Our Blog
Read some of our latest news, views and comments on issues and
news within the industry.
The Government are Shortsighted on the Effect of 20% VAT on Home Improvements and Repairs
11 May 2012 by Administrator
The Government would appear to be behaving irrationally in not
reducing the VAT on home improvements, refurbishment and repairs to
all domestic properties.
The extent of illegal trading in the building industry is
increasing every year. The so called "black economy" involves many
thousands of individuals and firms being paid in cash and not
charging VAT at 20%. Each month we speak to many members from all
parts of the UK and frequently we hear that they are being undercut
by builders that offer to carry out work without the addition of
VAT, subject only to them paying in cash. Many, but not all, of the
"cash only" builders are from overseas; mostly from East Europe. A
few would possibly have a turnover less than the VAT threshold for
compulsory registration however with building material costs
including VAT at 20% added to the labour costs most firms will have
a turnover above the threshold. Then there is the question of
income tax and national insurance contributions added to the
possibility that some may be claiming job seekers allowance and
other benefits.
From the customer's point of view it is very attractive to save
one sixth of the costs by paying cash and evidence indicates that
all classes of homeowners are taking advantage of the savings - at
the taxpayers' expense!
The Government is being very shortsighted in continuing with its
policy of requiring 20% VAT to be applied to repairs, extensions
and maintenance work to both private and commercial properties. A
reduction to 5% would answer most of the problems and would almost
certainly increase the amount collected by HM Revenue and Customs.
Legitimate builders would benefit as they would be able to compete
with the "cash only" traders and the customers' temptation to
conspire with the cash builder to defraud the Revenue would be
reduced. It seems that reducing VAT on building work to 5% is a
"win win" proposition for the Government - if only they could see
it!
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Required - A Budget for Business
08 March 2012 by Administrator
The Chancellor of the Exchequer has
an opportunity to present a budget that will restore the UK's
ability to compete with the rest of the world in manufacturing and
the provision of services. In particular he has the opportunity to
substantially reduce or eliminate a number of "on costs" created by
successive UK governments that other governments of countries that
we compete with do not burden their manufacturing or service
providers with. Business rates, green taxes, excessive National
Insurance contributions, road fund licences and excessive tax on
motor fuel are some examples. Depending on the product or service
being provided these "on costs" could amount to 30% of the export
selling price.
Business rates should be eliminated
on all business premises under 2000 square meters and reduced by
50% on all other premises. "Green tax" on the supply of power (gas
and electricity) for businesses should be eliminated. National
Insurance contributions by employers should be substantially
reduced for persons over the age of 25 and eliminated on persons
under the age of 25. This would go a long way in encouraging
businesses to take on more staff and help reduce youth
unemployment. Road fund licences on commercial vehicles should be
substantially reduced and motor fuel tax should be reduced by at
least 15%. Transport and delivery costs in the UK are considerably
higher than in most other countries particularly the US and the far
east. By taking this dramatic action the UK would once again be
able to compete with the rest of the world on a more level playing
field. Our exports would rise, our imports would reduce and
unemployment would fall rapidly, particularly for young
persons.
The "books" could be balanced by
increases in corporation tax and further substantial reductions in
benefits; particularly excessively high housing benefit and the
elimination of child benefit after the third child. Benefits should
not be available to anyone who has not contributed to the tax
system for a minimum period of five years. This would discourage
"financial migrants". Further savings should be made by reducing
overseas aid, simplifying the tax system and leaving the European
Union.
Another boost to businesses would be
the removal from office of the Secretary of State for Business,
Innovation and Skills and President of the Board of Trade, Dr
Vincent Cable MP. Some of his proposals are offensive to a large
number of people working hard to survive in business and his
replacement with someone more in tune with the business community
would be very welcome.
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Charges for Breach of Health & Safety Regulations
31 January 2012 by Administrator
The Health and Safety Executive (HSE) have published more
information on the charges that they will make for their time
investigating and dealing with breaches in Health and Safety
Regulations including the Construction (Design and Management)
Regulations 2007.
The headline rate is £124 per hour spent by an HSE Inspector
when they find something non-compliant. This "fee for intervention"
will be applied when there is a "material breach" which is, "when
in the opinion of the HSE Inspector, there has been a contravention
of health and safety law that requires written notification
(e-mail, instant visit report, letter, enforcement notice or
prosecution) of the contravention to the duty holder".
