business news 31 August 2021
James Salmon, Operations Director.
British business confidence hits four year high. UK the best European country to start a business. Lockdown start-ups set to stick around. September set to see office return? And more business news.
British business confidence hits four year high.
British business confidence reached its highest level in more than four years in August, according to a poll by Lloyds Bank. Lloyds’ monthly business barometer rose by 6 percentage points to +36%, the highest since April 2017, while optimism in the economy rose by six percentage points following a dip in July. More than a third of the 1,200 companies surveyed by Lloyds predicted they would offer staff pay rises of at least 2% over the next 12 months and 17% anticipated wage growth of at least 3%. The poll also saw 44% of companies say they expect to increase the prices they charge, the highest proportion since December 2017. Lloyds economist Hann-Ju Ho said: “Staff shortages remain a challenge but as the economy moves back towards pre-pandemic levels we can be optimistic that the momentum for business confidence and economic optimism can be sustained in the months ahead”.
UK the best European country to start a business
The UK has been named as the best country in Europe to start a business, topping the list due to its large economy, low unemployment rate, and ease to start and run a business. The UK also came out on top of a ranking of countries with the lowest cost of starting a business. The study carried out by e-money platform Tide said that while the UK is the best location for launching a firm, its weather, culture, and political climate were among issues that may deter future business owners.
Lockdown start-ups set to stick around
A new survey suggests that the pandemic prompted a surge in first-time entrepreneurs and that many of them plan to continue working for themselves. The poll by technology design agency Studio Graphene shows that seven in ten people who started a business during the pandemic have seen it become their main professional focus. However, more than half of respondents said they expected their businesses to perform less well now that lockdown restrictions had been lifted. The poll also saw three-fifths of those surveyed say they had launched their venture in response to the problems created by the coronavirus outbreak. Ritam Gandhi, founder and director of Studio Graphene, said the poll “suggests that many of these new start-ups, which may have originally been passion projects or side-hustles, are in fact long-term pursuits”.
September set to see office return?
Jill Treanor in the Sunday Times looked at whether September will see large numbers of staff return to offices, saying employers are set to determine whether UK cities “can capitalise on the ‘back-to-school vibe’ and once again be crammed full of office workers”. Saying that as the lifting of lockdown restrictions in July coincided with the start of the summer holiday period, it “delayed any push by employers for a return”. Paul Swinney, director of policy at Centre for Cities, believes September “is the month where we’ll see some change.” Ms Treanor says that while many commentators expect hybrid working to be the common option, there are signs that workers are “increasingly warming” to the idea of going back full-time, with a LinkedIn and Censuswide poll in June showing that 49% of UK employees would prefer a hybrid work model while just 12% wanted to be in an office full time. By July, however, the proportion who wanted hybrid work had fallen to 31% and the number preferring full-time office work was up to 37 %. Graham Clemett, chief executive of office provider Workspace, believes the move back to offices will be led by small firms, which he says are not as cautious as large employers and could see the benefits of workplace collaboration.
Kwarteng: UK workers can ease lorry driver shortage
Business Secretary Kwasi Kwarteng has told firms to hire British workers to tackle a lorry driver shortage that has left supermarkets and suppliers struggling to meet demand. While it has been suggested ministers could being forward a review of the Shortage Occupations list to make it easier for overseas HGV drivers to secure a visa, Mr Kwarteng has written to business leaders to suggest foreign labour only offered “a short-term, temporary solution” and stress the “importance of utilising the strength of our domestic workforce”. In a letter to Logistics UK and the British Retail Consortium, Mr Kwarteng pointed to concerns that the end of the furlough scheme on September 30 could see an increase in unemployment, urging employers to help the “many UK-based workers [who] now face an uncertain future and need to find new employment opportunities”.
IoD questions Government stance on worker shortages
The Institute of Directors (IoD) has questioned Government advice suggesting firms invest in UK workers, saying the move will not solve short-term labour shortages that are hitting retailers and supply chains. The business lobby group has called for new, flexible visas that would allow foreign staff to fill crucial roles, particularly as lorry drivers, with a shortage of workers coming in the wake of Brexit and the pandemic. Roger Barker, the IoD’s director of policy, said that while business “should certainly be investing in the skills and capabilities of the domestic workforce, that is unlikely to be a solution to short-term labour market shortages”. He has called on the Government to “adopt a more pragmatic approach, including a more flexible visa regime, which alleviates some of the current pressures on business.” Industry groups including Logistics UK and the British Retail Consortium have also called on ministers to provide temporary UK visas to EU truck drivers to help address the issue, while groups including the Confederation of British Industry and Federation of Small Businesses have warned that staff shortages, if left unaddressed, could put the post-pandemic recovery at risk. Despite calls for a rethink over visas, Business Secretary Kwasi Kwarteng has advised employers to invest in UK-based staff rather than relying on foreign labour.
