Its latest State of Trade Survey of member firms, many of which work in the domestic repair, maintenance and improvement market, shows overall workloads falling at the fastest rate since the first three months of 2012.
The net balance for residential workloads was -23% compared to -15% in the final quarter of last year. The FMB says this gives particular cause for alarm as this type of work traditionally represents the lifeblood of the smaller builder.
‘Last year was a tough one for our members, but there were some encouraging signs in the final quarter of 2012 that the industry may be turning a corner. These latest survey results however paint a bleak picture, and our members are telling us that they are faced with the unenviable choice of putting up their prices or laying off staff,’ said Brian Berry, chief executive of the FMB.
Workloads continue to fall, costs keep rising and credit conditions remain extremely tough. As predicted by members in the final quarter of 2012, the first three months of this year has seen 30% of firms shed staff. Around 26% of firms did however anticipate that workloads may begin to pick up in the next few months.
The FMB is calling for a cut in VAT from 20% to 5% on home renovation and repairs. Berry said that currently home owners simply can’t afford to get work done to make their homes more comfortable, affordable and energy efficient.
The survey also shows that the outlook in Scotland is worse while in Wales it is more positive. The composite indicator for Scotland, which combines responses to questions on workload, expected workload and enquiries, showed a net balance of -20%, compared with -16% in England, just -1% in Northern Ireland and a positive balance of 1% in Wales. In Scotland this figure was -34% in the final quarter of 2012, which means firms did see some improvement in the first months of 2013.
‘To secure work our members are working on minimal margin if any at all. This does not give them any confidence over the short to medium term. This in turn impacts upon employment and apprenticeship places. Add to that increasing material and labour costs and the picture for the next quarter remains bleak,’ said Grahame Barn, the FMB’s director for Scotland.
He believes that more should be done to promote the government’s flagship Green Deal policy in Scotland as there is negligible awareness among Scottish home owners.
There has been a substantial improvement in Wales with the composite indicator moving from -8% in the final quarter of 2012 to a current 1%. But Richard Jenkins, director of FMB Cymru, said that many members are still facing the unenviable choice of putting their prices up or even laying off staff to make ends meet.
‘Wales has performed better than other parts of the UK, but there is little doubt Welsh firms have had to recover from a lower base, so perhaps it is just the case that things couldn’t have got much worse for builders in Wales,’ said Jenkins.