The Construction (Design and Management) Regulations 2007 define
duty holders as: Clients (except domestic clients), Designers, CDM
Co-ordinators, Principal Contractors and Contractors. Designers
include: architects, structural and civil engineers, mechanical
services engineers, landscape architects, interior designers and
temporary works designers.
The HSE have provided details of the potential average costs for
intervention activity. The actual intervention costs will depend on
the particular circumstances and the complexity of the
investigation that is required to follow all reasonable lines of
enquiry.
The following are the HSE's estimated average costs to be
recovered:
- An inspection which results in a letter - approximately
£750.
- An inspection which results in an Enforcement Notice -
approximately £1,500.
- Investigations - ranging from approximately £750 through to
several thousands of pounds to, in extreme cases, tens of thousands
of pounds.
Although the following is not a complete or exhaustive list of
potential material breaches of the Construction (Design and
Management) Regulations 2007 that might involve HSE action and
charges they are indicative of the type that might be investigated
following a site visit:
- Failure to plan, manage and monitor construction work in a way
which ensures that it is carried out without risks to health and
safety.
- Failure to notify the Client of his duties under the
Construction (Design and Management) Regulations 2007 before
commencing work.
- Failure to provide every worker carrying out construction work
under his control with adequate information and training.
- Failure to provide adequate welfare facilities on site for the
full duration of the construction phase in accordance with Schedule
2 of The Construction (Design and Management) Regulations
2007.
- Failure to comply with the Work at Height Regulations
2005.
- Failure to comply with the Lifting Operations and Lifting
Equipment Regulations 1998.
We recommend that all builders and contractors take particular
care in managing their construction projects and ensure that they
and their site managers and supervisory staff are conversant with
all Health and Safety Regulations. All persons responsible for
managing a construction site, however small, should have
successfully completed the "Site Managers Safety Training Scheme".
This is a five day course that can be taken on a "one day a week"
basis or all five days in the same week. The cost is in the region
of £500 per person. An investment of £500 may well save you over
£1,500 in charges if you were served an enforcement notice or were
investigated following an accident.
For further information refer to our website www.buildersguild.co.uk
and the links to the Health and Safety Executive's website www.hse.gov.uk
3 comment(s)
Financial Crisis and Advice to Members
21 December 2011 by Administrator
As we approach the end of 2011 we get closer to the collapse of
the European financial system. As we stated in our blog on
7th November 2011 the Euro is fatally flawed. Sometime
early in 2012 one or more of the countries using the Euro will
default and this will be the start of a collapse that will have far
reaching consequences.
The Prime Minister, David Cameron, was right to veto the
proposed new treaty and his standing and credibility in the eyes of
the more intelligent public was greatly enhanced. The other leaders
of Europe are making a huge mistake in their attempt to preserve
the Euro and the Eurozone. Many of the struggling "Club-Med"
countries will not be able to convince their electorate to accept
the severe austerity measures necessary to remain in the Eurozone
and many of the countries involved will not be able to pay the
interest on their debt. Most of the leaders would not dare to tell
their electorate the facts and the level of austerity that will be
imposed on them in the near future. The proposed fiscal rules will
remove most budgetary powers from the national and democratically
elected governments. The majority of people in Europe are being
deceived by their leaders into thinking that the Eurozone is
viable. Fiscal union of such diverse peoples that make up the EU
simply will not work.
How will the problems of the Eurozone affect the construction
industry in the UK? The Government has indicated that it will try
to stimulate the economy by embarking on a number of infrastructure
projects. This may help the larger contractors but is unlikely to
create work for small and medium size builders who rely on smaller
projects for domestic and commercial clients. The domestic market
will be depressed for some time due to the number of people being
made redundant in both the private and public sector and the
general reluctance to embark on anything but essential repair work.
The lack of confidence in future prospects of continuing employment
and the potential collapse of some financial institutions will not
change in the short term.
The problems for the well established and totally legitimate
builders are exacerbated by the costs of VAT and contributions to
the Construction Industry Training Board. Time and time again we
hear of Members being undercut by builders that offer to carry out
work without the addition of 20% VAT. Sometimes builders require
payment in cash, other times they take a cheque and cash it in one
of the many high street agencies offering "loans to payday" or the
clearing of cheques and payment in cash for a percentage fee. The
Government is being very shortsighted in continuing with its policy
of requiring 20% VAT to be applied to repairs, extensions and
maintenance work to both private and commercial properties. A
reduction to 5% would answer many problems and would almost
certainly increase the amount collected by HM Revenue and
Customs.
