SMEs report biggest surge in growth

AXA, one of the UK’s biggest construction insurers, has released a report on the SME construction industry outlook.

Following a tough start to the year, with the ‘Beast from the East’ wreaking havoc on construction sites across the UK, and the waves created from the collapse of Carillion, SME growth optimism is at a high.

Reporting the biggest surge in growth optimism in five years, AXA is seeing construction SMEs rising against drops in housebuilding and rises in material prices. Some 56% of SME construction firms are predicting rising workloads over the next six months, double the number in the same period of 2016, with the number of firms citing ‘lack of work’ as the biggest risk also falling, to just 16%.

While the collapse of construction giant, Carillion, sent shockwaves through the industry, SME firms have escaped the brunt of its effects. A whopping 84% of SME builders report they work entirely for private householders and local businesses, rather than larger contractors.

While the industry as a whole is calling on SME builders to plug the gap in the housing market, few companies are reporting an appetite to break into the sector. Eight in ten rely entirely on small residential projects for business, and while two thirds have the appetite to break into housebuilding and public works, just one in ten say they have any realistic prospect of doing so, citing a ‘closed shop’ culture’.

The top reason given was that both arenas are considered ‘closed shop’, with contracts and permissions going to an elite circle of bigger companies. Difficulties accessing finance and skilled workers were cited in second and third place only.

Gareth Howell, Managing Director, AXA Insurance UK plc, lent his support to industry calls for an SME ‘Help to Build’ scheme: “The UK is 100,000 houses per year down on its target for new affordable homes. The biggest public-sector contractor has just crashed, leaving this field open to newcomers. There have been suggestions that small firms will ride to the rescue on both fronts, but they have been out in the cold for way too long. In the case of housebuilding, 30 years or more. Small firms have learnt to live without such projects, but can our infrastructure live without them?”

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