The short version
Why it matters: Every quarter we release our State of Trade Survey and it is the only survey of its kind to track the experience of small to medium-sized (SME) construction firms in the UK. A vital tool for our engagement with Government, as the data is later used to inform decision making.
What we found: The latest Q3 survey looked at activity from July to September 2022. Our members were asked a series of questions which helps the FMB to identify how the industry is being affected by political and economic changes and with many challenges presenting themselves to our builders in recent months.
- 74% of small, local builders are in favour of retrofitting UK homes to improve their energy efficiency.
- 62% of FMB members have been impacted by a shortage of materials.
- At least one third of FMB members are struggling to recruit carpenters, bricklayers and general labourers.
- 90% of FMB members reported an increase in material costs in Q3 2022.
A National Retrofit Strategy
At a time when the UK is being hit by both an energy and cost-of-living crisis, we asked members if they felt they wanted to see a National Retrofit Strategy to help them deliver energy efficiency improvements to homes. Upgrading homes could lead to less energy being used, securing the UK’s energy security and cutting bills for homeowners.
Over 74% of our small, local builders voted in favour of retrofitting and upgrading our existing UK homes. While this is a great response, we need the Government to support this, and we will continue to speak with MPs to emphasise the benefits of introducing the strategy.
Key indicators across the sector
Since the beginning of 2022, there has been a decline in both workload and enquiries, this has unfortunately continued into Q3, causing a lot of challenges for our members who are still recovering from the impacts of the pandemic. As it stands, enquiries have now dropped into negative territory for the first time since 2013, (excluding the drop in spring 2020 due to the pandemic). The results from Q3 highlights the current challenges facing the market and our FMB members.
Employment and skills shortages
Employment levels have slightly decreased in Q3, and this could be a reflection of the fact that there is an industry-wide shortage of skilled workers. It could also be a reflection of the various challenges the industry is under. Either way it is not a positive sign, and we need more young people to consider getting into construction to prevent the shortage of employment levels continuing to drop.
The FMB has been working hard to engage with key policy makers in order to highlight the need for further investment in young people in order to encourage them to join the industry. One of the ways to do this is to create a system that works and benefits the industry on both a local and national scale.
At the FMB, we feel a national retrofit strategy would do exactly that. It will be an opportunity to back industry calls for a Net Zero Retrofit Hub to be established, alongside providing immediate jobs for our young people and skilled workers, which will also help level up our local communities.
While there may be a shortage of skilled workers, there doesn’t seem to be a shortage of work as a third of FMB members reported a higher workload in Q3 when compared to the previous quarter, this could be due to the fact that the industry is beginning to recover from the challenges it faced in work during the pandemic. In terms of total enquiries, a third of FMB members reported an increase in Q3 compared to Q2 2022, while nearly two in five (38%) reported this to be lower.
Prices and costs
In terms of prices and costs, this has been continuing on an upward spiral in recent quarters and continues to be the case in Q3 2022. 90% of FMB members reported an increase in material costs in Q3 2022 and 88% of respondents expect material costs to increase in Q4 2022. Whereas 76% of builders have had to put up their prices for work in Q3 2022.
The rise in material costs is having a detrimental impact on our members' businesses, particularly during a period of time when many people are faced with a cost of living and energy crisis. The hike in material costs does not bode well for the industry as whole.
Key indicators in the UK nations
In Scotland, Wales and England our data indicates that there has been a considerable decline in our members’ workload since Q2 2022. However, the total workload in Northern Ireland has risen considerably in in the recent quarter to 38%, compared to Q2 2022, where it was at 15%.
Key indicators from the English regions
Most regions in England have experienced an increase in workload in the recent quarter, with the Midlands being the region experiencing the highest increase. Whereas the South has seen a decline in total workload from a 16% increase on balance in Q2 to 10% in Q3. By contrast, total workload in both Greater London and the North has held steady since Q2 2022. The decline in demand for both workload and enquiries could be a direct reflection of the current economic state. We need the Government to help consumers across the country with cost-of-living pressures, so they are not inclined to cut back on any home improvements, not least those that might make their homes warmer and cheaper to heat.
Why is a National Retrofit Strategy needed?
A National Retrofit Strategy is needed to ultimately reduce the amount on emissions in the UK. The Government has set out various policies in order to decarbonise sectors across the UK by 2050, and in order to do this it is crucial to retrofit our UK homes. Currently, our homes are largely reliant on gas powered energy. This also leads to homes being hit by unpredictable price rises due to political and economic uncertainties, which has now caused the cost of energy crisis. The benefits to a National Retrofit Strategy are numerous, but please see below for some examples:
- A National Retrofit Strategy would mean homeowners would be less reliant on gas powered energy, saving consumers money in the long run.
- Upskilling the current construction workforce would lead to more jobs for the small and medium sized business sector.
- An increase in jobs would mean economic benefits for local communities, contributing greatly to the Government's current levelling up policy.
You can find a full breakdown of our recent findings in the Q3 2022 State of Trade Survey.