'A fourth year of less building work'

BUSINESS is not looking good for small to medium-sized construction firms, according to a new report.

They are about to enter a fourth year of falling workloads, say the shock findings.

And a third of companies in the sector are expecting to cut their staffing levels this year.

The latest State of Trade Survey from the Federation of Master Builders (FMB), the largest trade association in the UK construction industry, paints a bleak picture for the sector which has already seen a number of construction firms close down in West Yorkshire.

Richard Diment, FMB director-general, said: "The construction sector has still not reached the bottom of the most savage recession for the industry in living memory.

"Cuts in government expenditure are making matters worse with more than half of building companies reporting falling levels of work in public repair and maintenance work.

"Our survey shows a sharp increase in those expecting workloads to contract once again in the first quarter of 2011.

"The Government is pinning its hopes of economic recovery on the creation of new jobs in the private sector but its policies are having exactly the opposite effect in the building sector.

"The increase in the rate of VAT earlier this month will cost the construction sector nearly 7,500 jobs this year alone.

"Cuts in public sector spending on social housing are having a particularly adverse impact with nearly half of building companies reporting that work in this sector had fallen."

He added: "The construction sector has the potential to build Britain out of recession and we know that for every 1 spent on construction output generates a total of 2.84 in total economic activity.

"If this could be coupled with expenditure on infrastructure projects as well as tackling the growing housing crisis the Government would be building the real foundations for a sustained economic recovery."

In the survey, the FMB found that 47 per cent of the firms surveyed expected workloads to contract in the beginning of 2011. In the last quarter of 2010, construction workloads fell for the twelfth successive quarter.

Gareth Harris of RSM Restructuring Advisory LLP

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