Business news 18 September 2024
The employment special – the cost of the workforce exodus, CEOs and the office return, worker fears and insecurity, inactivity due to sickness, Labour reforms, money worries, HMRC confusion, markets, insolvencies & more business news that we thought would interest our members.
James Salmon, Operations Director.
Workforce exodus costs £16bn a year
The Institute for Employment Studies reports that the UK has seen a significant workforce exodus, with 800,000 fewer individuals in work or seeking employment since the onset of the Covid pandemic. This “participation crisis” has resulted in a £16bn annual loss in tax receipts, highlighting the economic impact of the workforce contraction. Tony Wilson, the institute’s director, noted: “This situation has parallels with the one Britain found itself in during the 1980s.” The report indicates that the UK is an outlier among developed nations, with employment rates falling rather than rising post-pandemic.
UK CEOs expect office return surge
Chief executives in the UK are increasingly optimistic about a return to pre-pandemic office working, with 83% expecting this shift within three years, up from 64% last year, according to a KPMG survey of 1,325 global CEOs. Additionally, 81% of UK bosses indicated they would likely reward employees who return to the office, a significant rise from 56% in 2023. Overall, 75% of UK CEOs remain optimistic about growth prospects ahead of the upcoming budget on October 30.
Workers fear missing out on jobs
Recent research indicates that many UK workers are hesitant to pursue new job opportunities due to past regrets. A poll of 5,000 adults revealed that 64% of those who regretted a previous job move are now more cautious. Key reasons for this hesitancy include concerns over work/life balance (29%) and losing flexibility (26%). Despite these fears, 23% are considering re-entering the job market, with 11% actively searching. Doug Rode, managing director UK&I at Michael Page, urged workers to act sooner rather than later, as a shift in the market is anticipated. “Our research indicates a shift in mindset with many preparing to make bold moves. Economic predictability and a demand for new skills are driving a renewed sense of optimism.”
Insecure work keeps staff from upskilling and finding new jobs
According to a new report from the Work Foundation, insecure work often traps individuals rather than serving as a pathway to better employment. The study tracked 10,000 people over four years, revealing that 44% remained in precarious jobs, while 9% fell out of work entirely. Ben Harrison, director of the Work Foundation, stated: “The very nature of insecure work makes it more difficult for individuals to transition to secure jobs.” The report highlights that workers in insecure roles earn, on average, £3,200 less annually than their secure counterparts, with nearly 7m people engaged in insecure work in 2023.
UK needs bold action on health crises
The UK’s economic inactivity due to sickness may reach 4.3m by the end of the current parliament, warns a health report from the Institute for Public Policy Research (IPPR). The report highlights a link between the health crisis and the faltering economy, with 2.8m people currently off work sick, an increase of 900,000 since before the pandemic. This absence could lead to a loss of up to £5bn in tax receipts in 2024, exacerbating the Chancellor’s “£22bn black hole” in public finances. Health Secretary Wes Streeting supports the findings, stating: “We won’t build a healthy economy without a healthy society.” The report calls for a comprehensive health policy overhaul to address these urgent economic challenges, stressing that better health is Britain’s greatest untapped path to prosperity.
Generative AI: A workforce game changer
Generative AI is often perceived as a threat to jobs, but a recent survey by KPMG reveals a different narrative. Writing in the Times, Jon Holt, chief executive of KPMG UK, says: “71% of UK chief executives see genAI as an opportunity to try new ways of working.” The survey indicates that many leaders believe genAI can enhance productivity without significant job losses, with a third even anticipating job creation. While challenges such as trust, regulation, and skills gaps exist, Holt stresses the potential of combining human intelligence with artificial intelligence to address the UK’s productivity issues. He advocates for collaboration between government and businesses to equip young people with the necessary skills for the future.
Labour pushes on with plan to end zero-hours contracts
Angela Rayner, the deputy prime minister, business secretary Jonathan Reynolds and Justin Madders, the employment rights minister, are set to meet with union leaders and business representatives today, including the CBI and FSB, to discuss Labour’s ‘Make Work Pay’ reforms aimed at addressing the issues surrounding zero-hours contracts. With over one million workers currently on such contracts, a Government source noted the insecurity they create, stating: “It cannot be right that someone on a zero hours contract can have their shift cancelled at the last minute on the bus to work.” While the Government does not plan to ban zero-hours contracts entirely, it aims to ensure that vulnerable workers are protected.
