As sites re-open, productivity has understandably dipped due to important social distancing measures. However, this is impacting on income and the Government must therefore delay the implementation of reverse charge VAT to avoid further cashflow issues for small firms. Construction PMI data published today found that activity continued to decline in May, albeit at a slower pace than in April, with new orders also dropping off.

Brian Berry, Chief Executive of the FMB, said: “Small to medium-sized (SME) builders are safely returning to work, but important social distancing measures on sites are understandably hampering productivity. That this is having an impact on cashflow means it’s essential that the Government delays its introduction of reverse charge VAT by at least one year. This disruptive tax change risks hitting SMEs the hardest at a time when we need to protect jobs and livelihoods. Delaying this policy would acknowledge that SMEs provide the bedrock of the industry and help support the recovery of the construction sector.”

Berry concluded: “Looking ahead, we know that further support will be necessary to ensure SMEs lead the recovery of the industry. I’m calling for several key interventions, including a national retrofit strategy which will help us to reach net zero carbon and create jobs. I also want to see barriers removed for local house builders so they can bring forward more homes, and greater support for SMEs to train apprentices. These firms operate across the country, are crucial to their local economy and are therefore central to the Government’s ‘levelling-up’ agenda.”

Notes to editors

The Federation of Master Builders (FMB) is the largest trade association in the UK construction industry representing thousands of firms in England, Scotland, Wales and Northern Ireland. Established in 1941 to protect the interests of small and medium-sized (SME) construction firms, the FMB is independent and non-profit making, lobbying for members’ interests at both the national and local level.

The FMB is a source of knowledge, professional advice and support for its members, providing a range of modern and relevant business building services to help them succeed. The FMB is committed to raising quality in the construction industry and offers a free Find a Builder service to consumers. 

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