Middle-class homeowners are calling off their renovation plans amid fears Rachel Reeves will hit them with higher taxes in October’s Budget.
Kitchen retailers said Sir Keir Starmer’s warning last month that he and the Chancellor would have to enact a “painful” Budget as they battle to stem a £22bn black hole in the nation’s finances was scaring off middle-income customers.
Jamie Everett, co-founder of Naked Kitchens, a bespoke kitchen manufacturer in Norfolk, said some customers had postponed orders after a strong first half of the year for sales.
“In September it’s like somebody just turned the tap off. It’s quite insane. I was surprised how strong August was given the backdrop,” he said.
“The Budget is the big roadblock right now. Once the Budget is gone, then if it’s a bad Budget, we will probably have another three to six months of a really difficult market, because that will force people to make decisions and just go, ‘No, I’m going to hold my powder dry.’”
Mr Everett said his business was experiencing strong demand from more affluent customers despite caution among the middle classes. “We’re taking our offering steadily higher in the marketplace. We’re going after clients with bigger budgets, people who are less affected by some of these changes.
“Our average order value has increased by probably 30pc, because people who couldn’t really afford to have one of our kitchens, no matter how desperately they might want one, they now are just going, ‘B----- it, we can’t afford it’, whereas the people that can are still going for it.
“It’s a proper old middle-class squeeze, this one.”
Despite a better economic outlook, gloom has descended over the UK after a bleak speech in August by the Prime Minister, when he said those with the “broadest shoulders should bear the heavier burden” at the Budget.
Matthew O’Grady, co-owner of Thomas Matthew, a kitchens retailer in Poole, Dorset, said he had been told by some customers explicitly that they were now holding off on orders until after the Budget, while others were not responding to quotes.
“There’s been a big decline in our quote to win rate – people are just not getting back to you,” he said. “I am hoping after the Budget announcement people have more certainty in the markets, things will get back to normal.”
It comes amid a wider downturn in consumer confidence across Britain as people rein in their spending, anticipating that the Budget will hit their finances.
Vince Gunn, the chief executive of kitchen company Harvey Jones, said: “I think the positioning of the October Budget, i.e. the Government calibrating and communicating to people that they will be financially adversely affected, has been a further dilution of confidence.”
GfK’s long-running consumer confidence index plunged by seven points to -20 in September, indicating that households are feeling less secure about their finances and the economy in general.
Speaking to BBC Radio 4’s Today Programme on Friday morning, Nick Glynne, the chief executive of Buy It Direct Group, which sells “big ticket” items such as appliances and furniture, said: “Until August, we were tracking slightly ahead of last year in volume and unit volume.
“But since the doom and gloom that was announced by and promoted by Keir Starmer, we’ve seen a 9pc drop in traffic coming to our website and a slightly further drop in actual conversions of people that come on to the site that don’t go ahead and buy.
“We are dependent on excess cash, whether it’s to fuel the purchase of a house or whether it’s to upgrade the kitchen or bathroom. So at the moment, we just have to play it quite cautiously.”
For those in the business of manufacturing and selling kitchens and other “big ticket” items for the home, the downturn in consumer confidence comes after many have struggled with supply disruptions and soaring costs over recent years, pushing some to the edge.
Mereway Kitchens – the company that supplied retailers such as John Lewis – was rescued for £500,000 after collapsing last August, but has since gone into administration a second time. Meanwhile, Harvey Jones itself was bought out of administration in February.
However, Mr O’Grady, of Thomas Matthew, said: “There’s a couple of our competitors that have gone out of business and although you think that would be a good thing, the problem is with people getting that low on work, they’re going to be dropping their prices. So it’s really having a knock-on effect on everything.”
A spokesman for HM Treasury said: “The Chancellor has been clear that the prize for bringing stability to our economy is investment and well-paid jobs which make every part of the country better off.
“We have been honest about the state of the public finances we have inherited but we are acting to rebuild Britain based on our fundamental strengths, including our world-leading renewable energy and service sectors.”
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