Business news 28 February 2024
140k small business accounts debanked last year. Net zero economy grew 9%. Red Sea attacks delaying goods. CEOs concerned about climate change And more business news that we thought would interest our members.
James Salmon, Operations Director.
140k small business accounts debanked last year
High street banks shut over 140,000 accounts held by small businesses last year, raising concerns about debanking. The closures accounted for 2.7% of the 5.3m business accounts provided by the lenders to SMEs. Eight banks – Barclays, HSBC, Lloyds Banking Group, NatWest, Santander, Metro Bank, TSB, and Handelsbanken – disclosed account closure data to the Commons Treasury Committee after requests for information from MPs. Reasons for closure included failure to provide regulatory information and dormant accounts. UK Finance has noted that a small proportion of accounts are closed due to financial crime, fraud concerns, customer due diligence, or account dormancy.
A recent report by the All-Party Parliamentary Group on Fair Business Banking found that thousands of customers were being debanked or having facilities refused every month. A Treasury spokesperson said: “We are taking action on debanking and remain committed to legislation – forcing banks to explain and delay any decision to close an account under new rules, protecting freedom of expression.” It is noted that the Financial Conduct Authority is reviewing the issue of account access.
Net zero economy grew 9% in 2023
A report from the Energy and Climate Intelligence Unit and Confederation of British Industry shows that the UK’s net zero economy grew by 9% in 2023, outpacing overall economic growth which came in at 0.1%. However, government policy reversals, lack of investment, and competition from the EU and US are putting future growth of green businesses at risk. The analysis shows that thousands of new green companies were founded in 2023, generating £74bn in goods and services and creating 765,000 jobs. The report, which analysed the green economy, found that net zero jobs were on average £10,000 better paid and 50% more productive than the UK average. The authors have emphasised the economic opportunities of the net zero transition and the need for increased investment.
Red Sea attacks delaying goods and pushing up costs
British firms say they are facing higher shipping costs and delays of up to four weeks due to attacks in the Red Sea. A survey of more than 1,000 firms by the British Chambers of Commerce (BCC) saw more than a third say they had been affected, with the rate rising to more than half among exporters. William Bain, the BCC’s head of trade policy, told the BBC’s Today programme: “The pressures are getting higher and higher and there’s only so long that costs can be absorbed.” He added the scale of price rises is not as high as the pandemic, “but these cannot be kept away from prices for long.” The BCC, which represents more than 50,000 businesses, has called for extra Government support for exporters, including the formation of an exports council to promote trade.
CEOs concerned about climate change impact on business
A new analysis of PwC’s annual UK CEO Survey reveals that 28% of UK bosses believe they are at risk from climate change in the next year. The survey also found that 24% expect climate change to impact how they do business over the next three years. The study highlights that climate change is a major concern for UK CEOs, with 43% of business changes driven by net zero goals. However, 26% of CEOs have no plans to make their businesses net zero. Challenges to becoming greener include a lack of demand from outside the company, a lack of green technology in their sector, complicated rules, and less money made from green investments. The study also reveals that 85% of UK bosses have made efforts to reduce their energy use.
UK sees record-breaking year for tech start-ups
Analysis from RSM shows that the UK has seen a record-breaking increase in new tech start-ups, with AI identified as a “driving force” behind tech incorporations. There were 51,017 new tech companies launched in the UK last year, with this a 22% jump on the 41,972 recorded the year before. Ben Bilsland, a technology industry senior analyst at RSM, said: “London projects itself as a leading global authority in tech. That strength is reflected across the UK by a vibrant and energetic sector that consistently supports early-stage businesses.”
Businesses demand tourist tax rethink
More than 500 leading businesses have signed a letter demanding the Chancellor scraps the tourist tax in a bid to boost the economy. The British Chambers of Commerce and Federation of Small Businesses have backed the campaign, calling on Jeremy Hunt to reintroduce the VAT rebate for tourists. Research commissioned last year found that scrapping the tourist tax could leave the UK £10bn a year better off.
