CPA Bulletin

24 CPA Bulletin > February 2023 www.cpa.uk.net This time last year, we were looking forwards to the end of COVID restrictions and a return to some form of normality as a country. Clearly, as I outlined in my last column for the November 2022 issue of the CPA Bulletin where I looked at the challenges facing the new prime minister (Going for Growth? The Challenges Facing Prime Minister Sunak), this was premature. If 2022 was the year of three Prime Ministers, four Chancellors, at least three Business Secretaries of State and probably the same number of Construction Ministers, alongside the escalation of conflict on mainland Europe and the subsequent impact on oil prices with the loss the red diesel rebate at the same time, what can we expect this year? All the current economic indicators suggest that the UK economy is now in recession, with business investment levels worse than the Office of National Statistics (ONS) first thought back in Q3 of 2022. The prevailing view is that while the UK’s recession is expected to last throughout 2023 and into 2024, it will be relatively shallow, rather than one which sees deep falls in economic growth. Although inflation is expected to have peaked already, its impact will still be felt across the economy, with limited real wage growth, impacted further by interest rates which remain historically high when compared to the last 15 years. The Prime Minister in his January speech, pledged to halve inflation, grow the economy and develop a more innovative economy. Fine words but business needs to see how this will be achieved and when. For the construction sector, the wider economic picture for 2023 will unfortunately have some impact, either through confidence in the house building sector, or civil engineering projects. This is despite construction showing far greater resilience in the period leading up to the end of 2022, actually outperforming the wider manufacturing and services sector through growth prospects and investment. For UK politics, stability, consistency and sustainability are the key watch words - both for the wider economy, but in particular, the construction sector. Having a Construction Minister that stays in post for a prolonged period, thereby recognising and getting to grips with the challenges our members face, will be a positive development. For too long the role has, for various reasons, been seen as an expendable one, where ministers stay for only a few months. This has to stop. As we have cited in the past and outlined at the CPA Conference in October 2022, construction is a driver for economic growth. Get the policy landscape right and it can create jobs, foster investment, showcase new innovations and technologies, develop new skills and act as a driver for exports. Yet, the industry remains fragile. Constant changes in the ministerial line up does little to restore the confidence of the industry or make our members believe the government is serious when it comes to working with construction. In December, the CPA wrote to the new Exchequer Secretary to the Treasury, James Cartlidge MP, reinforcing our concerns on the Government’s approach to diesel as a fuel for construction plant and low carbon alternative fuels, as well as addressing the misunderstandings that exist around the Super Deduction Allowance (SDA) and the need for a successor when the allowance ends at the end of March. We hope, by the time you read this, to have set up a meeting with the team at the Treasury, to discuss our concerns further, and highlight the impact losing the red diesel rebate has had on the industry. Alongside the rise in costs from the switch to white diesel, we know there continue to be concerns from some members on the switch to HVO, its availability and sustainability, the availability of new construction plant and shortages in spare parts. All of these issues are set to remain and impact on operations throughout the year. While no one could predict the war in Ukraine and its subsequent impact on global oil prices when the Treasury first proposed changes to the status of red diesel almost three years ago, we need an honest and open debate about the role of diesel in construction. While the industry, working with manufacturers, is making great strides in lowering emissions and developing low carbon alternatives to diesel, this work will take time to come to fruition. While a host of private and public sector sponsored projects on alternatives to diesel are being developed, we have to maintain a balance that enables the plant-hire sector to remain profitable and can operate in a sustainable way, while also lowering emissions and the impact POLICY: 1 POLICY 2023 - A year of challenges and opportunities for our sector If the last three years have taught the business community anything, it is to plan for the unexpected, demonstrate resilience, and do the very best they can for their customers and clients. The plant-hire industry has demonstrated these traits each and every day.