Banks still failing construction

That is according to the Federation of Master Builders (FMB), which has found that one in four of its members has missed out on contracts because they cannot secure funding.

The latest figures for the ‘funding for lending’ scheme show that lending fell significantly in the last three months of 2012.

More than 40% of construction SMEs surveyed said they had found it harder to gain access to finance in the past two years, while 43% reported that credit is more expensive than two years ago and 25% faced increased charges for credit facilities.

The FMB said that its survey confirmed its fears that “banks are actively discriminating against construction firms”. 25% of respondents reported that they had lost work as a result, and 16% said they had been refused requests for credit by a bank that had previously considered them trustworthy – explicitly because they work in the construction industry.

 Of those surveyed, a quarter reported they had lost business or had to abandon plans for growth or investment because they were unable to raise the necessary funds, and 18% said that the number of staff they were able to employ had fallen as a direct result.

The FMB has now written to business minister Michael Fallon – whose portfolio includes construction – asking him to intervene and have a word with the banks.

FMB chief executive Brian Berry said: “What we are seeing is that otherwise viable and successful firms cannot access suitable finance for business operations, including buying new equipment and plant. This is having a serious knock-on effect on jobs and growth in the sector.

“The fall in net lending by banks under the government's funding for lending scheme comes as no surprise. SMEs and the construction industry are continually touted as the drivers of economic recovery but, without access to finance, the sector will continue to decline.”

He added: “The government needs to prevail upon banks not to discriminate against viable and successful firms just because they work in the construction industry. If the funding for lending figures don't improve significantly in the first quarter of 2013, the government needs to urgently explore alternative vehicles to improve the flow of finance to construction SMEs.”

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