Business news 17 May 2023

James Salmon, Operations Director.

Insolvencies fall 15% in April. Pay growth and employment climb in Q1. One in five struggling with bills and credit repayments. 78% of people look to cut costs.  And more business news that we thought would interest our members.

Insolvencies fall 15% in April

Corporate insolvencies fell by 15% year-on-year in April, with figures from the Insolvency Service showing that 1,685 companies went insolvent last month. This also marks a month-on-month decline, with 2,457 insolvencies recorded in March.

The decline in insolvencies was driven by a fall in creditors’ voluntary liquidations, which were 23% lower than last April. PwC’s Carla Matthews said that “on the surface” these figures look “encouraging”, but warned “we’re not out of the woods yet.” “The trading environment remains challenging for business,” she noted, adding that the outlook for the rest of the year “may still be turbulent.”

The Insolvency Service data shows that there were 531 bankruptcies in April, marking a 5% year-on-year decline in individual insolvencies. On average, there were 6,336 individual voluntary arrangements registered each month in the three months to April, with this 16% lower than the same period last year.

R3 president Nicky Fisher warned that the figures reflect “a changing debt solutions market where options for individuals might not be as readily available as they might be.” She added that there could be a “backlog of cases building up as a result.”

Pay growth and employment climb in Q1

Pay growth hit 6.7% in the first three months of the year, according to the Office for National Statistics (ONS), while pay growth in the public sector came in at 5.6% – the highest rate since 2003. However, when price rises are taken into account, total pay – including bonuses – was down 4% annually in real terms.

The ONS report shows that the employment rate edged up to 75.9% between January and March, with this driven by an increase in part-time employees and self-employed workers, with 156,000 joining the workforce, while the unemployment rate rose slightly to 3.9%. Vacancies fell by 55,000 in the three-month period, while PAYE numbers were down for the first time for two years in February, by 136,000 to 29.8m.

Meanwhile, There were 556,000 working days lost because of labour disputes in March.

The ONS data also shows that the number of people not working due to long-term sickness has risen to a new record of 2.5m.

0Darren Morgan, director of economic statistics at the ONS, said: “Despite continued growth in pay, people’s average earnings are still being outstripped by rising prices.” Reflecting on the ONS report, Employment Minister Guy Opperman said: “We’re continuing to see progress in the labour market as we take action across government to grow the economy. Employment is up; economic inactivity is down; and vacancies have fallen in successive quarters.”

One in five struggling with bills and credit repayments

Around one in five adults are struggling with bills and credit repayments, according to the Financial Conduct Authority (FCA). The analysis shows that the number of people burdened by these financial challenges has increased from around 7.8m (15%) in May 2022 to 10.9m (21%) in January 2023.

The number of adults who missed bills or loan payments in at least three of the previous six months is estimated to have increased by 1.4m, from 4.2m (8%) in May last year to 5.6m (11%) this January.

The City watchdog has conducted a poll of more than 5,000 adults in the UK and found that 29% of those with a mortgage and 34% of renters had experienced payment increases in the six months to January.

Around 28.4m people felt more anxious or stressed due to the rising cost of living in January than six months earlier, while 11% had put off dealing with financial matters, such as leaving post unopened or ignoring warning letters.

The FCA says it has repeatedly reminded firms of the importance of supporting customers and working with them to solve problems with payments. It has reminded 3,500 lenders of how they should be supporting borrowers in financial difficulty and told 32 lenders to make changes to the way customers are treated.

78% of people look to cut costs

An HSBC survey of more than 2,100 people shows that 78% are proactively looking for ways to reduce their outgoings. Nearly half (49%) had cut back on non-essential spending and 38% are sticking to stricter budgets. It was also shown that 45% are shopping at a cheaper supermarket.

HSBC also found that juts 3% of respondents were aware that they can contact their bank or building society to discuss their financial worries without it impacting their credit score.

Jose Carvalho, HSBC UK’s head of wealth and personal banking, said: “The increased cost of living is taking its toll on many people, but our research shows people are doing the right thing by taking action to get a grip on some of their discretionary spending.”

AI

Testifying before Congress, Sam Altman, the boss of OpenAI who developed ChatGTP suggested that American regulators be empowered to licence and audit artificial-intelligence models and recommended that AI firms be given “guidelines about what’s expected in terms of disclosure”. America has to date shown are far more lax approach towards AI regulation than Britain or the EU.

