Impact of the financial crisis and rising energy costs on makers

The current economic recession and spiralling energy costs are severely impacting many craftspeople in the UK. We asked our members for their thoughts and feelings on the current situation, to support our funding bids to help alleviate pressure on the heritage crafts sector, as well as provide specific points we can raise with government departments and agencies on behalf of the sector.

Taking into account the current situation facing the country, 88.9% predicted that the profitability of their heritage crafts businesses will worsen over the next six months. 11.1% said they thought that their profitability would say the same and no-one said that they thought that their profitability would improve.

22.3% thought that the likelihood of their businesses surviving the next six months as a result of the crisis was less than 50:50.

The reasons for this included:

Rising production costs, including materials and labour
Cost of electricity, heating and travel
Rising workshop rents
Drop in orders and sales, including because of the reduction in customers’ disposal income
Unwillingness of the market to bear necessary price increases
Impact of the media on people’s willingness to spend

“The majority of people prefer, understandably, to put food on the table and heat their home.”

61.1% of respondents were equally worried about rising costs and reduced income.

“At present our landlord has not increased the charge for electricity as he is trying to negotiate a deal with his supplier, but we expect to be hit hard. Some suppliers have already increased prices, and more will do so.”

“Craft is a luxury commodity and so people tend to stop, or reduce, spending on art and crafts during recessions or times of financial stress.”

“Our income will be greatly reduced as people won’t have money to spend on bespoke, handmade items. Instead they will choose mass produced items that come from abroad and are made by people in factories who are paid peanuts.”

43.8% of respondents have changed their business model to help deal with the crisis, including becoming more reliant on online sales

37.5% have been eating into cash reserves within the business in order to survive.

12.5% have already had to reduce their workforce.

“[I am] trying to minimise all costs that I can in my personal life and business, and looking into the feasibility of teaching courses… The high capital investment… makes this daunting but hopefully a potential way of diversifying income.”

Suggestions of how the Government might alleviate the situation included:

“Small cottage businesses should be given more grants/financial help to survive.”
“Reduce our bills if we work from home…, garden workshops and small rented spaces.”
“There need to be ‘level up’ grants for artisans, mid-career or entry-level, who can demonstrate passion, dedication and skill in a craft. It would be good to have some recognition for tutors of craft who also want to level-up but have to teach to survive.”
“A reduction in VAT.”
“The government should be decoupling the electricity price from gas, allowing renewable energy suppliers to supply cheaper clean energy. They should also be expanding the UK’s renewable energy production in the country. This would combat the problems more effectively than artist/craftsmen-targeted relief.”
“Give professional crafters a discount card, similar to those for students.”

The effects of Brexit on international sales and the ongoing effect of the pandemic were also cited as a common factor making the current situation worse.

“Brexit makes it impossible to trade with consumers within the European Union. This has resulted in the loss of around £20,000 of sales during the past year from mail order and attending shows within the EU. We need to rejoin the customs union as a start to getting back our membership of the European Union.”

Heritage Crafts is seeking funding to help alleviate the effects of the current situation.