UK subcontractors could be losing £3bn (€3.5bn) a year due to unpaid work, according to Bibby Financial Services (BFS).
The report ‘Subcontracting Growth’, surveyed 250 UK subcontractors between September 21 and October 6 of 2016, and estimates that subcontractors lost an average of £16,000 each year, a sum which exceeds £3bn when applied to the 198,000 present in the UK.
Helen Wheeler, managing director of construction finance at Bibby Financial Services, said: “The construction sector is characterised by high upfront costs and for this reason, unpaid work and debts that cannot be recovered are serious issues for both big and small firms.
“The issue is particularly problematic for smaller subcontractors…in extreme cases, it can lead to insolvency.” Wheeler added that despite a post-Brexit vote ‘bounce back’, more needed to be done to support smaller construction firms.
She said: “Unpaid work continues to be a key issue for such firms and this represents a significant economic leakage, affecting both output and employment.”