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SMEs put Hansford on the spot over VAT, skills and policy

When chief construction adviser Peter Hansford started his role in December he set out to understand the building industry better after a long construction career focused largely on the civils sector.

CN joined Mr Hansford on a visit to Coventry last week when he met members of the National Federation of Builders to hear their take on regulatory problems that they say are “killing the industry”.

These range from ongoing issues with planning permission, hiring apprentices and finding work, to the need to reduce VAT.

Despite his high-profile focus on forming a new industrial strategy for construction over the next 15 years, Mr Hansford shows his willingness to get back to basics and deal with the practical problems confronted by builders every day.

The snow lying on the roof of the new care centre being built in Coventry by West Midlands-based Stepnell has made working conditions difficult. It provides a glimpse of problems confronting builders that lie outside their and even the government’s control.

Self-help measures

Mr Hansford is keen to emphasise aspects where industry can help itself, such as improving its image to attract younger people to consider careers in construction.

He is keen to stress that his role is not to tell government what it should and shouldn’t do, but to act as a conduit of sorts between the government and the industry.

But NFB members, who include builders, architects, steelwork and lift engineers, are downbeat as they list the stifling restrictions they encounter in planning, hiring and, in particular, high VAT.

One member says VAT reduction is “not just about getting more work; it’s about improving standards” as he warns that ‘cowboy builders’ are not only doing work cash-in-hand from which the Treasury sees no benefit, but are also seen on TV screens bringing the industry’s image down.

Another says that if VAT on repair and maintenance was even halved “you would have people coming back [to the industry] straight away”.

He adds that when VAT was cut from 17.5 per cent to 15 per cent in 2008 his order book was full within three months. When it was raised to 20 per cent, he had to lay off five staff as orders plummeted, three of whom were apprentices.

In focus: Midlands

Midlands construction jobs

  • Down 4.1 per cent in 2012
  • Fell from 274,000 to 262,000 (September 2011-September 2012)

New construction orders West Midlands

  • Down 42 per cent in the third quarter of 2012
  • 2008 Q3: £1.19bn
  • 2012 Q3: £695m

Value of construction output: East Midlands

  • Down £260m in the third quarter of 2012 compared with four years earlier
  • 2008 Q3: £1.994bn
  • 2012 Q3:£1.734bn


Stepnell managing director Mark Wakeford says with VAT on energy at 5 per cent and VAT on measures to reduce energy consumption at 20 per cent, the government has policies the wrong way around.

Mr Hansford says he understands the problem, and while emphasising that he is not here “to defend government’s policies” he advises them to keep lobbying through organisations such as the NFB.

Another member raises concerns that Mr Hansford is mostly interested in reducing carbon for new buildings, and reminds him of the need to cut carbon in our existing homes.

The chief construction adviser refutes this, saying cutting carbon is “mainly not about new buildings” and that the Green Construction Board is well aware of the issue and holds a key interest in the repair and maintenance of existing stock.

Skills concerns surface

On skills and training, members tell Mr Hansford they are being prevented from taking on apprentices for reasons including colleges shutting courses and grants being unavailable.

One managing director trains apprentices in-house and pays for the training himself as he can’t access grants. Another criticises bigger companies for not doing their part, claiming that smaller firms are supporting more than their fair share of apprentices.

Addressing the requirement to attract students to the industry, Peter Hansford says companies “need to focus on teachers and ensure that they know about construction”.

“If they don’t understand the industry they won’t be able to advise on it,” he adds. “University is not a ‘one-size-fits-all’ approach and that message comes from teachers.”

Questioning who makes the decisions to invite schools to sites, he is told that it is becoming more of a client request, but one director says health and safety requirements mean inviting schools can be more hassle than it is worth.

Mr Hansford says the industry needs to find a way of increasing awareness among schoolchildren and that while payback would not be immediate, it would come in a few years’ time and points to the Olympics as an example of a positive image that is still fresh in people’s minds.

Sitting down after the group has dispersed, it is clear he has taken a lot from the meeting – much of which, such as VAT reduction, he has heard repeatedly already.

But with SME engagement, skills and financing among the central themes of his long-term strategy, the concerns of the NFB’s members and thousands more in the industry have been taken on board by one of the few men who can bring about the practical changes they need.

The issues

VAT:

A Cut the VAT campaign was established by 21 organisations including the British Property Federation, Royal Institute of British Architects and National Federation of Builders after chancellor George Osborne increased VAT from 17.5 per cent to 20 per cent in 2010.

The campaign calls on the government to reduce VAT on home improvements to 5 per cent and has support from coalition MPs as well as shadow chancellor Ed Balls.

Campaigners argue it would bring thousands of empty properties back into use and help improve energy efficiency of the UK’s housing stock, while tackling rogue traders by levelling the playing field.

Skills:

Construction apprenticeship starts dropped by 14.6 per cent to 24,000 in the academic year to 2011/12, it was revealed this month.

A report by the Construction Skills Network in January found that 29,050 new entrants were needed every year to replace workers leaving the industry.

A trade delegation led by CITB-ConstructionSkills chief executive Mark Farrar raised the issue with skills minister Matthew Hancock in a meeting at 11 Downing Street last month.

Trade bodies will push for greater investment in repair and maintenance works as part of their budget 2013 submissions to boost employment and apprenticeships.

Midlands:

Jobs and construction output in the Midlands have plummeted in recent years and Stepnell managing director Mark Wakeford told CN that SMEs are having to look further afield for work, while major contractors are eyeing smaller deals in the region.

Planning approvals in the West Midlands towards the end of 2012 showed boosts in industrial, education and private housing work.

But starts on site in the region decreased in 2012 by almost a third in health, while infrastructure and utilities starts also fell; industrial work, however, increased.

In the East Midlands, community and amenity contract awards plummeted in 2012 and while education and social housing contracts were strong, they are expected to contract in 2013.

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