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Costs rise but Welsh builders boom

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Survey results positive: FMB urgest caution on future threats

SMALL and medium-sized (SME) building firms in Wales enjoyed strong growth in the final quarter of 2017, according to the Federation of Master Builders (FMB) Cymru.

Key results from the FMB’s latest State of Trade Survey, which is the only quarterly assessment of the UK-wide SME construction sector, include:

  • The pace of growth among Welsh construction SMEs quickened in Q4 2017 compared with the previous quarter;
  • Fewer construction SMEs predict rising workloads in the coming three months, down from 41% in the previous quarter to 38% in Q4 2017;
  • 87% of builders believe that material prices will rise in the next six months, up from 82% in the previous quarter;
  • More than two-thirds (68%) of construction SMEs are struggling to hire bricklayers and 63% are struggling to hire carpenters and joiners;
  • Nearly two thirds (61%) of construction SMEs expect salaries and wages to increase in the next six months.

Ifan Glyn, Director of FMB Cymru, said: “Growth among Welsh construction SMEs has now risen for five consecutive quarters. Wales was the only home nation in the UK to experience a faster rate of growth in the final quarter of 2017 when compared to the three months to September. These results are particularly pleasing, and perhaps even surprising, given that rising costs and ever-worsening skills shortages continue to burden Welsh firms. However, there is certainly no room for complacency.

“The skills crisis is getting steadily worse and this is having a knock-on effect on rising salaries and costs. More than two thirds of construction SMEs are struggling to hire bricklayers and this has increased by nearly 10% compared with the three months leading up to September of 2017. The salaries for these scarce skilled tradespeople have rocketed. What’s more, almost 90% of firms believe that material prices will rise in the next six months and this, coupled with a rise in wages, will see firms’ margins squeezed.”

Glyn concluded: “The Welsh Government has set an ambitious target to build 20,000 affordable homes and while the results of the FMB’s research are mainly positive for Wales, it does expose these continuing threats which could undermine these plans. With Brexit on the horizon, we should be aware that the skills shortages could be exacerbated in the coming months.

“Although EU migrants only represent a small proportion of construction workers in Wales, we know that London is heavily reliant on these workers. Indeed, half of London’s construction workers were born outside of the UK.

“If London and the wider South East continue to suffer skills shortages, tradespeople from Wales may choose to work across the border after being tempted by the prospect of higher wages. It is therefore equally important for construction firms across the UK that the Westminster Government treads carefully and delivers a responsive and flexible immigration system to replace the free movement of people. Anything less will be a cause for alarm for the Welsh construction sector.”

The report was compiled by Experian and in Q4 2017, 338 construction SMEs responded to the survey. The results reflect balances – ie the number of firms reporting a rise in workload against the number of firms showing no change or a fall. This gives a qualitative, as opposed to quantitative, overview.

Experian offers this explanation: “Balances reflect the percentage of responses reporting higher workloads against those reporting lower workloads. In some cases, though the chart suggests activity has fallen strongly, a large proportion of respondents indicated there had been no change in workloads compared with the previous quarter.”

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MP makes Budget case for support for self-employed and small businesses in Ceredigion

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BEN LAKE MP has called on Chancellor Rishi Sunak to extend the government’s financial support package for businesses and self-employed workers in next week’s Budget as many struggle to stay afloat during continued lockdown restrictions. 

The Chancellor, Rishi Sunak is to set out the UK Government’s budget on Wednesday 3 March, almost a year since the last Budget on 11 March 2020. 

To help businesses and our local high streets over coming months, the Ceredigion MP has called on the Chancellor to extend the lowered rate of VAT at 5% for hospitality and tourism for a year to March 2022 and to extend the business rates relief package. 

Mr Lake also called on the Chancellor to retain the furlough scheme for the duration of pandemic restrictions, as recent figures show more than 178,000* in Wales are still receiving government help from the CJRS. He also urged the Chancellor to expand the existing eligibility criteria for the Self-Employed Income Support Scheme in order to offer some help to the many individuals who have not received a penny in Government support thus far. 

Ben Lake MP said: “For many businesses and self-employed workers, the financial support government has offered over the last 12 months has been a lifeline. Now, as we are finally starting to see light at the end of the lockdown tunnel, we cannot remove this lifeline prematurely. Extending this help for a little longer, and expanding the criteria to help those that have been excluded thus far, would offer small businesses the support they require to ‘bounce back’ from the pandemic.” 

