Material shortages causing construction problems

Aug 12, 2021
Stephen is one of the firm’s tax partners. He specialises in income tax, capital gains tax, corporation tax, inheritance tax, and stamp duty land tax. He also specialises in advising property and construction businesses.
construction material shortage

After a promising few months of record-breaking growth in the construction sector, the IHS market index has registered as 58.7 in July. It is important to note that this means there is still growth in the industry as any score above 50 demonstrates growth. However, this is a substantial decrease from the previous month’s score of 66.3. Is this a signal that the backlog of construction work that built up over the pandemic is starting to run out?


Why has growth shrunk so suddenly?

There have been reports of widespread supply issues across the sector with over 80% of those surveyed in the industry reporting rising costs in July and 66% reporting longer delivery times. This is most likely to do with the shortage of haulage drivers in the UK at the moment. This is making it extremely difficult for constructions firms to source building materials which is resulting in productivity being reduced. In addition, the Royal Institute of Chartered Surveyors has predicted that costs of building materials are likely to increase by 10% over the next 12 months. It is believed that the price increase is linked to issues that are unique to the UK. For example, a shortage of haulage drivers, impact of Covid on the supply of materials, Brexit trade frictions, and a shortage of contractors.

Another reason why growth has shrunk so suddenly is that some construction firms have said that pent-up demand is starting to ease resulting in lower growth for new orders.


How can we help?

At Hawsons we have a dedicated team of property and construction accountants at our offices in Sheffield Doncaster and Northampton.

Having an accountant who understands the challenges of this dynamic sector and is able to help you plan for the future is an advantage in a competitive environment. At Hawsons we have a great deal of experience in advising and helping businesses in property and construction and we can assist you as your business grows.

Our in-house tax team have advised in many aspects of taxation specific to the property investor including in the areas of VAT, Capital Allowances, Income, and Corporation Tax and Capital Taxes.

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Stephen Charles, Tax Partner

Stephen Charles

Tax Partner, Sheffield

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