[{"id":"69025b51-e7dc-464f-b25e-bcd62abc2684","cells":[{"id":"a2cacea9-6490-4315-9662-4a26f80ab12c","inline":null,"size":12,"layout":{"plugin":{"name":"peracto/layout/container","version":"1.0.0"},"state":{}},"rows":[{"id":"7a5fb79b-ec00-4f79-814a-4dc511af6f08","cells":[{"id":"4a035434-00c2-486b-9ae6-8d55accaf647","inline":null,"size":12,"content":{"plugin":{"name":"peracto/content/text","version":"1.0.0"},"state":{"text":"

The 17th Williams State of the Trade survey of 2022 finds that despite weathering the Covid crisis and a strong start to the year, the impact of the war in Ukraine, supply chain issues and an uncertain domestic economy was felt by tradespeople across the board. Despite participants feeling the least confident in their business in the coming year since our records began, pricing has risen in line with inflation.

Since 2003 we have been gathering hard data about prices, discounting habits and order books, and comparing it with market sentiment indicators which give a flavour of how tradespeople and trade firms are viewing the marketplace and the future. The survey was not carried out during 2020 due to Covid-19. Data for our 2022 survey was gathered at the end of the year to reflect plumbing and heating engineer’s opinions and experiences over the previous 12 months.

Following the news that the UK narrowly avoided a recession in the final quarter of 2022 when the economy remained at a zero growth rate, our survey reflects the national merchant’s outlook on the coming year “Sales volumes through Builder’s merchants were relatively flat in 2022 compared with 2019 with sales value growth largely driven through inflation…overall we anticipate negative growth -1.6 2023” (1).

Looking first at the headline labour rates for general plumbing work (Table 1.) and for gas work (Table 2.), the main takeaway is that the median rate has changed significantly for the first time in 3 years, adding an extra £10 and £2 to the median average hourly rate (after call-out charges). This trend continues in the growth in the upper quartile and deciles of hourly rates reflecting a comprehensive rise in costs.

The upper decile has hit a record £100 per hour charge compared to those at the bottom of the scale in the second table detailing gas work rates (Table 2.), suggesting that those charging lower rates are less cost sensitive and potentially more inclined to stick to a lower rate regardless of economic activity – perhaps this work isn’t their usual bread and butter.

Between the two tables, it is plumbing that has seen the most growth in per hour charge the last year, although pipped by gas work across the 4 years at a £20 increase. Given that 65% of respondents last year said that they planned to raise prices in 2022, these increases are hardly surprising.

Table 1.

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Table 2.

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Inflation

Inflation was the hot topic in 2022, continuing to put pressure on the UK economy with the consumer price index rising by 10.5% in the 12 months to December (2). Tracking the median plumbing hourly rate vs inflation (Table 3.), we can see that rates appeared to increase at a greater rate against inflation in the previous 5 – 6 years. This gain has virtually been cancelled out by the inflation leap this year and now sits at an equal rate, suggesting that the purchasing power and lifestyle may have improved in those years for plumbers, but average household expenditure will catch up and plumbers are likely to see their outgoings becoming less fruitful.

Table 3.

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Although we hear the impact of these challenges each day at the trade counter and on social media, we can see this more clearly when comparing the median plumbing hourly rate across other key variable costs for trade business such as the price of diesel, and personal high value purchases such as the average house price.

Table 4.

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Last year, we reported that sky-rocketing pump prices have wiped out in a few months most of what was gained over the previous decade, so unless labour rates improve sharply in 2023, then an hour of plumbing this year may pay for no more diesel than it did back in 2013.

Table 5.

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Unlike fuel, labour rates and house prices rose in almost perfect harmony from 2011 to 2017. Over the next 3 years - similarly to the trend against general inflation - rates appeared to be positively pulling away in growth, however they have also stayed in line with the trend by equalising in 2022.

Discounting

The trend in discounting has remained an unusual tactic in 2022. 2018 was the last year that we saw tradespeople being haggled down to a lower price when winning work – a commonplace occurrence after the 2008 recession.

Table 6.

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By 2021, pressure to discount had all but disappeared, with confident tradespeople sticking to their price 84% of the time, and although the scales tipped a couple of percentage points backwards, the vast majority of quoted prices continue to stand. Communicating to customers the impact of business costs on pricing has always been a challenge to the tradesperson and respondents reported more questions from their customers around quotes, apparently cancelled out, however, by the desire to improve property value.

