Scrooge banks send contractors to the wall

Tight-fisted bankers are sending contractors under on a daily basis as they cut credit lines and hike the cost of borrowing.

A quartet of construction companies failed last week as Government plans to increase bank lending prove ineffective.

Angry firms have been telling CJ how high-street banks are threatening the future of the industry.

The horror stories came as another grim week for construction saw four well known names call in the administrators.

Pettifer Construction, Linpave Building, York House and Robin Ellis became the latest victims of the downturn.

And contractors are furious with the banks that they blame for exacerbating the current crisis.

Alan Jarvis, managing director of Kent builder AC Jarvis, said: "The banks are not helping anybody at the moment. We are having to operate without an overdraft facility.

"Our bank has told us to ask for half the cash up front when we are bidding for a job, which is ridiculous in the present market."

Another added: "We are a successful business yet the bank doesn't want to know. It's like your history counts for nothing - they are just refusing all credit whatever the circumstances."

Industry leaders have held a series of meetings with Business Secretary Lord Mandelson in a bid to makethe banks free up credit lines.

One contractor said: "We are being hit now - all these Government initiatives are taking too long."

Desperate firms are now trying to access credit from a £25m pot called the Transition Fund set up by regional development agencies.

A spokeswoman for one of the organisers Advantage West Midlands said: "We have had applications from construction firms already and that is set to increase.

"The next few weeks before Christmas will be a tough time with people needing to be paid ahead of the annual shutdown."

That prediction was backed-up by the Civil Engineering Contractors Association. A spokesman said: "A survey of our members in October revealed that 20% of the workforce will be laid off over the next six months.

"Now, anecdotally, that looks more like a third as problems with the banks worsen.