When temporary financial support ends
As the UK Government removes the financial supports put in place amidst the COVID-19 crisis, it is exposing the fact that some construction companies were already struggling and that temporary, state-funded support was merely a sticking plaster applied to a more deep-rooted and festering wound.
I have an analogy I’d like to share with you. It’s an analogy that is almost certainly inspired by Paul Ford’s excellent new book — Dangerous Structure — that I am currently re-reading (first time for work, second time for pleasure).
When a building is undermined or damaged by flood, fire, act of God or an act of terrorism, it is commonplace for that structure to be propped while further decisions are made, while remedial action is taken or — in some cases — while the structure is dismantled.
Those props fall under the broad heading of temporary works; with temporary being the operative word.
That same logic — only this time with financial propping — was applied by the UK Government when it became clear that the COVID-19 pandemic wasn’t going away any time soon. Those props came in the form of Business Grant Funding (BGF), Coronavirus Business Interruption Loan Scheme (CBILS) and a variety of other financial aids with equally catchy acronyms.
Such schemes were not a bad thing. The UK Government is guilty of a plethora of crimes against freedom, public health and common sense. But, in this instance, the Government was doing a good thing. But, like all good things, these schemes came to an end. And their ending has exposed a severe lack of remedial action among some construction companies. In fact, it now appears that the Government’s financial support through the COVID-19 crisis merely served to cover up pre-existing and fundamental problems among some contractors.
I hate to mix metaphors, but some companies were already taking on water long before COVID-19 made landfall here in the UK. CBILS and other such schemes merely served to keep them afloat. And rather than taking the necessary remedial action while they were supported by Governmental flotation devices, some of those companies chose to sail on regardless. Now that support has been removed, they are beginning to run aground on a post-COVID reef.
Many companies that are now expected to be fully self-supporting find themselves adrift in a business seascape changed beyond all recognition. Yes, there is plenty of work out there. But all the while their heads were being kept above the water by a rubber ring of state financial support, costs have been rising. Equipment and insurance costs have escalated; workers are in short supply and are, therefore, more expensive; and materials are difficult and, in some instances, virtually impossible to obtain. Stir into the mix the likely cost implications of the end of the red diesel tax relief, and those companies that were already holed below the water line are now losing their flotation assistance amidst a gathering financial storm.
That storm has already claimed several victims; Castleoak and Create Construction among them. Others — NG Bailey and Surco for example — have slipped into the red. And I fear there will be more to come.
Coming full circle to where this article began, the full title of Paul Ford’s new book is Dangerous Structure, Emergency Response. And there’s the rub. A dangerous structure requires an emergency response. Propping merely facilitates that response; it does not solve the underlying problem.
Having already mixed my metaphors, I will throw in one more for good measure. Imagine a pair of construction or demolition companies as two middle-aged men. Both have been diagnosed with a severely damaged knee, and both are issued with a temporary walking stick to tide them over during the pandemic.
One of the men exercises regularly, attends his physiotherapy sessions, eats a bit more healthily, and loses a bit of weight. When he returns his walking stick, the condition of his knee is much improved. It might still require more attention in the future but, for now, he is more than capable of standing on his own two feet.
The other man, meanwhile, spent his lockdown on the sofa watching daytime TV. He decided against exercise and has comforted himself by consuming his body weight in biscuits. And now, as he hands back his walking stick, he finds he is unable to support his own weight. He slips, stumbles, falls and is unable to get up again.
Former chancellor George Osborne once urged businesses to fix the roof while the sun was shining. The COVID pandemic was not by any mean a prolonged period of sunshine. But some companies were able to fix their respective roofs while the Government held a large financial umbrella over their heads.
Sadly, it appears, some companies viewed that umbrella as permanent.
Mark Anthony is the founder and editor of DemolitionNews.com