Apprentice Wage Rates

Apprentice Wage Rates

Following the increase in the National Minimum Wage (NMW) rates from 1 April 2021, the Construction Industry Joint Council (CIJC) has confirmed that, where the pay rates for apprentices in the Working Rule Agreement do not align with the NMW, the NMW takes precedence and apprentices should paid in line with the latest NMW rates.

In last week’s newsletter we reported that the Minimum Wage Rate changes announced in the Budget came into force on the 1st April.  New rates of the National Living Wage (NLW) and National Minimum Wage (NMW) come into force on 1 April 2021. These follow recommendations made in the autumn by the Low Pay Commission (LPC). To mark the uprating, this report looks ahead at the implications of the incoming rates and the LPC’s remit for the year ahead.

The new NLW and NMW rates are set out below. The NLW now applies to all workers aged 23 and over. The previous age of eligibility was 25. This will come down again to 21 by 2024.

Previous rate Rate from April 2021 Increase
National Living Wage £8.72 £8.91 2.2%
21-22 Year Old Rate £8.20 £8.36 2.0%
18-20 Year Old Rate £6.45 £6.56 1.7%
16-17 Year Old Rate £4.55 £4.62 1.5%
Apprentice Rate £4.15 £4.30 3.6%
Accommodation Offset £8.20 £8.36 2.0%

These increases mark the first step on the path to the Government’s target of an NLW set at two-thirds of median earnings by 2024. This report sets out the latest pathway to that target, based on projections of average pay growth. We are currently consulting on the NLW and NMW rates to be introduced from April 2022.

More information on the NLW and NMW is available here
Visit the FIS Employment Toolkit here

COVID-19: Employer Testing Duty and Self Isolation Rules

COVID-19: Employer Testing Duty and Self Isolation Rules

If you are an employer that requires staff to travel regularly across UK borders, you must take reasonable steps to facilitate your employees to take tests.

To help protect the country from coronavirus (COVID-19), there are testing regimes in place for those who travel regularly across UK borders. If you are an employer that fulfils the following definition, then you must take reasonable steps to facilitate the taking of tests by your employees:

  • you employ more than 50 employees, of which some or all are required to take workforce tests, including agency workers you are responsible for
  • your employees are required to complete testing after international travel

As an employer your ‘reasonable steps’ to facilitate the taking of tests might be:

  • establishing workplace coronavirus (COVID-19) testing or providing your employee with home testing
  • supporting access and signposting employees to testing outside of the workplace

Remember:   A key consideration for any policy is that if you get a positive lateral flow test (LFT) which is confirmed by a positive PCR test, LFT testing will not be effective for 90 days after you have tested positive so you must not use the tests during this period.

For more information on defining “reasonable steps” click here
BuildUK has set up a guide to help set up and run a workplace testing site
BuildUK has also produced a helpful flow-chart around what to do if a worker needs to self isolate

Visit the FIS COVID-19 Hub here

New COVID Recovery Loan Scheme Launches

New COVID Recovery Loan Scheme Launches

A new government-backed loan scheme was launched on Tuesday 6 April by the Chancellor of the Exchequer, to provide additional finance to those businesses that need it.

  • Loans will include 80% government guarantee and interest rate cap.
  • The Recovery Loan Scheme will ensure businesses continue to benefit from Government-guaranteed finance throughout 2021-opened until 31 December 2021.
  • The Recovery Loan Scheme can be used as an additional loan on top of support received from the emergency schemes – such as the Bounce Back Loan Scheme and Coronavirus Business Interruption Loan Scheme – put into place last year.
  • From 6 April, businesses – ranging from coffee shops, and restaurants, to hairdressers and gyms – can access loans varying in size from £25,000, up to a maximum of £10 million. Invoice and asset finance is available from £1,000.

You can read the Chancellor of the Exchequer’s statement in full here.

  • For more information on what other financial support you can get for your business, click here
  • For the latest COVID updates visit the FIS COVID-19 Hub here
FIS gathering data on immigration and potential labour shortages

FIS gathering data on immigration and potential labour shortages

To support ongoing engagement with the Home Office and the wider sector FIS is tracking the impact of changes to the labour market.

FIS has repeatedly raised concerns that interior systems installers (dryliners, ceiling fixers, partitions installers etc) have not been included as an eligible occupation for the skilled worker route in the new UK Points Based Immigration System and that no construction workers have been included on the shortage occupation list.  This omission means that from the 1st July, if an EU worker (excluding Ireland) has not applied to work in the UK through the Settlement Scheme, they will not be eligible to work.

Across the sector, at the start of 2020, it is estimated that the workforce relied on some 40% of trade operatives from the EU.  As a consequence of these changes, the annual recruitment target for UK national has doubled, putting huge strain on the training infrastructure (particularly against the background of COVID-19) and for every 5% of EU workers that opt not to return to work in the UK or continue working in the the UK beyond the 1st July we see this target double again.

With reports of Labour Shortages already as things start to pick up in 2021, we are calling on companies in the sector to complete our short market survey.

 

Minister for Construction among proposals in Forum manifesto

Minister for Construction among proposals in Forum manifesto

In an unprecedented show of co-operation, commitment and collaboration, the construction industry in Scotland has come together to issue its first-ever manifesto detailing the crucial steps which need to be taken to secure a viable and sustainable future for the sector.

Acting through the CICV Forum, a comprehensive range of trade associations, professional bodies, companies and individuals have signed up to the manifesto’s proposals.

First among the proposals, published in the run-up to the Scottish Government elections in May, is a plea for a dedicated Government Minister for the construction industry, which would recognise its importance both to the recovery and to a net zero-carbon future.

As well as a Minister for Construction, the manifesto proposes:

  • A Chief Construction Adviser who would support the Minister and focus on delivery aligned with whole asset performance
  • The development of an effective public sector maintenance and improvement programme
  • The establishment of a VAT reimbursement fund for home repair and maintenance with a role for the Scottish National Infrastructure Bank
  • Investment in affordable homes
  • Development of the skills arena
  • The introduction of a cycle network within the infrastructure investment plan
  • The encouragement of conflict avoidance.

The Forum points out that 175,000 people, including 10,000 apprentices, work directly in the sector in Scotland – 10% of the total workforce. It also contributes £21.5 billion to the country’s GDP and is a major economic multiplier, generating £2.94 for every £1 spent.

Hew Edgar, Associate Director of Policy at the Chartered Institute of Building (CIOB), and Chair of the Forum’s Future Planning sub-group, said: “This manifesto is a declaration of intent, emerging from the environment of collaboration and co-operation which the CICV Forum has fostered during the COVID-19 pandemic.

“This is the industry speaking with one voice, with an aim to benefit the future health, wealth and wellbeing of the country.”

The manifesto is also designed to support the next government’s plans to meet Scotland’s ambitious targets on net zero, reduced energy use, decarbonisation, climate change, and other principal policy objectives around accessible, sustainable places and inclusive economic growth.

And Mr Edgar added: “In offering these proposed policy initiatives, the CICV Forum and its members demonstrate that they will continue to engage positively with the next Scottish Government, representatives in Holyrood and the wider sector to provide intelligence, best practice and advice.”

Iain McIlwee CEO at FIS responded “It is great to work with colleagues in Scotland through the CICV and present this coherent document to the now Scottish Government and have it ready to continue the debate when the new Government forms in the summer”.

The manifesto is the latest initiative from the CICV Forum, which was established last March to protect and guide the industry through the ravages of the pandemic,

Made up of trade associations, private companies and professional bodies, it has drawn on the collective expertise of its members to maintain a steady supply of information and practical advice to the sector.

  • Download the manifesto here.
FIS Signs the RICS Conflict Avoidance Pledge

FIS Signs the RICS Conflict Avoidance Pledge

FIS has joined other leading construction groups in signing the RICS Conflict Avoidance Pledge.  Commenting on the signing, FIS CEO, Iain McIlwee stated:

“Signing the pledge underpins our commitment to creating a better environment for our supply chain.  It isn’t rocket science, in fact it underpins many of the values we expect of the FIS community and were instilled in me by my Mum!  The Pledge is about creating and maintaining good business relationships, and dealing with problems early and amicably and working collaboratively to ensure projects are delivered on time, on budget and without the need to waste huge amounts of money on legal disputes.

The construction industry spends around 1.6% of its total expenditure in the UK on legal services, which compares unfavourably to the UK economy’s median spend of 0.8%.  This is because we have created an adversarial environment built on win lose contract negotiations.  We have made the contract more important than the project – we have even started calling ourselves contractors rather than constructors!  We need to consign this 20th Century thinking to the past as it stands in the way of progress and undermines attempts to drive up quality and reduce waste.  The RICS Avoidance Pledge and corresponding Conflict Avoidance Process (CAP) are part of an industry wide commitment to change this and we are eager to support and encourage others in and around our community to do the same”.

Martin Burns, Head of Dispute Resolution Services (DRS), Research & Development at the RICS stated:

“It is great that we have leading trade bodies like FIS supporting the pledge and actively encouraging their members to sign and adhere to the terms laid out.  The culture in construction needs to change, but change will openly happen when enough people take that first step to being better and believe that others can and will change too.”

As part of signing, FIS is encouraging all members to sign the Conflict Avoidance Pledge and working with wide industry groups to ensure that the core principles are embedded in future editions of standard construction contracts.

We believe in collaborative working and the use of early intervention techniques throughout the supply chain, to try to resolve differences of opinion before they escalate into disputes.

Wording of the RICS Conflict Avoidance Pledge

We recognise the importance of embedding conflict avoidance mechanisms into projects with the aim of identifying, controlling and managing potential conflict, whilst preventing the need for formal, adversarial dispute resolution procedures. We commit our resources to embedding these into our projects.

We commit to working proactively to avoid conflict and to facilitate early resolution of potential disputes.

We commit to developing our capability in the early identification of potential disputes and in the use of conflict avoidance measures. We will promote the value of collaborative working to prevent issues developing into disputes.

We commit to work with our industry partners to identify, promote and utilise conflict avoidance mechanisms.

On signing the pledge an organisation will be listed on the Conflict Avoidance Directory as Bronze, Silver or Gold.

Bronze verified – This indicates that the individual, business or organisation is a signatory to the CA Pledge.

Silver verified – This indicates that the individual, business or organisation is a signatory to the CA Pledge AND has taken formal steps to incorporate policies to give effect to their commitment to avoiding and effectively managing disputes.

Gold verified – This indicates that the individual, business or organisation is a signatory to the CA Pledge AND has taken formal steps to incorporate policies to give effect to their commitment, conflict avoidance and dispute management procedures AND is actively engaging in such policies.

