North West construction sector: stamina and persistence required to maintain Covid recovery

The construction sector can overcome the economic challenges of coronavirus but it is likely to be a long road to full recovery.

That’s according to a survey of 100 construction companies across the UK, compiled in association with Lancashire-based accountants and business advisers MHA Moore and Smalley.

The MHA Construction Sector Report 2020 found that while 71 per cent of companies who have used the Government’s furlough scheme planned to bring back all furloughed staff, 32 per cent of companies surveyed had been forced to make redundancies.

And while 44 per cent of those surveyed said coronavirus was having minimal impact on their business, 49 per cent claimed the impact was substantial, with 30 per cent believing it would be more than a year before business returned to pre-pandemic levels.

Joe Sullivan, partner at MHA Moore and Smalley’s Preston office said:

“The fact that the majority of firms using the furlough scheme plan to bring back all furloughed staff is a positive sign. However, the sector’s future is currently very uncertain.

“Government projects are now the most likely source of revival. Housebuilding, although buoyed by strong demand, is likely to suffer from a rise in unemployment. Commercial building is unlikely to thrive, with many companies questioning whether they need as much office space as before.”

He said with the stark contrast between companies who had felt minimal impact from coronavirus and those claiming the impact had been substantial, any future government relief must be properly targeted.

Joe added:

“Not everyone needs help and there is no blanket solution for the companies that do need assistance. In particular, the government needs to be mindful that big infrastructure projects tend to benefit larger companies the most, and even disadvantage small ones by sucking in materials and labour.”

The biggest concern, shared by 61 per cent of respondents, was economic uncertainty. Supply chain disruption also ranked high on the list of worries, mentioned by 45 per cent of respondents.

The vast majority of respondents have used of some form of Government support. 81 per cent have used the furlough scheme and 68 per cent have used the VAT deferral scheme.

However, take up of other schemes was much lower, with only 13 per cent making use of the Coronavirus Business Interruption Loan Scheme (CBILS) and 12 per cent taking advantage of the Bounce Back loan scheme.

The MHA Construction Sector Report 2020 can be viewed here.