A new report has revealed Scotland’s plumbing and heating sector is facing a triple whammy of rising costs, weakening order books and falling profit margins.
The findings are revealed in the Plumbing and Heating Federation’s (SNIPEF) latest State of Trade report for Q2 2026.
Some 96% of businesses reported higher material and product costs. 54% noted declining profit margins, while 44% of firms said order books are below expectations for the next six months. Only 19% reported workloads above expectations.
SNIPEF described current trading as remaining ‘relatively resilient’, although conditions have softened since Q1. Some 29% of businesses traded above expectations and 33% as expected, while the proportion experiencing quieter conditions increased from 29% in Q1 to 38% in Q2.
Fiona Hodgson, chief executive of SNIPEF, said, “These results show a profession that is still active, but under sustained and growing pressure. Costs are rising across almost every business we surveyed, with more than half seeing margins fall and forward order books weakening. That combination reduces employers’ confidence and capacity to invest, recruit and grow.
“My concern is that these pressures are emerging at the same time as policymakers are looking to businesses to create more apprenticeships and build the skilled workforce Scotland needs. If we are serious about increasing apprenticeship numbers, supporting housing delivery and meeting the demands of the transition to low carbon heating, then we need to focus just as much on the employers expected to make that investment as we do on the targets themselves.”
SNIPEF added that national ambitions to expand apprenticeships are colliding with a more difficult employer reality, with only 14% of employers likely to recruit an apprentice in the next six months. This contrasts sharply with the political emphasis being placed on apprenticeships and technical education. The Scottish Government has committed to supporting 25,000 Modern Apprenticeships during 2026 to 2027 and is reviewing contribution rates for apprenticeship training, while new prime minister Andy Burnham has placed technical routes and youth apprenticeships at the centre of the UK Government’s skills agenda.
Although SNIPEF welcomes these ambitions, it warns that increasing apprenticeship numbers depends on employers being willing and able to create the jobs and sustain the training. Plumbing and heating employers carry the majority of the four-year apprenticeship investment, including wages, supervision, college release, reduced productivity during training, and the financial risks associated with recruitment and retention.
These pressures are particularly significant in a safety critical profession where training standards and workplace experience cannot be reduced to increase numbers. SNIPEF is calling for greater attention to the employer side of the apprenticeship system.
The research also reveals significant sums of working capital continuing to be tied up through retentions. More than a third of businesses reported having more than £10,000 held in retentions, while 15% had more than £100,000 withheld.
The findings come as the UK Parliament considers the Commercial Payments Bill, which proposes major changes to construction payment practices, including a ban on the deduction and withholding of cash retentions under construction contracts.
SNIPEF is calling for greater clarity over what will replace retentions, concerned that an unintended consequence of reform could be the introduction of alternative forms of security that are more expensive or harder to access, disproportionately disadvantaging SMEs.