Visit the FIS Contractual and Legal Hub here

Guidance from BuildUK: Delivering On-Site Training

Guidance from BuildUK: Delivering On-Site Training

Following the reopening of schools and colleges on 8 March, the Department for Education (DfE) has confirmed that on‐site training can resume for students of all ages in the following further education (FE) settings if a provider follows the operational guidance:

• Sixth form colleges
• General FE colleges
Independent Training Providers (ITPs) ‐ defined as organisations that receive Education and Skills Funding Agency (ESFA) formula funding for the provision of 16 to 19 education
• Designated institutions
• Adult and Community Learning Providers (ACLPs)
• Special post‐16 institutions.

The National Construction Colleges in Bircham Newton (East) and Erith (South) are gradually reopening, with their apprentices due to return from 22 March. All FE providers should continue to follow pre‐COVID‐19 guidance for adult students and “judge the right balance between on‐site and remote delivery in order to provide high quality education and training”.

Apprenticeship providers should also read the current apprenticeships guidance, which confirms that FE apprentices may now return to training and assessment in educational settings, in addition to the training and assessment that is currently permitted in the workplace where the apprentice cannot work from home and the workplace is COVID‐19 secure.

There has not been any further guidance issued about resuming face‐to‐face training in the workplace. Companies will need to determine if any training required can be undertaken remotely or is essential at this time, as they may be required to explain how they are complying with the current ‘stay at home’ restrictions.

Construction Leadership Council Unveils First Sector-wide Construction Skills Plan

Construction Leadership Council Unveils First Sector-wide Construction Skills Plan

The Construction Leadership Council (CLC) today (Thursday 11 March) publishes the first sector-wide skills plan for construction, developed by Industry.

The Industry Skills Plan for the UK Construction Sector 2021-25 sets out the key skills challenges facing construction and how they will be tackled.  The plan sets out a series of clear actions and commitments for both industry and Government to help meet these challenges, grouped under the following four areas:

  • Careers
  • Standards and Qualifications
  • Training, Education and Development
  • Culture and Working Environment.

To improve the attractiveness of construction careers and access to them, a Talent View portal will be created, providing a one-stop-shop for new entrants and an industry standard for work experience will be put in place. In addition, up to 7,000 STEM Ambassadors will be encouraged to join the sector-specific Construction and Built Environment scheme, with a target of 1,700 fully supported by 2024.

A set of new construction traineeship programmes, and a pathway from Further Education into construction, will be developed in order to support and boost routes into the industry.

There will be a move to focus of competence by developing new competence frameworks. New training standards will be set in two areas: to support the drive towards Net Zero fossil fuel emissions; and for Smart Construction to develop digital and offsite construction skills.  The CLC also supports the drive towards increased direct employment. The plan supports Government mandates on direct employment through procurement.

Mark Reynolds, Group Chief Executive of Mace and CLC member, said: “This is the most ambitious and wide-ranging skills plan the construction sector has ever produced. It should have a far-reaching impact on how we attract, retain and develop people in construction and help deliver upon Government’s home-building and infrastructure plans.  “Many of the challenges we address in this plan will require a shared commitment over years, so the hard work starts now to deliver real and lasting change for the benefit of the whole sector.”

Commenting on the Plan FIS CEO, Iain McIlwee stated:  “There is some good thinking in the plan and, in the main, it is easy to support and uphold the principles it projects.  I do, however, have some concerns over the section on direct employment.  We would need to see drastic changes in procurement to enable businesses to employ more.  We maybe haven’t got the balance quite right, but with ridiculously short lead times, insufficient allowance in programmes and surge construction when the programme slips, flexibility is essential and that is before you look at the scale and geographic spread of projects in construction and the fact businesses are so easily cast aside in favour of a cheaper quote.

Employment is not the only way to ensure we have an engaged and evolving workforce, indeed the concept of employment has drastically changed in recent times with key tipping points like the introduction of CIS and the death of the final salary pension scheme changing the landscape .  We need to be careful of falling into the trap that PAYE is the only way and it was better because we used to employ everybody.  I am not convinced construction ever did in the conventional sense (remember the cards?) and there are areas like Health and Safety where we have been able to show marked success.  I think we should bring some academic rigour to this part of the plan to better understand the balance and impact on productivity and quality by utilising a freelance contingent and ensure that procurement focusses on how we respect, invest in, manage the competence of and supervise individuals rather than simply how we employ people.”

The plan sets out a series of clear actions and commitments for both industry and Government to help meet these challenges, grouped under the following four areas: Careers; Standards and Qualifications; Training, Education and Development; and Culture and Working Environment.  Commitments include:

  • Creating Talent View, a one-stop-shop portal for new entrants
  • Recruiting 7,000 construction STEM Ambassadors
  • Developing an industry standard for work experience
  • Producing competence frameworks
  • New training standards for Net Zero and Smart Construction
  • A pledge to promote direct employment

Details of how to get involved in these commitments will follow in the coming weeks.

 

COVID-19: Preparing for spot checks

COVID-19: Preparing for spot checks

During the COVID-19 pandemic, businesses have been encouraged to follow government guidance and ensure workplaces are COVID-19 secure.  As the regulator, the Health & Safety Executive (HSE) is tasked with enforcing these measures and has been visiting workplaces to confirm that they are in place. Your premises may therefore be visited by contractors working on behalf of the HSE.

These contractors will have appropriate ID and authorisation letters that empower them to undertake visits and spot checks. They should ask for someone in authority on site and will then ask questions from the list below.  This latest piece of guidance from the CICV (supported by FIS) is a handy checklist of questions to help businesses prepare for spot checks and health and safety inspections.

You can download the checklist here

Free rapid tests for all businesses for regular workplace testing

Free rapid tests for all businesses for regular workplace testing

All businesses in England are now able to sign up to the government’s free COVID-19 workplace testing programme.

As part of the government’s roadmap to cautiously lift restrictions, businesses of all sizes, including those with fewer than 50 employees, can register from today to order free lateral flow tests for their employees.

Around 1 in 3 people with coronavirus don’t have symptoms, which means they could be spreading the virus in workplaces without knowing. Rapid testing detects cases quickly – in under 30 minutes – meaning positive cases can isolate immediately, breaking chains of transmission.  Regular testing could be the difference between a workplace being able to stay open and operational, or needing to close due to a COVID-19 outbreak. It will form a crucial part of the government’s plan to gradually and safely ease restrictions as we get back to a more normal life.

So far over 3,500 businesses are signed up to offer workplace testing programmes, and over 14,000 have registered their interest in offering rapid testing, with many already rolling tests out.  Businesses have until 31 March to register for the government’s workplace testing scheme, which will remain free until the end of June. All those who can work from home should continue to do so.

Health Secretary Matt Hancock said:

Regular workplace testing is a vital part of our route back to normal life, which is why I’m very pleased that we’re now expanding our offer of free workplace testing to businesses of all sizes, including SMEs.

These rapid tests will allows positive cases of Covid-19 to be caught quickly, which is crucial in helping businesses protect their workplaces and employees as we cautiously lift restrictions.

I urge all businesses to register their interest in the programme before 31 March to help break chains of transmission and keep people safe.

Dr Susan Hopkins, COVID-19 Strategic Response Director to PHE and Chief Medical Adviser to NHS Test and Trace:

Around one in three people who have coronavirus never show any symptoms but may still be infectious. This means they could be spreading the virus without realising it.

Rapid testing can help detect asymptomatic cases quickly, preventing the virus from entering workplaces and stopping outbreaks before they occur.

Combined with other protective measures, rapid testing is a vital tool to help us lower infection rates and ensure that they stay low. If you’re offered a test, please do take it.

Alongside the roll out of the vaccination programme and following the ‘Hands, Face, Space’, regular testing is a vital tool to stop transmission as sections of society are reopened.

The expansion of asymptomatic testing is already well underway in larger companies for those who need to leave home for work. Both private and public sector employers have signed up to provide rapid testing at asymptomatic testing sites, along with a self-test option for those that cannot access a workplace testing site. This includes the UK’s largest employer – the NHS, those working in adult social care, education staff and a wide range of other sectors.

An online portal has been launched for businesses to find out more about offering rapid workplace testing. Businesses will be provided with all the information they need to plan and deliver their testing programme, along with promotional materials.

All local authorities in England are now offering rapid lateral flow testing for small businesses if they can’t offer rapid workplace testing. Businesses can find their local test site online.

Build UK has published a simple guide providing an overview of the LFD testing process and the steps required to set up a testing site.

Visit the FIS COVID-19 Hub here

FIS Signs Building a Safer Future Charter

FIS Signs Building a Safer Future Charter

Finishes and Interiors Sector has signed the Building a Safer Future Charter.  The Charter is designed to encourage a proactive response to Dame Judith Hackitt’s Building a Safer Future Review in the wake of the Grenfell Tower tragedy.  The Charter was originally conceived and created by a group of ‘Early Adopters’ comprising local authorities, contractors, housing associations and property developers, with the support of the Ministry of Housing, Communities and Local Government (MHCLG).

FIS CEO, Iain McIlwee stated:

“FIS has opted to become a Registered Signatory of the Building a Safer Future Charter in our own right and help encourage our members to do the same, because change isn’t just about what we do, but is absolutely about what we all can achieve together.  FIS has committed significant resource to a number of workstreams organised by Government and the Industry to support the structural and cultural change that will help us to realised a better and safer sector.  As part of this ongoing commitment it was a natural next step for FIS to sign the Building a Safer Future Charter.  We recognise change isn’t just about what we do as individual businesses or even as the Finishes and Interiors Sector Community, but how we collaborate more effectively with the widest possible construction sector.  Becoming a Registered Signatory it is about looking inward, listening and taking that next vital step towards delivering the culture and behavioural change required in relation to the Charter’s objectives around building safety.  In confirming our support as a Registered Signatory, we will now be working to ensure that we embed the principles of the Charter into our activities.”

To find out more about the Building a Safer Future Charter, click here

To mark the signing FIS is hosting a webinar on the 18 March at 12:30 with Amanda Long, CEO of Considerate Constructors Scheme who have been tasked with managing the Building a Safer Future Charter.  This complimentary webinar looks at the how the Building Safety Charter works and why companies in the Finishes and Interiors Sector should consider signing up.  Register to attend here.

