Almost a third of Britain’s small building firms have shed staff since the turn of the year, according to new research from the Federation of Master Builders (FMB).

The FMB’s quarterly State of Trade survey found 30 percent of builders have shed staff in the first three months of 2013, up from 27 percent in the final three months of 2012. The results also showed a sharp decline in workloads with 39 percent of respondents reporting a drop, up from 31 percent in the final quarter of 2012. Plus, the number of respondents reporting and increase in work fell to 18 percent from 22 percent.

Respondents predicted that wages, materials and output prices would all go up in the next six months. Brian Berry, chief executive of the FMB, called on the Government to cut VAT on home improvements to help stimulate activity in the industry.

Although a fairly positive set of results in the final quarter of 2012 indicated the industry may be turning a corner, Mr Berry claimed the latest survey results “paint a bleak picture”.

He concluded: “Our members are telling us that they are faced with the unenviable choice of putting up their prices or laying off staff.”