business news 28 September 2021
James Salmon, Operations Director.
Petrol prices hit 8 year high in fuel panic. Xero Forms Small Business Payment Task Force. Growing case for interest rate rise. International Trade. SMEs face double whammy. Farewell to furlough and other business news.
Petrol prices hit 8 year high in fuel panic
Petrol prices have hit an eight-year high according to the RAC as wholesalers raise prices and they are passed on to consumers.
The spike in pump prices comes as consumers panic about supplies and long queues form outside forecourts as reports circulate of profiteering at some petrol stations.
Howard Cox, founder of campaign group FairFuelUK, said price rises of between 5p and 10p per litre have become “the norm in the last few days”.
The RAC said “This is adding up to a “pretty bleak picture for drivers” as the government puts the army on standby to help ease fuel supply problems caused by a shortage of HGV drivers to make deliveries.
The RAC said that the average price of a litre of petrol across the UK increased from 135.87p on Friday to 136.59p on Sunday, the highest level since September 2013 with prices set to increase as wholesale prices get passed on at the pump. Oil is currently at a 3 year high in dollar terms and the pound is weakening so prices were going up without the current panic buying.
The fuel crisis is spreading throughout the economy as firms are rationing journeys due to fuel supply concerns and staff are struggling to commute. Major U.K. industries from food processing to utilities were already reeling from the effects of Brexit, a supply-chain crisis and record surge in energy prices. The sudden disruption to road-fuel supplies threatens to spread that pain even deeper into the economy, leaving small businesses, care workers and taxi drivers unable to do their jobs.
A leak to the media by an unnamed haulage-industry association about delivery problems at a few stations had triggered the panic, he said. But hauliers blame Brexit for exacerbating an existing shortage of trained lorry drivers, whose numbers have fallen by nearly a quarter over the past 12 months. The government plans to issue 5,000 short-term visas for foreign drivers and has the army on standby to help make deliveries.
What started last week as a limited problem affecting BP who said it was forced to shutdown a few of its stations due to lack of delivery drivers quickly exploded into a national crisis.
Xero Forms Small Business Payment Task Force
Xero, the global small business accounting platform, has announced the formation of a prompt payment task force of leading experts, brought together to find new solutions to the late payment crisis which has had a stranglehold on small firms for decades.
47% of small firms cite cash flow issues and late payments as two of the biggest obstacles to their growth. Xero also found that almost three in five (59%) of big businesses actually lengthened their payment terms during the pandemic
The prompt payment task force – in association with The Entrepreneur’s Network – will discuss research on the late payment culture and look to come up with practical recommendations to take to the government and key stakeholders. Experts include; Dr Veronika Koller, behavioural scientist Dr Alexandra Dobra-Kiel, accountant Kara Curtayne, psychologist Dr Audrey Tang, business journalist Simon Read, and owner of Small Business World, Zing Pritesh Mody.
CPA has been tackling late payment for decades and we believe the only way to end the late payment culture is to pass on the cost of late payment to customers. If a customer knows they are going to have to pay for a late payment, it’s amazing how they can suddenly find ways to pay on time. By applying late payment compensation legislation, those costs can be passed on. Many suppliers are wary of charging late payment compensation with existing customers out of fear of losing goodwill. Something those business customers know all to well and use to get away with late payments.
But what if they knew that as soon as the relationship ended, those suppliers would turn round and ask for late payment compensation retrospectively for all the late payments, going back years? Maybe then, if with current goodwill, late payments wouldn’t be worth the risk. That it what CPA is helping suppliers do! We help our clients dig through their accounting records, calculate the late payment compensation and interest they are due from their previous customers who paid late and we then collect it on their behalf.
1) Our clients are getting compensated for the late payments their suffered in the past.
2) Those former customers who paid them late are learning the true cost of late payment! And hopefully they are thinking twice now about habitually paying their current suppliers late.
