Banks criticised for failing to ease lending restrictions as firms hit by falling workload

Civil engineering contractors are facing a winter of falling workloads and restricted credit facilities, according to the Civil Engineering Contractors Association (CECA).

It has urged the government to take action as work volumes fall and the industry prepares for a sharp increase in redundancies, particularly in small civil engineering firms.

CECA says that despite the government's £37bn bail out to the banks carrying the condition that lending return to 2007 levels, increasing numbers of construction firms have reported a squeeze on their credit facilities.

Rosemary Beales, director of CECA, said she hoped yesterday's meeting between the chancellor and bank chiefs would address the issue and have a direct “positive impact on the plight of contractors, particularly the smaller businesses”.

She added: “Banks are failing to keep their part of the bargain by not lending at 2007 levels. If the cost of this is losses in employment and skills, and the future cost of construction with the absence of a vibrant SME market, then the cost to the taxpayer will be far greater than the initial bail out.”

Contractors operating in the housing market are among those worst affected by the economic downturn, and are already facing a slump in workload as projects finish.