Given the publication of the troubling latest IHS Markit / CIPS PMI data, trade bodies are reflecting on the impact the 2008/9 financial crash had on the construction sector and the lessons that can be learned for the sector to survive the current coronavirus crisis.
Federation of Master Builders
Grants could bring construction SMEs back from the brink, says FMB
The FMB says that it is paramount that the Government steps up its support for small construction firms, as we risk seeing a crash similar to that experienced during the financial crisis of 2008-09 when just under half a million workers left the industry. Its statement comes in response to the construction PMI data published on 6th April. This data showed that construction activity in March fell at the fastest rate since April 2009.
Brian Berry, Chief Executive of the FMB, said: “This data is shocking but sadly not surprising. In just the first month of this outbreak, construction output has fallen at the fastest rate since the financial crisis a decade ago. It reflects what we have been hearing form our members, 60% of whom have had to stop the majority of their work, to protect their workforce and their clients during the coronavirus outbreak.
He continued: “While Government advice remains to keep sites open, for many firms this is unfeasible and unsafe. Most domestic sites are closed, and even our house building members are struggling to keep going as materials are in short supply. This is having a big financial impact on the sector, particularly on small and medium-sized firms who make up the vast majority of the industry.”
Brian concluded: “Cash grants not linked to business rates – almost 90% of small builders don’t operate from an office – are needed now to bring SME construction back from the brink. The FMB stands ready to work with the Government to develop this support stream. The loan scheme isn’t working for our members, and delays to bring other cash support online could prove terminal to hardworking building firms up and down the country.”
National Federation of Builders / House Builders Association
Further Government action needed to protect construction, say NFB members
A statement from the National Federation of Builders (NFB) and its members notes that they “remember what happened the last time the economy crashed in 2008 (when) a third of housebuilders ceased trading, 100,000 construction jobs were lost and industry has still not fully recovered. The coronavirus crisis is far more devastating and wider reaching than the 2008 crash and has the potential to see widespread closures across the entire industry.”
Richard Beresford, Chief Executive of the NFB, said: “We are in constant dialogue with our members and they have put forward their current top needs to help the industry survive and recover from the coronavirus. During this crisis, the Government has already proved it’s willing to listen to industry and it must continue to do so, if we stand any hope of protecting those who will drive our economic recovery.”
The NFB membership proposes that the Government take the follow actions as the next steps needed to protect the industry:
1: Include construction companies and housebuilders in the business rates relief exemption – Allowing reduced cost burden while our business does not receive income;
2: Immediately suspend planning contribution (CIL/section 106) payments – Businesses will be paying a tax on an income which cannot be generated;
3: Immediately suspend council tax charges on new build unoccupied/incomplete homes – Homes cannot be sold or completed, therefore will not use any council services;
4: Automatically extend all planning permissions by a year – Work has ground to a halt, permissions are lapsing and projects will take months to restart;
5: Release written sector guidance for construction – This will ensure the wider industry continues operating, as, eg: merchants, service providers have shut down, meaning homes cannot be sold or completed;
6: Open the Coronavirus Job Retention Scheme (CRJS) as soon as possible – The timeframe is too long and businesses will close while trying to manage their cash flow.
In these unprecedented times, the country must make tough decisions and the NFB believes that these actions are not only workable but most are immediately deliverable.
Richard added: “We must ensure that as many businesses remain resilient and have enough of their own cash to survive this pandemic. Our measures will help do that, especially as many companies are now not earning any revenues. If we don’t act now, thousands of companies and their supply chains will go to the wall.”
Rico Wojtulewicz, Head of Housing and Planning Policy at the House Builders Association (HBA), said: “These measures will help to save thousands of small and medium sized housebuilders. Without them, we haven’t got a hope of solving our housing and skills crisis, or levelling up our nation.”
