Skip and diesel price hikes are bad news for builders and home owners, warns FMB
Nearly two-thirds of builders have had to pass skip price increases on to clients and a fifth have had to pass on diesel price rises, making home improvement projects more expensive for home owners, according to new research by the Federation of Master Builders (FMB).
The key results from the FMB’s research into skip prices are as follows:
• Three quarters of builders have said that the price of skips has risen over the past 12 months;
• The average cost of an eight yard skip has gone up by £24 over the past year, meaning an additional cost of £360 for the average extension;
• Nearly two-thirds of builders have had to pass skip price increases on to clients, making home improvement projects more expensive for home owners;
• Three quarters of builders said that skip price rises have squeezed their margins.
The widely-reported hike in diesel prices is also starting to bite and is having the following impact on small and medium-sized (SME) construction firms:
• Nearly half of construction SMEs have made lower margins on projects;
• Nearly a fifth (17%) have been forced to raise the prices they charge clients;
• More than one in ten have had to turn down jobs they would have normally accepted as they are too far away;
• 10% have taken steps to reduce vehicle use.
Commenting on the research, Brian Berry, Chief Executive of the FMB, said: “The increase in the price of skips and diesel is bad news for builders and home owners alike. Nearly two-thirds of builders have had to pass skip price increases on to clients and a fifth have had to pass on diesel price rises. This has made home improvement projects more expensive for home owners. What’s more, the impact of the rising price of skips could have an impact on our communities through a rise in fly-tipping. No matter how much the price of skips might increase, there is never any excuse for fly-tipping and any individuals found doing so should be severely reprimanded. In 2016 and 2017, more than one million incidences of fly-tipping were dealt with by councils in England and the last thing anyone wants is for this number to increase.”
Berry concluded: “The increase in the price of skips and diesel have come at a bad time for the UK’s builders. The cost of doing business is rising more generally for construction firms. Wages and salaries are all rocketing because of the ever-worsening skills shortages in construction. What’s more, material prices have been rising because of the depreciation of sterling following the EU referendum. Looking ahead, material prices are expected to cause an even bigger headache going forward, with recent research from the FMB showing that almost 90 percent of builders believe that material prices will rise in the next six months. We are advising builders to price jobs and draft contracts with this plethora of price rises in mind to avoid a further squeeze on already razor thin margins.”