Table 7.

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Business Confidence & Order Books

We may have narrowly dodged a domestic recession in 2022 - and now we’ve crossed the threshold into 2023 and a global recession looks like it may not be as deep or protracted - but the outlook at the end of 2022 was somewhat gloomier.

Asked about the previous 12 months, no respondents considered business as Very Poor, with the smallest proportion in the history of the survey replying Poor. Although there was a drop in the Very Good selection, business was only downgraded to ‘Good’ confirming that the year following lifting of Covid restrictions really was a bumper one.

Table 8.

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Looking forward to 2023 though, there has been a radical shift in expectations. A record 18% of respondents were pessimistic with an expectation that the coming year will not be as prosperous, no doubt in response to the forecast recession.

Table 9.

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Although the short term diary might be packed, order books for the long term have shrunk, consequently growing in the short to medium term. This is the biggest single year shift we have seen in this question, possibly indicating that there is less demand on schedules already for the coming year.

Table 10.

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Geographical variation

Over the 17 years of collecting and studying this data, it has been reported that the only impact of geography on pricing appears to be a very small increase in likelihood that a plumber charging rates in the top decile will be located within or just outside the M25 are only rarely in rural areas. Those charging in the lower decile don’t appear to follow any geographical pattern. This either challenges the assumption of London weighting or our respondents are more likely to travel into the London boroughs than live there.

Local Market Awareness

Every year we ask respondents whether they think that they are cheap, average or expensive compared to other tradespeople in their area to understand how tradespeople compare themselves to each other. The exact same percentage rate themselves as Average as in 2021, given the rise in pricing that implies that those who have changed their costs feel fully justified and inline with the rest of the market. The smallest percentage rate themselves as expensive, scattered from Christchurch to Manchester, so those who appear to be to think they’re getting away with edging their margins up are not within a specific region.

Table 11.

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Landlords certificate

One of the often-discussed figures we see on social media and at the trade counter is what gas engineers might charge for a landlord’s certificate (CP12). What we can say with confidence is that the mean average our respondents charged for a Landlord Gas Safety in 2022 across the UK was £76 (for a typical property 1 x boiler 1 x gas hob or fireplace) which will either lay to rest or add a little spice to these conversations.

Outlook for Pricing

Finally, asked if they intended to raise rates in 2023 the expectation to ‘rise by between 10% and 25%’ has hit a record high of 31% - compared to last year’s 25%. However, those expecting an increase in total remains the same as the previous year.

Table. 12

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In another first for the survey, and by this point in our analysis probably unsurprisingly, absolutely no respondents expected rates to fall by more than 10% with barely a handful predicting any fall at all.

We can certainly see that in response to the question that we asked last year – if not now, then when? - tradespeople have adjusted their behaviour in response to wider economy exceeding expectations from 2021. Although the severity of the predicted recession is being busily reforecast as we write, the news that grocery price inflation has reached risen 17.1% (3) in 4 weeks to date does not bode well for the following 11 months, on the other hand, if successfully implemented the new Northern Ireland Brexit deal may give some breathing space to those suppliers importing/exporting goods.

The resolution of component shortages on boiler supplies should also ease the related sourcing and quoting issues that many tradespeople have felt. Our own Head of Supply Chain, Jon Elsmore feels that although that may not be felt quite yet there is hope -

“Component shortages are currently impacting several industries worldwide. In 2022 this severely restricted the output of the boiler manufacturers and therefore supply into the wider marketplace across the whole year. We are now seeing recovery start to take full effect but are still servicing an element of pent-up demand as our stock position normalises.”

The question on everyone’s lips as each new bulletin brings fresh questions about the future…

…. what will happen next?

The sharp rise in fittings cost has stood out to PKS Plumbing and Heating Services LTD of Portsmouth. They also shared their frustrations with the sheer speed of inflation, and the difficulty managing situations where quotes from just a few weeks ago were now out of date. However, their workload is keeping them busy –

“I think its going to be the same as last year – everyone still wants work done. The cost of materials mean that customers are questioning whether work is necessary, but they’re still going ahead”

John Newcombe, CEO BMF 2023
www.ons.gov.uk (02.2023)
https://www.reuters.com/markets/global-markets-recession-2023-02-10/ (02.2023)
Kantar (02.2023)

"}}}]}]}]}]

State of the Trade Survey 2022