Fall In Construction Activity Affecting Small Builders 

Though the pandemic disrupted the vast majority of services and brought some sectors to an absolute standstill, the construction industry was one of the least affected at the height of lockdowns and the following months. Two years on, however, and compounding issues including inflation and rising energy costs have finally started taking a toll on the housing industry. 

The Office of National Statistics has observed a 1.4% fall in construction activity in June 2022, marking the first decrease in output since October 2021 following seven consecutive months of growth. 

The ONS’ latest figures have become a growing concern for small builders, particularly given the wider fall of 6.1% for private new housing and the continuing fall of 0.2% for repair, maintenance and improvement (RMI) work, according to the Federation of Master Builders (FMB). 

Brian Berry, Chief Executive of the Federation of Master Builders, says:  

“Costs are up across the board for both builders and consumers alike which is affecting business confidence. With 98% of FMB members experiencing material cost increases, builders are inevitably having to pass on these costs to consumers. The result is that householders are starting to hold back, with many households increasingly concerned about rising energy prices and the threat of a recession later in the year.” 

In total, new construction orders decreased 10.4%, which is equivalent to roughly £1,355M, in the second quarter of 2022 compared to the first. Not since October 2020 had the UK’s construction industry recorded such a large quarterly fall, which, combined with an annual output price growth of 9.6%, is leaving a lot of workers wondering where the industry is headed. 

Speaking of the impact these shifts have had on builders’ lives, Berry commented on the lack of support from authorities, describing the current state of the British Government as a “standstill”, and further added that he didn’t expect “any ambitious announcements to help support the sector until September when the new PM is announced”. 

From Berry’s perspective, action needs to be taken sooner rather than later, and he’s suggested a strategy to help boost building work across all components of the sector by cutting the rate of VAT from 20% to 5% or below. 

The Government has so far made no mention of an approach of that kind, but Brian Berry is confident that, if such measures were taken, not only would these be a “welcome start” to increase building output, but would help encourage homeowners to insulate their homes ahead of winter and further rising energy bills as well. 

Have you noticed a difference in the industry’s output in recent months? Has your business been affected by it? Get in touch and let us know in the comments below.