2023 trades industry predictions

The trades industry has experienced increased demands, high prices, and material shortages in the last year. With supply chain issues, a cost of living crisis, and a global energy crisis defining 2022, tradespeople have had to adapt to constant change.

Read on for our predictions for the industry in 2023, with the rising cost of materials, shortage of skilled workers, and tool theft all being front of mind.

Predictions for the trades industry in 2023

Price of materials will continue to rise

One of the biggest challenges of 2022 was the rising cost and shortage of materials. And for some tradespeople, this meant having to turn down work due to not having the materials for the job.

The price rises show no sign of slowing in 2023 as inflation hits a 40 year high and a global energy crisis makes production more costly.

Certain materials are more energy-intensive to produce such as steel, glass, concrete, cement, and bricks. As a result, the price for these materials is likely to increase at a higher rate than others.

The same goes for aggregates like sand, gravel, and clay. They’ve increased in price by 56 per cent in the last year according to the Department for Business, Energy and Industrial Strategy (BEIS), and are likely to increase further in 2023.

Further shortages can be expected with wood and timber. The Construction Leadership Council (CLC) said in November that the price will remain high due to continuously high demand across Europe.

Housing market and construction slowdown

With the UK entering into a recession, the opportunity for new construction is likely to decrease. Both commercial construction and private housing projects are expected to slow down until the UK’s economic downturn calms.

And industry experts estimate that new construction won’t reach its pre-crisis levels until 2027, which would mean eight years without growth in the sector.

However, Dr David Crosthwaite, Head of Consultancy Services at Building Cost Information Service (BCIS) gives tradespeople a more optimistic perspective:

“Our market conditions index suggests the impact of the latest crises have been less severe than the impact of the 2008 financial crash, which is encouraging – but the outlook for construction continues to be challenging for the immediate future.”

Lack of skilled workers

With retirement rates rising, while employment rates fall – a labour shortage remains a key issue for the trades industry. Combined with much of the workforce from outside the UK being turned away due to legislation brought about by Brexit, the problem looks to continue in 2023.

The Office for National Statistics estimates that there are 244,000 fewer workers in the construction industry than three years ago. And the Federation of Master Builders (FMB) reports a similar issue.

At least one third of FMB members struggled to recruit carpenters, bricklayers, and general labourers between July and September 2022. And this shortage could affect small businesses disproportionately, as FMB suggests it takes three years to train a skilled tradesperson.

This puts extra emphasis on employee retention for small businesses as skilled tradespeople become harder to come by.

Raising awareness of tool theft

Tool theft remains one of the biggest issues facing the sector and, despite progress being made, it will continue to be a talking point in 2023.

Stamp Out Tool Theft, Simply Business’s campaign in association with On The Tools, highlights the devastating impact tool theft can have on tradespeople.

Our research shows 78 per cent of tradespeople have experienced tool theft and 99 per cent of those tools are never recovered.

And many feel the difficult economic climate could make things worse. In fact, 58 per cent of tradespeople believed the frequency of tool theft would increase due to the cost of living crisis.

This makes van security and vigilance even more important in 2023. With our latest research, you can find out the tool theft hotspots to look out for in the coming year.

The cost of driving for work

For many trades, driving from job-to-job is the only way of working. So whenever there’s an increase in costs, tradespeople are affected both personally and professionally. So it’s important to understand whether next year will be as costly as 2022.

London’s Ultra Low Emission Zone (ULEZ) will be expanding to cover the whole of the capital from August 2023. This means vehicles that don’t meet the emission standards will have to pay a £12.50 charge in a much wider region than before.

Visit the official ULEZ website to understand where the new zone is and whether your vehicle is exempt from the charge.

Another significant challenge is the price of fuel. Fuel costs reached record highs in 2022, with the war in Ukraine sparking a global energy crisis. In July, the cost of petrol rose to 191.53p a litre while diesel reached 199.05p a litre.

Fortunately, after supply chain issues were resolved, the current cost of fuel has settled at 150.84p a litre for petrol, and 173.52p for diesel according to RAC.

In the chancellor’s Autumn Statement, increases to fuel duty and company van tax were outlined.

If you use your work van for personal journeys, you’ll end up paying more tax from April 6 .

At the basic tax rate, you’ll pay £720 a year for this benefit. But from next April, the basic rate will increase by £72 a year.

Higher rate taxpayers could end up paying £144 extra a year with this tax increase.

After the Autumn Statement, the Office of Budget Responsibility (OBR) released a report that mentioned a “planned 23 per cent increase in the fuel duty rate in late March 2023”.

This increase would add a potential 12p a litre to fuel costs. Chancellor Jermey Hunt has disagreed with the report stating: “That is not government policy. We will make a decision on that at the next budget in the spring.”

Come back to the Knowledge centre in spring where we’ll cover all the latest updates from the Spring Statement.

Financial changes to watch in 2023

After a turbulent financial year in the UK where the pound has fluctuated and inflation has drastically soared, there will be big tax and financial changes from April 2023.

The current income tax personal allowance is £12,570 and it’s been frozen until 2028.

This is a ‘stealth tax’. People will earn more because of rising costs but their personal allowance won’t change, so they’ll end up in a higher tax bracket. This means they’re taxed more and keep less of their earnings.

A reduction to the additional income tax threshold will come into effect from April 2023. It’ll change from £150,000 to £125,140, meaning more self-employed people could end up paying 45 per cent on their earnings above £125,140.

Around 250,000 more people are likely to be brought into the additional rate following the change, according to the Independent.

And if you have employees, the national minimum wage will rise to £10.42 from April 2023.

Will the government help tackle late payments?

In a recently launched Payment and Cash Flow review, it was estimated £23.4 billion is owed to small businesses in outstanding invoices.

The Business Secretary Grant Shapps said: “That many small firms are routinely paid late is intolerable and presents a real barrier to productivity, the creation of high-skilled jobs and ultimately economic growth.”

The outcomes of this review will be available early 2023. Be sure to come back to the Knowledge centre where we’ll be covering all the developments of the review.

If you’re currently experiencing an issue with late payment, read our guide that includes our late payment letter template.

More useful articles for tradespeople

• How to do a self-employed tax return
• Tips for securing and recovering stolen tool
• Tool insurance

What do you think will happen in 2023? Let us know in the comments below.