A FRESH call has been made for the Government to help the North-East's small and mid sized construction firms as another succumbed to the economic downturn.

Family owned, care home specialist Dalton Construction UK Limited, based in Seaham, County Durham, has ceased trading, leading to the loss of 12 jobs.

It is the latest in a line of building businesses which employ up to 100 people to run into difficulties this year, with Newcastle's Dorin Construction amongst the highest profile casualties.

In August research by Experian revealed that the North-East had endured the UK's highest rate of collapse for mid-sized construction firms, employing up to 100 people, since the start of the recession in 2007 and this week a study, by the Centre for Economics and Business Research and Glenigan, found the economic benefit of spending on construction in the North-East fell by 23.4 per cent between 2007 and 2010, the largest drop in the country.

Last night Kevan Carrick of RICS (Royal Institution of Chartered Surveyors) North East, said reducing VAT on construction work and changing the public sector procurement process to give smaller firms more chance would both be beneficial.

Mr Carrick said: "Public sector spending cuts are hitting the region hard and with bank funding also extremely difficult to secure, the construction sector is bearing the brunt of the economic downturn.

"There are few projects going ahead and smaller construction firms are finding it particularly difficult to find work.

"The housing market, where many small construction firms carry out extensions, renovations and repairs, has been flat for some time and the outlook remains the same.

"On top of this, small firms also face increased competition for contracts from the larger companies who need a constant stream of work and are bidding for jobs that were once thought to be too small."

Although Mr Carrick welcomed Government interventions, such as enterprise zones, the Regional Growth Fund and the recently announced Growing Places Fund, he said they were unlikely to have any effect for months or even years.

He added: "Reducing VAT to 5per cent on construction work would bring down costs and changing the rules on the public sector procurement system would help smaller firms to get a slice of larger contracts.

"Increased funding for building projects is urgently needed in the North-East, either from the government, from the banks or, ideally, a mixture of both.

"Research shows that every £1 spent in construction stimulates a total of £2.84 of economic activity, so it's clear that investment would stimulate economic growth in the region."

A meeting of creditors for Dalton Construction has been arranged for November 21 at the offices of Clark Business Recovery in Leeds.