Bailey sees growing case for interest rate rise
Bank of England Governor Andrew Bailey says he can see a growing case for raising interest rates, noting that other members of the Monetary Policy Committee share this sentiment. In a speech to the Society of Professional Economists, he said: “All of us believe that there will need to be some modest tightening of policy to be consistent with meeting the inflation target sustainably over the medium term”. He added: “Recent evidence appears to have strengthened that case, but there remain substantial uncertainties and we are monitoring the situation closely”. The Bank last week increased its forecast for inflation at the end of 2021 to over 4%, far exceeding its 2% target rate. Although it expects the jump to be temporary, the Bank said the case for higher interest rates seems to have strengthened. Mr Bailey believes distinguishing between one-off increases in price levels and factors that could drive up the rate in the longer-term may present the Bank with a challenge, saying: “Monetary policy should not respond to supply shocks which do not become generalised through their impact on inflation expectations”.
International Trade
The United Kingdom entered its first round of negotiations with the 11 member states of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). The CPTPP, with a combined GDP of £9 trillion, would offer the UK access to some of the world’s fastest growing economies, including Japan, Australia, Canada and Chile.
SMEs face NI double or triple whammy
Metro’s Rosie Murray-West warns that the 1.25% increase in National Insurance rates could deliver a double or triple whammy for small business owners, saying that not only will they be paying more NI themselves if employed, or more dividend tax if they pay themselves through dividends, but their businesses will also face a higher rate of NI on every employee. While Scott Gallacher from Rowley Turton has described the increase as a “tax on jobs”, Mike Cherry, national chair of the Federation for Small Businesses (FSB) says the move is an “anti-jobs, anti-small business, anti-start up manifesto breach”. Mr Cherry says the “hikes” will leave business owners and sole traders feeling “demoralised”, adding: “Business owners who have done all they can to retain and support their staff during the pandemic are now being punished”. Looking at things employers can do to bring down their wage costs, Praveen Gupta of Azets says SMEs need to focus on legal tax measures that reduce the bill.
Farewell to furlough
City A.M.’s Michiel Willems looks at the possible impact of the Job Retention Scheme coming to an end this week, asking small business owners about whether now is the correct time to remove the support package. Jenni Letheren, owner of JLL Accountancy & Admin, thinks Chancellor Rishi Sunak has made the right decision in withdrawing the furlough scheme, saying: “It is right that it stops, and those that have taken advantage of it begin to repay the money to which they were not entitled”. She adds: “I also hope the Government has considered the additional pressure HMRC is going to be under to recoup these losses and does not expect an already stretched department to deal with this.”
Shadow Chancellor details Labour’s tax ambitions
Shadow Chancellor Rachel Reeves has outlined Labour’s plans for tax reform if the party wins power, saying a Labour government would freeze business rates next year before going on to abolish the rates altogether as the system is neither “fair” nor “fit for purpose”. Alongside the initial freeze, SMEs would see rates cut, with an increase in digital taxes covering the cost of increasing he threshold for small business rates relief. Ms Reeves added that Labour would have a “laser focus” on efficiency in the tax system, with tax breaks that fail to deliver for the economy or taxpayer to be scrapped. Ms Reeves also used her speech at the Labour party conference to hit out at large online firms such as Amazon for paying less in tax than high street businesses, urging the Government to increase the digital services tax to 12% for the next year to make sure online companies are paying their fair share. The Shadow Chancellor also insisted that Labour has “no plans” to increase income tax, despite party leader Sir Keir Starmer having said the move is not “off the table”.
Shadow Employment Secretary quits over minimum wage stance
Shadow Employment Secretary Andy McDonald has quit his shadow cabinet role, saying his position had been made “untenable” by Labour leader Sir Keir Starmer’s refusal to back a £15 an hour minimum wage. In his resignation letter, Mr McDonald said Sir Keir’s office had “instructed” him “to go into a meeting to argue against a national minimum wage of £15 an hour and against statutory sick pay at the living wage”. This, he insisted, was “something I could not do”. Labour wants a £10 minimum wage at least, up from the existing £8.91.
