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Tue July 07 2020

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Coronavirus: Small builders feeling the pressure

20 Mar A survey of members by the Federation of Master Builders this week has found that 78% of them are already seeing projects delayed or cancelled due to the coronavirus outbreak.

The Federation of Master Builders (FMB), which represents small and medium-sized construction building companies, has written to the secretary of state for business, the housing secretary and the chancellor of the exchequer asking for help.

The letter, signed by FMB chief executive Brian Berry, says: “I cannot stress enough that for many small building companies the impacts of Covid-19 are being felt immediately, and most firms cannot wait days or weeks, let alone months for financial support. Building firms are struggling as much as other sectors but unfortunately have not received the same attention. We recently surveyed our members on the impact of COVID-19, and they told us that the following impacts have already taken place:

  • Delays and cancellations: 75% of FMB members operate in the repair and maintenance sector, primarily in the domestic market. Social distancing measures have meant three quarters (76%) of members have reported cancelled, delayed or paused projects. Cashflow is king in the construction industry and any delay to a project can have serious financial implications. The vast majority of firms (98%) have reported they will be unable to reclaim on their insurance for losses.
  • Fall in enquiries: Just under two thirds (64%) of FMB members have seen a fall in the number of enquiries.”

The FMB has asked the government to:

1. Provide a three month tax holiday on VAT, PAYE and CIS payments and delay the implementation of reverse charge VAT by a year;

2. Extend the £25,000 cash grant currently only provided to retail and hospitality to construction firms;

3. Provide the equivalent rate of statutory sick pay to the self-employed who fill 37% of industry jobs;

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4. Ensure that the coronavirus business interruption loan scheme is quick and easy to use, and is launched as soon as possible.

The FMB is also calling on the government to work with the Construction Industry Training Board to help employers keep their apprentices; provide clarification to builders and householders whether social distancing means all domestic building work must stop even if all concerned are well; and start to issue construction industry-specific guidance.

Brian Berry said: “The government has overlooked the market in which small builders operate. Builders working in the domestic sector simply cannot work from home and are already feeling the impact of the pandemic as a result. The government must intervene as a matter of urgency if small building companies are to protect their workforces, avoid further job losses, and prevent building companies going to the wall.”

He continued: “We mustn’t allow a repeat of the 2008 recession when one in three SME construction firms left the industry. Building new homes and levelling-up infrastructure will be key to rebuilding our economy after the virus has passed, and the government will need an army of builders in place to deliver that.”

Build UK is also seeking government intervention on the issue of insurance, among others. "We know that insurance is an issue for many businesses," said Build UK yesterday. "The Treasury has confirmed it will stand behind those businesses that have business interruption insurance policies which include pandemics, but will have excluded Covid-19 because it is such a new virus. However, many small businesses will still not be insured through business interruption policies because most are dependent on damage to property and will exclude pandemics.

The Construction Leadership Council is  is calling for the government to declare the pandemic an event covered by force majeure.

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