How about some stimulus to the Housing Sector?

Lieben Der Kuche Ltd
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With so little momentum in the UK housing market but with the housing market underpinning so much of the UK economy it is baffling why the Government haven’t encouraged any real stimulus in the sector?

When the car industry was faltering in 2008/9, UK plc (i.e. the taxpayer) unlocked lending to the car manufacturers and their UK supply and retail chains. They gave loan monies, backed other loans, promoted the Car Scrappage Scheme and gave significant support to Jaguar and General Motors, who were both suffering significantly.

No one can argue that in terms of Jaguar, it was a great investment as 4 years on, and Jaguar is recording not just record profits, but record levels of UK exports. Whilst General Motors haven’t fared as well, the previous assistance from the UK government was highly instrumental in keeping the Vauxhall plant at Ellesmere Port, Merseyside open and saving it from job losses which GM instead chose to offload in Europe.

UK Housing Stimulus
One cannot help but wonder that in such austere economic times of cuts, cuts and more cuts, when does stimulus seem like the viable option?

Would it not bolster the UK economy, the faltering Housing and Home Improvement sectors (and therefore UK retail as a whole) if stimulus was injected in the form of Home Improvement Loan schemes to free up credit lines for new kitchens or conservatories or home offices for those starting a business on the back of being made redundant? Would VAT reductions (or a VAT free period – wishful thinking I know) on DIY & Home Improvement products and services help stimulate the sector? Let us not forget that it is the end consumer who ultimately shoulders the VAT burden and it was this VAT reduction which worked well for the car industry?

The answer I think is a resounding YES
Unlike the car industry and the Government saying in its announcement of the stimulus packages back in 2008/9 that it was “protecting UK manufacturing” the UK Home Improvement, DIY and House Building sectors are not dominated by foreign companies.

It is great that Jaguar has done so well and you can argue that the workers on the whole are UK workers, so the stimulus safeguarded UK jobs, but Jaguar is owned by Tata Group, an Indian firm. When we look at the more popular brands that saw sales increases in the stimulus package, the Germans, Japanese and Americans dominate.

UK Small Business
If we take the lessons learned from the Car Industry Stimulus and apply it to the examples of DIY, and Home Improvements in the form of new windows, a new kitchen or bathroom, a home office, a conservatory or just some shelves and a lick of paint, practically all the businesses that would be involved are UK businesses.

Granted Ikea dominate the flatpack furniture industry but B&Q and Homebase dominate DIY. And whilst there are some big UK firms such as Magnet, Wickes, Howdens and the like, most of the UK Home Improvement industry, from the retailers, suppliers, fitters and other contractors will all be UK SME`s, and unlike the car industry, almost all of the money in the process, from supply to fitting, will remain in the UK. UK jobs will be safeguarded, as will UK profits.

Maybe it is wishful thinking that the government would want to stimulate the economy and adopt a policy other than reductionism and perhaps because the UK Home Improvement sector is so dominated by SME`s means that unlike the car industry, perhaps no one from the sector has bought a seat at a Downing Street dinner lately?


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