The government has launched a review of freelance tax rule changes due to come into force in April

Looming changes to IR35 rules are causing widespread concern in construction.

HMRC rules are due to change from April 6 making contractors liable for determining the tax status of off-payroll professionals.

Major contractors have been auditing freelancers employed via personal service companies as thousands of professionals are braced for a move back to PAYE.

The government is now calling for evidence from affected individuals and businesses to ensure “smooth implementation of the reforms.”

Financial Secretary to the Treasury Jesse Norman said: “We recognise that concerns have been raised about the forthcoming reforms to the off-payroll working rules.

“The purpose of this consultation is to make sure that the implementation of these changes in April is as smooth as possible.”

Current rules allow workers to be employed via a personal service company (PSC) which determines whether IR35 tax rules should apply.

That responsibility is due to shift from April to contractors who will determine employment status.

Freelance workers fear they will lose out through higher tax payments while contractors will also face bigger bills from direct employment.

The government is also reviewing its Check Employment Status for Tax (CEST) online tool which has attracted widespread criticism.

Chancellor Pledges Review of IR35 Changes

Chancellor Sajid Javid is promising to review looming freelance tax rule changes which are causing widespread concern in construction.

HMRC IR35 rules are due to change next April making contractors liable for determining the tax status of off-payroll professionals.

Major contractors have been auditing freelancers employed via personal service companies as thousands of professionals are braced for a move back to PAYE.

But Javid told the BBC Radio 4’s Money Box programme “We’ve already said that we’re on the side of self-employed people.

‘We will be having a review and I think it makes sense to include IR35 in that review.”

Current rules allow workers to be employed via a personal service company (PSC) which determines whether IR35 tax rules should apply.

That responsibility is due to shift from April to contractors who will determine employment status.

Freelance workers fear they will lose out through higher tax payments while contractors will also face bigger bills from direct employment.

One industry expert said: “They are desperate for any vote they can get so alienating a million freelancers is not a good idea.”

Skanska prepares for world record pipe-jacking task

A Skanska-led joint venture is starting to prepare the way for a record-breaking pipeline push 30m below the River Humber for National Grid.

Eight 610m sections of concrete cased pipes will be pushed through Humber River tunnel
The firm has just completed the 18-month first stage tunnel drive for the £100m gas transportation project slightly behind programme.

Now preparation work is getting underway to attempt the challenging pipe-jacking feat.

This will involve painstakingly pushing eight, 610m sections of pipe at about one metre a minute through the 5km tunnel.

Before the two hydraulic thrust machines start the epic task next spring, the team must first dismantle the 3.65m diameter TBM Mary.

Steve Ellison, lead project manager of Capital Delivery at National Grid, said: “It’s the first time a tunnel has been constructed beneath the River Humber and a fantastic achievement for everyone involved.

“Over the next few weeks we’ll be dismantling the tunnel boring machine and lifting her out of the ground in sections, ready to be transported back to Germany, where as much as possible will be refurbished and renewed to get her ready for her next tunnelling job.

“The next steps for us here under the Humber involve clearing the pipes, cables and ancillary equipment that has been servicing the tunnel boring machine and preparing for the world record-breaking pipeline installation early next year.”

Hydraulic thrusters will be installed at the Goxhill site on south side of river for the epic pipeline push

The 850-tonne sections of pipe will be pushed on rollers into the new tunnel from Goxhill on the south side. To aid installation the tunnel will be flooded with water.

When one pipe section has been installed, the next will be moved into position, welded to the one in front, and the push will continue until all of the pipeline is installed beneath the river.

When complete it will be the longest hydraulically inserted pipe in the world.

Birmingham’s Curzon Street station worth up to £435m

HS2 has begun the search for a construction team to deliver the design-and-build package for Birmingham’s Curzon Street station worth up to £435m.

The new station, which is set to open in 2026, aims to unlock 36,000 jobs and 4,000 new homes. The contract has an estimated value of between £355m and £435m.

Early works contractors are on the site in the centre of Birmingham preparing for main construction works.

Designed by WSP and Grimshaw Architects, the new Curzon Street station is described as the first new intercity station built in the UK since the 19th century.

