Construction leaders looking to Brown for a lift from the Budget

Building industry leaders yesterday called on Gordon Brown, the Chancellor of the Exchequer, to use this year's Budget to expand the Private Finance Initiative and training programmes and abolish the landfill tax. Michael Harrison looks at the first of the many business submissions that will hit the Chancellor's desk over the next two months.

In its annual Budget representation, the Construction Confederation warned that the recovery in the industry remained patchy with growth likely to slow next year unless action was taken to stimulate demand.

The confederation urged the Chancellor to channel more capital receipts into the PFI to generate work where there was spare capacity and restore the cuts in training funds for 18- to 24-year-olds to bolster the industry's skills base.

It also called for a reduction in VAT on renovations and housing alterations, an extension of capital allowances to all commercial buildings, and a review of Capital Gains Tax.

Ian Deslandes, the confederation's chief executive, said: "Whilst continuing growth in construction output is expected in 1998 and 1999, the latest forecasts suggest that growth will be slower than previously anticipated. This is disturbing given the clear need for improvements to the nation's environment."

He added that, in light of the marked differences in output between different regions of the country and even different firms operating in the same area, it was essential that the Budget did not jeopardise what remained a patchy recovery.

Calling for a review of the landfill tax, the confederation argued that it had not worked in the way intended and had triggered a 75 per cent increase in fly-tipping. The confederation represents an industry accounting for more than 5 per cent of national output and employing 1.4 million people.

The confederation's latest trade survey revealed a marked slowdown in output in the third quarter of last year. The survey reported a balance of 14 per cent of companies reporting higher growth between July and September - down on the level in the previous quarter. Housing output in the public sector fell by 2 per cent during the quarter compared with a year ago while output in new public sector construction projects fell by 19 per cent compared with the same period a year earlier.

Figures published yesterday by the Government show that housebuilding remains static, with 14,000 new starts in November 1997 - the same as a year ago. Meanwhile, the number of new homes completed fell from 15,700 to 15,200.

The confederation said business optimism remained buoyant over the next 12 months with 54 per cent of firms projecting higher growth. But this masks wide regional variations with Scotland, for instance, expected to continue falling deeply.

A balance of 26 per cent of companies expect to take on more labour but an increasing number are reporting skills shortages - hence the call for more training programmes.