Pre-budget: Help plant by helping banks, say manufacturers

Plant manufacturers will not see an upturn in their fortunes until the banks can lend on normal terms again, the Construction Equipment Association (CEA) has warned.

In his response to the pre-Budget report, CEA chief executive Rob Oliver said: "My view is that the credit crisis has really choked demand for construction equipment.

"Until the banks feel able to lend on a normal commercial basis again, the government is doing nothing more than trying to inflate a punctured balloon."

He also criticised the government's decision to cut VAT rates from 17.5% to 15%, arguing that a greater investment in construction would have safeguarded and created many more jobs.

But he welcomed the governments plans to bring forward £3bn to spend on housing and infrastructure from 2010-11 and called for it to be deployed to projects on the ground quickly.

There was also disappointment that the government had not done enough to help fuel prices fall.

Chancellor Alistair Darling announced yesterday that fuel rates would rise to compensate for the cut in VAT, on the basis that motorists, haulage and plant firms were all benefiting from falling oil prices.

But James Hookham, the Freight Transport Association's director of policy, condemned the move:

"By offsetting the reduction in VAT with an increase in fuel duty, he has added thousands to the transport bills of companies across every sector. Not only does this hurt businesses directly, it also hurts the consumer, who will end up paying more to cover transport costs,” he said.