Lobby group calls for action on food inflation

Ministers have been urged to address labour shortages and red tape in a bid to help ease food price inflation. Food and Drink Federation chief executive Karen Betts said: “Action to fill labour and skills shortages and to simplify current and upcoming regulation, as well as simplifying post-Brexit labelling changes, would help to drive down prices.” Speaking after Downing Street hosted a Farm to Fork event, Ms Betts said it was a “constructive first step” but added that it was “a pity there wasn’t more of a laser focus on immediate issues and the drivers of inflation.” National Farmers Union (NFU) president Minette Batters said the summit was “positive” and “extremely timely.” She added: “I think there has to be realisation in government that a lot of the regulation and legislation that we’re facing is very costly.”

Tax threshold freeze comes under fire
The Government has come in for criticism after a report from the Institute for Fiscal Studies (IFS) think-tank revealed that one in five taxpayers will be pulled into the 40p rate of income tax by 2027 on the back of the Prime Minister’s decision to freeze income tax thresholds. Former Conservative leader Sir Iain Duncan Smith said the Government “cannot go on like this,” adding: “Higher taxes, in the end, mean the economy will do worse because there is less money flowing back in.” Sir Iain added that people “will also be demotivated from moving on up to be successful and do better, as they find they will pay more tax even before they get going.” Former Treasury Minister John Redwood warned: “People are overtaxed … The squeeze on people’s spending power is too great, with frozen thresholds hitting people hard.” Ex-Cabinet ministers have also spoken out, with Simon Clarke saying: “We think we are suffering with our income tax burden now, but this analysis shows the worst is yet to come,” while David Jones added: “People of relatively modest means are being pulled into higher tax brackets by fiscal drag, a time-honoured Labour technique that Conservatives should never employ.” Looking at tax policy in the wake of the IFS report, Chris Etherington of RSM commented: “The Conservatives have to raise taxes in order to reduce spending. Normally they would turn to VAT, but they can’t because this is inflationary, which means they have to place the burden on the taxpayer.”

Experian

Experian reported a rise in annual revenues despite a challenging economic backdrop, seeing growth in all regions, but profits took a hit from a goodwill impairment. The credit checking agency said revenue in the year to March 31, 2023, rose by 6% to $6.59bn, up from $6.22bn the year prior in what the firm called a “year of very strong progress.” That was slightly below City expectations of $6.64bn.

Sage

Sage upgraded its full-year organic recurring revenue growth forecast to around 11% on Wednesday after a strong first half. It had previously expected growth to be above the 9% level achieved in its last financial year.

British Land

British Land swung to an annual loss in the financial year that ended March 31, as the value of its portfolio saw a double-digit fall. The commercial property developer and investor swung to a pretax loss of £1.03 billion from £963 million profit, as total revenue was little changed at £418 million from £412 million. The firm recorded £798 million in negative valuation movements, compared to a gain of £475 million the year prior.

Why should you become a CPA member!

The Credit Protection Association (CPA) has been assisting thousands of UK businesses to get paid, since 1914. We have seen many financial crises, this one will be particularly deadly for suppliers for some time to come.

CPA eases cash from tardy debtors – Efficiently, Effectively, Economically and Ethically. And we provide credit information so you can monitor and assess your key customers.

Unlike other credit management companies, we offer our members a fixed annual subscription regardless of how high the debt value maybe!

No face-to-face meeting required – just call Peter Uwins, CPA’s National Sales Manager, on 020 8846 0000 (business hours) or email nsm@cpa.co.uk today.

When you see your money come in, you will be so glad you used CPA.

The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections

Do you have a commercial late payer that is causing you grief? Use CPA’s no-win, no-fee, commercial debt recovery service!

If you have a particular business customer who is late paying and causing you sleepless nights, why not offer it to CPA for purchase on recourse?

CPA’s collection department will then pursue the debt. We will be liable for any costs incurred and then when we have recovered the debt, we will pay you the net principle debt recovered less our percentage.

Once you have enjoyed that success then you can consider the more cost effective membership which includes our Overdue Account Recovery service and Status/Credit reports as well as a range of other complimentary services.

Just call  020 8846 0000 and ask for Godfrey Nelson or Cris Shirley (business hours) or email debtpurchase@cpa.co.uk today.

The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections.

Get compensated for previous late payments

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You put up with the PAIN – now claim the GAIN!

Claim late payment compensation (LPC) from former business customers who paid you late in the last six years!

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Check our compensation calculator to see how much your business could be owed!

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The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections.