Government must keep cash flowing in construction

Government must keep cash flowing in construction

ARTICLE · By Timber Trade Federation · 20 March 2020

Around two thirds of the respondents to the TTF survey on the impact of Covid-19 have reported a drop in demand for timber as the sector prepares for six to 12 months of disruption.

Covid-19 Survey Results

0%

Respondents reporting a medium impact

0%

Respondents reporting a reduction in demand

0%

Respondents taking measures to limit contact

Survey notes: This survey is only a snapshot designed to give an initial feel for how the industry is responding and should not be interpreted as representing all members. The total number of respondents to this survey was 21, representing a range of timber merchants differing in both size and market.

The impact on businesses has been reported as ‘medium’ by half of the respondents, while a quarter reported the impact as minimal and the remainder as high.

Businesses are reporting they are taking precautionary measures, including cancelling physical meetings and switching customers visits with phone calls and other digital technologies.

More than 80% of businesses have limited travel for staff, and a third are reporting some impact to their operation from employees who have needed to self-isolate as a precautionary measure.

Currently businesses are reporting that they expect these containment measures to run for three months and are projecting for demand to be restored between Q3 2020 and Q1 2021.

This aligns with expert projections of how the virus is expected to impact the global economy, as provided by McKinsey, however there is awareness that this situation is evolving.

While most respondents have reported they are satisfied with the level of support from Government to install health measures, only a third thought enough was being done for business.

The key calls from respondents from Government is for the suspension of VAT, PAYE and Business Rates for small businesses to support cash flow, which is essential for the many SMEs in the construction sector.

The Timber Trade Federation have joined others in the manufacturing sector in supporting these policies, as well as calling or Government to issue sector specific advice.

We will also be issuing a series of policy demands next week after reviewing the measures announced by Government over the past week and how they will affect the industry.

In the meantime, we strongly advise our members to ensure they have a business continuity plan in place, and to keep closely in contact with us via our LinkedIn, newsletter, and Covid-19 hub.

David Hopkin, Chief Executive Officer of the Timber Trade Federation:

“The past week has seen a lot of uncertainty enter the market, both for TTF members and the construction sector as a whole. Covid-19 is a humanitarian crisis, and how it is handled over the coming weeks will determine its economic impact.

“We support the Government in taking steps to protect the health and safety of people, which always must come first, and measures taken to support workers and businesses including loans and the extension of statutory sick pay will prove useful.

“However, we now need the Government to begin showing leadership by providing sector-specific advice. Not all have the option to work from home so we can’t always take a uniform approach. 

“Maintaining cashflow in the construction sector is essential for supporting many thousands of contractors in the construction sector, along with 210,000 SMEs. This means providing assurances that responsibly run construction sites can stay open.

“Further, we need the Government to extend the same support to the construction and manufacturing industry which they have provided to retail and hospitality, as shown through the suspension of business rates.”