The builders who are seeking cash payments for their work and
not charging VAT are also not making any contribution to the CITB.
The CITB itself is well past its sell by date and the whole
question of craft training and youth unemployment needs the urgent
attention of the Government. If young people were given the
opportunity of building craft training from the age of 15 in
technical colleges they would be employable at 18. This is a matter
that should be addressed by the Department for Education. The CITB
have an abysmal track record in the training of core building
crafts: carpenters, joiners, bricklayers, plasterers, painters and
decorators. The shortage of these particular trades has attracted
large numbers of well trained and competent craftsmen to come to
the UK from other European countries to fill the gap. The problem
for this country is that most of the money that they earn is taken
out of the UK and not spent here.
Small and medium size builders and subcontractors should pay
particular attention to profitability and "cash flow" and not be
tempted into "suicide" bidding for work to keep busy. Members
should take particular care in checking the creditworthiness of all
potential clients before entering into a contract or agreement to
carry out work. If there is the slightest doubt, ask for a deposit
to cover the first weeks labour and materials costs and then seek
payment every week to cover the following weeks costs. Any time
payment is not forthcoming or if a cheque is not honoured - stop
work.
Our advice is not to fall into the trap of borrowing from the
bank. Their interest rates are extortionate and they will want
personal guarantees and possibly even a charge on your property. It
is very important that you provide a written quotation detailing
the work required and obtain a written instruction from the client.
Your quotation should include the payment terms. It is also
important that you price all work carefully and include a
reasonable profit margin. It might seem hard but if you are short
of work and do not see the situation changing in the near future
you should make staff redundant sooner rather than later. Being
prudent now will leave you in a stronger position when the economy
improves later next year.
Finally, don't blame the current Government; they are making us
pay for the previous Government's folly of spending more than they
received in taxation. Hopefully the present Government will not
waver in its undertaking to cut costs and waste, and start looking
after the hardworking tax payers of this country.
We would be pleased to receive comments on this blog or any
other matters from Members or other readers.
We hope that all or our members and their staff and families
have a very Happy Christmas and a successful and prosperous
2012.
4 comment(s)
The Fatally Flawed Eurozone
07 November 2011 by Administrator
It becomes clearer by the day that
the "eurozone" is fatally flawed.
The European Union is hopelessly
mismanaged, its accounts have not been audited for over 17 years,
they continue to demand increases in contributions in excess of
inflation, they dream up more and more regulations that make member
states less and less competitive with the rest of the world.
More significantly a number of
member countries have over many years failed to balance their
budgets - they have spent more than they can raise in taxation.
They have had to borrow the shortfall and this shortfall attracts
interest and therefore the amount they owe has grown larger and
larger. The amount owed by a number of countries is now so large
that it is virtually impossible for them ever to repay without the
most stringent austerity measures leading to much lower standards
of living and considerable hardship for the majority of people. The
Greek debt is so large that banks are being asked to write off 50%
of the money owed to them. European politicians are misleading us
by saying that this is not a default by Greece. How can it not be?
How many of our members would get a warm reception from their banks
if they sought a 50% reduction in their loans or overdrafts?
Even with this massive write-down
Greece will still owe so much that at the interest rates that it
has to pay it will be impossible for them to keep their
indebtedness from rising. But Greece is not alone. Italy, Portugal,
Spain and Ireland now have to pay such high rates of interest on
their loans that they face austerity measures shortly to be as
stringent as those being imposed on Greece.
As we pointed out in our blog on
21st October 2011 the Euro is irrevocably doomed to fail.
Supporting the Euro is a waste of taxpayer's hard earned money.
Simply putting more money into countries that are hopelessly in
debt is not the answer and writing off part or all of the
indebtedness is an admission of the failure of the particular
country to exercise sound financial management.
It was a serious error of judgment
by David Cameron not to permit a free vote in the House of Commons
on holding a referendum on the UK's membership of the European
Union. The argument that we could not survive if we left the EU
because 50% of our trade is with member countries is nonsense. Do
you think Germany would not trade with us? How many German cars do
we import? Do you think France would not trade with us? How much
French wine, cheese and other products do you see on our
supermarket shelves? Trade takes place both ways and if the price
is right goods are sold and goods are purchased.