Luke Johnson slams Labour’s fantasy reforms
Luke Johnson, the newly-appointed chair of Revolution Bars, has expressed strong criticism of Labour’s proposed overhaul of workers’ rights, labelling it a “socialist fantasy.” He argues that the reforms, aimed at addressing the UK’s “culture of presenteeism” and banning zero-hours contracts, may not enhance productivity as intended. Johnson stated: “It’s a wild and unsubstantiated assumption, and the risk is it does the opposite.” He also attributed the stagnation in productivity to the shift towards remote work since the COVID-19 pandemic. Additionally, business groups have cautioned that Labour’s reforms could lead to increased costs for struggling firms, potentially discouraging hiring.
Money worries plague the nation
According to a recent poll of 2,000 adults, finances remain a significant concern for 41% of the UK population, with energy bills, groceries, and car costs being the primary drains on daily spending. The cost-of-living crisis has left 24% feeling stressed, while 36% have not sought advice from anyone. Financial expert Peter Komolafe stressed the importance of discussing money worries, stating: “Money worries can be stressful, but it’s important to know there are simple steps you can take to both alleviate the pressure and help you feel better.” The survey also revealed that 22% of adults wish to feel more confident discussing finances, and 72% would turn to family for help. To improve financial wellbeing, Komolafe suggests creating a budget, building savings, and reaching out to energy suppliers for support.
Savers flock to cash Isas
Savers have significantly increased their investments in cash Isas, with inflows rising from £157.9bn to £188.5bn in just six months, according to data from Paragon Bank. By the end of June, total adult cash Isas reached £351.6bn, up from £309.3bn in December 2023. The surge is attributed to savers seeking to protect their cash from potential tax changes, as Derek Sprawling, managing director of savings at Paragon Bank, noted: “The increase is understandable given the growth in savings rates means more savers are facing the prospect of paying tax on money held in non-Isa accounts.” The popularity of fixed-rate cash Isas has particularly soared, with total adult cash savings balances climbing to £1.18trn.
Markets
Markets continue to hold their breath ahead of this weeks FED meeting in Washington with traders split between a 25 and 50 basis point cut in US rates.
Yesterday, the FTSE 100 lost some of its early gains but still ended positive and closed up 0.38% at 8309.86 and the Euro Stoxx 50 closed up 0.69% at 4860.78. Overnight in the US the S&P 500 rose 0.03% to 5634.58 and the NASDAQ rose 0.20% to 17628.06.
US Retail Sales unexpectedly rose in August, though growth was only minor suggesting that consumers remained cautious about spending. According to the US Census Bureau, advance retail and food services sales rose to $710.8bn last month, up 0.1% from July. That was down from an upwardly revised 1.1% monthly gain in July (0.1 percentage points higher than the initial estimate), which was the highest rate of growth seen since early 2023. However, it was still better than the 0.2% decline expected by economists.
This morning on currencies, the pound is currently worth $1.322 and €1.187. On Commodities, Oil (Brent) is at $72.7 & Gold is at $2570. On the stock markets, the FTSE 100 is currently down 0.5% at 8268 and the Eurostoxx 50 is down 0.27% at 4848.
Inflation matches expectations
UK Inflation held steady during the month of August, data from the Office for National Statistics showed Wednesday, and matched analyst expectations. The headline consumer price index (CPI) was in line with the previous 2.2% reading in July and also matched a prediction from a Reuters poll of economists. Headline CPI had come in at 2% in May and June, in line with the Bank of England’s target rate.
Intel
Intel outlined plans to split its foundry business into a separate subsidiary with its own governance structure within the wider group. Intel Foundry comprises the Santa Clara-headquartered technology trailblazer’s semiconductor manufacturing wing, which is an aspect of the business chief executive Pat Gelsinger has been at pains to grow.
