Chancellor Gordon Brown may introduce an aggregates tax designed to deter quarrying for environmental reasons.
Brown first suggested the idea in May 1997 and in November's pre-budget statement said that the aggregates tax was still being considered. The tax would need to be backed by legislation and would take at least a year to introduce.
The hike would be a further blow to contractors that have been hit by price rises announced by leading producers including Hanson, Tarmac and Aggregate Industries. The rise is thought to average about 5%.
The Quarry Products Association, which has been lobbying against the tax, believes the budget is crunch time. Association economist Jerry McLaughlin said: "This is it. It could literally go either way." The association has attempted to appease the government by proposing environmental initiatives. These include bringing all quarries into line with tough ISO 9001 standards, contributing to local authorities' planning costs to help police the industry and providing 拢20m to fund initiatives.
Simon Vivian, chief executive at Hanson Quarry Products Europe, said there was a danger that the tax would be a money-making exercise rather than a genuine attempt to protect the environment.
The construction industry is also hoping the budget will clarify the Treasury's position on a cut in VAT for repair and maintenance work.
Civil servants at the DETR are understood to have been lobbying Treasury colleagues for a cut in VAT on repair and maintenance work in return for the introduction of VAT on new building work. The DETR argues that the cut is the only way to tackle cowboy builders.
Construction Confederation public affairs director Stephen Ratcliffe said he was hoping for a hint that a VAT cut was being considered. "I'd be extremely surprised if they announced a cut straight away. The only thing that might be in the budget is a commitment to look at it." The Major Contractors Group is also hoping the budget will include a clear statement on the future of the private finance initiative.
Contractors are concerned that the government's plan to introduce a central fund to back PFI deals will mean the private sector loses out.
Director Jennie Price said: "A mention in the budget would make a lot of sense. It's extremely important that we get some clarification of PFI.
"It's important because of the large investment contractors have made in it and because of the way they have structured their businesses around the way it works. If financing is taken out of the hands of the private sector, it will be a major concern."
