Housing cutbacks squeeze builders

Contractors working in social housing are feeling the squeeze as the draconian cuts in the Government's social housing programme begin to take effect.

The œ500 million cuts in the Housing Corporation's budget over the last two years are forcing some contractors to rationalise their operations and look for alternative sources of revenue.

Willmott Dixon is reducing staff in two area offices, Housing Eastern in Bedfordshire and Housing Southern in Crawley, as a result of the cuts. An office in Basingstoke was closed last year.

And other contractors are switching work away in an attempt to cushion the blow of the cuts.

Kier, one of the top 10 in social housing, expects social housing work handled through its regions to halve in 1995 to œ40 million.

However, the firm hopes to regain the turnover from industrial and commercial clients, so minimising job losses.

Howard Seymour, analyst at BZW, said: 'It's going to be tough. People went into the market to mitigate the effects of the recession. Some are trying to get out, others to reduce their exposure.'

Willmott Dixon chairman, Ian Dixon, said: 'The reduction in social housing spend is dramatic.

'We are not prepared to buy work so there will have to be some redundancies, though both offices will stay very much open.' Dixon said the number of redundancies will be in single figures.

Other contractors are also feeling the pinch. Countryside is moving into student housing and urban regeneration to make up for the housing shortfall and Lovell is seeking to increase its partnership work with local authorities in an effort to get round the shortfall in publicly funded housing association work.

Mansell is also bracing itself for a drop in work.

Mansell's Geoffrey Bell said: 'With a 25% cut in the Corporation's budget it must be in decline. We are noticing fewer enquiries.'

The drop in enquiries is bourne out by the latest BEC state of trade figures for 1994 out this week (see page 3).

The National Federation of Housing Associations estimates that the number of new starts will drop from around 45,000 to 27,400.