Tech leaders warn Labour over tax hikes
Prime Minister Sir Keir Starmer has pledged that Chancellor Rachel Reeves’ upcoming Budget will focus on economic growth and wealth creation. However, proposed tax increases, particularly on capital gains, are raising concerns among British entrepreneurs. Sir Martin Sorrell cautioned that “increasing capital gains tax, especially without index-linking or time apportionment, will drive entrepreneurs and business owners out of the UK.” Tech leaders, including Lewis Liu, warn that a capital gains tax hike could jeopardise the UK’s tech ecosystem, pushing talent abroad. The tech sector, contributing over £150bn to the economy annually, is urging the Government to reconsider tax policies that could hinder growth. As the Budget approaches, the stakes are high for the future of the UK’s tech industry, says Jess Jones in City AM.
HMRC under fire for tax confusion
HMRC has been criticised for not adequately informing online sellers about the need to file tax returns. Starting in 2025, web platforms will report income to HMRC based on calendar years, complicating tax calculations. The Low Incomes Tax Reform Group (LITRG) highlighted the absence of a standard reporting format, leading to potential confusion among sellers receiving different forms from various platforms. Reports will be issued in January, coinciding with HMRC’s peak period. Many sellers mistakenly thought a new tax was introduced, rather than just changes to reporting rules. Sellers can earn up to £1,000 tax-free under the trading allowance, but any income above this may be taxable. An HMRC spokesman stated: “We’ve recently published and promoted guidance for online sellers and we run an extensive Self Assessment campaign every year, which reminds people to check if they need to file a tax return.”
Tax raid fears prompt landlord sell-off
Landlords are facing significant capital gains tax bills, with new analysis indicating potential liabilities of up to £90,000 under Labour’s proposed tax reforms. Chancellor Rachel Reeves has not dismissed the possibility of aligning capital gains tax with income tax, which could lead to increased tax burdens for property owners. According to David Fell, lead analyst at Hamptons: “While on the face of it aligning capital gains tax rates with income tax rates sounds fair, the biggest issue is probably inflation.” This change could discourage landlords from selling, further tightening the rental market, as evidenced by a 59% drop in new rental homes in East Anglia.
CALA
Legal & General has agreed to sell its housebuilding unit CALA Group to funds managed by Sixth Street Partners and Patron Capital. The unit has been sold at an enterprise value of £1.35 billion, and L&G said it stands to receive cash proceeds of £1.16 billion.
PZ Cussons
PZ Cussons reported a swing to an annual loss, with its bottom line hurt by one-off hits and a revenue decline. Revenue in the year ended May 31 declined 20% to £527.9 million from £656.3 million a year prior. It posted a pretax loss of £95.9 million, swinging from profit of £61.8 million. Hurting its bottom line, it reported a £140.6 million hit from ‘adjusting items’.
Xero acquires Syft for deeper insights
Xero has announced its acquisition of Syft Analytics, a South African insights platform, for $US70m (£A104m). Syft, which aids accountants and small businesses in forecasting financial outcomes, will enhance Xero’s offerings. CEO Sukhinder Singh Cassidy stated: “Syft accelerates this further by offering deeper insights to help both small businesses and accounting partners to make informed decisions.” The deal includes an upfront payment of $40m, with the remainder in earnouts and stock compensation over three years. Following the announcement, Xero’s shares rose by 1.9%, reaching $147.80, the highest since 2022. The acquisition is expected to be finalised by the third quarter of Xero’s 2025 financial year.
Insolvency specialist’s strong start to the year
Begbies Traynor Group has reported a “good start” to its new financial year, following a decade of profitable growth. The company’s results for the year ending 30 April 2024 show revenues rising from £121.8m to £136.7m, with adjusted EBITDA increasing from £26.6m to £28.5m. Executive chairman Ric Traynor stated: “The last financial year was another successful one of strong financial performance,” highlighting the firm’s growth strategy focused on organic development and mergers and acquisitions. The first quarter results for the period ending 31 July 2024 were also promising, with double-digit growth in revenue and adjusted profits compared to the previous year.