Featuring 400 m-long platforms to accommodate the high-speed services, the station will include seven platforms in 2026 when the first phase of HS2 is expected to open.

The station will be fully integrated into Birmingham’s tram network and will offer connections to the wider West Midlands.

The winning construction bidder will take over the design functions from the WSP-Grimshaw team once the scheme has been granted planning permission.

HS2’s CEO at the CN Summit
Mark Thurston will be on stage tomorrow for Day One of the two-day CN Summit. There’s still time to book your place, plus look out for all the Summit coverage and reaction over the coming days.

HS2’s other Birmingham stop – Interchange – will form part of a new gateway station for the region and is part of a larger transport hub serving the West Midlands, Birmingham Airport and the NEC.

Over the weekend the Sunday Times reported that HS2 could be delivered more than a year late and exceed its official £55.7bn budget.

The newspaper reported that negotiations over the main civils contracts for the new lines had come in “several billion pounds” above the £6.6bn budget.

Commenting on the Curzon Street procurement, HS2 chief executive Mark Thurston said: “HS2 is already unlocking new opportunities to create skilled jobs across the West Midlands and, over the next decade, the winner of the Curzon Street contract will go on to build one of the most exciting and high-profile elements of the project.

“We’re looking for the best the construction industry has to offer. Companies that share our commitment to safety, good design, environmental protection and value for money.

“Together we will deliver an iconic new gateway to Birmingham – a building the city, the wider region and the travelling public can be proud to call their own.”

Lendlease Reveal Value of Euston Redevelopment

The redevelopment of the area around HS2’s Euston station could be worth nearly £6bn, the company behind the project’s masterplan has revealed.

Lendlease, which won the master-developer contract in February, said it expected the overall Euston redevelopment covering the area around the station to be worth AUS$10.2bn (£5.8bn) when fully completed.

The value was revealed as part of Lendlease’s results for the year to 30 June 2018, in which the company recorded an estimated global development pipeline of AUS$71.1bn (£40.5bn).

The pipeline was boosted by a number of new developments in the UK, including the Silvertown Quays scheme in east London valued at AUS$6.1bn (£3.47bn) and the High Road West regeneration in Tottenham, worth AUS$2bn (£1.14bn).

Lendlease also won a development role on Milan’s Milano Santa Giulia with a development value of AUS$3.6bn (£2.05bn), taking the total European development pipeline to AUS$29.3bn (£16.68bn).

As part of Lendlease’s focus on the European market, former CEO of international operations and Europe Dan Labbad will now focus solely on Europe.

Lendlease posted global pre-tax profit for the year to 30 June of AUS$1.07bn (£610m), up from AUS$1.01bn (£570m) in the previous 12 months.

Global revenue for the company stood at AUS$16.57m (£9.43bn), down from the previous year’s figure of AUS$16.66bn (£9.48bn).

Lendlease’s UK construction arm saw gross profit hit £48.4m for the year to 30 June 2018, up from £44.8m in the previous 12 months.

The UK business reported EBITDA (earnings before interest, taxes, depreciation and amortisation) of £12.8m on revenue of £389m, giving it an EBITDA margin of 3.3 per cent.

Lendlease Construction managing director for Europe Neil Martin said the improved performance had been driven by more selective bidding in the division.

He said: “Our tight control on costs [… and] our focus on profitability rather than revenue has led to further growth in gross profit for Lendlease’s construction business.

“Our recent focus to manage risk exposure across the portfolio means that a significant amount of our workload is now construction management.

“Achieving this balance between fee and risk work has been key to this year’s positive results.

“Whilst revenue is down, the profit margin is up and this positions us strongly as we continue to deliver on the expanding pipeline.”

Despite the increase in UK profit, Lendlease’s global construction operations saw full-year profit drop 77 per cent from AUS$338m (£192.4m) to AUS$78m (£44.4m).

Much of this was down to the group’s Australian construction business, which was hit by losses of AUS$23.1m (£13.2m) for the year, compared with a profit of AUS$201m (£114.4m) for the previous 12 months.

Five Network Rail Projects to Watch

Network Rail’s CP6 programme is looming into view while several CP5 projects continue to make the headlines.

Midland Main Line

Midland Main Line upgrade_Network Rail_Masts installed between Kettering and Corby

Midland Main Line electrification was first proposed in the 1970s, yet only the London to Bedford section was completed before the scheme was ditched in the following decade.

