Blog: The red tape strangling Scotland’s property and construction sector

Lorraine Macphail
Lorraine Macphail

Lorraine Macphail is head of property and construction, Scotland at Grant Thornton

In 2009, Scotland’s property and construction sector faced a crisis. The industry was one of the worst affected by the global economic downturn. Thousands of workers were laid off as businesses were forced to scale back their operations or face the risk of administration.

The good news is that growth has returned to the sector. Grant Thornton’s Scotland Ltd 2015 research, exploring the top private companies in the country, has revealed an increase in turnover, employee numbers and – crucially – a rise in both public and private sector contracts.

But, behind those positive highlights, deep concerns linger about the long term fragility of one of the country’s most important industries. From house builders to major infrastructure suppliers, the almost universal view is that red tape and bureaucracy are holding back development and more sustainable, long term growth.

Buoyed by demand for housing and a spree of recent government infrastructure projects, the industry is ready to flourish, but it needs an element of freedom to enable that growth. Both Holyrood and Westminster appear to be keen to listen to the concerns of the sector, but urgent action is required now.

The recent Budget went some way to offering support. A reduction in Corporation Tax, combined with reforms to the grossly out-dated Business Rates system and a commitment to further infrastructure investment, goes some way to reaffirming support for the sector. But, while it’s a step in the right direction, much more needs to be done. Action must be taken to unlock available land, further reductions in burdensome taxes should be considered, more detailed consultations need to take place with the industry to avoid further issues such as the removal of rates relief on empty units, which has caused difficulties for developers, and a long term strategy should be devised to explore how to maintain funding and support for a long-term mix of private and public projects.

Figures from The Scottish Property Federation reveal that building firms alone are contributing around £10bn every year to Scotland’s GDP. Employing around 200,000 people, these firms are contributing around 10% of our country’s productivity. The statistics speak for themselves. Our property and construction industry is an essential, core part of our economy. All parties need to work together to ensure its sustainable, long term future.

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