Columnist

A budget of ups and downs

A few days have passed since the budget, and it has given us time to assess the impact on the construction industry. 

At CAN, we have gone through the Chancellor’s statement and can see some ups and downs.

Specifically, for the North East, we have lost a big infrastructure project in the dualling of the A1 in Northumberland.

This not only impacts on our contractors in the region, but also those who are living with the current infrastructure. 

It was, though, heartening to see the Government reiterate its pledge to build new housing stock and invest £5 billion into this area and construction in general.  

However, there was little to address a critical skills shortage that is choking the industry, both locally and nationally.

We are critically short of workforce, and SMEs, who are the lifeblood of the industry, will be concerned not only about recruitment but about retaining a workforce with national insurance costs rising by approximately 1.2 per cent.

Indeed, one contractor noted this week that an additional £500,000 of turnover would be required to service its existing staff levels.

It seems the only way to cover this burden will be to increase tender costs, with clients having to pay more for their projects and, potentially, doing less work generally as budgets are finite.

We also see wages increasing at the lower end of the wage spectrum, which is to be welcomed to, hopefully, raise the standard of living for those who it impacts. 

This is a positive for us as an industry in trying to recruit and make it look attractive but, again, the impact on business will be difficult for those who operate in the SME sector. 

For those in employment, however, we see pay rises being squeezed to help pay for additional employer taxes.

So, overall, what does it mean? 

We suspect things may be tighter for a time, especially in the SME market in construction.

Hopefully, some of these measures will be reviewed and, if growth does come to the economy, we would hope things could be re-examined to ease the burden on SMEs and encourage the recruitment of staff across the industry to help with the skills shortage.

Tim Barrett is chair of Construction Alliance North East

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