Buyer sought for surfacing giant
International Decorative Surfaces Limited (IDS), one of the UK’s largest distributors of surfacing materials, is currently seeking a buyer following the appointment of joint administrators Alastair Massey and Tony Wright from FRP Advisory on 9 September 2024. The company, which has 393 employees, has faced significant challenges due to a slowdown in the property and construction sectors, leading to some redundancies. The administrators are actively marketing the business and its assets for sale, with a stockholding of over 6,000 product lines and a fleet of 85 vehicles for nationwide delivery.
Latest Insolvencies
Appointment of Administrator – NAUNTON DOWNS DEBENTURES LIMITED
Petitions to wind up (Companies) – BALMFORTH TRANSPORT LIMITED
Appointment of Liquidators – DAVID MANSFIELD CONSULTANT SURVEYORS LIMITED
Appointment of Liquidators – DANICARE LIMITED
Appointment of Liquidators – HAVANA LEISURE (SOUTHERN) LIMITED
Appointment of Liquidators – ALVIN PROPERTIES LIMITED
Appointment of Liquidators – CYGNUS SOLUTIONS LTD
Appointment of Administrator – GALLANT BUILDING SERVICES LIMITED
Appointment of Liquidators – BENTLAND FARMS LIMITED
Appointment of Liquidators – DARLEY PARK PROPERTIES LIMITED
Appointment of Liquidators – VALUE CATALYST LTD
Appointment of Liquidators – PAINTBOX PROPERTIES LIMITED
Petitions to wind up (Companies) – THE DESIGN AND MANAGEMENT COMPANY PD 2024 LIMITED
Appointment of Liquidators – CLARKE STEELS LIMITED
Appointment of Liquidators – ST. CROSS BUILDERS LIMITED
Appointment of Liquidators – MATTICA MARKETING LTD
Appointment of Liquidators – VIRIYA LIMITED
Appointment of Liquidators – SCOTBY CYCLES LIMITED
Appointment of Liquidators – TANGIBLE RESULTS LIMITED
Appointment of Administrator – J G CHATHAM LIMITED
Petitions to wind up (Companies) – MYLES RETSON HAIRDRESSING LTD.
Appointment of Liquidators – FOSTER JONES LTD
Appointment of Liquidators – ROSSETT GREEN INVESTMENTS LTD
Appointment of Liquidators – EVREX SHIPPING SERVICES LIMITED
Petitions to wind up (Companies) – BTTLR LIMITED
Appointment of Administrator – FABLINK TANK SYSTEMS LIMITED
Appointment of Liquidators – GGE UK 2 LIMITED
Petitions to wind up (Companies) – FOX BAR HOTEL LTD.
Petitions to wind up (Companies) – CCS FOREKO LTD.
Appointment of Liquidators – CLONTEC MANUFACTURING LTD
Appointment of Liquidators – MLPS PROPERTY DEVELOPMENT LTD
Petitions to wind up (Companies) – ANDYS TAXI CABS LTD
Appointment of Liquidators – WEST MIDLANDS DERMATOLOGY SERVICE LIMITED
Appointment of Administrator – STREAMLINE PANELS AND ASSEMBLIES LIMITED
Petitions to wind up (Companies) – MDJ LOGISTICS (SCOTLAND) LTD.
