The Federation of Master Builders addressed the ‘closed shop’ culture reported by SME workers who say it prevents them from landing bigger projects.
In a review by AXA, SMEs reported growth in the face of a difficult winter for the industry, but are struggling to diversify into housebuilding and public works. Despite the collapse of Carillion and the fact that 56% of SME building firms in AXA’s survey predicted rising workloads in the next six months, it is claimed big contracts are still only going to an elite circle of companies. SMEs that did win housebuilding and public projects said that it was because they knew the right people.
Sarah McMonagle, Director of External Affairs at the FMB, said: “AXA’s findings represent a more optimistic outlook than the FMB’s own research. Our latest State of Trade Survey shows that fewer than half of construction SMEs predict rising workloads in the coming three months. Indeed, although workloads for construction SMEs remained positive in the first three months of this year, they grew at a slower rate than in the final quarter of 2017.
“AXA’s research also shows that despite two-thirds of construction SMEs wanting to diversify into larger projects, including public sector contracts, just 10% said that they are likely to do so. We are therefore calling on the Government to do more to make public sector contracts accessible to small, local firms. By breaking larger contracts down into smaller lots, it will be possible for SMEs to be the principal contractor as opposed to being left with two choices – not carry out public sector work or only carry out public sector work by forming part of the supply chain for a major contractor. As we know, the latter has never been so uninviting what with Carillion’s collapse and unfair payment still being rife in our industry.
"Using smaller local businesses provides real local economic and environmental benefits. SMEs employ local people, meaning that the money spent is likely to go to local suppliers and remain within the local economy. Furthermore, in the construction sector, two-thirds of apprentices are trained by SME firms.
“If the government procures a greater proportion of its products and services from a broader range of small companies, it will reap the benefits."