 

 

 

 

FIS Budget Response – A Budget focussed on investment

FIS Budget Response – A Budget focussed on investment

Commenting on Today’s Budget, FIS CEO, Iain McIlwee stated:

Who’d have thought twelve months ago, the first Budget after leaving the EU would have no mention of Brexit!  Against the backdrop of COVID and uncertainty that still surrounds it did start to provide a vision for Building our Future Economy.

A Recovery built on investment is absolutely the right approach.

When we look to investment in people, the doubling of incentives to support businesses taking on apprenticeships is welcome, but it does not fully reflect the value that business delivers through apprentice schemes.  It would have been good to hear this go further and guarantee that the Apprenticeship Levy is ringfenced and adapted to support further investment in the infrastructure needed to deliver quality apprenticeships.  The focus on additional support for traineeships is also encouraging and we will be looking to ensure this is targeted at creating jobs in our sector.  It is crucial that we pull out all of the stops to support businesses here as the immigration policy has the potential to hamstrung parts of economy if  we do not effectively support the huge scaling up in training that is required to offset.

Extending and adapting the stamp duty holidays should ensure that the recovery in the housebuilding sector does not come to a hard stop and combined with mortgage guarantees supports continued investment.

It was encouraging for our sector to hear that the Chancellor used construction as the exemplar for investment in describing the new Super Deduction Scheme.  This scheme, which goes beyond full expensing and allows businesses to reduce their tax bill by 130% of the cost, sounds like a really positive move and we look forward to fully understanding the scope and type of investment that can be supported.  Announcements around this, carrying back business losses and the re-emphasis of the importance of R&D Tax credits help, with the time lag soften the blow of what on the surface are fairly steep increases in corporation tax.

The National Infrastructure Bank and focus on Regional Growth and Free Port areas again should encourage investment and reconfirms that Government is committed to investing in vital infrastructure.

It was also good to hear the intrinsic link being made between economic and environmental development, signified most clearly by incorporating environmental sustainability and the transition to net zero within the remit of the Bank of England.

My one real disappointment is that the Budget was silent on Building Safety Aspects and we still seem to be floundering around this issue that is very much at the core of how we look after people within our society, but it was also a shame that we did not get recognition of the cash impact of Reverse Charge VAT, an extension to the deferral scheme would have helped many businesses keep their head above water.  It is a shame too that, given the extended period of lockdown the Chancellor did not extend the interest free period on some of the loan packages (e.g. CBILS) that have supported businesses through this difficult period.

Full Budget Report: BUDGET 2021 PROTECTING THE JOBS AND LIVELIHOODS OF THE BRITISH PEOPLE

FIS Members: Read the CPA Response to the Spring Budget 2021 here

Transcript of the Chancellor’s speech below:

Coronavirus what was originally thought to be a temporary disruption to our way of life has fundamentally altered it. People are still being told to stay in their homes, businesses have been ordered to close. 1000s of people are in hospital much has changed. The one thing has stayed the same.

I said, I would do what it takes. I have done. And we have announced over 280, billion pounds of support. Protecting jobs, keeping businesses afloat, helping families get by.

Despite this unprecedented response.

Since March over 700,000 people have lost their jobs.

Our economy has shrunk by 10%, the largest fall in over 300 years. Our borrowing is the highest it has been outside of wartime.

It’s going to take this country. And the whole world. A long time to recover from this extraordinary economic situation.

But we will recover.

This budget to protect the jobs and livelihoods of the British people.

First, we will continue doing whatever it takes to support the British people and businesses through this moment of crisis. Second, once we are on the way to recovery. We will need to begin fixing the public finances. And I want to be honest today about our plans to do that. And third, in today’s budget. We begin the work of building our future economy.

Madam Deputy Speaker. Today’s forecasts show that our response to coronavirus is working. The Prime Minister last week set out our cautious irreversible roadmap to ease restrictions. Whilst protecting the British people.

The NHS deserving of immense praise has had extraordinary success in vaccinating more than 20 million people across the United Kingdom, and combined with our economic response. One of the most comprehensive and generous in the world. This means the office for budget responsibility on now forecasting in there was a swifter and more sustained recovery, and they expected in November.

The OBO now expect the economy to return to its pre COVID level by the middle of next year six months earlier than previously thought.

That means growth is faster. Unemployment lower wages higher investment higher household incomes higher.

But while our prospects are now stronger coronavirus has done, and is still doing profound damage.

And today’s forecasts made clear repairing the long term damage will take time to VR still expect this in five years time, because of coronavirus our economy will be 3% smaller than it would have been.

Before I share the detail of the OBL forecasts. Let me thank Richard Hughes, and his team for their work.

It will be our forecast that our economy will grow this year by 4% by 7.3% in 2022, then 1.7 1.6 and 1.7% in the last three years of the forecast.

And the OPR have said that our interventions to support jobs have worked in July last year, they expected, unemployment, to peak at 11.9%. Today, because of our interventions. They forecast, a much lower peak six and a half percent.

That means, 1.8, million fewer people are expected to be out of work than previously thought.

Every job lost, is a tragedy, which is why protecting creating and supporting jobs remains my highest priority.

So, madam Deputy Speaker let me turn straight away to the first part of this budgets plan to protect the jobs and livelihoods of the British people through the remaining phase of this crisis.

First, the furneaux scheme will be extended until the end of September for employees, there will be no change to the terms, they will continue to receive 80% of their salary for hours not work until the scheme, and as businesses reopen, we will ask them to contribute alongside the taxpayer to the cost of paying their employees.

Nothing will change until July, when we will ask for a small contribution of just 10% and 20%. In August, and September.

The government is proud of the furlough. One of the most generous schemes in the world, effectively protecting millions of people’s jobs.

Second, support for the self employed, will also continue until September, with a fourth grant covering the period February to April, and a fifth and final grant from May onwards. The fourth grant will provide three months of support at 80% of average trading profits for the fifth grant, people will continue to receive grants worth three months of average profits with the system, open for claims from late July.

But as the economy reopens over the summer, it is fair to target our support towards those most affected by the pandemic. So people whose turnover has fallen by 30%. We’ll continue to receive the full 80% grant.

People whose turnover has fallen by less than 30% will therefore have less need of taxpayer support, and will receive a 30% grant.

And I can also announce a major improvement in access to the self employed scheme.

When the scheme was launched the newly self employed. Couldn’t quantify because they hadn’t filed, the 1920 tax return. But as the tax return deadline has now passed. I can announce today that provided they filed a tax return by midnight last night. over 600,000, more people, many of whom became self employed last year, can now claim the fourth and fifth grants.

Over the course of this crisis. We will have spent 33 billion pounds, supporting the self employed. One of the most generous programmes for self employed people anywhere in the world.

We’re also extending our support for the lowest paid, and most vulnerable to support low income households. The Universal Credit uplift of 20 pounds a week will continue for a further six months, well beyond the end of this national lockdown. We’ll provide working tax credit payments, with equivalent support for the next six months. And because of the way that system works operationally, we will need to do so with a one off payment of 500 pounds. And over the course of this year, as the economy begins to recover. We are shifting our resources and focus towards getting people into decent well paid jobs, we reaffirm our commitment to end low pay, increasing the national living wage to eight pounds 91 from April, an annual pay rise of almost 350 pounds for someone working full time on the national living wage.

And my Right Honourable friends. The Education Secretary and the Work and Pensions secretary of taking action to give people the skills they need to get jobs or get better jobs, the restart programme, supporting over a million long term unemployed people, the number of work coaches, double the kickstart scheme funding high quality jobs for over a quarter of a million young people, the Prime Minister lifetime skills guaranteed giving every adult the opportunity for a fully funded level three qualification. And we bought businesses to hire new apprentices. So we’re paying them more to do it. Today, I am doubling the incentive payments we get businesses to 3000 pounds. That’s all new apprentice hires of any age, alongside investing 126 million pounds of new money to triple the number of traineeships, we’re taking what works to get people into jobs, and making it better.

Madam Deputy Speaker. One of the hidden tragedies of lockdown has been the increase in domestic abuse. So I’m announcing today, an extra 19 million pounds on top of the 120 5 million pounds, we announced that the spending review for domestic violence programmes to reduce the risk of reoffending, and to pilot a network of rest bike rooms to provide specialist support for vulnerable homeless women to recognise the sacrifices made by so many women and men in the armed forces community and providing an additional 10 million pounds to support veterans with mental health needs.

And on current plans. The funding to support survivors of the thalidomide scandal runs out in 2023.

They deserve better than to have constant uncertainty about the future costs of their care. So not only will I extend this funding with an initial down payment of around 40 million pounds. I am today announcing a lifetime commitment, guaranteeing funding forever. And let me thank the thalidomide trust, and the Honourable Member for North Dorset for their leadership on this important issue, as well as supporting people’s jobs incomes, the lowest paid and most vulnerable. This budget, also protects businesses. We’ve been providing businesses with direct cash grants, through the recent restrictions. These grants come to an end. In March, I can announce today that we will provide a new restart grant. In April, to help businesses reopen and get going again, non essential retail businesses will open first, so they will receive grants of up to 6000 pounds per premises, hospitality and leisure businesses, including personal care and gyms will open later or be more impacted by restrictions when they do, so we’ll give them grants of up to 18,000, pounds. That’s 5. billion pounds of new grants, on top of the 20 billion pounds we’ve already provided, taking our direct total cash support to business to 25 billion pounds. And I pay tribute to my Right Honourable friend the member for ronzi in Southampton north, the highlighting the particular needs of the personal care sector.

And with my Right Honourable friend the culture Secretary were making available, 700, million pounds to support our incredible art, culture, and sporting institutions, as they reopened. Back in the UK and Ireland’s joint 2013 World Cup, launching a new approach to apprenticeships in the creative industries and extending our 500 million pound film and TV production restart scheme.

Even with the new restart grants. Some businesses will also need loans to see them through as the bounce back low and see those programmes come to an end, we’re introducing a new recovering loan scheme to take their place. Businesses of any size can apply for loans from 25,000 pounds, up to 10 million pounds through to the end of this year, and the government will provide the guarantees and lenders of 80%.

Last year, we provided an unprecedented 100% business rates holiday in England for all eligible businesses in the retail hospitality and leisure sectors attack worth 10 billion pounds.

This year, we’ll continue with a 100% business rates holiday for the first three months of the year. In other words, through to the end of June, for the remaining nine months of the year, business rates will still be discounted by two thirds, up to a value of 2 million pounds to close businesses with a lower cap, than those who have been able to stay open a 6 billion pound tax cut for business.

One of the hardest hit sectors has been Hospitality and Tourism 150,000 businesses that employ over 2.4 million people need our support to protect those jobs. I can confirm that the 5% reduced rate of VAT will be extended for six months to the 30th of September.

