You Say from Mark Mitchell, Chairman, Cornwall Group:
The budget has created a challenge for industry. The increase in the National Minimum Wage and National Insurance, will cost employers on average £2,000 per employee.
That’s a big lump sum but what’s more damaging is the lack of notice. We plan 12, 18, 36-months ahead. We make projections and we plan development and investment strategies based on them.
Six-months’ notice on such a significant cost-change to our business model, makes those projections worthless.
Costing our Group around £750,000 additional overhead a year is a significant challenge, we would have shaped our investment strategy accordingly. Would we still have invested £3m in new machinery this year? We might – but we would have preferred to do it with an understanding of our hand.
Six-months is simply not enough time to do that, particularly in a still challenging market. Things remained slow at the end of last year and the start of this.
We don’t expect Government to ride to the rescue of industry. The private sector is tenacious – but we don’t expect Government to pull the from under.
The chancellor is unlikely to turn things back on the NMW, but it – and the Bank of England – can take action to support it going forward. UK inflation remains above target, but economic growth remains significantly below it.
We need the Bank of England to lower the base rate to ease pressure on households and get the housing sector moving, if we are to see a meaningful change in home improvement and construction markets this year.
The other quick win that Government could deliver for business would be a cut in business rates. We’re a landlord and a tenant. We talk to people who are now paying more in business rates each month, than they are in rent. That simply cannot be right, and reform is needed.
The third change is meaningful investment in construction apprenticeships. Government has disincentivised the sector to invest and the skills crisis will hold back any ambitions it has to build 300,000 new homes a year.
If things don’t change and the market remains supressed, then the industry should prepare for casualties, particularly from April.
We will continue to focus on sustainable growth, invest and remain open-minded about future acquisitions – but government must recognise its potential to influence the private sector, for worse, or for good.
