Encon Insulation Comment: Q2 2019

Mike Beard, Merchant Development Director Encon Insulation is BMBI’s Expert for Insulation Products – Distribution.

A new Prime Minister and government should mean that a conclusion to the Brexit impasse is more likely by the end of October. But nothing is certain, and the style of the new regime is creating fresh uncertainty and short-term confidence is fragile. Falls in sterling are undermining it even further.

We know little of the government’s housing plans, and realistically can’t expect anything until November at the earliest. Assuming the government survives challenges in parliament and probably an early general election we hope to see a new policy emerge to boost new build and the number of housing transactions, which should affect insulation positively. Given the, now unarguable, effects of climate change on the economy, improving the poor energy performance of Britain’s housing stock needs to be one of the most pressing priorities of a new government. Insulation is at the heart of any effort to improve energy efficiency of new or existing housing. But, however many homes we build, it’s almost inconceivable that more than 1% of the housing stock can be built in a year, so serious reductions in carbon can only come from improvements to existing dwellings.

For that reason, I call on the government to encourage homeowners to improve the energy efficiency of their homes by reducing VAT on home improvement projects whether they DIY, or a builder does it for them. The green agenda is gathering momentum, and insulation as a market sector will surely benefit from this environmental focus, provided the government gets behind it.

Currently, glass mineral wool insulation and plasterboard are only available on an allocated basis from manufacturers. For insulation this has mainly been caused by temporary plant shut-downs for routine maintenance and capacity uplift but levels are improving. However plasterboard still proves to be a longer term challenge. Demand has pushed UK manufacturing capacity to its limits and imported products – priced at a premium – have not kept pace with demand. New capacity takes time and cash to action and political and economic circumstances are likely to weigh on investment decisions. This is worrying for a basic construction product in a market that’s stable at best. If there’s a post-Brexit bounce in housing and RMI this could become a problem.

Finally, I welcome ‘The Pulse’ (https://www.mra-research.co.uk/the-pulse/), a new research initiative that tracks merchant confidence and industry issues such as online developments, product and skills shortages.

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