Almost a third of Britain's small building firms have shed staff since the turn of the year, as falling workloads and rising costs have forced many SME construction companies to scale back their operations, according to new research by the Federation of Master Builders (FMB).

The FMB's latest State of Trade Survey of member firms, many of which work in the domestic repair, maintenance and improvement market (RM&I), shows overall workloads falling at the fastest rate since the first three months of 2012. The net balance for residential workloads was -23 percent, compared to -15 percent in the final quarter of last year, giving particular cause for alarm as this type of work traditionally represents the lifeblood of the smaller builder.

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Brian Berry, Chief Executive of the FMB, said: "Last year was a tough one for our members, but there were some encouraging signs in the final quarter of 2012 that the industry may be turning a corner. These latest survey results however paint a bleak picture, and our members are telling us that they are faced with the unenviable choice of putting up their prices or laying off staff."

"Our members have for years eaten into their own profit margins in a bid to maintain capacity – but that cannot continue. There was little in the Government's recent Budget Statement to cheer small domestic RM&I companies. We urgently need to see a cut in VAT from 20 percent to 5 percent on home renovation and repair, as householders simply can’t afford to get work done to make their homes more comfortable, affordable and energy-efficient."

(CD/H)