And even then, we won’t go straight back to the 20% rate will have an interim rate of 12 and a half percent for another six months, not returning to the standard rate, until April of next year.

In total, we’re cutting back next year by almost 5 billion pounds.

Madam Deputy Speaker, the housing sector supports over half a million jobs, the carton stamp duty I announced last summer, has helped hundreds of 1000s of people buy a home and supported the economy at a critical time, but due to the sheer volume of transactions we’re seeing many new purchases won’t complete in time for the end of March. So I can announce today. The 500,000 pound nil rate band will not end on the 31st of March, it will end on the 30th of June, then, to smooth the transition back to normal. The nil rate band will be 250,000 pounds, double its standard level, until the end of September, and we will only return to the usual level of 125,000 pounds from October. The first.

Even with the stamp duty cut. There is still a significant barrier to people getting on the housing ladder. The cost of a deposit. So I’m announcing today, a new policy to stand behind homebuyers a mortgage guarantee lenders who provide mortgages to homebuyers who could only afford a 5% deposit or benefit from a government guarantee on those mortgages. And I’m pleased to say that several of the country’s largest lenders, including Lloyds NatWest Santander Barclays and HSBC will be offering these 95% mortgages, for next month. And I know more, including Virgin Money will follow shortly after a policy that gets people who can can’t afford a big deposit the chance to buy their own home. As the Prime Minister has said, we want to turn generation rent into generation by.

So, madam Deputy Speaker, the further extended to September, self employed crops, extended to September, Universal Credit extended to September, more money to tackle domestic violence, bigger incentives to hire apprentices higher grants to struggling businesses, extra funds for culture, arts and sport, new loan schemes to finance businesses kickstart restart a lifetime skills guarantee business rate cut VAT cut stamp duty cut, and a new mortgage guaranty, the first part of a budget that protects the jobs and livelihoods of the British people.

And Madam Deputy Speaker. As you can see, we’re going long, extending our support well beyond the end of the roadmap to accommodate, even the most cautious view about the time, it might take to exit the restriction.

Let me summarise, for the house. The scale of our total fiscal response to coronavirus at this budget, we are announcing an additional 65 billion pounds of measures over this year and next to support the economy in response to coronavirus, taking into account the significant support announced at the spending review. This means our total COVID support package this year in next is 352. billion pounds. And once you include the measures announced that spring budget last year including the step change in capital investment. Total fiscal support from this government over this year and next amounts to 407 billion pounds coronavirus has caught one of the largest, most comprehensive and sustained economic shocks. This country has ever faced. And by any objective analysis. This government has delivered, one of the largest, most comprehensive and sustained responses. This country has ever seen.

So, madam Deputy Speaker.

We’re using the full measure of our fiscal firepower to protect the jobs, and livelihoods of the British people, but the damage done by coronavirus combined with a level of support unimaginable only 12 months ago has created challenges for our public finances.

The ob RS fiscal forecasts show that this year. We have borrowed a record amount. 355. billion pounds. That’s 17% of our national income, the highest level of borrowing since World War Two.

Next year, as we continue our unprecedented response to this crisis.

10.3% of GDP and amount so large, it has been one rival in recent history. This year, without corrective action borrowing would continue at very high levels, leaving underlying debt rising indefinitely.

Instead, because of the steps, I am taking today. Borrowing falls to four and a half percent of GDP in 2223 3.5%, in 2324, then 2.9 and 2.8%. In the following two years. And while underlying debt rises from 88.8% of GDP this year to 93.8% next year. It then peaks at 97.1% in 2324. Before stabilising and falling slightly to 97% and 96.8%. In the final two years of the forecast.

Let me explain why this matters.

The amount we’ve borrowed is comparable only with the amount we borrowed during the two world wars.

It’s going to be the work of many governments, over many decades to pay it back.

Just as it would be irresponsible to withdraw support too soon. It would also be irresponsible to allow our future borrowing and debt to rise unchecked.

When crises come. We need to be able to act. And we need the fiscal freedom to act of freedom that you only have, if you start with public finances in a good and strong place.

The only reason we have been able to respond as boldly as we have the COVID is because 10 years of conservative governments painstakingly rebuild our fiscal resilience.

When the next crisis comes, we need to be able to act again.

And while our borrowing costs are affordable right now. Interest rates and inflation may not stay low forever.

And just a one percentage point increase in both would now cost us over 25 billion pounds. And as we have seen in the markets. Over the last few weeks, sovereign bond yields can rise sharply.

This budget is not the time to set detailed fiscal rules with precise targets and dates to achieve that by. I don’t believe that would be sensible. But I do want to be honest about what I need. I sustainable public finances and how I plan to achieve our fiscal decisions are guided by three principles. First, while it is right to help people and businesses through an acute crisis like this one in normal times, the state should not be borrowing to pay for everyday public spending.

Second. Over the medium term, we cannot allow our debt to keep rising and given how high, our debt now is we need to pay close attention to its affordability.

And third, it is sensible to take advantage of lower interest rates to invest in capital projects that can drive our future growth.

So the question is, how we achieve that, how we balance the extraordinary support we are providing to the economy right now with the need to begin the work of fixing our public finances.

I have an always will be honest with the country about the challenges we face. So I’m announcing today, two measures to begin that work. Let me take each intern.

Madam Deputy Speaker, our response to coronavirus has been fair with the poorest households benefiting the most from our interventions. And our approach to fixing the public finances, will be fair to asking more of those people and businesses who could afford to contribute and protecting those who cannot.

So this government is not going to raise the rates of income tax, National Insurance, or VAT instead. Our first step is to freeze palatable tax thresholds. We’ve nearly doubled the income tax personal allowance over the last decade, making it the most generous of any g 20 country. We will, of course, deliver our promise to increase it again next year to 12,570 pounds. But we will then keep it at this more generous level, until April, 2026, the higher rate threshold will similarly be increased next year to 50,000 pounds 270, and will then also remain at that level for the same period. Nobody’s take home pay will be less than it is now. As a result of this policy. But I want to be clear, with all members that this policy does remove the incremental benefit created have thresholds continued to increase with inflation. We are not hiding it. I am here, explaining it to the house, and it is in the budget document in black and white.

It is a tax policy that is progressive and fair.

And I will also maintain at their current levels, until April 2026, the inheritance tax thresholds, the pensions lifetime allowance. The annual exempt amount and capital gains tax and for two years from April 2020 to the VAT registration threshold, which at 85,000 pounds will remain more than twice as generous as the EU, and OECD averages. We’ll also tackle fraud and our COVID schemes, with 100 million pounds to set up a new HMRC task force of around 1000 investigators, as well as new measures and new investment in HMRC to clamp down on tax avoidance, and evasion, the full details are set out in the red book.

Madam Deputy Speaker.

The government is providing businesses with over 100 billion pounds of support to get through this pandemic. So it is fair and necessary to ask them to contribute to our recovery.

So the second step, I am taking today is that in 2023, the rate of corporation tax paid on company profits will increase to 25%.

Even after this change, the United Kingdom will still have the lowest corporation tax rate in the g7 lower than the United States, Canada, Italy, Japan, Germany and France were also introducing some crucial protections. First, this new higher rate won’t take effect until April 2023, well after the point when the OPR expect the economy to have recovered.

And even then, because Corporation taxes, only charged on company profits. Any struggling business will, by definition, be unaffected.

Second, I’m protecting small businesses with profits of 50,000 pounds or less by creating a small profit rate maintained at the current rate of 19%. This means around 70% of companies, 1.4 million businesses will be completely affected.

And third, we will introduce a taper above 50,000. So the only businesses with profits of a quarter of a million pounds, or greater will be taxed at the full 25% rate. That means only 10% of companies will pay the full higher rate. So yes, it’s a tax rise on company profits, but only on the larger, more profitable companies, and only in two years time, and I wanted to announce this now, because I think for business certainty matters.

For the next two years. I’m also making the tax treatment of losses significantly more generous by allowing businesses to carry back losses of up to 2, million pounds, three years, providing a significant cash flow benefit. This means companies can now claim additional tax refunds of up to 760,000 pounds. And because of the current 8% Bank surcharge the implied overall tax rate for banks would be too high. So we will review the surcharge to make sure the combined rate of tax on the UK banking sector doesn’t increase significantly from its current level, and to make sure this important industry remains internationally competitive.

Madam Deputy Speaker.

These are significant decisions to have taken decisions, no Chancellor wants to make.

I recognise, they might not be popular. But they are honest.

And let’s consider the alternatives.

The first is to do nothing to leave our deficit problem and treated, our debt problem for someone else in the future to deal with that has never been the way of a conservative government and nor do I believe it can be the way of a responsible Chancellor.

Another alternative would be to try and find all the savings we need from public spending.

But when we said at the last election that we were the party of public services people believed us, and they will write to believe us. And when we said we’d be the party that invest in new infrastructure, they will write to believe that to the only other alternative would be to increase the rates of tax on working people, but I don’t believe that would be right, either.

So while I believe our approach. While bold is compatible with our duty as a fiscally responsible and business friendly government. This is the right choice and I’m confident it will command public assent. I have one final announcement on business tax, with the lowest corporation tax in the g7, and a new small profits rate. The UK will have a pro business tax regime.

But we need to do even more, to encourage businesses to invest, right now, business investment creates jobs lifts growth spurs innovation drive productivity. For decades, we’ve lagged behind our international peers. right now. While many businesses are struggling, others have been able to build up significant cash reserves. We need to unlock that investment, we need an investment led recovery. So today, I can announce the super deduction for the next two years, when companies invest. They can reduce their tax bill, not just by proportion of the cost of that investment as they do now, or even by 100% of their costs. The so called full expensing that some have called for with the super deduction. They can now reduce their tax bill by 130% of the cost.

Let me give the house, an example, under the existing rules a construction firm buying 10 million pounds of new equipment could reduce their taxable income in the year they invest by just 2.6 million pounds with the super deduction. They can now reduce it by 13 million pounds. We’ve never tried this before, in our country. The OPR have said it will boost business investment by 10% around 20 billion pounds more per year. It makes up and meets our tax regimes the business investment truly world leading lifting us from 30th in the OECD to first and and worth 25 billion pounds during the two years that is in place. This will be the biggest business tax cut in modern British history. Bold unprecedented action to get companies investing, creating jobs and driving our economic recovery.

Madam Deputy Speaker. Let me now turn to duties.

