Only one in five small firms are benefiting from national construction infrastructure contracts it has emerged
National infrastructure projects are failing to benefit small subcontractors according to new research.
Bibby Financial Services (BFS) said over three quarters (78 per cent) of subcontractors across the UK were not benefiting and dismissed the view that fiscal stimulus through large scale infrastructure projects was having a direct multiplier effect on smaller firms.
The findings formed part of the Subcontracting Growth report.
National projects benefit large firms
BFS’s managing director of construction finance Helen Wheeler said: “Despite the sound of claxons coming from Government each time a large scale infrastructure project is announced, it is clear that any benefits to the construction industry are swallowed up by the large and the few.
“Our research shows there are minimal signs of contracts and work trickling down to smaller businesses for these multi-billion pound projects.
“In recent years we have seen the Northern Powerhouse begin to take shape and in the last few months the go ahead for Hinkley Point and Heathrow’s third runway.
“What’s missing though is evidence that these projects are providing trade and jobs to a wider range of businesses throughout the construction industry.”
Commercial contracts offer greatest opportunity
Additionally, over two fifths of contractors (45 per cent) said when they considered opportunities to secure more work commercial contracts were the most beneficial to them. Only 24 per cent said housebuilding was the most beneficial and only four per cent of subcontractors said national infrastructure projects would provide opportunity to secure more work.
Peter Vinden, managing director of construction specialists The Vinden Partnership, said: “Small subcontractors are looking towards the commercial and residential sectors for work, but we must make the process of tendering and winning contracts for national infrastructure projects simpler and fairer.
“Without this, large scale projects such as the Midlands Engine and Hinkley point will fail to stimulate supply chains as they should.”
National Infrastructure Delivery Plan
Part of the government’s National Infrastructure Delivery Plan, implemented in March 2016, revealed improvements to the procurement process for national infrastructure projects. This would level the playing field for both national and regional subcontractors.
The report from BFS found almost a third (31 per cent) of firms would support in tendering for national contracts.
Wheeler added: “The new Chancellor has set-out the Government’s economic stall by axing his predecessor’s deficit target in favour of a focus on fiscal stimulus, such as spending on homes and transport.
“Such fiscal measures are welcomed but our research shows that not all businesses in the construction supply chain are set to benefit. Subcontractors are crying out for support and, ahead of the Autumn Statement, the Government should heed this warning and takes steps to address this issue.”
The report also found 52 per cent of subcontractors thought local authority contracts presented the biggest benefit, while 23 per cent said the Northern Powerhouse would provide benefits. Some 21 per cent cited Hinkley Point, HS2 and South East airport expansion as key projects.
