The warning is contained in a new hard-hitting report from the Chartered Institute of Building.

The CIOB said that construction’s employment model is creating potential exploitation problems down the supply chain.

The report states: “Tier one contractors complain that  they are lucky if  they make 2% margins, but margins become even tighter with every subsequent layer of subcontracting.

“The model puts smaller companies under constant pressure to reduce their overheads.”

An enforcement officer added: “If a price is too  good to be true, buyers should be asking themselves if they’re ethically doing the right thing.

“But at the moment many major contractors are putting their heads in the sand.”

A Home Office source told the CIOB: “We’ve had dealings with major public infrastructure and building projects.

“We’ve also seen problems on hospitals, power stations and prison sites.

“Clients engage with companies with  strong reputations and brands, but they don’t fully understand that the company can’t deliver the whole project without the help of others.

“The further down the contracting list you go, the weaker the visibility.”

CIOB chief executive Chris Blythe said: “Our business models are normalising hardship, both for individuals and companies.

“And, whilst these models do not always lead directly to modern slavery, they are creating an environment in which it is easier for exploitation to thrive and criminality to infiltrate supply chains undetected.

“The constant pressure on prices is forcing out ethical players.

“Suppliers and labour agencies should be rewarded for finding and reporting problems, contractors need to promote fairer business models and clients need to be more explicit about their ethical expectations.

“This goes to the heart of professional leadership. We need to empower everyone working in this industry to act, share and collaborate for the greater good.”

To download a copy of the full report click here