This is a tough time for hospitality. So I can confirm that the planned increases in duties for spirits like scotch whiskey wine cider and beer will all be cancelled. All alcohol duty is frozen for the second year in a row, only the third time in two decades. And right now, to keep the cost of living low. I’m not prepared to increase the cost of a tank of fuel. So the plant, increasing fuel duty is also cancelled.

Madam Deputy Speaker.

This budget protects the jobs and livelihoods of the British people. This budget is honest about the challenges facing our public finances and how we will begin to fix them.

And this budget does one other thing. It lays the foundation of our future economy. The third part of our plan.

If we want a better future economy. We have to make it happen. We have to do things that have never been done before. The world is not going to be any less competitive, after coronavirus. So it’s not enough to have some genuine desire to grow the economy. we need a real commitment to green growth is not enough to have some general desire to increase productivity, we need a real commitment to give every business large or small, the opportunity to grow, innovate and succeed. It’s not enough to have a genuine desire to create jobs, we need a real commitment to create jobs where people are and change the economic geography of this country. And we can’t strengthen our domestic economy without remaining a global outward looking nation.

This future economy won’t be created in any one budget. But today we lay the foundations.

Madam Deputy Speaker, our future economy needs investment in green industries across the United Kingdom, so I can announce today, the first ever UK infrastructure bank, located in Leeds, the bank will invest across the UK in public and private projects to finance the green Industrial Revolution, beginning this spring, it will have an initial capitalization of 12. billion pounds, and we expect it to support at least 40 billion pounds of total investment in infrastructure. And I know my Right Honourable friend the member for Pudsey will particularly welcome the location of this new institution offshore wind is an innovative industry where the UK already has a global competitive advantage. So we’re funding New Port infrastructure to build the next generation of offshore wind projects in Teesside and Humberside, and in November I amounts we will launch a world leading sovereign green bond. Today we’re going further announcing a new retail savings product to give all UK savers the chance to support green projects, as my white friend the member for northeast Bedfordshire has campaigned for. We’ve also asked him for a first to establish a new group to position the city, as the global leader for voluntary high quality carbon offset markets and underpinning. All of this will be an updated monetary policy we met for the Bank of England. It reaffirmed that 2% target, but now it will also reflect the importance of environmental sustainability and the transition to net zero. Madam Deputy Speaker, our future economy will also address our productivity problem and support small business. Too often smaller firms don’t have the time or resources to acquire the extra skills and training they need to be more efficient, more digital, and more productive. Thanks to be the business. We have made a good start, and supporting these firms. Today, the business secretary and I are going further with a new set of UK wide schemes, help to grow, but help to grow management will help 10s of 1000s of small and medium sized businesses get world class management training. 1000s of business schools across the UK, will offer a new executive development programme with mentoring and peer learning and government will contribute 90% of the cost of real commitment. To learn more, make more and earn more. Second, help to grow digital with the pandemic. Many businesses have moved online. This has been a challenge, but we want to turn it into an opportunity. We’re going to help small businesses develop digital skills by giving them free expert training and a 50% discount on new productivity enhancing software worth up to 5000 pounds each both programmes will commence by the autumn. And I urge interested businesses to register today on gov.uk, forward slash help to grow a real commitment to help over 100,000 businesses become more innovative more competitive and more profitable.

Madam Deputy Speaker a future economy requires us to be at the forefront of the next scientific and technological revolutions, becoming a scientific superpower is something we can be. I don’t think that’s you breadstick or unrealistic, our incredible vaccination programme has showed the world what this country is capable of. So I’m providing an extra 1.6 billion pounds today to continue the rollout, and improve our future preparedness. And I want to make the UK, the best place in the world for high growth, innovative companies. So I’m launching to wide ranging consultations today, to make sure our research and development tax reliefs, and our enterprise management incentives are internationally competitive. And my wife honourable friend the Home Secretary knows that a scientific superpower needs scientific superstars. So together we’re announcing ambitious visa reforms aimed at highly skilled migrants, including a new unsponsored points based visa to attract the best and most promising international talent in science research and tech new improved visa processes for scale up and entrepreneurs and radically simplified bureaucracy, for high skilled visa applications. Now, as well as support for innovation and access to talent, high growth firms need access to capital. To do that, we’re taking steps to give the pensions industry more flexibility to unlock billions of pounds from pension funds into innovative new ventures, launching a new future fund breakthrough to help fill the scale up funding gap and changing the rules to encourage more countries more companies to list here. Let me thank the Lord Hill for leading this landmark review. The FCA will be consulting on his proposals, very shortly.

to local leaders like the brilliant there for the West Midlands, and the St. Louis are making the case for investment in their area. We’re also creating 150 million pound fund to help communities across the UK, take ownership of pubs theatres shops or local sports clubs at lots of risk of loss, putting more power in the hands of local people. And I’m launching the first round of the levelling of fun today, inviting applications from local areas across the United Kingdom. And I was grateful to my wife and I were friends the transport secretary, and the community secretary for their support on this crucial initiative.

Madam Deputy Speaker.

I have one final announcement that exemplifies the future economy of policy on a scale. We’ve never done before, a policy to bring investment trade, and most importantly job right across this country to replace the industries of the past with green innovative fast growing new businesses to encourage free trade and reinforce our position as an outward looking trading nation open to the world of policy, we can now only pursue now that we are out of the European Union Freeport Freeport, our special economic zones with different rules, to make it easier and cheaper to do business, they’re well established internationally. We’re taking a unique approach, and our free port will have similar planning to allow businesses to build infrastructure funding to improve transport needs cheaper customs with favourable tariffs VAT or duties and lower taxes, with tax breaks to encourage construction private investment and job creation, an unprecedented economic boost across the United Kingdom. Free ports will be a truly UK wide policy, and we will work constructively with the Scottish Welsh and Northern Irish administration. Today, I can announce the eight free port locations in England.

East Midlands Airport Felixstowe and heritage Humber Liverpool City region Plymouth Solon Thames, and Teesside pay to new freeports in eight English regions, unlocking billions of pounds of private sector investment, generating trade and jobs, up and down the country. I commend members from across the house for the campaigning, but in particular. The Honourable Members for red car Cleethorpes and great Grimsby, as well as inspiring local leaders like Ben houchin de mer for tees Valley.

Madam Deputy Speaker. This take just one of those places Teesside. In the past, it was known for its success in industries like steel. Now, when I look to the future of T side. I see old industrial sites being used to capture and store carbon vaccines, being manufactured offshore wind turbines, creating clean energy for the rest of the country, all located within a free port, with a treasury just down the road, and the UK infrastructure bank only an hour away.

I see innovative fast growing businesses, hiring local people into decent well paid green jobs. I see people designing manufacturing and exporting incredible new products and services. I see people putting down roots in places they are proud to call home. I see a people optimistic and ambitious for their future that madam Deputy Speaker is the future economy of this country.

And so, whilst this last year has been a test, unlike any other. That which we are, we are, the fundamentals of our character as a people have not changed. Still determined. Still generous still fair. That’s what got us through the last year. It’s what will guide us through the next decade and beyond. This time last year, we set out to deliver on the promises we made to the British people.

But the most important promise was implicit, and in truth is made by every government, irrespective of their politics, and that is to do what must be done when the danger is imminent, and when no one else can.

Today, we set out a plan to protect the jobs, and livelihoods of the British people. But the promises that underpin that plan remain unchanged from those, we pledged ourselves to 12, long months ago.

To unite and lead to level up to create a world class education system to keep our streets safe to keep our NHS strong to support the most vulnerable to reform and improve public services to grow the economy to spread prosperity to extend the awesome power of opportunity to all corners of the United Kingdom, and yes, to be honest and fair in all factory do. Madam Deputy Speaker, an important moment is upon us a moment of challenge and of change of difficulties Yes, but of possibilities to. This is a budget that meets that moment, and I commend it to the house.

Cyber Security: New Cyber Aware Campaign

Cyber Security: New Cyber Aware Campaign

The National Cyber Security Centre (NCSC), together with Cabinet Office, DCMS and Home Office, has recently launched the latest phase of its Cyber Aware campaign. This included, on Friday 26 Feb, a self-assessment tool on the website to help sole traders and micro businesses check how safe they are from cyber threats, and to give advice on areas of improvement.

The increased use of email, online payments and collaboration software has brought great benefits to businesses, including the construction sector, but it does come with risks.

According to Action Fraud reporting, between Nov 2019 and Dec 2020, the construction sector was in the top three sectors impacted by cyber crime where the victim was a business.

That is why, as part of the Cyber Aware campaign, the NCSC has created the Cyber Action Plan available at CyberAware.gov.uk to help micro businesses with fewer than 10 employees and sole traders securely navigate the increasingly digital landscape they operate in. You may also find the links to the resource hub and toolkit helpful. These include suggested messaging, key behaviours, and a leaflet for use digitally or in print.

After responding to questions on their current IT practices in the new Cyber Action Plan, businesses will receive tailored advice on how to improve their cyber security, based on the responses given.

The Cyber Action Plan recommendations stem from the six practical, actionable steps from the technical experts at the NCSC that protect us from the majority of online crime:

  1. Use a strong and separate password for your email
  2. Create strong passwords using 3 random words
  3. Save your passwords in your browser
  4. Turn on two-factor authentication (2 FA)
  5. Update your devices and apps
  6. Back up your data

The behaviours underpin the cross government Cyber Aware campaign, and you may hear radio advertisements in March urging businesses to use the Cyber Action Plan.

FIS Business Risk Management Tool

FIS has produced a Business Risk Management Tool to support contractors and help them adopt a structured approach to understanding risk and reducing uncertainty.  The tool identifies over 120 common risk areas for contractors against the categories including IT & Cyber Security, Business Management, Contractual, Financial, Quality, H&S and Procurement,  providing a mechanism to score and rank risk and advice on mitigation and management.

The Risk Management Tool is available to download free for members of the FIS community here – FIS Business Risk Management Tool.

A List of Commonly Asked Questions about Reverse Charge VAT

A List of Commonly Asked Questions about Reverse Charge VAT

With the Domestic Reverse Charge VAT now in place, HMRC have produced a list of frequently asked questions.  FIS members are reminded to pay particular attention to use of intermediaries such as agencies and payroll companies to understand the implications of VAT associated with their services and credit options that they may have available to mitigate any impact.

Further information, a range of supporting tools to manage necessary communications up and down the supply chain and some suggestions to help mitigate the impact have been made available in the FIS Reverse Charge Toolkit here

When do I account for the reverse charge?

VAT is due when a VAT invoice is issued, or payment is received, whichever is earlier.  This is known as the tax point.

