Almost all of Scotland’s ‘forgotten’ builders have furloughed over 80% of staff

More than three-quarters of Scotland construction sector has reported a cease to all cash flow stop while 95% have furloughed at least 80% of their staff, a new survey has revealed.

Almost all of Scotland’s ‘forgotten’ builders have furloughed over 80% of staff

Despite this, the Scottish Building Federation (SBF) said the sector has been “forgotten” and has called on the UK and Scottish governments to offer support similar to that given to other sectors forced to close due to COVID-19.

Whilst the retail, hospitality and leisure sectors have been designated “heavily-impacted” sectors who benefit from 100% rates relief, and further grant funding, the construction sector, which employs over 170,000 people and makes up 10% of Scotland’s GVA, has received no specific support. The SBF’s survey also indicated that only 36% are eligible for the £10,000 grant funding offered through the Small Business Bonus Scheme (SBBS) and Rural Rate Relief (RRR).

Over a hundred SBF members responded to the survey undertaken during the past week and reinforces the findings of the survey by the Construction Industry Coronavirus Forum (CICV Forum) of which SBF is also a member.

Key findings include:

  • 95% have furloughed between 80 -100% of their workforce.
  • 76% report that cashflow has stopped entirely
  • 36% have indicated that they are eligible for £10,000 grant funding through SBBS and RRR
  • 98% of sites controlled by SBF members are closed in compliance with guidance issued by the Scottish Government, with the remainder falling under the ‘essential work’ category.
  • 71% want similar support to that offered to retail, hospitality and leisure sectors that have also been told to shut

Unlike the retail sector, SBF said the construction sector cannot adopt alternative measures of getting their product to market, therefore it has no other means to generate revenue and bring cash into the business whilst sites remain closed.

Also unlike the retail sector, where cash flow returns as soon as customers buy products or services, cash will not start to flow into construction businesses immediately after the sites reopen. Work has to be carried out before any payment will be received and given the payment processes involved under the majority of construction contracts, the cash will not start to flow into businesses for a period of around two months following a return to work.

SBF is asking the Scottish Government to bear this in mind when considering any additional measures that may be made available to assist the construction sector during the initial period following a return to work when it is considered safe to do so.

Vaughan Hart, managing director of SBF, said: “Most of our members are Scottish-based SMEs and have heeded the Scottish Government’s advice to stop working to protect both their staff and the wider community. We thank our members for acting in a responsible manner at this time whilst we gain a greater understanding of what we need to do in order to ensure the safety and wellbeing of those working in our industry.

“We welcome the Scottish Government’s second phase of funding which includes a fund of £100m to support businesses in financial distress due to COVID-19.

“Other heavily-impacted sectors which were initially advised to close have rightly received significant support and other industries have now received bespoke support packages from the Scottish Government. Construction seems to have been forgotten despite being one of the most crucial sectors to the Scottish economy.

“Our sector employs over 170,000 people and is 10% of the Scottish economy but many of our members are struggling. They urgently need specific support from government if they are to survive the current crisis and be in a position to help rebuild the Scottish economy when it ends.”

  • Read all of our articles relating to COVID-19 here.

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