The impact of Coronavirus on the plumbing and heating industry
The CIPHE has been working closely with the Construction Industry Council (CIC) to put forward the issues affecting everyone in construction - and the plumbing and heating industry in particular - to the Government during the current crisis. The CIC, with input from the CIPHE, has put together Key issues for the recovery, a document aimed to bring the Construction Leadership Council a greater insight into what the construction industry needs to help it recover from the pandemic.
In this blog, CIPHE CEO Kevin Wellman, has picked out the many issues covered in Key issues for the recovery, which directly affect the domestic plumbing and heating sector.
1) Cash flow
Contractors and their supply chain are most at risk in the period immediately following a full return to work, due to cash flow issues. Businesses will need to keep their belts tight, or consider adapting their charging practices to make sure they have sufficient cash reserves to maintain the business until invoices start being paid.
2) Planning delays
Planning departments in Local Authorities have been running a skeleton staff and will be significantly behind. This will have a knock on effect on both those new projects requiring planning consent and projects reaching the end of their period of planning consent. Significant changes will have to be made to how departments are run, or getting new projects onto site will be delayed.
Careful thought needs to be given to the timing of any new regulations and legislation in relation to the economic health of the industry following the coronavirus pandemic.
4) Tax relaxations/deferrals
To help generate work in the construction sector, Key issues for the recovery has suggested that:
- Stamp duty should be relaxed or suspended to encourage growth within the housing market.
- VAT on repairs and maintenance should be abolished.
- Government should continue the phased process of deferred statutory payments, e.g. tax, vat, levies, CIS
5) Speed of Government action
It is vital that the Government gives clarity on business support measures quickly. If there are to be extensions or reductions in measures, then these will need to be factored into decisions on how businesses proceed to put coherent recovery plans into place.
Liquidity and cashflow are essential to aid businesses through the recovery and yet the banks appear to have little appetite to lend. The government needs to exert pressure on the banking system.
7) Supply Chain
Supply chains will be damaged across many facets of the industry and confidence will be low with regard to jobs emerging after the crisis. The supply chain may therefore be slow to ramp up again and will impact building progress. This will have a knock-on effect on design elements, which can only go so far while little is being built.
Contractors are unable to get materials, either as specified, or alternatives, or the prices have been uplifted due to supply and demand, so a method of ensuring materials from outside of - and within - the UK needs to be prioritised for assistance to keep the supply chain moving. Additionally, increases in raw material costs are likely to create inflation. Managing this will be key for market certainty.
There is anecdotal evidence, reported by the CIPHE of a growth of counterfeit products including PPE and Legionnaires’ disease testing kits. Action will need to be taken to reduce the influx of counterfeit goods.
9) Public Confidence
Building consumer confidence in letting tradespeople in their homes could be problematic.
10) Travel Support
In the recovery, tradespeople may be unable to afford to travel to site after weeks of no pay/and delays from Government support for self-employed. Employers should consider offering Travel Loans to known self-employed trades personnel offset against payments due.
11) Water Safety
The CIPHE has been talking to insurance underwriters about buildings that have been unoccupied for long periods of time and the potential problems that can arise. If a building hasn’t got a water safety (management) plan in place, overseen by a competent person, there is a risk of contamination of stagnant water supplies (i.e. cold water storage cisterns).
If water temperatures have reached critical levels, microbial growth will occur, potentially leading to waterborne problems such as Legionnaires’ disease, Pontiac fever etc. During lockdown, some schools, for example, have ensured that plumbing systems have been checked and flushed on a regular basis during their closure but CIPHE believes that this has not been the case across the board. Another example will occur in the closure of hotels where entire wings might have been isolated creating a large dead leg of stagnant water. It begs the question who would wish to be the first resident in a hotel which has been on lockdown for three months?
A legacy of the virus, or at least in mitigating against it, is the increased use of water for washing hands, etc. If such changes of habit are sustained, arguably for all the right reasons, CIPHE argues that we are likely to experience water shortages further down the line.
12) Mental Health
The current crisis is taking its toll in terms of stress, anxiety and depression etc. There needs to be more support on mental health and wellbeing, counselling etc.
13) Skill Shortages/Labour supply throughout the construction industry
Combined with BREXIT and UK demographics, there was already a skills shortage going into this pandemic. This could be exacerbated by early retirements brought on by the lockdown, which are always higher in downturns; the immigration rules coming into effect next year; and those leaving the sector to pursue other opportunities that bounce back more quickly.
The construction industry has been largely portrayed negatively in the past few weeks and this is likely to significantly affect recruitment to the industry via the careers and education system, leaving the industry with a greater skills crisis in the longer term.
On the CIC’s Key issues for the recovery document, Kevin commented, “The CIPHE will continue to put the interests of the plumbing and heating industry forwards, via the CIC, in one strong voice with our partner organisations. The reality is that Government support for our industry will be vital in the months and years after the virus has gone. Lifting of lockdown restrictions will not be the end of our troubles. We are therefore working night and day to ensure the support for our members is there and that the Government understands the full range of measures required to help the construction industry recover.”