the Midlands and South Wales. With the exception of Yorkshire and Trent there is a marked North/South divide. General builders have reported an increase in workloads. Specialist contractors have experienced a significant decrease in orders.
At the end of the first quarter the FMB members were optimistic. Expectations for an increase in orders showed a positive balance of + 14. However, actual workload decreased by -1. The main area where expectations have not been realised is new private housing, despite the strong housing market being experienced in some parts of the UK. Private housing repair, maintenance and improvement is the strongest sector. Private commercial construction is showing some improvement.
Despite the Government's Capital Receipts Initiative and additional cash for other public expenditure programmes, social housing continues to disappoint. Workloads for new social housing construction have decreased by -36, for social housing repair and maintenance the figure is -7.
Despite the flatness of overall workload levels, many building companies are still experiencing difficulties in recruiting skilled tradesmen. The number of companies reporting difficulties has increased form 50% to 56%. Carpenters and joiners continue to be most difficult to find particularly in London and the South West. Many companies reported that they would increase their level of training if workloads permitted the investment.
Commenting on the Survey, Ian Davis, Director General of the FMB said:
"It is a disappointment that the increased levels of enquiries reported in the first quarter of this year did not translate into actual orders. Although some areas have busier order books, the majority of builders have yet to witness the economic improvement that is being reported with other industry sectors."
His comments were supported by Derrick Ovington, FMB President, who highlighted how the difficult business environment for Britain's builders is being exacerbated by cowboy builders, and the confusion of new tax changes.
"Although the Government is to initiate proposals against cowboy builders, until steps are taken to reduce VAT on private building repair and maintenance, the homeowner attracted by a 17.5% cost reduction will employ cash-in-hand rogue traders to the detriment of reputable builders.
"Furthermore, despite the welcomed announcement by the Inland Revenue of transitional arrangements to ease the introduction of the new Construction Industry Scheme, the requirement for sub-contractors to have a registration card without which they cannot be paid will place extra bureaucratic burdens on the smaller building company."
Further Information
For further information, please contact:
Federation of Master Builders
Gordon Fisher House
14-15 Great James Street
Holborn
London
WC1N 3DP
Tel: 020 7242 7583
Fax: 020 7404 0296
First posted: 19 July 1999. Last modified: 12 July 2000.
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