How long before the Greek Drachma
re-emerges?
0 comment(s)
Referendum on Membership of the European Union
21 October 2011 by Administrator
If the Conservative Party is to
retain the respect and support of the electorate they must permit a
referendum as soon as possible and certainly by the end of March
2012. David Cameron's integrity, policies and leadership are now
being questioned by his supporters and the public generally. A huge
majority of people voted Conservative because of his undertaking to
hold a referendum and they will not forgive him if he continues to
renege on that undertaking.
For many reasons it is essential
that the United Kingdom leaves the European Union. It is clear that
the leadership of the EU and our current government have little or
no understanding of basic economics or good housekeeping. It is
irresponsible to allow expenditure to exceed income. Failure to
understand this leads to financial crisis and that is exactly what
we have in Europe as well as at home.
The common currency, the Euro, is
irrevocably doomed to fail. Supporting the Euro is a waste of
taxpayer's hard earned money. Simply putting more money into
countries that are hopelessly in debt is not the answer and writing
off part or all of the indebtedness is an admission of the failure
of the particular country to exercise sound financial management.
In short, Greece will never pay its debts and at least four other
countries will be in the same position by the middle of 2012.
It would be much more sensible if
the Euro were to be dismantled in an orderly manner over the next
month or so and admit that a single European currency was never
going to work than for it to be propped up until the inevitable
happens. The British people supposedly living in a democracy
will not accept collapsing living standards for the sake of
supporting the Euro and the European Union. There are no benefits
only hardship and suffering. The British people voted
to join a Common Market and not a political union. It is time for
them to be given the opportunity to speak for themselves. From our
research we believe that the outcome of a referendum would be a
large majority in favour of leaving the European Union and a
substantial majority in favour of leaving the European Union but
retaining trading links.
David Cameron will not be forgiven if he imposes a "three line
whip" on Conservative Members of Parliament forcing them to vote
against holding a referendum. Individual Members of Parliament of
all parties will not be forgiven if they do not show independence
from their leaders and respect for the electorate and vote in
favour of a referendum.
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Illegal Workers
10 August 2011 by Administrator
The UK Border Agency find that it is
particularly difficult to get messages to the construction and
related industries on illegal working and have asked the Guild of
Builders and Contractors to help by providing information and
promoting the message. They have provided information on a recent
successful visit to a company operating to the west of London.
A Southall builders' merchant is
facing a big fine after the latest in a series of UK Border Agency
raids targeting illegal workers.
Acting on intelligence, officers
visited Western Timber and Builders Merchant on Western Road,
Southall on the morning of Thursday 4 August, where they questioned
staff to see if they had the right to work in the UK.
Three employees, all Indian nationals,
were arrested for working illegally. A 27-year-old man was arrested
for entering the country illegally, while two men aged 34 and 25
were found to be failed asylum seekers.
A fourth man, believed to be a
customer, was also arrested for immigration offences.
Three of the four remain in detention
awaiting their removal from the UK. The 27-year-old man was later
granted immigration bail and must report regularly to the UK Border
Agency while his case is dealt with.
Western Timber and Builders Merchant
now have to prove that they did the correct right-to-work checks on
their staff, or they could face fines of up to £10,000 per illegal
worker.
Salma Raja, head of the UK Border
Agency's Ealing Local Immigration Team, said:
"Those who employ illegal
workers are not only breaking the law, they're also taking jobs
from those who do have the right to work and are undercutting
Southall's legitimate businesses and traders.
We're happy to work with firms to
help them understand what checks they need to do, but those who do
break the law should know that we are out there looking for them,
and they will be caught."
Every year, the UK Border Agency
imposes civil penalties on thousands of companies which fail to
carry out proper right-to-work checks on staff.
Legitimate companies and in particular
builders and contractors are suffering from competitors offering
"cash in hand" prices free of VAT. Many of those are also illegal
immigrants or employ illegal workers on a "cash in hand" basis. One
member operating in North London has reported that he is
unsuccessful in 80% of his quotations. Both private and business
property owners are giving the work to small bands of illegal
workers.
Members unsure of the steps they need
to take to avoid employing illegal workers can visit www.ukba.homeoffice.gov.uk/advice-for-employers
or they can call the UK Border Agency's Employers Helpline on 0300
123 4699.
