Chris Pateman and...

Don’t rely on RMI 1

Published:  02 June, 2011

Renovation, maintenance and improvement are keeping independent merchants ticking over, but for how long? Three industry figures from the BMF, Unimer, and the Scottish Minister for Enterprise, Energy and Tourism give Lisa Arcangeli their views about what happens after Easter.

Economic performance will be the most basic test of the success of this government and, with more cuts heading our way, a few clouds are starting to form on the horizon.

Independent merchants this year have been pleasantly surprised with steady sales, despite all the dire predictions. Sooner or later, though, someone will have to measure the ‘good times’. There has been too much theorising about the nature of the market. What is needed is robust, informed and respected advice. Who better to deliver this than some of the industry’s key pundits?

According to Chris Pateman, managing director of the Builders’ Merchants Federation, the merchant sector will start to see the impact of the Government’s cutbacks from April onwards.

“There have been a great deal of things that the Government has had to put on its books in order to make sure they happened by the end of the financial year. But, to be able to get new cash to spend for 2011-2012’s tax year will be much harder,” he reasons.

Mr Pateman believes that the chief cutbacks will manifest themselves in reductions in social housing. This will involve local authorities and social landlords who undertake ‘responsive maintenance’ and who purchase small quantities of goods through their local builders’ merchants.

“The risks attached to social housing are spread more widely across the merchant sector than those attached to newbuild,” he states. However, it will be the national merchants that are disproportionally exposed to the fortunes of the major housebuilders.

“Government cutbacks,” Mr Pateman points out, “are not about not spending. They are about employment – or the lack of it. People without jobs will be less inclined to spend whatever cash they have on RMI or DIY.

“We have already seen 10 000 people lose their jobs in the West Midlands at the beginning of the year and Manchester council recently laid off 2000 people.”

The move was criticised by Liberal Democrat leader Nick Clegg. At his party’s Spring Conference this month, he launched a furious attack on the Labour-run council. “Anyone who sacks a member of staff or shuts down a public service for political purposes is a disgrace to politics and a disgrace to Britain,” Mr Clegg said.

... Howard Grant: differing views, similar objectives.

The things that will gladden the merchant market, says Mr Pateman, will be the Green Deal and the Renewable Heat Incentive – even though they will only start to filter down to the domestic market in 2012.

The UK Government argues that its two-phase launch could deliver more green heat installations than would have been expected under the previous arrangement. This would have seen both the domestic and non-domestic tariffs being launched at the same time. The upshot is that the Government risks being accused of dithering by a twitchy market that is still in need of reassurance.

The Government’s interim sop is a ‘bridging scheme’. The ‘Renewable Heat Premium’ payment will support renewable heat installations for residential dwellings, but appears to be an anaemic offering.

The Scottish Government’s launch, on the other hand, is full-bodied. Its announcement that it intends to boost the renewable heat market with a home renewable energy loan scheme, flies in the face of the UK Government’s decision to delay the domestic phase of the RHI until 2012.

Scottish Minister for Enterprise, Energy and Tourism, Jim Mather, says his government will be launching a £500 000 interest-free loan scheme to boost the number of households installing green heat and electricity technologies.

People living in Scotland will be able to apply for loans worth up to £2000 from 1 April to help install a range of renewable energy technologies such as heat pumps, solar panels, micro-wind turbines or biomass boilers.

The loan scheme will be funded by the underspend in the Scottish energy budget for 2010-11.

“Low-cost, low carbon heating technologies are especially attractive in areas off the gas grid. They will cut emissions and support jobs in the manufacturing and installation industry,” Mr Mather explains.


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