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Industry urges renewed Budget push

Trade bodies are hoping the Government will tackle the industry’s two biggest headaches in next week’s Budget – funding and workloads.

Bank of England Governor Mervyn King all but cut up the Government’s credit card at the end of March after he warned Prime Minister Gordon Brown to stop spending.

As a result much of the construction industry’s Budget wish list focusses on tax cuts and actions as opposed to calling for more spending.

The Civil Engineering Contractors Association drew up a seven point wish list.

Among other things, Ceca called for 10-day payment pledges by all local authorities as well as the Government sharing risk on trade credit agreements to help supply chains that rely on the insurance.

Ceca chief executive Rosemary Beales said: “The steps put forward in November’s Pre-Budget Report did not amount to the level of support the construction industry needs.

“The seven steps we have asked the Chancellor to take are affordable, not difficult to deliver and will have a positive impact on our industry in a short space of time.”

The British Property Federation called for tax on empty properties to be scrapped.

It said empty rates had led to the demolition of more than 15 million sq ft of property, razed to save businesses large and small from an additional cost that they cannot bear in the current market.

Even the biggest brands – like ASDA and Legal & General - have admitted flattening buildings, while individual post office owners forced to close by Gordon Brown have also been hit with empty rates bills.

The National Specialist Contractors Council called for the empty property rates to go as well as taking up the opportunity to cut VAT on R&M to 5 per cent after European ministers voted last month to allow the cuts.

The NSCC also said it would not support an expected 5 per cent increase in business rates from next April.

Chief executive Suzannah Nichol said: “Imposing an extra cost on businesses is never popular. But at the moment it is more than unpopular, it will send businesses to the wall.”

The Construction Products Association wrote to the Treasury calling for the Budget to focus on three themes – liquidity and credit, investment and fiscal measures.

The association said lending institutions into which large sums of Government money had been invested should make money available to viable businesses for their everyday operations.

It also called for greater visibility in terms of Government funding support for PFI projects and a clear programme identifiying projects to support the £3billion of capital spending that has been brought forward in the pre-Budget report.

It called for the public sector to be active in the housing market buying unsold private sector homes that would be suitable to help deliver its own target of delivering 75,000 affordable homes by the end of 2011.

The Association said it has urged the Government to avoid increasing any of the taxes that affect business, in particular climate change levy, aggregates levy, and the fuel duty escalator.

It also urged the Government to cut VAT to 5 per cent on domestic repair and maintenance work, while also calling for a reduction of VAT to 5 per cent on products that make a significant contribution to a building’s energy efficiency.

Looking beyond 2009/10, the industry has expressed fears that the funding brought forward from 2010/11 will not be replaced leading to a sharp downturn in that year.

Net public sector capital spending will be frozen in cash terms at its 2010/11 levels, falling as a share of GDP to 1.8 per cent by 2013/14.

The industry is calling for the government to return to its original policy of holding net public investment at 2.25 per cent of GDP.

Councils have also been urged to spend more than £30 billion of “rainy day” cash reserves on construction projects ahead of next week’s Budget.

Government figures show that local authorities have built up sizeable reserves after being instructed to save for a rainy day, money that could now be spent on construction work.

UK Contractors Group director Stephen Radcliffe said: “There has never been a rainier day.

“The Central Government message is that money needs to be spent on construction at the moment. That message has got to get through to local Government.

“We have seen quite a bit of evidence that further education college projects are slowing because advisors are saying there are better deals ahead. That is unacceptable when this money is available.”

Northern Ireland crunch

The Northern Ireland Executive may need to hold an emergency budget and slash its capital spending to combat the effects of the recession, a leading local economist has warned.

Ulster Bank’s top economist Richard Ramsey said expected public expenditure cuts in chancellor Alistair Darling’s upcoming UK budget could force the Executive to take repercussive action to soften the blow.

Mr Ramsey said the “most concerning ‘known unknown’” was to what extent the Northern Ireland’s capital investment plans – which were projected at the height of the property boom and were partially reliant on property and land sales – would need to be scaled back.

His comments followed the announcement of an emergency budget in the Republic, where finance minister Brian Lenihan unveiled a series of major tax rises and public spending cuts to plug the country’s deficit.

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