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‘An industry with no cash’

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Job retention scheme may be too late for many firms

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Nearly 80% of construction firms in Scotland have no cash flow and two thirds have furloughed employees in the wake of the coronavirus shutdown.

The statistics are revealed in a survey by the newly-formed Construction Industry Coronavirus (CICV) Forum which has called for faster action on the job retention and business loan interruption schemes announced last month.

More than a third of businesses surveyed have closed completely while a quarter have staff and sub-contractors in self-isolation.

John McKinney, secretary of the Scottish Contractors Group, one of the trade associations involved in the CICV, said: “These disturbing results illustrate very clearly that the construction sector in Scotland is being hard hit despite the measures that have been put in place to alleviate the pain.

“It is clearly incumbent on all branches of government and public bodies to step up efforts to expedite payments under the Coronavirus Job Retention Scheme announced by the Chancellor in March. However, there is a danger that even this may be too late for many firms, especially smaller enterprises.

“The same urgency is required for the Coronavirus Business Interruption Loan Scheme, which needs to be fast-tracked. Nearly half of companies which have applied have found the process cumbersome and difficult.”

A spokesman at one firm said: “Cash flow is a major concern; we will only last a maximum of six weeks if government funding or bank loans don’t come through. We will then have to start making staff redundant.”

Another contractor expressed frustration at businesses that continue to ignore the lockdown. “I’d like to see a clampdown across the whole industry, with penalties enforced on those flouting government instructions.”

Companies also called for better information from the UK and Scottish governments, urging greater clarity over what work can be carried out and the financial and commercial implications of the virus.

“What about when it’s all over – how heavily are we going to be penalised financially through tax and VAT?” asked one contractor.

The survey followed last week’s forecast by Strathclyde University’s Fraser of Allander Institute that construction in Scotland could contract by 40-50% if coronavirus restrictions remain in place for three months.

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©Scottish Plant.  Article posted 15/4/2020