What has been happening in the electrical services sector
Demand for domestic electrical services is closely linked to the housing market and the strength of the economy as a whole. New houses need wiring and electrical fixtures installed, and older houses are often renovated or altered after being sold to a new occupier. So the industry benefited from the housing market boom of the early and mid 2000s.
Unfortunately, the housing market boom came to an abrupt end in 2008 as the economy weakened. This caused an inevitable downturn in demand for all construction services, including electrical work. The economy and the housing market stayed very weak throughout 2009 and into the early 2010s. Trades-people like electricians had to make more effort than ever to make sure that their existing customers stayed loyal and potential new customers chose their business. 2013 saw things start to improve as the economy began to strengthen, and the construction industry in particular enjoyed much stronger demand. Conditions continued to improve during 2014. The government's Help to Buy scheme boosted the housing market, which also had a beneficial impact on demand for domestic electrical services.
The recovery in the construction industry continued strongly into the first half of 2015 due to wages going up, low interest rates, falling oil prices and people's confidence in their employment. This produced the longest period of sustained growth since the financial crisis, with uninterrupted growth from May 2013 until June 2015. The recovery lost momentum in the third and fourth quarters of 2015, however, and slowed further in January 2016, although for the year to December 2016 as a whole, the total number of new homes started was up 5% on the previous year, rising to the highest level since 2007.
Due to the economic uncertainty following the Brexit vote, higher inflation, the weakening growth of real wages and the loss of consumer confidence in the economy, growth in the construction industry remained subdued during 2017. Little change is expected for 2018 - the Construction Products Association forecast that the sector would remain flat, at best, during 2018. New private industrial orders have been falling and growth has been dependent on an increase in infrastructure activity and private housebuilding offsetting a sharp fall in the commercial and industrial sectors. This pattern is expected to continue in 2018.
The loss of jobs in the industry resulting from the downturn following the financial crisis has led to a skills shortage. Some 300,000 skilled craftsmen left the industry, many for good. This has led to higher potential earnings for electricians.
The faltering recovery of the general economy and the construction industry has been alleviated to an extent by:
- the popularity amongst homeowners of extending their homes because of the high price of moving up to a larger property, particularly in areas where prices are high, for example in London
- the increase in buy-to-let landlords creating a spike in renovations - although recent tax changes have made buy-to-let less attractive so there may be a reduction in this work in future
The market remains competitive and it's still very important for trades-people like electricians to run their businesses professionally and efficiently - and to offer customers excellent service and value for money.
In the commercial sector, demand for electrical services has been boosted by businesses installing and upgrading computer networks, which require data cabling. There has also been growth in demand for the installation of burglar alarms and security lighting.
Materials prices saw some sharp rises during the late 2000s and early 2010s. Fuel prices soared too, making it more and more costly for trades-people like electricians to run their business vehicles. The mid 2010s saw this situation improve as petrol and diesel prices fell back but the fall in the value of the pound following the vote to leave the EU led to rising fuel prices and an increase in the cost of imported materials, once again putting margins under pressure. Higher costs, weaker demand and the uncertainty resulting from the Brexit negotiations made for tough trading conditions during 2017 and into 2018.
Concerns over faulty home electrics led the government to amend the Building Regulations in England and Wales to include a requirement on electrical safety - Part P of the Building Regulations. This requirement, introduced in January 2005, means that building control bodies have to carry out checks on certain specified electrical work in dwellings in England and Wales unless the work has been carried out by an approved 'competent person'. Scotland and Northern Ireland have their own separate building control and certification arrangements.
However, in 2013 the government made changes to the regulations to reduce the scope of work which must be notified to building control or self certified. Also as part of the changes, it became possible from April 2014 for electricians who are registered with a third party certification scheme to certify notifiable electrical work done by other people.
There are several different competent person registration schemes available for electricians, including some run by the main trade associations. Getting registered can mean extra training and costs, and involves on-site assessment.
The web has become very important to businesses like electricians in recent years. Many people now turn to the web instead of telephone directories to search for things like electrical services, while would-be customers can also search online for reviews, opinions and information about contractors. Trades-people like electricians can use online job-matching, feedback and referral websites like Rated People to find work and enhance their online reputation.
Environmental and low-carbon technologies
Energy use in housing is a major source of carbon emissions, so a great deal is currently being done to try and reduce the amount of power consumed in a typical home and to make homes more self-sufficient for their energy needs.
Low-consumption technologies include low-energy lightbulbs (compact fluorescent and LED), 'smart' meters, and motion-sensor lighting. Domestic microgeneration has also become more commonplace, using technologies that include solar photovoltaic panels and combined heat and power (CHP) boilers.
In 2010 the government introduced a 'feed-in tariff' to provide a financial incentive to householders who install microgeneration technologies. The Microgeneration Certification Scheme was set up to enable suitably qualified competent installers to demonstrate their credentials.
The financial incentive created a boom in demand for solar photovoltaic installations, with suitably qualified installers cashing in on demand. However, the government controversially slashed the amount of subsidy available during 2012, leading initially to confusion and then denting demand. Further changes were made to the scheme which came into effect in 2016. These changes include reductions in the tariff, changes to the rate at which they decrease and six monthly deployment caps, limiting the total annual cost to £100 million to the end of 2018-19. You can read more about the feed-in tariff on the Ofgem website.
The early 2010s also saw the introduction of the Green Deal scheme, under which funding was made available to home owners and tenants for qualifying energy-saving installations. Green Deal work, which included the installation of fan-assisted replacement storage heaters, air-source heat pumps and low-energy lighting among other products, had to be done by an authorised installer. In July 2015 the government stopped funding the Green Deal Finance Company, which was set up to lend money to Green Deal providers, effectively bringing an end to the scheme.
Keeping up to date
Joining a trade association will help you to keep up to date with developments in the electrical industry. Membership is generally subject to certain criteria being met but it can bring a range of benefits such as warranty schemes, being listed in the members' register and access to help, advice and training services.
The Electrical Contractors Association (ECA) is one of the main trade associations for electrical contractors in England, Northern Ireland and Wales, while SELECT represents those in Scotland. Both organisations promote quality and safety and represent the interests of their members at local and national level. To be eligible for full membership of the ECA a business must have been trading continuously for at least a year. However, new businesses can join the ECA Registered Associate scheme.
Other trade and professional bodies for the electrical contracting industry include NICEIC and the Institution of Engineering and Technology (IET).
Subscribing to a professional journal is another excellent way of staying up to date with developments. Professional Electrician and Installer is aimed at small and medium sized electrical contractors. You can find out more on their website.
You can get a lot of useful information by visiting a trade show for the electrical sector such as ELEX Show. You will be able to meet manufacturers, suppliers and importers of hand tools, equipment, fixtures and fittings.