Along with many other business owners, I would like to see a road map for economic recovery and clear support from the Chancellor for businesses, giving them a chance to survive as we come out on the other side of this pandemic.
By the end of last year, the economy had shrunk by 9.9 per cent and as we sit and work from home, we have no certainty that the road map for a return to “normality” will work.
It is heavily based upon two factors: (1) the roll-out of the vaccine, which is succeeding, and (2) the general public abiding by the new rules, which is unclear given the current concerns that people are becoming “relaxed” after their first inoculation.
What we need is the economy to grow faster. The Treasury has indicated some understanding of this. Ahead of the Budget, the Treasury announced the mortgage guarantee scheme, not just allowing thousands of people to get on the housing ladder but an injection into the construction sector as hope of the housing market demand increases.
Having more houses built will, of course, have a huge impact on the developers and their supply chain, together with permanent construction jobs. Construction was one of the sectors that looked like it was doing ok at the end of last year, as was the housing market as a whole with the Government’s assistance in respect of stamp duty.
The construction industry, and specifically the housing sector, may also benefit from more changes the industry is seeing as a whole. The housing construction market is experiencing a movement towards producing homes in a quicker, efficient and easier way by using a system known as modular construction.
This involves building three-dimensional structures, which can be entire houses, off site in a factory. This cuts down on build time and weather complications or impact.
Modular construction can be a good solution when building several similar properties. If employed by construction companies, this could see an overall benefit to their profits.
There, however, is always a concern when talking about the construction industry and that concern still remains – the payment of the supply chain.
This is still an issue despite Build UK in its January 2021 report (covering July to December 2020) stating the average payment days were improving and had reduced by 10 days.
For now, I will take the good news that the construction industry specialising in housing could be seeing a boom which can create a number of jobs and help many small businesses within the sector. As society, public services and the economy rebuilds, the question is who can carry the heavy burden of the rebuilding and the deficit?
We are not the only country in this situation, and many are not choosing to increase taxes at this stage. Sixty-four per cent of all government revenue comes from Income Tax, VAT and National Insurance so I appreciate the desire for an increase. It is a quick and easy option but could be seen as premature.
The conversation about taxation needs to take place and what we need is a road map for this.
Let’s not choke businesses before they are let back into the economy. Let’s encourage sectors like we are seeing within construction. Let us grasp this opportunity to use our imagination and not just attempt to reboot, but rather reset, with a new vision of what the future can be.
By Rashmi Dube - Partner – Gunnercooke
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