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Specialist Contractors Fear Worst From Budget Cuts

27 Oct 10 The construction industry is bracing itself for a period of uncertainty following the Government’s Spending Review according to the latest NSCC State of Trade Survey.

The results for the third quarter of 2010 reveal a sharp decrease in expected workload with just 25% of Specialist Contractors predicting an increase over the next quarter, down from 40% in quarter two.

The Spending Review saw capital budgets slashed by up to 74% across Government departments with Local Authority spending set to fall by almost 30% over four years, making it unclear where future work is going to come from. The impending cuts are already having an impact on enquiries and orders with 36% of Specialist Contractors reporting a decrease in enquiries and 45% a fall in the number of orders.

Payment practices have worsened for the third successive quarter with just 2% of Specialist Contractors now receiving payment within 30 days. This is in spite of a commitment to 30-day payment throughout the supply chain in the public sector, which has been accounting for 40% of construction work in recent years. 83% of respondents have monies withheld against them in retentions, almost a third of which are overdue for release at an average of over £50,000 per respondent.

The NSCC Chief Executive, Suzannah Nichol MBE, commented on the outlook for Specialist Contractors:

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“The construction industry is facing another difficult period while we wait for the impact of the Government’s Spending Review to become clear. This quarter’s results highlight the detrimental effect of uncertainty on the specialist sector and restoring confidence will be vital to the long term recovery of the industry and the wider UK economy.”

NSCC contributes its findings to the State of Trade Survey published by the Construction Products Association (CPA) to enable the experiences of the specialist sector to be compared with the wider industry.

The full State of Trade report can be viewed by clicking onNSCC State of Trade Report: 2010 Q3.  

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