Interest in electrifying the Midland line gradually returned, driven by its potential to cut costs, reduce emissions and improve train performance. However, in 2009 the then transport secretary Lord Adonis decided to prioritise the Great Western Main Line, with the Midlands Main Line kicked into the long grass once more.

In 2012 Conservative transport secretary Justine Greening announced funding had been released for the scheme as part of a wider £4.2bn “rail revolution”, but the project was paused in July 2015 by her successor Patrick McLoughlin amid reports of missed targets and cost overruns.

After restarting three months later, the project ran into further difficulties in July 2017 when transport secretary Chris Grayling scrapped electrification on the lines to the north of Kettering and Corby. Instead, bi-mode trains – electro-diesel locomotives – will be used on this part of the line to avoid “disruptive” electrification works.

Carillion had been the main contractor for the London to Corby route of the scheme, and its collapse in January saw work grind to a halt. After weeks of uncertainty, it was announced last week that Amey had picked up the contract and Carillion staff working on the project will be transferred to Amey.

Waterloo station

network rail waterloo 1

Waterloo was buckling under the pressure of accommodating for a 100 per cent increase in passenger capacity in the past 20 years, prompting Network Rail to invest £800m to improve and increase capacity at the station.

In April 2016, Aecom, Colas Rail, Mott MacDonald and Skanska scooped a £453m contract to transform Waterloo International Terminal and deliver platform modifications elsewhere in the station, with Skanska’s part of the scheme worth in excess of £165m.

In August last year, platforms one to four were extended to allow train operator South Western to run 10-carriage trains along the tracks from December. Platforms 20-24 will be brought back into use, platforms five and six will be shortened and the end of platforms seven and eight will be narrowed.

The revamped Waterloo International Terminal is due to re-open in December 2018.

TransPennine upgrade

network rail transpennine route upgrade map

This scheme will see journey times across the North from Newcastle, Hull and York towards Manchester and Liverpool via Leeds reduced while enabling more frequent services.

However, the project is currently at a standstill while it awaits the necessary government backing, despite contractors having been announced for the works.

In March 2017 Construction News revealed that an Amey / Bam Nuttall joint venture will deliver works to the west of Leeds, with a Murphy / Siemans alliance overseeing the programme east of Leeds.

Potential infrastructure options for the route have been submitted to the Department for Transport for consideration.

Network Rail chief executive Mark Carne revealed at the CN Summit last year that he expected the TransPennine upgrade to begin in Control Period 6 – the next funding round from 2019 to 2024.

It was confirmed in February this year that Network Rail has earmarked funding for the scheme to be delivered in CP6, though the JVs are still awaiting a precise start date.

Great Western Main Line

network rail western trackworks

The Great Western Main Line’s electrification has been plagued by difficulties since it was first announced in Network Rail’s 2014-18 rail investment programme.

In September 2014, it was estimated that electrifying the route between London and Cardiff would cost £1.6bn. However, Network Rail bosses were hauled in front of MPs on a public accounts committee in November 2015 to explain why the programme’s budget had spiralled, with chief executive Mark Carne admitting it could cost between £2.5bn and £2.8bn.

A year later, four projects within the overall Great Western programme were put on hold until CP6 – namely the electrification of lines between Bristol Parkway and Bristol Temple Meads, Bath and Bristol, Henley and Windsor, and Oxford and Didcot.

Then in July 2017, transport secretary Chris Grayling reduced the scope of the programme by announcing that Cardiff to Swansea would not be electrified.

East West Rail

network rail east west rail phase 2 map 1

This scheme envisages a new railway between Oxford and Cambridge to improve connectivity between the east and west of England.

Three phases have been set out for the work: western, central and eastern.

Section one of the western phase was completed in December 2016, with an updated connection built between Oxford and Bicester village. Section two of the western phase will upgrade and reconstruct routes between Bicester to Bedford, and is currently at consultation stage.

In December 2015 Atkins, Laing O’Rourke and VolkerRail were picked to design and construct the central phase, which covers works between Bedford and Cambridge.

