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Chancellor’s tax tinkering could create massive infrastructure jam

As the dust settles on the Autumn Statement and the industry starts to take stock, there is one announcement that has gone largely unnoticed – and yet could threaten the viability of the UK’s mobile construction workforce.

The government’s planned review of the valuation of ‘benefits in kind’ is a consultation that has to be taken very seriously, and could herald a significant change in the business models for construction organisations.

Construction has relied on a mobile workforce since the days of the navvies and continuing investment in critical infrastructure such as Sellafield relies on being able to take skilled resources to remote locations.

With infrastructure investment shifting from central London to Hinkley Point and High Speed 2, the importance of labour mobility can only grow.

Added construction cost

Current arrangements allow costs of subsistence and temporary accommodation to be treated, within reasonable limits, as a non-taxable benefit.

Yet under the review, the range of taxable benefit could expand – driving further cost into an industry that is already challenged to deliver better value.

“We know that – given the complexity of the UK’s tax system – small changes can have disproportionate impacts”

Could it be that, in its efforts to widen the tax base, the Treasury will inadvertently damage the industry that is pivotal to delivering the UK’s productivity boost?

This won’t be intentional, but we know that – given the complexity of the UK’s tax system – small changes can have disproportionate impacts.

One need only look at the massive impact of changes in stamp duty on the London housing market to recognise the potential for collateral damage.

Amid all of the fanfare around the £23bn infrastructure fund and industrial strategy, this is one consultation that the industry needs to take very seriously if it is to retain and expand its capability to deliver to the UK’s infrastructure need.

Simon Rawlinson is head of strategic research at Arcadis

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