PM warned over youth unemployment
Boris Johnson has been urged to help young people find jobs as the economy recovers from the coronavirus pandemic. In a letter to the Prime Minister, the Youth Employment Group calls on Mr Johnson to “drive forward a coordinated cross-departmental approach to tackling short-term and long-term youth unemployment to ensure that there will be no ‘lost generation’.” The letter, which is signed by more than 80 experts including the chief executive of The Prince’s Trust and the boss of Careers England, says that while officials have sought to help youngsters get into work through investment in employment support, education, training and jobs, the “challenge for young people is far from over”. It also warns that young people with multiple disadvantages and lower qualifications are much more likely to become long-term unemployed, arguing that this threatens the Government’s levelling up agenda.
Over 50s in work set to hit record high
Employment amongst over 50s is set to hit a record high of 47% by 2030, with the rising state pension age cited as a key reason. Legal and General Retail Retirement and the Centre for Economics and Business Research have tracked employment amongst older people and found the number of people over 50 and in work has increased from 31% in 1992 to 42% in 2020. The study shows that many people are continuing to work past state pension age, with 8% of people over 66 currently recorded as in work, with the rate set to hit a record 11% by 2030.
TUC: Give workers more bank holidays
The TUC says UK workers are not granted enough bank holidays, with eight public holidays a year in England and Wales – four fewer than the EU average. Those in Scotland and Northern Ireland fare slightly better than their neighbours, with nine and ten public holidays respectively. TUC general secretary Frances O’Grady said a new public holiday between September and Christmas would be “a great way to thank working Britain for getting us through these tough times.” Saying that yesterday’s August Bank Holiday will have been “a welcome break for everyone working hard to get us through the pandemic”, she questioned why workers will not see another national holiday until Christmas, arguing that the number of holidays UK workers get is “so stingy compared to other nations.” A spokesman for the Department for Business, Energy & Industrial Strategy said that while an additional bank holiday may benefit some, the cost to the economy would be “considerable.”
Redrawing the economy, post-pandemic
Erik Britton, managing director of Fathom Consulting, considers the economic climate, arguing that issues such as the pandemic, efforts to tackle climate change and a “possible shift to a higher inflation/interest rate equilibrium” could drive broad changes. He says that countries are emerging from the coronavirus crisis “into a world where working practices are set to change and where physical infrastructure is set to be replaced or retrofitted on a grand scale”, arguing that these changes bring the potential to “rip up the economy as we know it and redraw it along fundamentally different lines.”
Food producers in visa plea
Companies from across the food production sector are urging the Government to grant extra one-off visas to solve Brexit-induced supply chain problems, with firms and lobby groups calling for a 12-month visa to be created for HGV drivers and other critical roles that have seen labour shortages. A report compiled by Grant Thornton on behalf of organisations including the National Farmers Union, the Food and Drink Federation, and the Road Haulage Association has asked ministers for a stop-gap visa to help solve the supply chain issue. The report found an average vacancy rate of 13% across UK food chain industries and more than 500,000 unfilled vacancies across food and drink businesses. The Grant Thornton analysis says “severe” disruption in the availability of workers because of the reduction in free movement of people following Brexit, coupled with the “unprecedented disruption” of the pandemic, has created a “chronic labour shortage across the whole supply chain”.
Business rates could hit post-pandemic recovery, warns FSB
The Federation of Small Businesses (FSB) has warned that “regressive and outdated” business rates are stopping small companies from investing in post-pandemic expansion plans, describing the system as “indefensible”. In a letter to ministers, the FSB says the tax could hinder the economic recovery and efforts to improve employee wellbeing. The body has called for changes including an increase to the threshold for small business rates relief from £15,000 to £25,000; tax exemptions for investments in solar panels, insulation, ventilation, recycling facilities and bike sheds; relief for childcare providers; and more frequent revaluations that are “light-touch and transparent”. With the Government due to release the findings of a review into business rates later this year, FSB chairman Mike Cherry said ministers are “absolutely right to overhaul a business rates system which often lets online retailers operating from remote warehouses off the hook whilst punishing small businesses that serve as community hubs”. He added that the levy, which brings in about £30bn a year for the Treasury, “hurts small firms trying to do the right thing”. Meanwhile, the British Property Federation (BPF) and British Retail Consortium have called for more frequent revaluations. While the Government is consulting on plans for revaluations to take place every three years instead of five, the BPF believes they should be done annually.
Civil investigations by HMRC fell during lockdown
HMRC civil investigations into suspected tax evasion have fallen during the pandemic compared to pre-pandemic levels, according to data obtained by UHY Hacker Young. Analysis shows HMRC opened 278 civil investigations into suspected tax evasion between April 1, 2020 to January 31 this year. This compares to 425 in 2019/20 and 438 the year before. While the pre-pandemic statistics are for full years, the data shows that on an average monthly basis, the number of civil investigations opened by HMRC during the pandemic fell to around 27 per month compared with 35 per month for 2019/20. The report centres on Code of Practice 9 (Cop9) enquiries which look into taxpayers who are suspected of committing serious tax fraud, which includes deliberately paying less tax than is due, over claiming tax reliefs or mis-claiming government grants. Financial penalties for Cop9 investigations can be as much as 200% of the tax HMRC believes it is owed. HMRC offers those whose affairs become the subject of civil investigations immunity from criminal prosecution if they agree to fully co-operate with the probe.
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