The construction industry has always been a major part of the UK economy and it’s one that has seen some difficult times in recent years. At the beginning of the recession building firms and suppliers were particularly badly hit by a combination of factors, including the collapse of the housing market and high fuel and transport costs. However, a number of initiatives are now underway to help boost this crucial part of the economy. In addition to the planned high speed rail link and the announcement of a nuclear plant building programme, the housing minister, Grant Shapps, has also announced the Get Britain Building initiative. The scheme is designed to not only provoke growth in the construction industry, but to address the UK’s shortage of affordable and rented accommodation. The fund that was launched last year has so far managed to under-spend by £100 million, leading Shapps to announce changes to the scheme allowing smaller building projects and firms to access funding.
The fund was established last year with a pot of £570 million available to those companies constructing a minimum of 25 homes. With the £100 million funding still available the Homes and Communities Agency will now accept applications from firms building only fifteen homes. The government estimates that releasing this money will facilitate the construction of a further 2000 homes. Originally the funding was put in place to develop around 15,000 homes on sites that had previously gained planning permission but where work could not be started due to lack of ready cash. Funding from banks has become notoriously hard to access for small businesses in every industry and the construction industry in particular. The small to medium sector has been particularly badly hit and by opening up the fund to smaller firms the government scheme may offer a lifeline for this type of firm.
The announcement is expected to be a welcome one for small construction firms and their suppliers, allowing access to cash in order to continue with previously mothballed projects or begin new schemes. With figures from the Office for National Statistics showing a nine per cent drop in output in the construction industry as a whole in April this year, there’s a strong a feeling that the changes to the fund are not before time. Some experts have predicted that the downward trend in output will continue for at least twelve months, however, the broader access to the funding may well help to stabilise this vital part of the economy.
The new deadline for applications for funding through the scheme is now the 25 July 2012, only a matter of weeks away and there is some other significant changes to the scheme. The cash available is now only in the form of loans or equity-risk share and there are time limits on when building must begin and when projects should be completed. The new start date for construction schemes gives firms until 31 March next year, while a condition of receiving the funding is that the project must be completed within two years. For many small firms and their suppliers this time scale should be more than realistic and help to get the construction industry, the industry’s supply chain and the housing market a much needed boost.
For those supplying the building industry with everything from a volumetric concrete mixer to a steady stream of bacon butties, the extension of the Get Britain Building scheme to smaller firms should help to revitalise this crucial sector of UK business.