Appointment of Administrator – NASSTAR GROUP LIMITED
Appointment of Liquidators – SUNAG CORPORATION (EUROPE) LIMITED
Appointment of Liquidators – THE SHADE PROPERTY COMPANY LIMITED
Appointment of Liquidators – CERES VENTURES LIMITED
Appointment of Liquidators – JUNCTION 240 LIMITED
Petitions to wind up (Companies) – WINDOW JUNCTION LIMITED
Appointment of Liquidators – TED NETWORKS LIMITED
Petitions to wind up (Companies) – BUBBLE AND GOOSE HOSPITALITY LIMITED
Appointment of Liquidators – MACMAL PROPERTIES LIMITED
Appointment of Liquidators – FAHIM SHAH CONSULTANCY LTD
Appointment of Liquidators – ANATIS UK LIMITED
Appointment of Liquidators – AGITUR CONSULTING LIMITED
Appointment of Liquidators – MITMAG LIMITED
Appointment of Liquidators – SAND MOULD SOLUTIONS LIMITED
Appointment of Administrator – FABLINK CAB SYSTEMS LIMITED
Appointment of Liquidators – PTKR LIMITED
Petitions to wind up (Companies) – RETAILSUPERVISON LIMITED
Petitions to wind up (Companies) – COMMODITIES TRADERS LTD
Appointment of Liquidators – TOWERS-PERKINS PRODUCTS & SERVICES LIMITED
Appointment of Liquidators – QUANTOCK CHEESE LIMITED
Appointment of Administrator – FABLINK TOOLSPEC LIMITED
Appointment of Liquidators – G A JOHNSTON ASSOCIATES LTD
Petitions to wind up (Companies) – KEVIN ROPER FURNITURE LIMITED
Appointment of Administrator – FABLINK UK LIMITED
Appointment of Administrator – FABLINK GROUP HOLDINGS LIMITED
Appointment of Liquidators – MULLEN CASTLE LIMITED
Petitions to wind up (Companies) – JZ MODERN ART LTD
Petitions to wind up (Companies) – ACC LEISURE GROUP LIMITED
Petitions to wind up (Companies) – LAKES HEATING SERVICES LIMITED
Petitions to wind up (Companies) – TRAVEL RIDE GROUP LTD
Petitions to wind up (Companies) – BMR CONSTRUCTION SCOTLAND LTD
Appointment of Liquidators – INDIGO BALLOON LIMITED
Petitions to wind up (Companies) – TANYA DIMITROVA LIMITED
Appointment of Administrator – FABLINK LIMITED
Appointment of Liquidators – M.D.V. LIMITED
Appointment of Liquidators – SCJW HOLDINGS LTD
Petitions to wind up (Companies) – AEE EXHIBITIONS LTD
Appointment of Liquidators – SHORT STORAGE LIMITED
Petitions to wind up (Companies) – PLUMBINGFORCE LIMITED
Why you should become a member of CPA!
The Credit Protection Association (CPA) has been assisting thousands of UK businesses to get paid, since 1914. We have supported our members through all sorts of difficult trading environments. With high interest rates and a struggling economy and elevated insolvencies, our services can help your business navigate these difficult waters.
Unlike other credit management and debt collection companies, we offer a range of services to our members that are all included as part of a fixed annual subscription, tailored to your needs.
Under your annual subscription you will have access to our main services:
- Our Creditcare credit reports provide credit ratings and limits along with a host of detailed information on your potential customers to enable you to trade with confidence and set appropriate credit policies for new customers.
- Our monitoring service will alert you to any significant changes in the status of those customers.
- Our Overdue account recovery service can be used to chase up payment on any invoices to those customers that have not been paid on time. Unlike other debt collection companies, this service directs your customer to pay direct to you and allows you to maintain your goodwill with them, rather than inserting ourselves into your relationship with you customer and insisting they pay CPA instead. Our Overdue account recovery service resolves over 80% of accounts referred to us.
All of the above services and other complimentary services such address verification, are included in your subscription!
And for the small minority of debts not resolved through our Overdue account recovery service, you can refer the debt to our collections department to escalate the late payment collections process.
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 and be warned of any potential risks. CPA has been improving business cash flow for over 100 years, by tackling late payers and campaigning against the late payment culture in the UK.
Unlike other credit management companies, we offer our members a fixed annual subscription regardless of how high the value of their debts maybe!
Rather than to borrowing more money to improve your cashflow, CPA suggests that business owners tackle the problem at its source. If late payments are a strain on your cashflow, then talk to CPA about how we can help you reduce those late payments.
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’s collection department 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
Have you been paid late by business customers in the last six years?
Maybe you no longer work with them. Under legislation, you are entitled to compensation you for those late payments you have suffered.
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!
CPA (LPC) Recoveries is using our bespoke software and decades of experience to do just that for our clients
Check our compensation calculator to see how much your business could be owed!
Discover NOW the potential value of late payment compensation hidden in your sales ledger!
The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections.