1st Quarter 2002 - Current Issues The 'scribble pad' is preceded by the invitation: "Are there any comments you would like to add about the current state of trade, or about issues that you would wish the Federation to address?" Most comments are about 'issues', but those about the state of trade commonly demonstrate that, whatever the general trend in work, there are always some firms not benefiting when the trend is up or doing well when the trend is down. That is certainly the case this time. At one end of the spectrum is the respondent operating principally in the Berkshire/Buckinghamshire/Hampshire/ Oxfordshire segment of the South East who reports "Plenty of work for those who want it. More than enough for everybody. Turning work away almost every day!" At the other is one on the Eastern flank of the South East, in the Bedfordshire/Essex/ Hertfordshire segment, who reports that neither he nor his father, who between them span over 65 years in the building trade, "can remember trade being so bad or enquiries so few … nor can we see any sign of improvement in the future". But, whilst the results from the regular survey questions show that the great majority are experiencing a rising or at least a steady trend in workload, there is quite widespread concern about the trend in prices and in profit margins. Many respondents remain very concerned about competition from firms and individuals not charging VAT or working for cash in hand, principally in the private housing repair, maintenance and improvement sector, which makes it difficult or even impossible for those that are registered for VAT to pass on to clients increases in their costs, including not least those resulting from Government actions. Particular reference is made to the increase in Landfill Tax, introduction of the Aggregates Levy from 1 April 2002, additional costs arising from the new Building Regulations for windows introduced from the same date (about which several respondents feel they do not yet have sufficient information), and the joining and annual renewal costs of actual and prospective registration schemes for firms and individuals. Many respondents writing in comments repeat the plea for reduction of the rate of VAT on housing RM&I, whilst some would wish to see all builders registered for VAT, irrespective of turnover, in order to create a more level playing field. However, there are other possible corrective measures, and one respondent, from one of the areas where the Government's Quality Mark scheme has been piloted, urges early national roll-out of that scheme as a means of combating unfair competition, notwithstanding that membership of the scheme adds to costs. As was the case in the second half of 2001, however, FMB members' concerns over unfair competition and the rate of VAT, and about growth in bureaucracy and 'red tape' including that associated with the Construction Industry Scheme for the taxation of sub-contractors, are subordinate to those over recruitment and training of the workforce. Note has been made in previous FMB survey reports of the strength of feeling amongst members of the Federation, expressed through their comments on the survey questionnaire 'scribble pad', in favour of a revival of the traditional apprenticeship for the training of skilled construction operatives, but this is coupled with concern that, with the present pressures on profitability described above, many firms cannot afford to take on apprentices, even if there were young people wishing to join the industry in that capacity. Particularly noticeable among the comments on this topic this time is the number that include a request for financial support for employing apprentices, particularly at the start of their apprenticeships, before they are making any contribution to the output of the firm which can be charged to its customers, which several respondents couple with a plea for being able to pay apprentices wages that are more competitive with those available in other occupations which they may join from school or college. There are various opinions on possible routes by which this support might be provided, but most envisage that, given present profitability levels across the industry, the principal contribution would need to come from public funds. 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: 25 June 2002. Last modified: 26 June 2002.