Construction industry bosses have blamed a lack of bank lending as the major cause of a decline in private sector building work over the past 12 months, according to the latest quarterly membership survey by the Scottish Building Federation.

The new results also show that industry confidence has slipped eight points compared to the previous quarter, taking confidence levels back to where they were this time last year. Compared to an overall rating of MINUS 21 for the first quarter of 2010, confidence now stands at MINUS 29.

88% of those responding to the new survey confirmed that they had seen a decline in private sector work during the previous financial year. Alongside a general lack of confidence in the economy, lack of demand from private sector clients and lack of bank lending facilities were cited as two principal reasons for the decline.

-- Advertisement --

Many respondents also complained of being priced out of the market for private sector work by competitors, suggesting that competition for new work is becoming increasingly intense.

Commenting on the results, SBF Chief Executive Michael Levack said: “These figures confirm that, over the past year, the industry has seen a proportion of new private sector work progressively drying up and competition for what work there is significantly intensifying.

“Overall, since the beginning of the year, when the economy has supposedly started to recover, we are actually seeing a significant weakening of confidence amongst construction employers about the short-term outlook for their business.

“An increase in public sector expenditure has helped to sustain many construction firms through this tough period but that has now come to an end. With major cuts in public sector budgets now underway, construction firms will be looking to the private sector to shore up their order books."

Based on the results of this survey Mr Leback said this will only happen if banks start lending again – both directly to construction firms and to the businesses and homebuyers that will drive additional demand.

"I would call on government at all levels to redouble their efforts to encourage banks to improve the supply of affordable credit and to ensure what public funding remains available is made to stretch as far as possible.”

(GK/BMcc)