CONTRACTORS this week urged the government to scrap the 5% tax which is paid on employers liability insurance premiums.
The call came after Chancellor Gordon Brown announced a review of employers' liability insurance in his pre-Budget statement last week.
All employers must by law take out insurance to cover themselves against claims from workplace accidents.
The review comes as the industry battles against increasingly crippling liability insurance premiums.
Some firms have had to face insurance cost hikes of as much as 400% over the last 12 months.
Despite this, government has so far refused to act.
'By deliberately pricing themselves out of the market, insurers have already driven firms out of business in other industries, ' warned Civil Engineering Contractors Association director, Rosemary Beales. 'Unless the government steps in, the construction industry could be next.'
Rail contractors are feeling the brunt of insurance increases, as this sector is considered among the most risky.
In response, firms have to pay skyrocketing premiums because there is only a handful of insurers prepared to offer cover.
Small firms are most likely to suffer as they are more likely to find themselves competing against uninsured cowboy firms, said a Construction Confederation spokesman.
Ruth Grant, a construction partner at law firm Lovells, said a host of factors had led to the current price hike. These are the impact of the 11 September terrorist attacks, the weakening of the investment market and traditional cyclical trends in the insurance market.
A House of Lords ruling on asbestos claims also added to percieved risks for insurers.