Ahead of this week’s Budget (20 March), the Electrical Contractors’ Association (ECA) says the government must do more to support construction or risk a triple-dip recession.
The ECA is calling for the government to increase investment in housing and infrastructure, or to cut VAT to 5% for building maintenance work. Such a cut would spark private sector growth independent of government, allowing industry to help itself.
ECA Group CEO Steve Bratt said: “If Britain builds, Britain grows. Business secretary Vince Cable’s recommendation to boost investment in construction is exactly what the country needs. Construction output is down by 7.9% on 20121 and if something isn’t done quickly, we’re in danger of stumbling into a triple-dip recession. The chancellor needs to either increase public spending in crucial sectors such as construction, or cut the capital expenditure required by the private sector to allow the industry to flourish.”
Bratt continued: “The recent downgrading of the country’s credit rating, from AAA to AA, signals that it’s time for a change in policy. More homes and better transport links will have a positive effect on employment and so get the country back on its feet. But all of this will remain a pipe dream without either Government spending or a tax cut.”
The ECA says a VAT cut on repair and maintenance work would create jobs and boost construction spending. Bratt said: “Trimming VAT to 5% would release an extra £374m a year for social housing improvement. More than that, it would create over 100,000 jobs by 2020, and stimulate around £1.45bn in spending on energy efficiency improvements.”
Bratt concluded: “Construction boosts business, not just in the short term when delivering projects, but for for years to come as these projects pay back into the economy. Every £1 invested in construction returns £2.84 to the economy3. We hope the chancellor takes note that what’s good for construction, is good for the country.”