The Labour Party’s proposed ‘Help to Build’ scheme, which would provide government guarantees for loans to SME house builders, has been welcomed by the Federation of Master Builders (FMB) as a means to help more small house builders enter the housing market.
Shadow Chief Secretary to the Treasury Chris Leslie MP, and Shadow Housing Minister Emma Reynolds MP, visited FMB member firm Building Associates Ltd at a site in Gillingham today to highlight what the scheme might achieve for small house building firms.
Brian Berry, Chief Executive of the FMB, said: “Small house builders have suffered very badly over recent years. They used to build two thirds of all new homes but they are now building just over a quarter and much of this reduction has happened in the past six years. This has inevitably had an impact on the overall capacity of the industry to build the number of new homes we need.
"The main barrier to SME house builders building more homes is the difficulty they face accessing finance on viable terms. Until this problem is addressed the large number of small building firms that have diversified away from building homes won’t re-enter the market.
“While it is encouraging that there is cross party support for more small house builders to enter the housing market, the ‘Help to Build’ idea being put forward by Labour is the most far-reaching solution to have emerged so far. This is an idea which could re-invigorate the SME house building sector and we hope the policy is implemented by whichever party forms the next government after the General Election.”
Labour's plans that have emerged from the Lyons Housing Commission – which will be published in full in September – focus on giving small-builders better access to finance, in turn increasing the amount of homes they can build.
It argues that during and after the 2008 bank lending to Small and Medium Enterprises (SMEs), including small-sized construction companies, more-or-less came to a standstill. The number of homes registered by companies building less that 500 units a year has dropped from 66% in 1988 to 27% in 2013.
To address this, and help to meet the target set by Ed Miliband that 200,000 would be built by 2020 this proposal, dubbed the Help to Build scheme, would give government guarantees for bank lending to SME construction firms.
