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SME workloads drop, survey suggests

Words: Laura Edgar
Construction / Shutterstock_303640871

Workloads for small and medium-sized construction companies decreased in the first quarter of 2019, according to research from the Federation of Master Builders (FMB).

The overall decline, which was reported by 29 per cent of those companies surveyed, is the first for six years. The final quarter of 2018 saw 13 per cent say workloads had declined.

Brian Berry, chief executive at the FMB, said: “This dip follows three years of political uncertainty, which have taken their toll on the SME construction sector. We knew anecdotally that the first three months of this year had been less busy for many of our members and our latest research confirms this. A perfect storm of diminished consumer confidence, rising material prices and increases in wages and salaries has resulted in the construction SME sector detracting for the first time in six years. These results are also very much in line with recent stats from the ONS and PMI data, all of which point to a wobble in the construction industry. Consumers and businesses alike are understandably putting off large investment decisions while the never-ending Brexit negotiations rumble on.”

The State of Trade Survey for the first quarter of 2019 finds that 41 per cent of construction SMEs think expectations have strengthened for the future and workloads will be higher, compared with the 33 per cent that thought this at the end of 2018.

Some occupations reported an easing of skills shortages, which the FMB attributes to there being less competition for works owing to lower workloads. The trade in shortest supply was bricklayers, with 64 per cent of SMEs struggling to hire them.

Of those surveyed, a “record-breaking” 88 per cent think material prices will rise over the next six months. SMEs think wages and salaries will increase over the next six months, up from 66 per cent in Q4 of 2018 to 71 per cent.

Berry said that while a slight lessening in the skills shortage is a silver lining to reduced workloads in some parts of the sector, the expected rise in material costs is “bad news for builders and consumers alike as construction projects, large and small, become more expensive to deliver”.

“The government must do what it can to boost the economy during this time of political uncertainty and that’s why we’re calling for a reduction in VAT from 20 per cent to 5 per cent on all housing repair, maintenance and improvement (RM&I) work. Reducing VAT on RM&I work could boost the UK economy by more than £15 billion over a five-year period, according to independent research by Experian.

“This reduction in VAT could also create more than 95,000 jobs and save 240,000 tonnes of carbon dioxide from thousands of homes. Such a VAT reduction has the backing of more than 60 charities, trade associations, business groups and financial firms as there is no other policy that would achieve so many of the government’s economic, environmental and social aims with so little cost to the public purse."

The State of Trade Survey for Q1 of 2019 can be found on the FMB website.

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