Builders hail £100m fund to finance small firms

The �100 million initiative is aimed at supporting small construction companies that are struggling to access finance. Picture: PA
The �100 million initiative is aimed at supporting small construction companies that are struggling to access finance. Picture: PA
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Housing industry leaders have welcomed a £100 million initiative aimed at supporting small construction companies that are struggling to access finance.

The Housing Growth Partnership, backed by £50m from Lloyds Banking Group, has been launched with the hope of creating 2,000 extra homes, as well as helping builders to recruit and train workers.

Karen Campbell, director of policy at trade body Homes for Scotland, said the scheme, supported by the UK government, was a positive step for firms that have been “adversely affected by limited access to development finance”.

She added: “Whilst this UK-wide initiative goes some way to addressing what is a key constraint for smaller developers, this is just part of the challenge.

“In this respect, we are working alongside the Scottish Government on a joint approach to unlocking small developments, with funding issues being considered alongside the challenges posed by land availability, the planning system, infrastructure delivery and opportunities for regeneration.

“It remains vitally important that this particular section of the industry is better supported in order to allow them to deliver more new homes in the right locations to meet Scotland’s diverse housing needs.”

The Scottish Government set a goal in 2007 to raise the rate of new housing supply to 35,000 in a bid to improve aff­ordability – a target that Nicola Sturgeon, now First Minister, described at the time as “ambitious but achievable”.

However, recent official figures show that just 15,541 homes were built in 2014 – some 40 per cent below the levels seen a decade earlier.

Alongside the £50m from Lloyds, the Westminster government has announced it will match that figure to support construction schemes. Overall, the partnership expects to make about 50 investments, ploughing up to £5m in each project, with a goal of providing an additional 2,000 homes.

It will also establish a network of builders, including experienced developers, who will act as mentors and advisers to those looking to expand and grow their businesses.

Andrew Bester, chief executive of commercial banking at Lloyds, said: “We believe building both a greater quantity and mix of homes will help Britain prosper and this partnership will help address the issue of housing supply in the UK.”

Federation of Master Builders boss Brian Berry added: “There has been a sharp decline in the numbers and output of SME housebuilders over the past eight years. One of the biggest obstacles these firms have faced is a severe difficulty in accessing finance. Without adequate access to finance they cannot bring forward the number of new homes they would otherwise.

“The new Housing Growth Partnership will directly help to address this issue and the additional £50m greatly increases the scale of what can be achieved. We commend Lloyds Banking Group and the government on their trailblazing approach and we hope this marks a real turning point in the fight to provide adequate finance to the SME housebuilding sector.”