Costs threaten building recovery

Rising material costs and wages will force building companies to put up their prices


INCREASES in material and labour costs could pose a serious threat to the fragile recovery in the building industry in Scotland, warns the Federation of Master Builders (FMB).

The FMB’s latest State of Trade Survey of member firms shows the net balance for workloads, expected workloads and enquiries in the third quarter of 2013 was positive across nearly all parts of the UK for the second quarter in a row. Scotland experienced the fastest overall increase of all the devolved nations, seeing an increase of 23 percentage points, but on the back of two successive quarters of very poor results, the overall balance remains negative north of the Border, at -3 percent. Material costs, wages and salaries are all expected to continue rising over the next six months, with the result that many building companies may have to put up their prices.
Grahame Barn of FMB Scotland said: “The survey results are promising for Scottish builders, but there is still a significant amount of work to do. Scottish builders have suffered from the worst effects of the economic crisis. They have been drowning in red tape, have had to cut back on employees, worry about their families’ financial security, and are rightly concerned about the future. With the recovery on the horizon, Scottish builders need every confidence that it will continue.”
Barn continued: “We hope swift action by the Scottish Government enacting the Procurement Reform Bill will be a great boost to SME builders. Also welcomed is the Government’s plan for trial ‘project bank accounts’, which give SMEs a guarantee they will get their money on time when working on major public-sector projects. At a time of economic uncertainty, removing payment delays allows small businesses to take back control of their budget. This is essential if we want them to continue taking on new employees, planning for the future, and ensuring their business stays on a solid financial footing.”
Barn concluded: “There is also cause for concern among SME builders when policy measures such as the Green Deal are underperforming so badly. The Scottish builders that deliver new homes for our growing communities, who retrofit existing structures to build a greener Scotland, and who provide new jobs to fuel the recovery, are right to expect better.”