Following the news that spending in the public sector is to be slashed, the UK’s construction industry is bracing itself for likely problems it will face as a result of the announcement. Early analysis suggests that smaller companies will be hit the hardest by the cuts as larger companies, normally used to receiving work from some of the bigger public sector departments (including hospitals and schools), will have to start looking in other areas for work. Larger companies are more likely to have the upper hand as they can afford to undercut their prices, compared to the smaller firm.
Spending in construction has fallen sharply with just 11.5% of new work going out to contractors in the past year. It is thought there could be a further 4.1% reduction in private sector investment over the coming year, and possibly 20% in public sector spending over the next three years.
With larger firms being able to survive for longer on reduced profits, smaller contractors will be the ones most likely to feel the pressure as job opportunities diminish. With the government cracking down on tax evasion and with contracting opportunities becoming scarce, this is a good time for contractors to employ the services of an umbrella company, if they haven’t already done so, to help them receive the full income they are entitled to whilst taking care of all contractual, legal and tax obligations.