Coronavirus: Two thirds of construction firms take at least 20% hit on turnover
Two thirds (67%) of construction businesses saw their turnover decline by at least 20% as a result of the coronavirus pandemic, with 40% reporting a decline of more than 50%.
That’s according to a new survey by the Office for National Statistics (ONS) on the business impact of covid-19, which was sent to around 20,000 businesses across the UK and covered the two-week period from 4 May to 17 May.
Nearly nine in 10 firms (89.9%) said they had applied for the government’s Coronavirus Job Retention Scheme – a figure surpassed only by arts, entertainment and recreation (91.8%) and accommodation and food service (97.1%).
Meanwhile, 19.7% of construction companies applied for a government-backed loan or finance agreement, and 16.4% applied for grants funded by the UK and devolved governments.
Construction businesses said that on average 53.8% of their workforces would return from furlough to their normal workplace within the next two weeks, although only 2.8% would return from homeworking.
Nonetheless, the sector has taken a major hit on turnover, with just 16% of businesses in the sector claiming that their turnover over the two weeks prior to the survey period had been unaffected. Only 1.3% of businesses said they had seen an increase in turnover.
The only sectors where a higher proportion of companies than construction reported a decrease in turnover of more than 50% were accommodation and food service (62.4%) and arts, entertainment and recreation (62.7%).
Cash reserves low
Worryingly, nearly a third (30.1%) of construction firms said their cash reserves would only last one to three months. Another 5.2% said they would last less than a month. Some 17.7% said they would last four to six months, 25.5% said they would last more than six months, and 3.6% said they had no cash reserves. Another 17.9% weren’t sure how long their cash reserves would last.
More than half (54.5%) of construction companies have deferred their VAT payments as a result of coronavirus crisis, while 22.6% have entered the HMRC Time to Pay scheme and 11.7% have taken a business rates holiday.
A total of 17.2% of construction businesses said they had increased the use of online services to communicate with their customers, while 62.8% said they were using online services more for internal communications and 19.5% had increased their use of social media for internal communication. However, nearly a third (30.3%) said they hadn’t increased the use of any online services.
Encouragingly, 42.9% of construction firms said they had been able to get the materials, goods and services they needed in the past two weeks, with 39.1% reporting that they had been able to obtain them but had to change suppliers or find alternatives. A further 15.3% said they hadn’t been able to access the materials, goods and services they needed.
Meanwhile, a majority (46%) of businesses reported that the prices of those goods and services had increased, compared to those who had seen an increase (24.5%). Another 10% said some prices had increased while some had decreased, while 16.9% weren’t sure.