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Sat October 31 2020

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Government policy risks boost to construction black economy

22 Sep 10 The policies of the Coalition Government are hurting small builders and will push many construction workers towards the black economy, a leading trade body has warned.

The policies of the Coalition Government are hurting small builders and will push many construction workers towards the black economy, a leading trade body has warned.

Richard Diment, director general of the Federation of Master Builders (FMB), said that public spending cuts, abolition of regional housing targets, and the continual difficulties for first time buyers to secure a mortgage are risking the future of the building industry.

He said: “The Government’s big idea is that jobs lost in the public sector will be replaced by new job creation in the private sector. The problem is that public sector cuts are moving at a far greater pace than private sector jobs growth.

“These cuts are not just direct public sector jobs, but also at firms whose business is supplying the public sector. The public sector procures around 40% of all construction work and major cut backs will inevitably result in jobs being lost at private sector firms.” 

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Diment concluded: “The result of this is that many of those laid off from construction firms will end up in the informal economy undertaking ‘cash in hand’ work for rogue builders that defraud clients and put lives at risk by ignoring essential safety precautions.

“What is even more worrying is that the Government is set to make the informal economy problem even worse in January when VAT will rise to 20%. This will cost 7,500 jobs in the domestic repair and maintenance sector within a year, and the total cost to the economy of this policy could be as high as 34,000 jobs.”

Diment was speaking ahead of next month's spending review.

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