Increasing late payments and spiralling running costs are taking their toll on small construction firms, with confidence amongst the sector falling considerably in Q2 2023, from 27.4 to -31.8, according to FSB’s latest Small Business Index.
FSB research found that more than a third of small construction firms (39%) experienced an increase in late payments in the last three months. Over the same period, almost 90 per cent of small construction businesses reported higher running costs compared to the same time last year. Input costs are a huge driver of this, cited by 75 per cent of construction firms in Q2, up from 44 per cent in Q1.
If the recent ambitious announcement by the Government to build one million homes over this parliament is to be achieved, increased focus should be placed on helping small construction firms. While welcome, other policy proposals about the regeneration of 20 towns and cities across the country, and an £800m injection into brownfield sites both lack detail in how small construction businesses will be supported to realise the essential revitalisation of residential and commercial spaces across the country.
To help support these small construction firms, FSB has set out a wish list calling for:
FSB Policy and Advocacy Chair Tina McKenzie, said: “Small construction firms are key to achieving housebuilding targets, giving a much-needed shot in the arm to the economy. But without targeted policies this cannot happen. Despite recent ambitious Government announcements within the sector, smaller firms are being left out. On top of this, small construction firms are being hit particularly badly by late payments and ever rising costs, both hampering their ability to complete projects and having a serious impact on cash flow.”
“Government needs to take the opportunity to put small construction firms front and centre of decision making. Measures like creating a focused strategy to ensure they are not forgotten when it comes to setting future policy, providing monetary support to allow small businesses to reclaim and develop brownfield sites and making changes to the way they pay Community Infrastructure Levy, would make a huge difference.”
“This list gives backing to construction firms and shows Government understands what is needed to reinvigorate the sector. We look forward to engaging across Government to implement these key measures to realise these essential and ambitious housing targets.”