Many businesses who are still not open due to lockdown measures are also now expected to start repaying their Bounce Back Loans. This is despite their situation largely remaining unchanged since they took out the loan, or in some unfortunate instances, worsened as they have not yet been able to trade.  

UKHospitality has estimated that the hospitality sector lost around £72 billion in sales in 2020 and faces, frankly, a debt mountain, including £4.2 billion in state-backed loans.  

Mr Lake said:  “It is important that businesses that took out bounce back loans and CBILS are required to pay only when they are in a position to do so – once they have ‘bounced back’ from the pandemic. Affording such a level of flexibility, and thus preventing avoidable business failures, would protect jobs, the taxpayer’s investment in the recovery, and the integrity of our financial system.

“We remain in the early stages of a vaccine-led recovery, and it is likely that we will have some form of restrictions for many months to come. Having done so much to protect the economy and the workforce, we must not withdraw support prematurely, as to do so would risk throwing away the investment taxpayers have made in the last year, and potentially our economic recovery.” 

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£3.8m to upgrade local gas network

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WALES & WEST UTILITIES says it is continuing its work to upgrade the gas pipes supplying homes and businesses across west Wales and has announced a £3.8 million investment programme for 2021.

The work, which will see 19km of gas pipe upgraded, not only keeps the gas flowing safely today, it also prepares the gas network to transport green gases like hydrogen and biomethane. Converting the existing safe and reliable gas network to run on green gas will help communities across Wales and south west England play their part in a green future and getting the UK to Net Zero.

Rob Long, Wales & West Utilities Chief Operating Officer, said: “While most of the gas network is underground and out of sight, it plays a central role in the daily lives of people across west Wales. Whether it’s heating your home, making the family dinner or having a hot bath, we understand how important it is for your gas supply to be safe and reliable and there when you need it.

“Our investment in local communities is essential to keep the gas flowing to local homes and businesses today, and to make sure the gas network is ready to transport hydrogen and biomethane, so we can all play our part in a green future.

“And it will make sure that we continue to support communities through Coronavirus, keeping the gas flowing so local people are safe and warm.”

Wales & West Utilities look after the pipes that keep the gas flowing to heat the homes and power businesses of 7.5m people across Wales and south west England. They operate the gas emergency service, connect new homes and businesses, and upgrade the gas network so it’s safe today and fit for a green future.

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Wales is moving in the right direction to ease coronavirus restrictions

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THE NUMBER of coronavirus patients being treated in Welsh hospitals is at the lowest for three months, Wales’ Health Minister Vaughan Gething has revealed at a briefing today (Feb 8).

The R number is below one, it was confirmed – the most recent estimate from SAGE is that R is between 0.7 and 0.9 in Wales.

He also confirmed that the latest figures show the testing positivity rate has fallen in Wales below 10%, which means Wales could soon be moving is from alert level 4 to alert level 3.

Mr Gething said: “There are some encouraging signs that the number of people needing hospital treatment for coronavirus is starting to fall.

“The number of people with confirmed Covid in our hospitals is at the lowest since 8 November and we have also seen a reduction in the number of people with coronavirus needing intensive care.

“Overall, we are seeing cases of coronavirus fall. Monday’s figures show there are around 115 cases of coronavirus per 100,000 people in Wales.

“But this varies widely across Wales.

In Wrexham, rates are above 220 cases per 100,000 people, although this is falling. In Ceredigion, the rate has risen over the last seven days to 56 cases per 100,000 people. “The positivity rate – this is the percentage of tests, which return a positive result every day – is also falling. It now stands at just below 10%.

“This is still high, but it’s a lot lower than the very high rates we were seeing before Christmas, when we had overall rates of more than 650 cases of coronavirus per 100,000 people and a positivity rate of more than 25%.”

BAM communities hesitant to get vaccines

Concerns have been growing in recent weeks about an apparent hesitancy from some people in black, Asian, and minority ethnic (BAME) communities to have the Covid-19 vaccine. Which is why Mr Gething also told the briefing that work was being done to counter some of the misinformation about the vaccine, which is common among some groups and communities.

He said that Welsh Government was closely monitoring vaccine uptake to make sure there are no barriers to take-up.

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