The Building Sector is Key to Recovery

KARREN BRADY VICE CHAIRMAN, WEST HAM UTD
 
THE BUILDING SECTOR IS KEY TO RECOVERY
 

What are your thoughts on the current strength of the UK Economy? 

The UK cannot isolate itself from difficulties in the rest of the world, in particular to what is happening in Europe, its main trading partner. 

However, whilst we are international traders there is a lot we could do internally in the UK to help the economy. I believe that one of the key ways to restart the UK economy is to boost the building trade, a sector that does not rely on exports.

There is a real shortage of housing in this country, and growth in the building industry would not only help to solve this problem, but itwould generate tens of thousands, if not hundreds of thousands of jobs in industries linked with the building trade.

I believe one measure the Government could take is to relax the rules enforcing a proportion of social housing to be offered on new developments.  Any builder with undeveloped land should be given a timeframe, say 18 months, within which to develop the land and if they meet this deadline they will not have to offer any as social housing, if they don’t want to.

I would also encourage investment in property by saying anyone who rents out a second home will not be liable for capital gains tax when they sell it, and neither would it be subject to inheritance tax. I believe these measures would result in reduced rental prices and increased investment in the property market. 

Councils who are sitting on large land banks should be encouraged to build council houses. They generally have a good credit rating so could borrow the money to build at low cost, and the rent received in future would cover the interest and repayments of the loans. 

How has the financial crisis and resulting weak economy affected your businesses?

 

The current economy has affected all businesses, and football is not in a cocoon. It is harder to raise finance than it was three to five years ago, but our industry is growing in value and therefore strength, as it’s the best league in the world. It’s the value of brands that create the real value of the business.

What do you think the government can do to encourage investment in UK business? 

Create more jobs and stop talking the economy down. They need to create an environment where people feel good about spending their money, because if you are spending you are boosting economic growth.

They should also create a favourable tax regime for capital investment, rather than just reducing corporation tax. It’s interesting that recently we have been made aware that some of the largest companies operating in the UK pay next to no tax at all. If smaller companies are allowed to claim the real cost of capital investment against their corporation tax bill, this will speed up the rate of investment.

The government should work more closely with business; after all we are the ones that create growth and jobs, and it would be nice to think that that is appreciated in an environment where business success doesn’t appear to be championed or celebrated.

What changes to the tax system would you like to see? 

I would cut inheritance tax to 20% and the top rate of income tax to 40%. 

Are you a saver/investor or a spender? 

All of the above at different times. The economic environment has created opportunity and if you have cash and are in a position to invest there are plenty of opportunities around to do so. I'm not an extravagant spender, but if the deal is right I, like all Entrepreneurs, am prepared to invest with my own cash.  I calculate risks and stick to what I know.

Investment Times Issue 99 (Jan 2013)