Hunt considers NI cuts as Budget nears
Jeremy Hunt is reportedly considering cutting National Insurance rather than income tax in next week’s Budget. The Chancellor already reduced National Insurance in last year’s Autumn Statement, taking the main rate down from 12% to 10%. Analysis shows that a further 1% cut would cost £4.5bn per year. With Mr Hunt looking to finalise his Budget plans this week, the Institute for Fiscal Studies (IFS) has warned that he should not cut taxes unless he can detail how the Government will afford them. The IFS said there is “only a weak economic case for another sizeable net tax cut.” Speaking to the BBC’s Today programme, IFS deputy director Carl Emmerson said that while tax cuts can help to boost growth in the economy, it “doesn’t mean the tax cuts will pay for themselves.” the Office for Budget Responsibility last week informed the Government that it would have about £13bn of fiscal headroom, with Mr Hunt expected to leave about £6bn in reserve. The Chancellor’s room for manoeuvre has been impacted by inflation falling faster than expected, resulting in lower tax revenues, and increased borrowing costs.
HMRC customer service at an ‘all-time low’
The Public Accounts Committee (PAC) has criticised HMRC, saying the tax office’s customer service levels are at an “all-time low” and that taxpayers are being short-changed by the service. Highlighting frustration over the quality of services and its impact on businesses, MPs said the growing complexity of the tax system and the increasing number of people paying tax have left tax officials struggling to cope. Data shows that 62.7% of callers seeking tax advice last year had to wait more than 10 minutes to speak to an adviser, up from 46.3% in 2021/22. On average it took just over 16 minutes for someone to answer the phone – up from around 12 minutes in 2021/22. The PAC said HMRC’s poor customer service is the result of “conscious choices made by HMRC and the Treasury,” adding: “HMRC insists it has good-quality digital services for customers, but this is not the experience shared by the taxpayers and their agents that got in touch with us.” An HMRC spokesperson said it is making “strong progress” in improving customer service.
City punching above its weight
Looking at sectors that are doing well despite challenging market conditions, Richard Tyler in the Times notes that financial and professional services “continue to punch above the country’s weight.” He cites Euan West, KPMG’s head of private enterprise, who says that the firm’s due diligence teams are busy again after a subdued 2023, with this a promising early sign of renewed corporate deal activity. Miles Celic, chief executive of lobby group TheCityUK, says: “Our sense is that there are once more good reasons to be upbeat about the UK.” He continues: “Without a successful financial centre, we can’t have a successful UK,” adding that “while there may be moments of international political and economic turbulence ahead, the UK looks well placed to once more be an island of stability.”
FCA urges savers to shop around for rates
The Financial Conduct Authority (FCA) has urged savers to shop around for the best savings rate and is launching a £600,000 campaign highlighting how easy it can be. This comes after a survey found that 52% of savers had switched savings accounts or were considering switching, while 69% would consider doing so. While the Bank of England’s interest rate increased from 0.1% at the end of 2021 to 5.25 in 2023, the nine largest banks only passed 28% of the base rate hike to easy access deposits between January 2022 and May 2023. From July to December last year, the amount held in non-interest-bearing accounts dropped by £13bn. For easy access accounts, which typically have lower interest rates, there was a decline of £9bn. Deposits in fixed-term accounts, which often come with higher rates of interest, increased by £24bn.
Think-tank: Workplaces should do more to support health
The Policy Exchange think-tank has suggested that firms which provide staff with access to counselling, physiotherapy, and flu jabs at work should receive tax breaks. The report argues that workplaces should play a greater role in supporting the nation’s health, reducing long-term sick leave, and cutting the benefits bill. The report has received cross-party backing and highlights the need for incentives and clear information to encourage employers to choose high-quality and cost-effective services. Sickness absence and ill-health among working-age people cost the country an estimated £150bn per year. Last year, 186m working days were lost due to sickness or injury.
Apple
In good news for Tesla and other EV manufacturers, but bad news for the 2000 working on the project, Apple has reportedly dropped its Apple Electric Car plans after a decade of development, having failed to get close to a viable vehicle.
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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!
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
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.