I wrote this before the election campaign when a Tory victory seemed likely. This issue of CFJ was due out on May 7, so you may now know the result unless it is a hung parliament (when uncertainty will reign). Flooring contractors may yet lament a Conservative administration committed to reducing the government debt by slashing spending. That is bad news for flooring firms that work in the construction industry which relies on public money.
I recall the election in 1979 of the Conservatives under Margaret Thatcher. She promised tax cuts and a change for the better after the bumbling Labour prime minister James Callaghan. But within weeks of her occupation of Downing Street Mrs Thatcher nearly doubled VAT to 15%, causing significant price hikes. So how high will VAT rise under Mr Cameron? Will it be 25% or a ‘modest’ 22.5%?
This time the Tories tried to ‘bribe’ voters by vowing not to raise national insurance, but remained coy about VAT. Paying to freeze NI will further curtail vital investment in schools, hospitals and infrastructure. This is a big blow to the construction industry, which had to sacrifice many thousands of skilled jobs during the recession. More than three million people (8% of the UK workforce), including many in flooring, rely on construction for their livelihoods.
Some in business believe its fine to decimate spending. Companies can simply lay off staff, but governments (i.e. you and I, the taxpayers) have to subsidise people on the dole and claiming benefits, which runs to many billions of pounds when unemployment is high.
Major construction companies depend on public sector clients for up to 75% of their revenue. With the recession it’s easy to forget that after 1997 when Labour was first elected, lucrative government contracts especially for refurbishment projects provided valuable work for flooring contractors. In contrast, for the nearly three decades the Conservatives were in power, schools and hospitals were starved of public sector cash.
It must be hoped that the new government (whatever its colour) embraces a recent study commissioned by the UK Contractors Group (UKCG), in partnership with the CBI. The report (Construction in the UK economy: The benefits of investment) shows that every £1 spent on construction increases GDP by £2.84, while stimulating economic growth elsewhere worth £1.84. Construction, it says, provides 28.5 jobs per £1m invested (40% more than manufacturing). Job creation is the big issue!
Mr Cameron makes out that he is an ‘enlightened’ Tory, but many in his party hark back to the old Conservative philosophy of the rich getting richer and sod the rest. Whether Mr Cameron prevails over his reactionary colleagues in the longer term remains to be seen.

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