For invoices issued before 1 March 2021 the normal VAT rules will apply.  For invoices issued on or after 1 March 2021 the reverse charge will apply

For authenticated tax receipts or self-billed invoices the tax point is normally the date the supplier receives payment.

  • before 1 March 2021 and the payment date will be on or before 31 May 2021, use the normal VAT rules
  • before 1 March 2021 and the payment date will be on or after 1 June 2021, use the domestic reverse charge
  • on or after 1 March 2021, you must use the domestic reverse charge

Does the reverse charge apply to work carried out for private customers?

No.  Reverse charge only applies to VAT and CIS registered businesses.  If the services are provided to customers who are not VAT and CIS registered then the normal VAT rules apply.

What about supplies that are only partly of services that should be reverse charged?

Normally if any of the services in a supply are subject to the reverse charge all the other services supplied will also be subject to it.  However if the reverse charge part of the supply is 5% or less of the value of the whole supply then this can be disregarded and the normal VAT rules can be applied.

Is zero rated work excluded from the supply value when the 5% is calculated?

No.  We have tried to avoid making any changes to the zero-rate.  The 5% value refers to a de minimis level of a supply that by itself would be subject to the reverse charge but can be ignored given the overall characteristics of the supply.  Excluding the zero-rate element would mean calculating a proportion of a proportion of a supply.

Do I need to change what I put on my invoices?

Yes.  Your invoice should clearly indicate that the reverse charge applies.  You can use any of the following wording:

  • Reverse charge: VAT Act 1994 Section 55A applies
  • Reverse charge: S55A VATA 94 applies
  • Reverse charge: Customer to pay the VAT to HMRC

The invoice should clearly state how much VAT is due under the reverse charge but that the VAT is not being included in the amount charged to the customer.

How does Making Tax Digital affect the reverse charge?

It doesn’t.  MTD only changes the way in which business have to submit their VAT returns and how the account for their VAT.  This must now be completed digitally.  Otherwise MTD has affect on the reverse charge.

What about the flat rate scheme?

Reverse charge supplies can’t be accounted for under the flat rate scheme.  Flat Rate Scheme users who receive reverse charge supplies will have to account for the VAT due to HMRC and recover it simultaneously on the same VAT Return.  Users of the Flat Rate Scheme will have to consider if it’s still beneficial to them bearing in mind that under the scheme they cannot recover VAT incurred on purchases of materials, overheads etc.

What are end users and intermediaries?

An ‘end user’ is a term used in reverse charge law and needs thought and to be understood.  It is a business who will use the building or structure themselves in their own business either as a building to sell, or to rent out, or for their own use, e.g. as offices.

Development and property companies are end users because they will rent or sell what they have commissioned. They deal in assets rather than supply construction services. Another construction business who will add your work to their work and bill everything to a client as construction services is NOT an end user.

For reverse charge purposes end users are businesses that are VAT and CIS registered but who do not make onward supplies of the construction services supplied to them.

Companies may be deemed Intermediary suppliers if they are VAT and CIS registered AND are connected or linked to end users by either:

1.  Being part of the same corporate group or

2.  by having a relevant interest in the same land where the construction works are taking place.

The reverse charge does not apply to supplies to end users and intermediary suppliers where they tell their supplier in writing that they’re end users or intermediary suppliers.

Does the notification by an end user or intermediary have to follow a specific format?

No.  As long as it is in writing. Typically it will probably be in a contract.

What about cash flow?

If you are a sub-contractor your as your customers will no longer be paying you VAT this will reduce the amount of payments coming into your business.  You’ll need to consider and plan for the impact of this on your day-to-day cashflow.  You can apply to be moved to monthly VAT returns to speed up any repayments that you are due from HMRC.

What if my client doesn’t provide me with their CIS details?

In order to apply the reverse charge you need to be sure that CIS applies to the payments made to you, even if there are no deductions due to having gross status. Therefore if they haven’t answered the CIS questions you should charge VAT in the normal way. If it turns out that CIS did apply they will be liable for accounting for the reverse charge not you.

What if my client fails to provide an end-user statement when requested?

If you ask and provide reasonable opportunity to your client to provide an end user statement and fail to get one, reverse charge.  If HMRC find that a customer has failed to notify end user status to their supplier they will require the customer to account for and pay the VAT, exceptionally they may require the customer to contact the supplier and request a corrected invoice.

If you are uncertain about any aspect of the DRC VAT requirements.

Further information, a range of supporting tools to manage necessary communications up and down the supply chain and some suggestions to help mitigate the impact have been made available in the FIS Reverse Charge Toolkit here

If you have any additional questions or areas where you are unsure FIS will take these forward to HMRC to seek clarity.  Email your questions to FIS via info@thefis.org

Brexit Update: Simplified Guide to Rules of Origin

Brexit Update: Simplified Guide to Rules of Origin

What are Rules of Origin?

Rules of Origin determine the economic nationality of a good under a Free Trade Agreement

(FTA). Businesses need to know about them because the Trade and Cooperation Agreement (TCA) means they can trade with the EU without paying tariffs – but only if their product meets the relevant Rules of Origin.

How do Rules of Origin impact my business?

To export tariff-free into the EU, traders must check their goods meet the Rules of Origin requirements set out in the Trade and Cooperation Agreement and have the right documentation. If your goods do not meet the Rules of Origin, they may face a tariff upon export to the EU.

What action do I need to take?

Watch the new on demand video which summarise Rules of Origin processes for businesses.

Then, if you are a UK exporter and your EU importer wants to claim zero tariffs on your goods, there are 3 key steps to work out whether your goods comply with rules of origin:

  1. Classify your good – every good has a commodity code and a list is available on uk
  2. Understand whether your good meets the applicable rule of origin from the TCA (Chapter 2 as well as Annexes ORIG-1 to ORIG-4 will be most useful). You can also use the export checker tool to find out what rule of origin applies to your exports.
  3. Understand how to demonstrate origin to the customs authorities.

For help in working out whether your goods comply and how to demonstrate this to customs authorities, read the Rules of Origin Guidance on trading with the EU.

You may choose to use a customs agent to help you with Rules of Origin and there is guidance available here on how to find one.

Useful Resources

For any further queries or general business advice you can contact BEIS’ dedicated business support helplines or ask customs and tax related queries and other border related queries on one of our forums. There is specific guidance and training on moving goods into, out of, or through Northern Ireland on gov.uk. You can also use the Brexit Checker tool on gov.uk/transition, which will provide you with a personalised list of the most up to date actions that your business needs to take.

– An updated slide deck on Rules of Origin (RoO) with additional sector-specific examples. (This is correct as of Wednesday 17th February 2021)

FREQUENTLY ASKED QUESTIONS: General Questions on Rules of Origin

 1. Can I export tariff free under the new UK-EU trade deal?

As of 1 January 2021, goods exported to the EU are eligible for zero tariffs if the goods meet the Rules of Origin requirements set out in the Trade and Cooperation Agreement (TCA) and have the right documentation. If not, the goods may be subject to EU tariffs.

The same applies for imports to the UK from the EU.

 2. What are Rules of Origin?

Rules of Origin determine the ‘economic nationality’ of a good. They are a standard part of free trade agreements (FTAs).

Rules of Origin require a qualifying level of manufacturing in the country of export to access zero tariffs. This ensures only goods produced in the countries party to the FTA (the UK or the EU) benefit from zero tariffs.

3. How do I comply with Rules of Origin?

First, traders need to understand whether their good meets the applicable rules. To do this they need to classify the good to find its Harmonized System Code and then consider the relevant rules for that good. Traders can do this using this online tool

Second, traders need to understand how to demonstrate origin to the customs authorities and what paperwork they need to include with the good when exported. Traders can self-declare goods meet the rules by making out a statement on origin. Alternatively, the importer can use importer’s knowledge. Traders should look at the origin procedures in the text of the Agreement.

4. What if I am importing goods into GB and then (re-)exporting them to the EU?

 The UK is no longer part of the EU Customs Union. This means that goods imported into GB cannot move freely between GB and EU Member States or vice versa. To be eligible for zero tariff export to the EU, these goods still need to comply with Rules of Origin. This means there must be some production in the UK. This applies to EU origin goods as well as to goods from the rest of world.

If traders move goods through GB from one EU Member State to another without the goods entering UK customs territory (i.e., without entering free circulation in GB), the goods may not need to meet Rules of Origin. Traders should consider whether they are able to use special customs procedures, such as the Transit Procedure (where the goods are moving through UK customs territory) or Returned Goods Relief procedure (for goods re-exported to the EU).

5. If I import goods from a third country, e.g., China and then re-export them to the EU, can I avoid tariffs?

If a good is exported from China to the UK, it will face a tariff upon import into the UK as it falls outside the scope of the TCA or any other UK Free Trade Agreement.

The TCA provides for tariff-free trade export for goods from the UK to EU that meet the Rules of Origin. So, the goods from China must meet the TCA Rules of Origin in the exporting country, in this case the UK, in order to avoid paying a tariff upon export to the EU.

 6. If a product is manufactured in the UK using EU-sourced materials, does that qualify towards meeting Rules of Origin?

The UK and EU negotiated full bilateral cumulation in the TCA. This means that any EU-originating materials and processing will be treated the same as UK sourced material for the purposes of Rules of Origin (and vice-versa).

To be eligible for cumulation, materials must be EU or UK originating (so not just sourced in the UK/EU but originating there).

And while EU-originating materials can count towards meeting Rules of Origin, importantly, the processing or manufacturing done in the UK must go beyond insufficient processing in order for the goods to attain originating status.

Guidance on rules of origin in the UK-EU TCA, including what Rule of Origin applies to your products, can be found here.  The full list of processes which do not confer origin can be found in Article ORIG.7 Insufficient Production, in the TCA.

7. What counts as insufficient processing?

The full list of processes which do not confer originating status is available in Article ORIG.7 Insufficient Production in the TCA. Completion of one or any combination of the included processes is insufficient to confer originating status.

For example, ‘simple painting and polishing operations’ or ‘peeling, stoning and shelling, of fruits, nuts and vegetables’ are not considered to be significant manufacturing and as such do not confer originating status by themselves.

You should always check the relevant Product Specific Rule of Origin for each product you wish to export. If the Rule for your product indicates an allowed percentage of non-originating materials (NOM), your product must meet this Product Specific Rule AND go beyond insufficient processing.

8.  Will I face a tariff if I send goods to the EU for repair?  

Businesses can apply for Outward Processing Relief which allows a business to pay less customs duty & VAT when goods re-enter the UK after being sent elsewhere for repair or processing.