Reeves pledges £28bn to make UK economy green
A Labour government would spend an extra £28bn a year until the end of the decade on helping Britain tackle the climate change crisis, Shadow Chancellor Rachel Reeves has vowed. Ms Reeves, who told the party conference of an ambition to become Britain’s “first green Chancellor”, said Labour would look to drive a shift toward greener technology. Ms Reeves told delegates: “I will invest in good jobs in the green industries of the future”. She added that the plans would be geared around “protecting and strengthening our everyday economy” and look to “protect our planet for future generations.”
UK electric car sales jump 186%
Analysis from UHY Hacker Young shows that electric car sales in the UK jumped by 186% to 108,000 in 2020, up from 38,000 in 2019. Globally, sales of such vehicles rose by 31% last year. The UHY report saw Vietnam lead the way, with an increase of 543%, Germany saw the next biggest jump, at 207%. Italy’s 204% increase put it ahead of the UK, while Israel saw the fifth biggest increase at 167%. David Kendrick, a partner at UHY Hacker Young, said of the findings: “It’s encouraging to see such a high growth rate in electric car sales in the UK. It’s one of the top performers, far ahead of other major economies such as the US”. However, he notes that petrol and diesel cars “still dominate the UK’s automotive market”.
Younger workers face £600 bill as Treasury targets student loans
Chancellor Rishi Sunak is considering cutting the salary threshold at which graduates start repaying student loans. Such a move would mean millions of graduates could be forced to pay an extra £656 each year. Tom Selby, of AJ Bell, said: “Young people might understandably think this Government has something against them. First, the Government hiked NI rates to pay for health and social care reforms – a tax that is mainly levied on younger people and doesn’t apply to retirement incomes. Now it is said to be considering an effective tax rise for new graduates.”
Jobseekers offered free broadband
Jobseekers are to be offered six months of free broadband via a programme launched by telecoms company TalkTalk and the Department for Work and Pensions. The scheme will look to tackle digital exclusion and remove barriers to employment by giving jobseekers access to “high-quality” broadband to help them search for jobs. They will be offered a no-contract voucher for six months of a TalkTalk package which normally costs £23 a month. Employment Minister Mims Davies said: “We want to support jobseekers in any way we can on their journey to securing employment, which includes levelling up opportunities by making sure they are digitally connected and can access the full range of support offered by our Plan for Jobs and our JobHelp website.”
House prices up £44 a day
House prices increased by £44 per day on average in the six months leading up to August, according to an index from Zoopla, with this up on the £30 a day increase recorded between July 2020 to January 2021. The average house price in August was £235,000, with this a record high for Zoopla’s index. The average property has seen its value climb £17,508 since March 2020, the month that the UK saw its initial coronavirus lockdown. Grainne Gilmore, head of research at Zoopla, said that while demand coming from buyers “has further to run”, this will be balanced by the ending of Government support for the economy via furlough and “more challenging economic conditions overall”. “We expect the market to remain busy compared to historical norms, and for price growth to remain in firmly positive territory at the end of the year,” she added.
Ferguson
Ferguson reported higher annual profit underpinned by cost cutting efforts and climb in revenue. For the year ended July 31, 2021, pre-tax profit rise 46.4% to $1.89 billion as revenue increased 14.3% to $22.79 billion.
Pennon
Pennon said it expected to deliver first-half results in line with expectations the as the pandemic drives greater demand for water.In a trading update for the six months through September, the company said Covid-19 had led to a substantial population increase in the regions it served. ‘Alongside this, as restrictions have eased businesses have ramped up demand, resulting in increased water usage and an increase in overall revenue,’ it added.
Moonpig
Moonpig upgraded its annual revenue guidance, citing resilient demand despite an easing of lockdowns. Revenue for the year through April was now expected at between £270 million and £285 million, the company said in a trading update for its annual general meeting.’Trading in the year to date has been strong,’ it said.
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.