Builders blame SNP over slump in industry

BUILDERS have blamed Scottish Government tax rises for crippling the industry, triggering the worst slump in almost three decades.

The collapse raises fresh concerns about the economy and Nicola Sturgeon’s pre-election pledge of 50,000 new affordable homes to be built by 2021.

The building sector was worth £253million in the 12 months to March – less than half the £543million of the previous year.

The £46million output in the first three months of 2016 was the lowest since the first quarter of 1987, once inflation is taken into account.

The Scottish building and property federations, which released the figures yesterday, said Scottish Government changes to tax relief on empty properties had triggered the slowdown. Previously, properties received 100 per cent relief from business rates as long as they were empty – now this only applies to the first six months.

David Melhuish, director of the Scottish Property Federation, said: ‘The recent figures for new construction orders for the industrial sector are a major concern.

‘The consequence for the development sector of paying 90 per cent rates soon after a building comes to market is that cash flow is hit, adding substantial risk for the investor and deterring projects or reducing their scale.’

Vaughan Hart, managing director of the Scottish Building Federation, said: ‘We’ve raised concerns for some time about an over-reliance by the Scottish construction industry on major infrastructure projects.

‘These new figures suggest changes to rates relief are having a major impact on output.

‘We fully support industry calls to reverse the new policy on rates relief so the industrial property market can recover, generating more new work for our members.’

During the election campaign, Miss Sturgeon pledged to build 50,000 new affordable homes by the end of the new parliament. Previously, the Scottish Government had attempted to ease the housing crisis by renovating empty properties.

The news is bad for the wider economy, as a strong construction sector has softened the blow from the oil price crash.

Yesterday’s Institute for Pubfell lic Policy Research (IPPR) report revealed the number of jobs in the finance and insurance sector had fallen by almost 10 per cent in five years. It also exposed a ‘weaker recovery’ north of the Border.

Separately, the Bank of Scotland revealed that workforce numbers in the private sector for the sixth successive month in May.

IPPR Scotland found that, between 2010 and 2015, 118,000 new jobs had been created, but the recovery was weaker in Scotland than the UK as a whole. In 2007, Scottish employment was 73.9 per cent, with the UK on 72.4 per cent. In 2015, the Scottish rate was 73.1 per cent, but the UK rate was 73.5 per cent.

IPPR Scotland director Russell Gunson said: ‘This report shows that while Scotland has seen a jobs recovery in recent years, there are real concerns ahead. Reform is required to make sure the skills system in Scotland is focused on the needs of the economy.’

Scottish Tory finance spokesman Murdo Fraser said: ‘The Scottish Government is being told by the industry in no uncertain terms that the policy choices it made are damaging construction. Ministers have to take that message on board and make the changes needed.

‘It’s not the first anti-business measure the SNP has devised and it doesn’t appear to be the last either. The result is a blow for the economy.’

A Scottish Government spokesman said: ‘Business rates relief for empty industrial property remains more generous in Scotland than in the rest of the UK, despite the Scottish Government having to take some tough decisions as a result of the UK Government’s cuts to our budget.

‘One of those was to reduce levels of empty property rates relief from April 1, to generate revenue. We have also committed to review the rates system.’

Comment – Page 14

‘A major impact on output’