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.”
Welsh Government confirms vacant land tax plan
THE WELSH GOVERNMENT will put forward the vacant land tax idea to test the Wales Act 2014 powers, Cabinet Secretary for Finance Mark Drakeford has announced.
The Cabinet Secretary will set out the next steps for proposing a new Welsh tax as part of the tax policy work plan for 2018.
Since announcing a shortlist of 4 new tax ideas alongside the draft Budget in October, the Welsh Government has been examining the case for each of these.
The 4 tax ideas were: a social care levy, a vacant land tax, a disposable plastics tax and a tourism tax.
Although the vacant land tax idea will be used to test the Wales Act powers, work will also continue on each of the other 3 tax ideas.
The decision to take forward the vacant land tax idea follows engagement with stakeholder organisations, the public and across government.
A vacant land tax has been chosen both because it could help to incentivise more timely development, and because it could help prevent dereliction and aid regeneration.
Professor Drakeford said: “Housing is a priority for the Welsh Government. A tax on vacant land could prevent the practice of land banking and land not being developed within the expected timescales.
“The Republic of Ireland vacant sites levy provides a useful starting point for how a vacant land tax could work in Wales.
“The existing model in the Republic of Ireland and the relatively narrow focus of the tax make this the most suitable of the 4 shortlisted ideas to test the Wales Act.”
The Irish measure, announced in their government’s 2018 Budget, will mean that any owner of a vacant site on the register who does not develop their land in 2018 will pay the 3% levy in 2019 and then become liable to the increased rate of 7% from 1 January 2019.
If land owners continue to hoard land in 2019, they will pay 7% in 2020.
When the Welsh Government announced it was considering such a measure in October 2017, before the UK Government said it was considering a similar plan, the House Builders’ Federation raised the spectre of developers decamping en masse to England with their large projects. That threat, such as it was, has receded but the Federation of Master Builders is still concerned.
Speaking to BBC Wales, Ifan Glyn of FMB Cymru said: “If there’s a tax that’s introduced that can focus solely on land banking for financial reasons to maximise profits, we would absolutely agree with that.
“Our issue is we don’t see how this tax can differentiate between land that’s been banked for financial reasons and land that isn’t being developed or stalling for reasons outside the developer’s control.”
A further wrinkle in the system was identified by Dr John McCartney, Director of Research at Savills Ireland.
Speaking about what were then only proposals by the Irish Government to impose the vacant site levy, he said that increasing the vacant site levy to 7% could amplify “boom-and-bust cycles” in the construction sector.
Dr McCartney said that land is a raw material for developers and it is natural for them to carry a stock of development land.
“No developer will now carry a land-bank in a slow market. This means when a recovery follows developers will spend the early years on site assembly rather than the house building they could and should be doing,” he explained.
Responding to the announcement, the Welsh Conservative Shadow Finance spokesperson, Nick Ramsay AM said: “From the outset, Welsh Conservatives have opposed the ludicrous proposal for a tourism tax in Wales, one which would cause serious harm to businesses across the country.
“While we are pleased the Welsh Government has listened to us and decided against taking this idea forward, once the mechanism has been tested, we would not expect the Labour Government to return to the table with this proposal, one which has been widely criticised by the industry.
“Our vigorous campaign will continue until Labour’s Finance Secretary consigns this ludicrous proposal to where it belongs: the bin.”
Commenting on the decision to bring forward a potential vacant land tax, Mr Ramsay added: “On the surface, we welcome the fact that, as in England, the Welsh Government is exploring the viability of a vacant land tax but we await the full details of this proposal from the Finance Secretary.
“However, an important distinction must be made between land held for legitimate technical reasons such as detailed planning or a lack of skills and materials, and land which is held for purely commercial speculation.
“Speculation distorts the main purpose of releasing land for much needed development and it will be vitally important to fully consult with the sector to ensure the right balance is struck.”
New row over Circuit of Wales
THE WELSH Government has been accused of leading Circuit of Wales promoters ‘up the garden path’ by UKIP Leader Neil Hamilton.
Mr Hamilton’s words followed the revelation that the Welsh Government were not prepared to offer the level of guarantee which it had told the Heads of the Valley Development Corporation it would consider.
In evidence before the Welsh Assembly’s Public Accounts Committee on Monday, the Permanent Secretary to the Welsh Government told surprised AMs that the amount of the guarantee the Welsh Government was actually prepared to consider offering was under one half of that it had told the company it would consider.
In addition, under stiff questioning from Adam Price AM and Neil Hamilton, it emerged that the Welsh Government had ignored advice from the UK Treasury to seek advice from the UK Government infrastructure advisory service and had also failed to tell the company of its bottom line position.
The cross examination of two of the Welsh Government’s most senior civil servants also uncovered that the Welsh Treasury, despite ample notice of the evidence session, were unable to answer the most basic of questions – such as whether officials advising the Welsh Government were aware that the Welsh Government’s guarantees only came into play on completion of the project and whether or not officials handling the project for the Welsh Government had told the Heads of the Valleys Corporation about its changed position on the guarantee.
And the matter was made no clearer by questions directed to the Welsh Government’s Economy and Infrastructure Secretary, Ken Skates on Wednesday (Feb 7). Despite two days having elapsed since senior officials had fobbed off Adam Price and Neil Hamilton with a promise to provide the answers to questions they had failed to address, Mr Skates found himself in the identical position – kicking the can further down the road in the direction of civil servants in Mark Drakeford’s Finance Department.