Both the UK and the EU will be retaining their existing Outward Processing Relief regimes. The use of the procedure is subject to the authorisation of the respective customs authority. Information on the UK’s scheme can be found here.

You can also use inward processing relief to pay less customs duty & VAT when bringing goods into the UK for processing or repair. Information on the UK’s scheme can be found here.

 9.  Is the 6-month easement on duty only for imports?

Yes, the 6-month staged import controls and associated deferral of customs declarations and duties (in effect from 1 Jan 2021) are only for imports into the UK from the EU.

Any duties that are payable are required to be paid after from 1 July 2021.

 10.  For items originating from the EU – what impact does Rules of Origin have for onward trade to NI?

If you are sending EU origin goods from Great Britain to Northern Ireland, you must first determine if the goods are considered ‘at risk’ (of entering the EU). If they are not ‘at risk’ or you can declare the good not ‘at risk’ through the UK Trader Scheme, no tariff will be due.

Traders could consider using customs procedures to mitigate the tariffs due on entry to NI for ‘at risk’ goods. These procedures include the Transit Procedure (where the goods are moving through UK customs territory), Customs Warehousing (where goods are stored in duty suspension in a designated warehouse under customs control) or Returned Goods Relief procedure (for goods re-exported to the EU).

Traders should also consider claiming a waiver of the tariff, subject to state aid de minimis limits. In future, traders could consider claiming a reimbursement of the tariff, if goods could later be shown to have remained in NI/returned to GB. The reimbursement scheme is currently in development.

The new Trader Support Service (TSS) can help you to understand the options available to mitigate the risk of paying any tariffs when moving goods into Northern Ireland from Great Britain but cannot make the decision which option if best for you and your businesses unique business practices.

If your EU goods undergo further production in the UK which goes beyond the list of operations in Article ORIG. 7 “Insufficient Production” then these goods will become UK origin under the TCA, and you can apply zero tariffs if you have the necessary supporting paperwork.

Detailed guidance on moving goods into, out of, or through Northern Ireland is available here.

11.  What if our supply chain cannot trace the precise location of their raw materials because they are sourced from all over the world?

Goods are typically considered to be non-originating unless proven otherwise. However, you need to check the product-specific rules for the product in question – tracing of materials would only be needed if you could not meet a process based rule through the activity you carry out in the UK.

If, for example, you can use a Change of Tariff Subheading (CTSH) rule and the inputs that are used are in a different 6-digit customs classification (subheading) to that of the product, the origin of the inputs is irrelevant as you would have met the rule in your own processing.

As with any Product Specific Rule, the processing or manufacturing done in the UK must go beyond insufficient processing (see Article ORIG.7 Insufficient Production in the TCA).

12. Is the maximum allowed percentage of non-originating materials (MaxNOM) the same for all products under the TCA?

No. You should always check the relevant Product Specific Rule of Origin for each product you wish to export, as there are different rules for different products, including any maximum allowed percentage of non-originating materials (MaxNOM).

If the Rule for your product includes a percentage of MaxNOM, your product must meet this Product Specific Rule AND go beyond insufficient processing.

13.  Do these Rules of Origin also apply to other countries with which the UK has a free trade agreement?

All FTAs will have Rules of Origin, but these are specific to each trade agreement. You can find guidance on the UK’s other Free Trade Agreements here, to understand which Rules of Origin apply to trade with that country.

 FREQUENTLY ASKED QUESTIONS: On demonstrating goods comply with Rules of Origin

 1. Can I use a customs agent to help me with Rules of Origin?

 Yes. There is guidance available on how to find a customs agent:

https://www.gov.uk/guidance/appointsomeonetodealwithcustomsonyourbehalf  

Compliance remains the responsibility of the importer and exporter.

2. What text do I need to use for origin statements?

The statement on origin must be provided on an invoice or on any other document that describes the originating product in sufficient detail to enable the identification of that product.

The statement on origin must take the form of the text found in Annex ORIG-4 of the UK-EU TCA (pg. 482).

In the UK, the Exporter Reference Number will be the Economic Operator Registration and Identification (EORI) number.

If the statement on origin is completed for multiple shipments of identical originating products within the meaning of point (b) of Article ORIG.19(4) [Statement on Origin] of the TCA, indicate the period for which the statement on origin is to apply. That period shall not exceed 12 months. Importations of the product must occur within the period indicated. If a period is not applicable, the field may be left blank.

3.  Do I need a declaration from my supplier?

 If the goods you are exporting incorporate originating materials from a supplier, you may need a declaration from your supplier to meet Rules of Origin requirements.

Until 31 December 2021, exporters may make out statements on origin based on supplier’s declarations even if they do not have all the relevant supplier’s declarations in hand at the time they make the statement on origin. Exporters must be confident that the exported goods meet the Rules of Origin requirements and may be asked to retrospectively provide a supplier’s declaration after this date.

4. What does the ‘supporting documentation’ from suppliers need to look like for proving origin?

If you are exporting goods you may need to get a suppliers’ declaration to prove the origin of materials used in the manufacture process. The declaration must use the exact form of words indicated in the UK-EU TCA (page 479).

Suppliers’ declarations can be made on the invoice for the goods supplied, on a bill of materials, or on any commercial document that fully identifies the goods.  A supplier’s declaration may be made out to cover a single supply or to cover regular supplies made over a period of time (a long-term supplier’s declaration).

A supplier’s declaration is not always required. For information on when a supplier’s declaration is and isn’t required, and for the wording to use, see the guidance here.

5. What evidence is needed to prove ‘importers knowledge’ of origin?

To use ‘importer’s knowledge’ to claim preference (zero tariffs), the importer may need to have information about the product including:

  • the HS code of the product and origin criteria used
  • a brief description of the production process
  • if the origin criterion was based on a specific production process, a specific description of that process
  • if applicable, a description of the originating and non-originating materials used in the production process
  • if the origin criterion was ‘wholly obtained’, the applicable category (such as harvesting, mining, or fishing; and the place of production)
  • if the origin criterion was based on a value method, the value of the product as well as the value of all the non-originating and/or originating materials used in the production
  • if the origin criterion was based on weight, the weight of the product as well as the weight of the relevant non-originating and/or originating materials used in the product
  • if the origin criterion was based on a change in tariff classification, a list of all the non-originating materials including their tariff classification number under the Harmonized System (in 2, 4 or 6-digit format depending on the origin criteria); or
  • the information relating to the compliance with the provision on non-alteration

(if applicable), for example a certificate of non-manipulation from the Customs Authority in the country of transit

Further guidance on importer’s knowledge can be found here.

6. Do I need to include an EORI number or REX registration number on a declaration of origin?

A UK exporter should use their UK EORI number on declarations of origin. If you don’t yet have an EORI number, find out how to get one here.

For consignments of a value above €6000 (currently £5700), an EU exporter must have a Registered Exporter (REX) number and include it on the statement of origin, in addition to their EU EORI code.

7. Where can I go for more information?

For full Rules of Origin guidance on trading with the EU, go to: https://www.gov.uk/government/publications/rulesoforiginforgoodsmovingbetweentheukandeu

When can we expect a return to the Office/Workplace

When can we expect a return to the Office/Workplace

As lockdown starts to ease, we look at what the guidance is for non-site-based work in the sector. Whilst the overall National effort and the flexibility shown by individuals has been nothing short of amazing, concerns are being raised that it is difficult to do many roles and drive programmes as efficiently remotely.

The Situation in England:

Step 1:  Earliest from 8 March

As before, people can leave home for work if they cannot work from home and to escape illness, injury or risk of harm, including domestic abuse.

In England, the guidance is essentially unchanged at the start of Step 1, if you can work from home, you must do so.  Exceptions include where you need access to systems or cannot work from home for mental health reasons.

Earliest from 29 March

Guidance will set out that people should continue to work from home where they can. People should continue to minimise travel wherever possible and should not be staying away from home overnight at this stage (see letter prepared by Build UK to support essential workers in need of overnight accommodation).

Here the language starts to ease with “must” being replaced by “should”, but Government is being careful not to encourage a mass return and is keen to keep pressure off the transport network.

Step 2:  Earliest from 12 April

People should continue to work from home where they can, and minimise domestic travel where they can.

As before the assertion is that individuals should work from home if practicable, but the language around travel is also starting to soften, we should “minimise” rather than avoid travel.

Step 3: Earliest from 17 May

The Government will continue to advise the public to work from home where they can.

There is no change to guidance in Step 3, but we are advised that ahead of Step 4, as more is understood about the impact of vaccines on transmission and a far greater proportion of the population has been vaccinated, the Government have committed to a review of social distancing measures and other long-term measures that have been put in place to limit transmission.

The results of the review will help inform decisions on the timing and circumstances under which rules on 1m+, face masks and other measures may be lifted. The review will also inform guidance on working from home.

Step 4: Earliest from 21 June

Whilst the headline suggests that “normality” will resume and the guidance points to the importance of – people should continue to work from home where they can until this review is complete.

Workplace testing and vaccine policy is anticipated to play a part.

How does the situation differ around the UK

In Scotland the First Minister this week announced ‘stay at home’ restrictions could be lifted on 5 April at the earliest, with further restrictions easing on 26 April.  The Scottish government intends to publish a further document in mid-March giving more detail on the sequencing of re-opening the economy from late April onwards.

The Wales Coronavirus Control Plan: Alert Levels in Wales – Coming out of Lockdown plan identifies the end of April (linked to the rollout of the vaccine to the next five priority groups) will be a clear milestone against which the intention is re-evaluate easing to alert level 3 based on the latest evidence.

Plans for the phasing out of Lockdown in Northern Ireland are due to be published on Monday

So what should you do as an employer about home working

When home working is not possible the CIPD recommends three key tests before bringing people back to the workplace: is it essential; is it sufficiently safe; and is it mutually agreed. Many factors must be considered, including the size and nature of the workplace, the number of vulnerable staff or those who live with vulnerable people, caring responsibilities, public transport dependency, as well as local and wider outbreaks. So, an employer with a large premises and car park may be able to fully implement social distancing and minimise employees’ local transport use, while an employer with smaller premises may feel social distancing is impossible in the workplace.

 

New economic report will help Forum assist with green recovery in Scotland

New economic report will help Forum assist with green recovery in Scotland

The CICV Forum (supported by FIS) has published an in-depth report aimed at helping public bodies make decisions on where public funding in construction gives the highest economic returns to help support a green recovery.

