Recession warnings, collapsed businesses and £3.5 billion in lost work: The true cost of the building supplies shortage to tradespeople

Recession warnings, collapsed businesses and £3.5 billion in lost work: The true cost of the building supplies shortage to tradespeople

• Supply shortage crisis has cost self-employed tradespeople £3.5 billion in rising costs and lost work – over £5,500 each on average
• 79% of UK tradespeople have had to turn down work in the last three months as a result of the supplies shortage
• Simply Business spoke to 250 UK tradespeople, who shared their first-hand experiences of the building supplies shortage – with warnings of business closures commonplace

The building supplies shortage has cost UK tradespeople over £3.5 billion – with almost 80% saying they’ve had to turn down work in the last three months as a result of the crisis, a new report reveals.

The study by UK small business insurance provider Simply Business has revealed the devastating impact of the supplies shortage, with more than one in three believing a post-pandemic surge in demand is the main reason for the current challenge.

Between rising material costs and a drop in earnings due to turning down work, tradespeople have lost an average of £5,598 each – with one in five saying they’ve lost over £10,000..

With 79% of the UK’s 801,000 self-employed tradespeople affected by the shortages, losses so far amount to a staggering £3.5 billion, with this figure set to rise as the shortages continue.

One tradesperson, Louis Clark who works in Buckinghamshire and Middlesex, added: “So many small firms such as myself are seriously struggling. I’m on the verge of losing my business. There is nothing I can do either. With increased quotes I get turned down constantly so I either work to barely break even or run at a loss.”

Daniel Baldwin, a builder from Basingstoke who works across the Southeast region, warns of a recession due to the shortages: “There is a massive gap in the skilled trades industry in construction. With massive price hikes on materials, work is slowing down. This country will be in recession in the next 12 months.”

What’s causing material shortages?

As the UK continues its recovery from the worst of Covid-19, 34% of tradespeople believe a post-pandemic surge in demand has been the top factor in driving the current material shortage.

A further third say the impact of Brexit on imports – with delayed border checks, tightened restrictions and trade barriers – is adding to the challenge. More than one in 10 (12%) feel Covid-19 travel restrictions are also playing a part.

James Cravenhodgson, a gardener and landscaper from Millom, Cumbria, commented: “We need some solution to all this as it’s hard to give customers straight answers as the market is so varied at the moment. It leaves us, the professionals, looking unprofessional. Either way, the market needs help otherwise customers will have no faith in the market itself. It’s a sad time for UK business holders for sure.”

The materials most impacted by shortages

Few trades have been able to avoid the impact of the supply shortage so far – and this is reflected in the materials that tradespeople say have been hardest to source in recent months.

Three in five (60%) tradespeople believe timber has seen the biggest increase in price or is the most difficult to get hold of, while 38% believe cement has proven most tricky to source.

Plasterboard (23%), tiles (15%), bricks (14%) and insulation (11%) were also called out as particularly expensive and/or scarce in the UK currently.

Michael Radford, who runs Liever Landscapes based in Scotland and works across Edinburgh and in Midlothian commented: “The main challenge is the rising cost of materials. In March this year we quoted for a patio job based on a material cost of around £400 per pack of sandstone paving. On commencing the job in July costs had surged to a staggering £640 per pack. It is very difficult, if not impossible, to factor in such large increases in material costs.”

Post-pandemic recovery and shoots of optimism

The self-employed have been among the hardest hit economically from the pandemic – with many forced to cease trading temporarily over the past 18-20 months.

Two thirds of tradespeople believe that rising material costs and supply shortages are further delaying their post pandemic recovery, while 70% believe it will take over a year for the industry to recover from the current challenges.

To help combat the challenge and support the recovery of self-employed tradespeople, one in three insist that increased government assistance is required and would improve the situation for the industry.

Despite the widespread impact of the material shortage crisis, the study revealed promising levels of optimism among UK tradespeople. Almost half of all tradespeople say they feel ‘optimistic’ about the coming months – once again demonstrating the strength and resilience of those in the industry.

Alan Thomas, UK CEO at Simply Business, comments: “The ongoing shortages in supplies is having a significant impact on tradespeople in the UK at a crucial time in their recovery from the effects of the pandemic. With 79% forced to turn down work in the last three months alone due to shortages, the total loss to self-employed tradespeople is expected to exceed over £3.5 billion.

“This is a huge blow to the livelihoods and dreams of so many tradespeople across the country, but the current situation should concern us all – small businesses are crucial to the UK, contributing trillions of pounds each year in turnover. A £3.5 billion hole in the books of self-employed tradespeople damages the wider economy, and it’s vital that they’re given the support they need to navigate this period of uncertainty.

“Thankfully, we’ve seen remarkable resilience among the trades community throughout the pandemic, and it’s encouraging to see almost half of tradespeople remain optimistic about the future despite current challenges. Tradespeople will play a key role in the rebuilding of our economy and communities, and their resilience in the face of such challenges should give us all confidence that we’re on the right tracks to recovery.”

Read more about the impact of the supplies shortage on tradespeople

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Methodology:

Data: Survey of 250 self-employed tradespeople from across the UK, conducted September 2021

How did we calculate the £3.5 billion figure?

The money lost was calculated between the increased cost of materials and the cost of having to turn down work
The weighted average of money lost due to increased costs, according to the SB survey, is £2,229.36
The weighted average of money lost due to turning down work, according to the SB survey, is £3,368.66
The weighted average of total money lost is £5,598.02
The percentage of tradespeople affected by increased costs, according to the SB survey, is 86%
The percentage of tradespeople who had to turn down work, according to the SB survey, is 71%
The average percentage of tradespeople affected by both is 79%
There are ~801,000 tradespeople in the UK, according to ONS
The number of tradespeople affected by both is ~628,785
Therefore the total money lost by UK tradespeople due to supply shortages is ~£3,519,952,538.02

Industries surveyed include:
Builders
Gardening/landscapers
Carpenters
Painters and decorators
Handymen/women
Bathroom, bedroom and kitchen fitters
Joiners
Plumbers
Roofers
Gas Fitters
Electricians
Glaziers
Plasterers
Bricklayers
Groundworkers
Tilers
Window cleaners

For further information, please contact:

Frank PR
[email protected]