The following summer saw the selection of a preferred geographic corridor for this leg of the route. Possible detailed route options continue to be considered, with construction works potentially starting in the mid-2020s.
Article Source: Construction News

Construction will be the worst affected major industry following Brexit

Construction will be the worst affected major industry following Brexit, according to a study commissioned by mayor of London Sadiq Khan.

The report, produced by data analyst Cambridge Econometrics, looked at the effects on trade, investment and labour on different sectors of the UK under four different Brexit scenarios.

Under the ‘softest’ Brexit scenario, in which the UK leaves the customs union but remains in the single market to retain free movement of goods and people, construction’s contribution to total UK GDP would decline by 3.5 percentage points – the biggest decline out of any sector, the report found.

In the event of the ‘hardest’ form of Brexit – no transition deal, no membership of the customs union or single market, and trading under World Trade Organisation rules, the industry’s contribution would fall by 8.2 percentage points – with only agriculture’s share facing a bigger fall.

Arcadis market intelligence lead Will Waller said: “It confirms a lot of what we all fear.”

Click here!
He added: “We’ve done quite a bit on the ‘hard Brexit’ scenario and for construction it would be really bad news.

“The industry needs to be pushing hard to make the government aware of this.”

Cambridge Econometric attributed the industry’s potential decline to difficulties in acquiring labour; the knock-on effect of a slowdown in the wider economy; exposure to non-tariff barriers, such as quotas and trade licences on imports and exports; and falls in investment.

The data analyst said: “Once the UK leaves the single market, it is likely that the skills shortage could get worse if the new agreements don’t allow for free movement of people.

“This could result in even higher pressures on wages as labour supply contracts, causing construction firms to face considerably higher project costs.”

The report also highlighted that the UK had benefited from €7.8bn of European Investment Bank investment in infrastructure projects, and that SMEs received €666m in European Investment Fund loans during 2015 alone.

The country will lose access to both of these funding sources after Brexit, the study noted, which could “significantly impact the ability of firms to deliver big infrastructure projects such as HS2 and reduce development opportunities for start-ups”.

RICS London policy manager Abdul Choudhury said: ”The UK Government must act promptly to keep EIB funding or introduce a new lender, or lending mechanism, to plug the gap created from the potential loss of EIB funds, particularly for shovel ready projects that are of great importance to London.”

Mr Waller notes that Cambridge Econometics have been forced to make many assumptions in its work, and others are sceptical of its reliability.

CPA economics director professor Noble Francis said: “Forecasting the next 12-18 months is challenging enough given the uncertainties around so Cambridge Econometrics attempting to forecast the effect of a hard Brexit on the economy and construction in London by 2030 is dubious to say the least.

”According to the research, overall impact of a hard Brexit would be a 3% hit to the economy by 2030 but the margins of error must be greater than that.”

Mr Waller also noted that there were threats to construction that were not covered clearly in the report which also needed to be addressed.

“Just disruptions in customs could lead to practical delays in delivery of materials,” he said.

“So we’re all going to have to think about our projects in terms of: do we need to change our procurement, do we need to stockpile materials. And that planning needs to start now.”

He suggested that one possible silver lining could be a decline in commercial construction freeing up the supply chain to put more resources into housebuilding.

The mayor of London said the report emphasised the risks the country faced and called on the government to do more to avoid a hard Brexit.

Mr Khan said: “If the government continues to mishandle the negotiations, we could be heading for a lost decade of lower growth and lower employment.

“The analysis concludes that the harder the Brexit we end up with, the bigger the potential impact on jobs, growth and living standards.

“Ministers are fast running out of time to turn the negotiations around. A ‘no deal’ hard Brexit is still a very real risk – the worst possible scenario.”

Latest Results from Jobs Outlook.

As the year draws to a close and we look forward to the Christmas break it’s a good opportunity for us to reflect on 2017 and what the jobs market will have install for us in 2018.

It has been a very busy year for Intersect Global.
Demand for both permanent and contract staff has been strong and the skill shortages our industry faces have continued to become increasingly apparent and challenging.

As Crossrail’s completion date draws closer other major projects such as HS2 and Hinckley Point will increase in activity and it will be interesting to see how employers cope with their recruitment needs.

