Government plans to allow local authorities to build thousands of new council houses is welcome news says the Federation of Master Builders (FMB) but warns the Government not to exclude small and medium sized builders from the process.

The Prime Minister's announcement comes at a critical time when only 375 council houses were built in 2008.

Brian Berry, Director of External Affairs at the FMB said: "With lists for those waiting for social housing at an all time high and with house building at its lowest level since 1924, this news could not have come at a better time. This initiative will also provide a major boost to the UK's construction industry.

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"The construction industry has been badly hit as a result of the recession and the downturn in the housing market. The industry is facing its biggest challenge for many years and the indicators are that many will struggle to survive in the current market. It is expected that some 300,000 jobs in the construction sector could be lost during the course of the recession and already over 50 per cent of FMB builders are warning that they will be making staff redundant over the coming months."

(CD/JM)