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Mace chief executive warns loan-to-cost funding ratios making it harder to access development finance

Mace chief executive Mark Reynolds has warned banks have tightened loan-to-cost funding ratios in the wake of the EU referendum, with a subsequent impact on raising finance for new schemes.

Mr Reynolds made his comments to Construction News ahead of his appearance at the CN Summit next week.

Asked what the EU vote had meant for his business, Mr Reynolds said: “The EU referendum has already caused a slowdown and affected a number of projects proceeding throughout the year.

“Since the Brexit vote, banks have reduced their loan-to-cost funding ratios, which is having an impact on raising finance for new schemes.”

He added that to mitigate the issues caused by the referendum, Mace has “looked at how we can further improve efficiencies in our business to make us more competitive and resilient”. 

CN asked Mr Reynolds a series of questions ahead of next week’s Summit:

What one action would you like to see from Theresa May’s government to support the construction industry?

I would like the government to support the infrastructure schemes being discussed and proposed, including the recommendations of the Davies report [on aviation].

I would also like to see the National Infrastructure Commission remit extended to include the findings of the [ICE’s] National Needs Assessment, setting a timetable to address the key conclusions.

While I applaud the apprentice levy, it is not right that construction now effectively has two levies (including the CITB’s). And I would like to see greater encouragement to invest in R&D activities, with increased tax credits being offered.

To what extent will the market offer more favourable margins for contractors in the future?

I think it is unlikely the market will offer more favourable margins for contractors – they are already too thin and not sustainable for our future industry. The risk and reward still remains inequitable.

If clients and consultants believe they will achieve similar margins to those achieved from 2008 to 2013, we will see more company failures.

What should the industry be doing to encourage young people to seek a career in construction?

We need to show the professional side of the industry and promote how property and infrastructure investment can really make a difference. We need to show the economic benefit regeneration has, along with how young people coming into the industry can make a real contribution.

Which recent Mace project are you most proud of?

Birmingham New Street: a fantastic regeneration scheme, delivered in partnership with Network Rail, who were a great client with a supply chain who were fully engaged.

Together, we achieved exemplary safety performance without any serious injuries.

Get more from Mace

Hear from Mark Reynolds on Day 2 at 16.15 in our main contractor CEO panel along with leaders at Bam Nuttall, Hochtief UK, ISG and Robertson Group.

Developer Irvine Sellar, for whom Mace built The Shard, will give a keynote address on day one.

He is one of more than 45 of the UK’s biggest clients set to address the two-day CN Summit.

For more on the speakers, read our round-up here.

To book your place at the CN Summit, click here or call Ilja Ryndin on 020 3033 2609 or by email at Ilja.Ryndin@emap.com

 

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