Its seems like significant changes are on their way for the contract workforce operating in the private sector, by way of changes to taxation.
Having recently attended a consultation meeting with HMRC on this matter it appears that industry has 18 – 24 months to prepare its self.

Here is a quick summary of the latest results from Jobs Outlook:

53 per cent of employers would have to take action if the recent budget introduces new measures which would increase their staff costs because of changes to taxation such as IR35, and one third of employers would have to increase their prices,

The latest Jobs Outlook survey of 600 employers also shows:
• 42 per cent of respondents expressed concerns that not enough permanent workers would be available to meet their demands and 40 per cent say the same for temporary agency workers.
• 80 per cent of employers say they have none or just a little spare capacity in their organisation to take on more work without new staff.
• 22 per cent of employers still plan to hire additional permanent staff in the next four to 12 months.

We would like to thank all of our clients, candidates and suppliers for their continued support and would like to take this opportunity to wish you all a Merry Christmas and a Happy and Healthy New Year.

PWC Report on EU Workforce Post-Brexit

In a report on post-Brexit economic prospects, PwC highlighted that EU migrants make up around 10 per cent of the UK construction industry’s workforce.
In London, this figure rises to 30 per cent, based on 2016 figures from the Office for National Statistics.
In March, the Royal Institution of Chartered Surveyors warned more than 175,000 construction workers could be lost due to a hard Brexit.
However, a push to attract and train more UK-born workers to construction, which has been advocated by a number of industry leaders, is unlikely to produce the necessary results in time, PwC warned.

“In the long run, efforts could be made to fill skill gaps arising from lower EU migration through enhanced training of UK nationals and automation,” the report said.
“But, realistically, such alternatives are unlikely to make up for any large reduction in EU migrant workers over the next five to 10 years.”
The comments chime with those made by Build UK’s new chairman, Mark Castle, to Construction News in September.
The industry has been looking at new ways to attract UK talent.
In September, Kier launched an initiative committing to staff visiting schools as career ambassadors.
PwC’s report also forecast that overall UK GDP growth will slow to 1.4 per cent next year, down from 1.5 per cent in 2017.
“This reflects slower consumer spending growth, offset by some rise in UK exports and public investment,” the report said.
“But risks to growth are weighted to the downside due to Brexit.”

Government Initiative Required to Ease Skill Shortages

Former home secretary Lord Blunkett has vote to force the government to “pull its finger out” on skills to prevent a labour shortage for the UK’s major infrastructure projects.
Speaking to Construction News, the Labour peer said the government must get colleges and education providers “geared up” to offer the construction skills needed for projects such as HS2 and the expansion of Heathrow.
“If we don’t plan now to get the careers advice in place at schools and get apprentices increased we are going to be in real difficulty,” he said.
On the prospect of Brexit, Lord Blunkett said the situation “adds a real urgency to the immediate future”.
Arcadis has estimated that UK construction could lose up to 215,000 workers by 2020 under a hard Brexit.

The Labour peer added: “Either we get our act together with diversity, with women, with people who have been unemployed for a long time coming back into workforce, or we end up with a massive shortage.”

Lord Blunkett, who also served as education and employment secretary in Tony Blair’s government, warned:
“We could end up putting the work out for other countries, which in my view would be a catastrophic outcome.”
The Labour peer, who is chairman of the Heathrow Skills Taskforce, was speaking to coincide with the launch of an online forum to gather views on the airport’s future education, employment and skills strategy.
Four logistics hubs are expected to be set up by Heathrow across the country to create 180,000 new jobs, including 10,000 apprenticeships, as part of the airport’s proposed expansion.
As part of his role on the taskforce Lord Blunkett has also met leaders from other major infrastructure projects, including Tideway, HS2, Crossrail and Hinkley, to discuss tackling the skills strategy.

“It’s clear we’re all in the same boat trying to plan ahead for major investment and skill shortages,” he said.

“What we hope to do is time the requirement for particular skills in such a way that people can transfer from one major project to another.”

On the government’s new T-Levels, designed to give parity to technical qualifications, Lord Blunkett said they are a “contribution” but added “unless they are actually implanted very quickly they are going to be behind the timeline”.

He added: “Part of the job of the taskforce is to persuade the government to pull its finger out and make this part of the follow through from the industrial strategy green paper.”