Recipro reports on banker’s bias against the construction industry

posted 10.06.2011
Bankers are being accused of prejudice against UK construction companies; this claim comes after at least a third of small contractors have been denied loans!

Shadow Business Minister Gordon Banks, who has worked in the construction industry for 31 years, with companies such as Costain, Barratt and Cartmore Building Supply in Fife, is now calling for Business Secretary Vince Cable to increase the pressure on banks to begin lending again.

Mr Banks said: “At last the secretary of state is recognising the failings of the banks in respect of lending and nowhere is it being felt more acutely than in the construction industry. High rates, high set up and management costs are all impacting negatively on the sector. What the banks and indeed the government fail to grasp is that a strong construction and indeed housing sector is necessary for economic growth in the UK. The industry is also a major skills provider and without bank lending into the industry, skills targets will not be met and the UK economy will be all the poorer for this failing.”

He went on to say: “The government acknowledges that Project Merlin has fallen at its first hurdle but sadly it has been duped by the banks and is now in a position where it can do very little if they won’t budge.

"That Santander has withdrawn from the Business Growth Fund further weakens this fund and suggests that there is little to be gained from it if individual lenders are able to do their own things to the same effect, as seems to have been suggested by the secretary of state.”

The Federation of Master Builders have come out very strongly over this issue and want an end to what they see as a bias against the construction industry due to the banks believing it to be high risk.

FMB director of external affairs Brian Berry said: “The banks have decided that the construction industry is high risk and good firms with exemplary credit histories are having facilities withdrawn and prices raised as a result. More than a third of FMB members have seen access to credit restricted and nearly half have had the cost of it increased. Banks have also restricted the availability of credit to construction clients, with nearly two thirds of our members saying that access to credit is also hampering the commissioning of work by clients.

Recipro feels that without the support of the banks and the government the construction industry will struggle to come out of this recession which is detrimental for the economy of the UK as a whole.

Recipro sourced this article from Construction enquirer & Construction index.

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