In addition, despite holding out hope last year that a re-tooled project could receive support in the future, Mr Skates rather firmly closed the door on any prospect of the Welsh Government becoming involved in any racing circuit development.
The lack of preparation in response to questions for which both civil servants and Mr Skates should have been prepared is, perhaps, startling. It would certainly be unfair to suggest that neither civil servants nor Mr Skates wanted to give a straight answer to a straight question because they did not fancy the row that might follow.
Following Mr Skates’ performance, Mr Hamilton said: “Now we know the Labour Government never intended to give the kiss of life to this visionary scheme and transform the poorest part of Wales. They deceived the Circuit’s promoters into spending millions on a finance package that never had a chance of success.
“They deceived the voters of Blaenau Gwent and the northern valleys in last year’s General Election by delaying until after polling day the announcement of their decision to pull the plug.”
Mr Hamilton continued: “Welsh Government constantly moved the goalposts on their proposed guarantee. First, they told the Circuit they wouldn’t guarantee more than 80% of total project costs. That was reduced to 50% but, in truth, they were never prepared to guarantee more than 25%. Their deception is a major scandal. £9.3 million of Welsh taxpayers’ money was wasted because of the Government’s bad faith in negotiations. Worse still, was encouraging false hopes of economic revival in the heads of the valleys only to dash them after the General Election votes were counted.
“Labour politicians should hang their heads in shame and voters should take revenge on these cynics at the next election. UKIP will continue to fight to get the Circuit back on the road. We will fight for the true interests of working people against a Labour Party which has lost touch completely with its roots.”
Regional Tourism Awards winners annnounced
THE NAMES of the Regional Winners for the National Tourism Awards for Wales have been revealed.
Having received more than 400 nominations for the 2018 National Tourism Awards for Wales, 44 businesses have been selected as regional winners which will now make up the finalists list for the National Tourism Awards (external link).
Tourism Minister Lord Elis-Thomas, said: “I’m delighted that we can announce our regional winners today – who are all to be congratulated for making it to the final. We have seen an exceptionally high standard of entries this year – who all showcase the best of Wales’ tourism businesses and I look forward to celebrating the industry’s achievements at the National Tourism Awards at the Celtic Manor Resort next month.”
Celtic Manor Resort Chief Executive Ian Edwards said: “We are delighted to be hosting the 2018 National Tourism Awards for Wales and look forward to a fantastic evening celebrating the best of Welsh tourism. We congratulate all the regional winners and finalists and wish them the best of luck for the national awards ceremony which takes place here at Celtic Manor. We were very pleased to win the Gold Award for Best Business Tourism at the last National Tourism Awards for Wales and we know there will be many more worthy winners rewarded this year.”
North – Dunoon Hotel
Mid – Llangoed Hall Hotel
S. East – Hilton Cardiff
S. West – St Brides Spa Hotel
North – Manorhaus Llangollen
Mid – Caemorgan Mansion
S. East – The Greyhound Inn & Hotel
S. West – Roch Castle
BEST SELF CATERING
North – Gors-lŵyd Cottage
Mid – Plas Dinam Country House
S. East – Monmouthshire Cottages LLP
S. West – Basel Cottage Holidays
BEST CARAVAN, CAMPING, GLAMPING
North – Llanfair Hall
Mid – Cosy Under Canvas
S. East – Parkdean Resorts Trecco Bay
S. West – Celtic Holiday Parks
North – Zip World
Mid – King Arthur’s Labyrinth
S. East – Cardiff International White Water
S. West – Folly Farm
North – Always Aim High Events
Mid – want to canoe?
S. East – Loving Welsh Food
S. West – Pembrokeshire Falconry
North – Underneath the Arches
Mid – Green Man Festival
S. East – Visit Cardiff (UCLF’17)
S. West – Long Course Weekend
BEST PLACE TO EAT
North – Manorhaus Ruthin
Mid – Ynyshir Restaurant and Rooms
S. East – The Whitebrook Restaurant with Rooms
S. West – Beach House
North – Zip World
Mid – Brecon Beacons Tourism and Brecon Beacons National Park
S. East – Wye Valley and Forest of Dean Tourism
S. West – Fishguard Bay Welcome (FBW)
YOUNG TOURISM PERSON OF THE YEAR
North – Tommy Davies – Coed-Y-Glyn Log Cabins
Mid – Kathryn Colling – Cambria Tours Ltd / Hafan Epic Retreats Cyf
S. East – Rhiannon Art Ltd
S. West – Sarah Jones – National Trust
TOURISM BUSINESS INNOVATION AWARD
North – St George’s Hotel
Mid – Dragon UAV
S. East – The Blaenafon Cheddar Company Ltd
S. West – The Wildlife Trust of South and West Wales
The announcement of national winners will be at the Awards Ceremony on 8 March 2018.
Popular This Week
News1 week ago
Llangrannog: Dog rescued from cliffs reunited with owners
News2 weeks ago
Electric charging points to be installed at council offices
News2 weeks ago
Public litter picking events to be held in Ceredigion
News4 days ago
Richards-Keegan cleared of sending underage girl nude pictures
News1 week ago
‘Deeply troubled’ teen took own life
News6 days ago
Child sex offender will receive ‘considerable and lengthy’ prison sentence
News2 weeks ago
Paddle gates to be installed at public toilets
Sport5 days ago
Bow Street through to League Cup quarter finals