The Government announcement guaranteeing up to 50% of the risk on loans for small businesses, up to £20 billion, is welcome news but needs to go further in order to secure the future of many small to medium sized (SME) construction businesses and the hundreds of thousands that they employ, says the Federation of Master Builders (FMB).

Richard Diment, Director General of the FMB said: "The Government's announcement is a step in the right direction to stabilising the finances of construction SMEs and goes some way to delivering on the FMB's demand the Government force banks to honour existing loans and overdraft facilities to small businesses. But the Government now needs to look at other measures to increase consumer spending in order to put more work into the construction sector.

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"House building has nose-dived because potential homebuyers are unable to get mortgages and stamp duty is an added unaffordable cost which prevents potential buyers from moving or getting on the housing ladder. Similarly VAT is a huge added cost which puts homeowners off improving their homes. If workloads continue to plummet, more construction companies will continue to have no other choice but to make more staff redundant. I have already heard from FMB members with long established companies that are cutting the working week down to just four days in a bid to save jobs because workloads have dried up."

Diment concluded: "The Government must consider other measures such as the FMB's five point plan which would kick start the building industry. The plan includes measures such as reducing VAT to five percent on home maintenance and repairs, reforming Stamp Duty to make it a graduated tax, having a clear strategy to upgrade the existing housing stock to make it energy efficient; thereby opening up a new market worth more than £3 billion a year to builders, and opening up the procurement process to small businesses."

(CD/JM)