For more information and contact
details for the Local Immigration Teams visit http://www.ukba.homeoffice.gov.uk/aboutus/your-region/london-se/local-immigration-teams/
Anyone who suspects that illegal
workers are being employed at a business or are undertaking work
for private or business clients can contact Crimestoppers on 0800
555 111 anonymously or visit http://www.crimestoppers-uk.org/.
Have you lost work to "cash in hand"
firms?
Please let us have your views by
sending an email to info@buildersguild.co.uk
or clicking on "comments" at the end of this item.
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Core Craft Training
29 June 2011 by Administrator
Over the past 30 or so years
successive governments have failed to provide core building trade
craft training and the current Coalition Government is not
addressing the problem.
Currently we are told that there are
nearly 3 million unemployed young people and yet the building
industry is so short of trained people that the majority of skilled
building craftsmen working on current projects are from overseas.
Most come from Eastern Europe and are highly trained at craft
colleges where they have completed a full time three year course
followed by further training with their local employers.
Similar craft training courses were
available in the UK 30 years ago until persuasive academics
influenced those in charge of the education system and insisted
that all pupils, irrespective of ability, must be academically
educated.
A large percentage of young people
would benefit from training that would lead to full time employment
in the building industry if craft training at colleges were to be
available throughout this country. Apprenticeship schemes will not
work in sufficient numbers to substantially reduce youth
unemployment.
Given appropriate teaching
facilities and competent training over a three year period some
100,000 young people could be absorbed into the building industry
and like the majority of the existing skilled craftsmen be
guaranteed a job for life.
With the abolition of our state run
building craft training colleges politicians were persuaded to
sanction the foundation for an industry lead training board funded
by a levy on all established building companies for the purpose of
reimbursing those builders then training indentured craft
apprentices.
Unfortunately the Construction
Industry Training Board's performance in ensuring that adequate
numbers are trained for these core building trades over the past 20
years can only be described as abysmal. The evidence is clearly
seen and understood by all in the building industry.
Currently builders provide over £140,000,000 per annum in levy
payments to the Construction Industry Training Board (CITB) and the
CITB provides part funding for training of 40,000 people in a very
wide number of trades but only 9000 in the core trades. (600
bricklayers, 4000 carpenters and joiners, 700 plasterers, 800
roofers, 3000 painters and decorators). The CITB has no remit to
fund the training of plumbers and heating engineers. It does
however part fund the training of many other non-core trades where
many of the benefiting employers do not contribute to the CITB
levy. Many builders employ plumbers and heating engineers and pay
the CITB levy but do not benefit from the part funding of training
of these trades.
As a direct result of the
failure of the CITB to address core craft training a number of
independent craft training centres have been established offering
to train applicants, for a substantial fee, in a City and Guilds
curriculum leading to the award by them of a suitable NVQ in the
chosen craft.
The problem with this type of training is that the applicant having
paid a substantial amount of money must find full time employment
with a suitable building company in order that the trainee can
demonstrate their competence. This on-site training and experience
particularly in the plumbing and heating discipline often takes two
to three years.
There are a few well-meaning
building contractors who provide opportunities for young people but
the numbers are totally inadequate.
The core building trades are: carpenters and joiners,
bricklayers, plumbers and heating engineers, painters and
decorators, plasterers and roofers. The failure to make craft
training facilities available to young people from the age of 15 is
an indictment of previous and the present government. Education
policies have let down thousands of now unemployed people and it
seems that the present administration has no plans to rectify the
situation.
The Guild of Builders and
Contractors are conducting further research into the activities and
performance of the Construction Industry Training Board and Gas
Safe. Results and comment will be the subject of future blogs.
1 comment(s)
Unannounced site visits from the HSE
14 February 2011 by Administrator
The HSE have announced that from the 14th February 2011 they
will be commencing a three month campaign of unannounced visits
focusing on working at height, asbestos exposure and site
order.
They are looking to target refurbishment projects in particular
as statistics have shown that this area is lagging behind others in
making improvements to reduce the number of accidents.
1 comment(s)
Subscriptions by Credit Card
17 January 2011 by Administrator
We are pleased to confirm that
subscriptions and other payments due to the Guild can now be made
by credit/debit card through a secure payment system by telephoning
the Membership Secretary. You will need to know your membership
number and have your credit card available.
0 comment(s)