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Andy Mitchell, chair of the Construction Leadership Council, has sent a letter to PM Boris Johnson putting forward a plan to sustain the industry and accelerate economic recovery

Within the letter, Mitchell reveals how the construction sector is ‘already working together to respond to the impact of the coronavirus’.

He warns that in order to sustain the industry over the coming weeks and months, there ‘needs clear support and recognition from the government for the essential work that it is doing, and the role it is playing in supporting public services and keeping the economy functioning.’

Mitchell outlined the work already put in place to support the industry, including:

In the letter, he wrote: “The construction industry also needs clear support and recognition from the government for the essential work that it is doing, and the role it is playing in supporting public services and keeping the economy functioning.

“For understandable reasons, we are seeing the closure of key construction product and material manufacturers, in parallel with the closure of electrical, plumbing and general builders’ merchants, and there is the very real prospect of many of the essential works not being able to be done, or unduly delayed, by difficulties in securing products and materials.

“I ask therefore that you and your ministers give very clear and visible encouragement that the production of building materials continues, if at all possible, and that electrical, plumbing and general builders’ merchants remain open so that essential maintenance and construction works can continue – and that the workers doing this are recognised, supported and appreciated.”

To protect construction businesses, Mitchell has asked Johnson to consider the following measures:

  • In addition to the Job Retention Scheme, suspending PAYE and CIS tax due to HMRC in April and May for construction and consultancy firms and workers, with no financial penalty. This will relieve some immediate cashflow challenges, and give companies time to secure the support of measures that the government has established;
  • Deferring/cancelling Apprenticeship Levy payments due for the duration of the crisis. Whilst firms in the sector are committed to retaining apprentices, and in the longer-term increasing the number of these, whilst the current restrictions are in place it is not possible for firms to train apprentices. This would further reduce cash flow pressure, but without affecting the longer-term provision of funding for apprenticeships;
  • We welcome the guidance on flexibilities in public procurement rules provided by Policy Procurement Notice 02/20: Supplier relief due to COVID-19, but urge Ministers to continue to encourage all public sector clients, regulated utilities and firms in the private sector working on public infrastructure to expedite cashflow through the supply chain, by making use of these;
  • Support for the Directors of micro-businesses. There are many directors of small building firms and consultancies who pay themselves a small salary, and top this up through dividend payments. These currently fall between the support provided by the Job Retention Scheme and through the assistance for the self-employed announced last week. This is a problem for other sectors too, and it would be welcome if the Government could ensure these Directors would be able to access support from one of these schemes;
  • Retention release – it is estimated that throughout the industry there is £4.5bn held by clients and firms in the supply chain) in the form of cash retentions, which is a routine withholding of between 1% to 5% of each regular payment to be released upon successful completion of the works without defects. There will, no doubt, be some strong opinions over this, but were the Government to direct all Government bodies to release all retention monies held this would inject cash at all levels of the construction supply chain;
  • Extend the £25k SME business continuity grants scheme to the construction sector.

Mitchell concluded: “There is much work also being done to make sure that the construction industry can play its full role in supporting a strong economic recovery, and the CLC is working closely with the IPA and BEIS to do the very best possible for the future.”

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