Banks have been accused of restricting credit to small construction businesses with a third unable to obtain loans according to the Federation of Master Builders (FMB).
Restriction of credit has been blamed on banks prejudice against construction and Labour MP Gordon Banks has called on the Government, and in particular business secretary Vince Cable, to act.
“At last the Secretary of State is recognising the failings of the banks in respect of lending and nowhere is it being felt more acutely than in the construction industry,” said Banks.
“High rates, high set up and management costs are all impacting negatively on the sector. What the banks and indeed the Government fail to grasp is that a strong construction and indeed housing sector is necessary for economic growth in the UK.
“The industry is also a major skills provider and without bank lending into the industry, skills targets will not be met and the UK economy will be all the poorer for this failing.”
Banks said Project Merlin, set-up to help small businesses get loans, has “fallen at the first hurdle”, and cites the withdrawal of banking giant Santender’s Business Growth Fund, evidence of the prejudice.
FMB director of external affairs Brian Berry added that “small building firms that the government needs to deliver many of its objectives from economic growth to green deal are being prevented from doing so because of a blind prejudice by the banks against construction firms and it has to stop.”