The report, carried out by Fraser of Allander Institute at University of Strathclyde, was commissioned by the Forum to improve understanding of how investment in construction activity creates multiplier effects across social, economic, and environmental impact measures. It also aims to support policy makers, clients and investors in understanding the return on investment associated with repair and maintenance activity.

John McKinney, Regional Manager of the NFRC, said: “The report highlights that investment in construction, including repairs and improvements, can play a vital role in a green recovery, and the important role Scotland’s existing buildings have in that recovery.

“We will look to highlight this report to the Scottish Government and funding bodies to assist in maximising the economic and carbon benefits of investment in the built environment.”

The report highlights that the construction sector is an important contributor to the Scottish economy supporting almost £16bn in Scottish GVA and almost 300,000 full-time equivalent jobs across the Scottish economy through both direct and indirect and induced economic activity.

The report also reveals that every million pounds spent on specialised construction activities, which includes repairs and improvements, generates £1.09m GVA return to the Scottish economy and supports 21 full-time equivalent jobs.

VAT rebate research as part of this study, also looked at how such a scheme could stimulate the repair, maintenance and improvement element of construction work. The research found that if VAT is cut from 20% to 5% in the specialised construction sector this could generate between £80m – £400m in Scottish GVA and support between 1,500 – 7,500 full-time equivalent Scottish jobs.

Mairi Spowage, Deputy Director of the Fraser of Allander Institute, said: “the construction sector is a significant contributor to the Scottish economy and will play an important role in Scotland’s green recovery from COVID-19.

Our analysis finds that specialised construction activities, which includes retrofitting and home improvements and repairs, has larger economic multipliers than the rest of the construction sector and the Scottish average across all industries.”

The report was commissioned by the CICV Forum with funding by Construction Scotland Innovation Centre (CSIC) though an i-Con Challenge Innovation Grant aimed at helping the sector to recover from the pandemic.  The project had input from Historic Environment Scotland and a number of private and public organsations provided insight to the study.

A webinar to present and discuss the findings in more detail will take place at 2pm on Wednesday 10 March.  Information on how to join the webinar will be available shortly.

The report can be viewed here.

Guidance from BuildUK: Delivering On-Site Training

Lockdown Easing and Workplace COVID‐19 Testing

The Prime Minister has confirmed the Government’s four‐step plan for a ‘cautious’ route out of lockdown in England. The current restrictions will be gradually relaxed, beginning with schools and colleges reopening from 8 March, and four specific tests will need to be met at each stage before further restrictions are lifted. The comprehensive roadmap confirms that individuals should continue to work from home where they can until at least 21 June, which is the fourth step and when social distancing measures will be reviewed.  The Scottish Government is expected to set out its plans for easing restrictions this week, with the Welsh Government due to review its current measures on 12 March and the Government of Northern Ireland on 18 March.

Build UK has published a simple guide to the Government’s workplace testing programme, which enables sites with 50 or more workers to undertake asymptomatic Lateral Flow Device (LFD) testing. The guide explains the testing process and sets out the steps required to set up a testing site. Tests are being provided free of charge until at least 31 March 2021, and companies should read the guide before signing up via the Government’s online portal.

Businesses with fewer than 50 workers are currently not eligible for workplace testing; however, they can access the Community Testing Programme in their local area by using the new postcode checker or visiting their local authority website and searching ‘LFD testing’

Visit the FIS COVID-19 Hub here

Secretary of State Open Letter to Industry on Mass Testing

FIS Writes to Chancellor urging for an Extension to VAT Deferral and Flexibility in Apprentice Funding

FIS Writes to Chancellor urging for an Extension to VAT Deferral and Flexibility in Apprentice Funding

Finishes and Interiors Sector CEO, Iain McIlwee, has written to the chancellor ahead of budget supporting the CLC submission and seeking additional support to manage Reverse Charge VAT implementation and flexibility in Apprenticeship funding.  The full text of the letter is available below.

Dear Chancellor,

I write on behalf of the Finishes and Interiors Sector, which accounts for around £10 billion of UK Construction work and over 200,000 workers.  Our community do the refurbishment, fit-out and finishing work to buildings of all types (homes, hospitals, offices etc), constructing internal walls, ceilings and adding the fixtures – over the lifetime of a building, there is typically upwards of 30 re-fits.  We support the work of the Construction Leadership Council (CLC) and have had input into and support the Budget submission already made by the CLC.

Since the New Year, pressure on our sector has become even more palpable as we adapt to the Reverse Charge VAT introduction, off-payroll working, changes to the CIS and new immigration policies.  I have outlined below two critical areas where Treasury could help us to avoid insolvencies and encourage investment in new jobs.

Extension of the VAT Deferral Scheme

The Domestic Reverse Charge (DRC) creates an immediate working capital impact on many of our members who operate as sub-contractors.  We are already working less productively in the wake of COVID, facing additional costs associated with logistics of Brexit and shortages of materials like timber and steel and are staring in the face of potentially severe labour shortages (which is driving up rates and will necessitate additional investment in training).

Example:

I am a the Financial Director of XX a construction business employing around 70 people through PAYE, CIS and which includes two young trainees. I write to express my concern that the government is pressing ahead with implementation of the Domestic Reverse Charge VAT for construction.  Our turnover is around £5 million and we estimate the cash cost to the business will be around £156,250.

With many contracts stalled, working capital is tight and this kind of dent to our cash position will limit our ability to adapt, scale up and invest as the market recovers.  We had hoped for a delay, but failing that, extending the VAT Deferral Scheme to support construction companies who may be struggling to pay as a result of the DRC would be a potential life safer.  The process already exists with the COVID scheme (giving those that deferred in March to June 2020 even more time), but it is not open to new entrants.  If we allowed construction companies to access deferral to get over the hump of cash flow problems this would undoubtedly limit the worst of the impact.

The Impact of Immigration Policy and English Apprentice Vouchers

The nature of our work and construction procurement practices, means many in our community undertake relatively large projects with relatively short lead times that involve the deployment of large numbers of people with a variety of trade skills that work in controlled sequence.  As a result we have always relied on a flexible workforce (historically through the “cards”, latterly leaning on the labour only sub-contractor model).  This enables firms to manage risk and individuals to optimise worktime by moving between projects and companies.  The make-up of our workforce was, pre-COVID, over 40% EU worker.  As a consequence of changes to the immigration system and the relative high dependence on EU work, our Annual Recruitment Target from the UK labour pool has virtually doubled this year.  For every 5% of migrant workers that do not return post COVID or decide not to settle beyond the summer, the target doubles again. This necessitates a major overhaul of how we recruit and train.

We are working with CITB and engaged through the Construction Leadership Council in optimising the Plan for Jobs, as an organisation we have schemes in place to support unemployed workers into construction (pre-COVID, our BuildBack programme had delivered 440 unemployed people into sustained employment over a c2 year period), we are a Kickstart Gateway and we are working hard with employers and providers to build apprentice provision.  Our Apprenticeship Standard is new (completed in 2019) and we are doing all we can (in a difficult environment for training) to help build demand and provision.  Delivery requires capital investment in materials, tools and space as well as investment in trainers, assessors and materials.  We would urge Treasury to consider ringfencing and relaxing the criteria for trading of English Apprentice Vouchers and, where businesses paying cannot utilise directly, vouchers are not just cascaded to support non-levy payers in the supply chain but, where this is not feasible or practical, redirected to investment in the training centres and resources needed to support the delivery of apprentices.  In this way large businesses will be incentivised to get involved to help drive change, work with providers and develop those vital links between industry and skills provision.  We need this engagement to support businesses and FE colleges in making the investment to run programmes that lead to jobs and to reward progression to employment rather than simply focus on completing courses.

These are vital times for our economy and the construction sector has done all we can to keep building through the pandemic, showing, at times amazing flexibility, inspiring innovation and humbling resilience.  The suggestions above are vital keys to help us to unlock the power of this industry to help build our way to a better future, support the much needed investment in digitisation and net zero and ensure that the UK Construction sector is truly the world leader that we have the potential to be.

Yours faithfully,

Iain

Iain McIlwee
CEO, Finishes and Interiors Sector (FIS)

Find out more about the FIS Three Steps to Rebuilding Construction.

Industry Mega-Poll to Track Impact of PI Insurance Crisis

Industry Mega-Poll to Track Impact of PI Insurance Crisis

Companies from across the industry are being asked to take part in the biggest ever review of construction’s growing professional indemnity insurance crisis.

In recent years firms from across the industry have reported sharp increases in premiums for PI insurance, while also seeing stricter curbs on the levels of cover.  Some firms have reported four-fold increases in policy costs, while others have said that they can no longer secure cover.

This has been driven by multiple factors including a response to higher historic claims from the sector, as well as a cyclical hardening of the insurance market.

The Construction Leadership Council is planning steps to relieve the crisis. This includes developing a robust evidence base, identifying in detail the areas where the
industry is facing the most significant difficulties.  The CLC is asking for companies from across the industry to take part in an on-line survey

It asks companies to provide confidential feedback on the costs and policy exclusions that they have experienced when renewing their cover. The poll is entirely confidential, but firms are asked to indicate
their type of business to help target any future support on those areas of greatest need.

Construction Leadership Council Professional Indemnity Insurance Group lead Samantha Peat said: “The Covid-19 pandemic has dominated headlines for the last year, but there is a second crisis that has been quietly growing for businesses across our industry.

“We are speaking to the UK Government and insurers to find ways to help businesses that could otherwise face an uncertain future due to the nature of their PI renewals.  We want businesses from across the industry to give us their views – whether you are affected or not – to help us shape the way we prepare a response from the whole sector.

CLC chair Andy Mitchell said: “We have seen in the last year that our industry can deliver real positive change when we work together to tackle shared challenges. Given the feedback from across construction about the difficulties faced by companies, I want to strongly encourage companies to take part in this survey, letting us know about their experiences”

FIS CEO, Iain McIlwee added, “It is good to see CLC drilling down into this issue, we have growing concerns that the market for PI cover is breaking.  Companies are being charged more and more for cover that covers less and less and this is now a regular part of our discussions with members.  With the number of underwriters willing to look at construction having reduced in recent years, it is only getting worse.  Integrated Project Insurance is still scarce, but potentially offers a more effective way of managing our insurable risks – it aligns the insurance to the risk management process, it has added benefits of encouraging earlier engagement and a more collaborative approach to construction.  Whatever the solution, something needs to be done as we are heading into an insurance crisis.”

The survey will be live until 12 March 2021. Industry-level details of the results will be published by Construction Leadership Council and will be used to inform ongoing work to support the sector.

FIS is encouraging all members of our community to complete the on-line survey here