The Building Cost Information Service (BCIS) has urged the government to use November’s Autumn Budget to lower business costs.
Reducing business costs such as wage requirements and business rates was the number one priority for construction professionals, ahead of sector-specific measures like increasing investment in housing delivery and boosting infrastructure spending, a BCIS poll shows.
The UK national living wage is currently £12.21 per hour for workers aged 21 and over, while firms are charged business rates based on the commercial property’s value.
Dr David Crosthwaite, chief economist at BCIS, said: “The government must recognise that to stimulate economic growth, it needs to better support all businesses, not just those in construction. It particularly needs to boost support for SMEs which are feeling high business costs more keenly.
“Increasing employers’ National Insurance contributions (NICs) in April reduced the impetus to invest, which has a direct impact on construction output and its ability to support the wider economy through the sector’s multiplier effect.
“I urge the government to rethink its stance on employers’ NICs in November’s Autumn Budget. The Chancellor is wedged between her own borrowing rules and the desperate need to raise public funds, but sticking with flawed manifesto pledges will not win favour or growth in the long-term.”
Two-thirds (68%) of construction professionals expect materials costs to rise in the next 12 months and 65% felt labour costs will increase in the same period.
Karl Horton, data services director at BCIS, felt the Budget month is a prime opportunity to get the ball rolling on more projects in the infrastructure pipeline.
He said: “The government is yet to confirm the private finance models it plans to use for projects in the Infrastructure Pipeline. A decision on public-private partnerships is expected by the time of the budget, but investors and construction businesses also need the finer details of specific finance models. The former to assess risk and return, and the latter to plan capacity.
“We know from the latest BCIS Civil Engineering Tender Price Index Panel that infrastructure demand is healthy, particularly for rail, aviation and energy-linked work, but skilled labour availability is still a major challenge.
“Training won’t resolve these gaps quickly so the best thing the government can do in the coming months is to give firms as much demand visibility as possible. Using the budget to support businesses and improve investment conditions is essential.
“This, alongside clear financial direction in the infrastructure pipeline, should help to kickstart more projects and improve the national economic picture sooner.”
Small to medium sized enterprises (SMEs) account for at least 99% of the private business population across every major industry sector.
