Business news 25 January 2022
James Salmon, Operations Director.
Small firms optimistic but barriers to growth remain. Apprenticeship Levy needs tweaking to help SMEs. Omicron held back recovery in January. And more business news.
Small firms optimistic but barriers to growth remain
The latest Small Business Index report from the Federation of Small Businesses (FSB) reveals that 54% of small businesses in the UK expect to grow over the next year. However, many are highlighting concerns over recruitment difficulties, inflationary pressures and tax rises in April. FSB national chairman Mike Cherry said: “The small business community stands ready to spur our economic recovery. The majority intend to grow over the coming 12 months, and many are looking to increase headcounts. Their optimism is, however, hampered by spiralling inflation, labour shortages and looming tax grabs. Come April, they’ll be faced with a jobs tax hike, an increase in dividend taxation, and fresh business rates bills. We urgently need the UK Government to start looking closely at the policies that will empower the small business community to spur our recovery from this recession as it did the last.”
Apprenticeship Levy needs tweaking to help SMEs
A survey conducted by Survation for the London First campaign group reveals that nearly half of firms subject to the apprenticeship levy have returned unspent funding to the Treasury. Although there is a clear appetite for recruiting apprentices, with 80% of businesses planning to hire at least one in the next year, 48% of businesses had to return apprenticeship levy funding to the Treasury over difficulties in how the levy can be spent. Just under a quarter of businesses said they were unable to use any levy funding within their own organisation, while just 51% of firms transferred unspent funds within their supply chain. Mark Hilton, membership and skills policy director at London First, called for the Government to tweak the system to help SMEs access funding. “Apprenticeships are popular, and there is broad support for the Apprenticeship Levy as a way of re-skilling the country,” he said. “However, it is clear from the survey that employers are struggling to take advantage of all the opportunities on offer.”
Omicron held back recovery in January
Economic growth slowed to an 11-month low in January as Omicron continued to weigh on demand. The IHS Markit/CIPS composite PMI fell to 53.4, down from 53.6 in December, marking the index’s third consecutive month of decline and its lowest level since February 2021. Hospitality, leisure and travel services all struggled to attract customers due to Covid restrictions, offsetting a rise in output among financial services firms. Manufacturing was less hard hit, with factories reporting a slowdown in input prices thanks to some easing of supply chain disruptions and a reduction in the cost of raw materials. Analysts indicate that the hangover from Omicron will be short-lived, and GDP will recover fairly rapidly over the rest of the first quarter.
Tory minister resigns over Covid fraud debacle
Lord Agnew of Oulton has resigned as a minister to the Treasury and Cabinet Office citing the Government’s “lamentable” record on tackling COVID business loan fraud. Speaking in the House of Lords chamber on Monday, Lord Agnew said the Treasury “appears to have no knowledge or little interest in the consequences of fraud to our economy or our society”, adding that a mix of “arrogance, indolence and ignorance freezes the government machine”. More than £47bn was given to small businesses under the bounce back loan scheme and the Government has already written off £4.3bn of this. “Total fraud loss across government is estimated at £29bn a year,” Lord Agnew added before stating that if the Government took fraud seriously it could afford to cut income tax by 1p.
UK ‘overstretched’ and ‘outgunned’ in economic crime fight, says report
Anti-graft charity Spotlight on Corruption says the UK Government is being “outgunned” by criminals with just £852m spent each year fighting economic crime compared with nearly £300bn lost to fraud and money laundering.
One in five young workers quit over parental leave
One in five younger workers resign from their job over poor parental leave policies, according to an Opinium survey. The poll of more than 2,000 adults found that 18% of 18 to 34-year-olds had left a job because of parental leave policies. A further 25% had decided not to apply for a job because they thought parental leave policies were inadequate. Caroline Nokes, Conservative chairwoman of the women and equalities committee, said: “We have to do better in supporting new parents in the workplace.”
Pub boss says younger workers will benefit from return to office
The chief executive of City Pub Group, Clive Watson, has said younger staff will improve their career prospects by returning to work in offices. He told the BBC: “Every junior staff needs a mentor; every junior staff needs to go to someone in the office to help them with their roles and they can’t really do that from home.” Mr Watson added that more flexibility can be brought into the mix, but it was also important for the mental wellbeing of workers to be with their colleagues.
Government debt
UK Public Sector Borrowing from the end of March to December was £146.8 billion – the second highest since records began in 1993. Government borrowing stood at £16.8 billion in December, down by £7.6 billion from the same month a year earlier, according to official figures. The data also showed that public sector debt, excluding public sector banks, was £2.34 trillion at the end of the month, or around 96% of gross domestic product (GDP).
Unilever
Unilever is reported to be planning to cut 150 of jobs as part of a wider restructuring to improve competitiveness. The consumer goods giant, maker of names from Marmite to Demostos is under pressure from investors to accelerate growth. On Monday Trian Partners, an activist hedge fund, revealed it had built a stake in the company.
Royal Mail
Royal Mail said its performance in the October to December, its financial third quarter, was in line with expectations. It said staff absences peaked at 15,000 within the UK domestic operation in early January, hurting service levels in some areas of the country and slowing the realisation of planned cost efficiencies.
PM refuses to say if NICs rise will go ahead
Boris Johnson refused repeatedly on Monday to rule out a delay to the £12bn National Insurance rise planned for April. The PM is under mounting pressure from his own MPs to ditch the tax rise to alleviate the cost of living crisis. The Telegraph reveals that there are now at least three Cabinet ministers who are privately arguing for a postponement. Meanwhile, Paul Johnson, the director of the Institute for Fiscal Studies, said there was certainly enough fiscal room for a postponement arguing for a one year delay to the tax hike. Former Brexit chief Lord Frost joined in, insisting the tax grab was neither necessary or justified, especially given the new pressures on energy prices and inflation. Tory MP Sir John Redwood also threw in the claim that the Treasury had overstated the country’s deficit by more than £60bn last year and by another £50bn this year so “they do not need the big tax rises they threaten for April.”
Dividend payments rose by over 46% last year
UK dividend payouts rose by 46.1% in 2021 from the previous year to total of £94.1bn, the best in nearly five years. One-off special dividends boosted the headline total by a record £16.9bn, according to Link Group’s latest Dividend Monitor, three times their normal level. Link expects underlying growth in dividends of 5% for 2022, bringing total payouts to £81bn. However, headline dividends will fall 7% to £87.5bn as special payouts are forecast to be much lower. Ian Stokes, Link Group’s managing director, corporate markets UK and Europe, said: “The recovery in UK dividends is not complete but the easiest part of the catch-up is now behind us. 2022 faces a number of headwinds in the form of Omicron disruption, inflation and tax hikes and that adds uncertainty to our forecast.”
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 charge our members a fixed annual subscription irrespective of how high the debt value is!
It takes less than 17 minutes to see how you would benefit, do you have the time now?
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
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
The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections.