Contractors seek advice as redundancies rocket

The number of contractors seeking advice over redundancies has doubled this year, according to figures from the National Federation of Builders.

The body said its employment helpline received almost 1,200 calls in the first seven months of the year, compared with 614 in the same period in 2007.

The body said these statistics showed that many SMEs were being forced to restructure to survive the downturn. Almost 500 contractors became insolvent in the second quarter of the year.

In the first half of this year calls to all of the NFB’s helplines, which offer advice on issues such as taxation and legal problems, were up 134% on the same period last year.

Julia Evans, NFB chief executive, said the figures were “the clearest evidence yet” that the turbulent market was taking its toll on SMEs in the construction industry.

She said: “We ignore these figures at our peril. Conditions are tightening and people are very carefully considering their next step.”

She added, however, that it was encouraging that people were asking for professional help. “The good news is people are seeking advice rather than just guessing what to do. That means employees are handled properly.”

Rupert Perkins, contracts director at Bristol contractor John Perkins, said: “It does depend a lot on what sector you are in. I think we will see a mixed picture in coming months.

“The good thing is SMEs have the ability to change quickly, so they have an advantage over bigger firms – it’s easier to turn around a small fishing boat than an oil tanker.”

The NFB urged firms to keep on top of late payments and perform due diligence on all new customers to help them cope with the “expected recession”.

Last month, Pricewaterhouse Coopers said that 449 contractors had become insolvent in the second quarter of 2008. More than half of all contractors reported a fall in enquiries, the Construction Products Association and Construction Confederation reported.