The letter, to minister of state for housing and planning Rachel Maclean, calls on the government to ‘focus policy proposals on a sector experiencing significant pressures’.
It says a new approach will be ‘pivotal to achieving house-building targets and economic aims’.
Measures that the FSB is advocating is deferring payment of community infrastructure levy (CIL) for small house-builders until they have made a sale on a development.
According to FSB’s latest Small Business Index, confidence among small builders plummeted from a score of 27.4 in the first three months to -31.8 by the end of June. Increasing late payments and spiralling running costs are among issues of concern.
FSB research found that more than a third of small construction firms (39%) experienced an increase in late payments between the first and second quarter of the year. Over the same period, almost 90% of small construction businesses reported higher running costs compared to the same time last year. Input costs are a huge driver of this, cited by 75% of construction firms in Q2, up from 44% in Q1, FSB reports.
If the government intends to meet its target of one million new homes over the life of this parliament, more focus is needed on helping small construction firms, the federation told the minister. Other policy proposals about the regeneration of 20 towns and cities across the country and an £800m injection into brownfield sites, while welcome, lack detail in how small construction businesses will be involved.
The Federation of Small Businesses has set out what it calls a wish-list of six measures to support small builders:
- A small construction business strategy to bring small housebuilders into the fold of government decision-making, ensuring that new and existing policy proposals provide focus on smaller firms.
- Brownfield development relief for small construction businesses using the model of land remediation relief.
- Small builders to be allowed to pay community infrastructure levy (CIL) due on any project at the end of the process on sale, rather than up-front.
- Government to reaffirm its target of 33% of public procurement money reaching small businesses, as well as require councils to measure this in their development projects and extend this intent to joint venture use of land.
- The creation of a national database of available public land for development and joint venture opportunities. (Larger construction businesses often have the advantage identifying and securing these partnerships, FSB says).
- Supporting the increased use of project bank accounts and reduce the maximum amount of retention payment funds that can be held to 2% of project value.
FSB policy and advocacy chair Tina McKenzie said: “Small construction firms are key to achieving house-building targets, giving a much-needed shot in the arm to the economy. But without targeted policies this cannot happen. Despite recent ambitious government announcements within the sector, smaller firms are being left out. On top of this, small construction firms are being hit particularly badly by late payments and ever rising costs, both hampering their ability to complete projects and having a serious impact on cash flow.
“Government needs to take the opportunity to put small construction firms front and centre of decision making. Measures like creating a focused strategy to ensure they are not forgotten when it comes to setting future policy, providing monetary support to allow small businesses to reclaim and develop brownfield sites and making changes to the way they pay community infrastructure levy would make a huge difference.”