Commercial rent arrears recovery postponed – business news 17 June 2021.

James Salmon, Operations Director.

Commercial rent arrears recovery postponed, SMEs worried about access to finance & late payments, fewer EU workers seek UK roles since Brexit, WFH rights, hint at tax rises, inflation interest rates, house prices and a lot more.

Commercial rent arrears

A ban on landlords evicting firms for unpaid commercial rent which was due to come to an end on June 30 is being extended for another nine months.

The Government has announced that it will be extending the moratorium on the forfeiture of a commercial lease and CRAR (commercial rent arrears recovery) until 25th March 2022.

Their main objective in doing so is to protect jobs, by allowing businesses to continue to trade when they are struggling to pay their rent.

When the moratorium was first introduced last year, the Government encouraged landlords and tenants to resolve debt issues through negotiation or arbitration. The Government now plans legislation, to be introduced in the current session of parliament, to support the orderly resolution of such debts. It will include a backstop: when negotiation is not successful, both parties will be required to undertake compulsory arbitration.

The Government stated today that tenants should start to pay rent either in accordance with their lease or with the arrangements they have agreed with their landlord.

There is an alternative option for the recovery of commercial rent arrears, which may be worth considering, and that is to raise a claim in the county court for the arrears and then transfer the judgment to the High Court for enforcement under a writ of control.

The writ will be valid for 12 months and does mean that the enforcement agent may also take control of goods at other sites where the tenant operates, not just at the demised premises.

Treasury Secretary Stephen Barclay said the delay in easing lockdown restrictions “present additional challenges” to business and announced that a moratorium protecting commercial tenants from eviction will be extended to March 25, 2022.

He also announced plans for a binding arbitration scheme to resolve disputes between landlords and commercial tenants, adding that this should be in place for when the eviction ban is lifted.

The measures, Mr Barclay said, “strike the right balance” between protecting landlords and supporting businesses most in need.

Helen Dickinson, chief executive of the British Retail Consortium, said the extension comes “in the nick of time”, with retailers needing time “to trade their way out of debt”.

The Institute of Directors (IoD) said businesses would welcome the extension but called for greater support, with director of policy Dr Roger Barker noting that firms will see the tapering off of furlough and business rates relief at the end of June.

SMEs worried about access to finance & late payments

SMEs believe access to finance could become harder over the next three years, with the late payment of invoices flagged as an area of concern. A study by MBH Corporation found that while 40% of SME leaders believe applying for funding will become more difficult, just 10% expect the process to become easier.

The study shows that 40% of SMEs plan to borrow to fund growth over the next two years. Callum Laing, CEO of MBH Corporation, said: “Access to funding is a constant worry for SMEs and being rejected can have major consequences for expansion plans”.

However, noting that just 17% of businesses that applied for loans in the last year were rejected, Mr Laing said: “The good news is that experience over the past year shows that SMEs which have applied for finance have been successful.”

The past 12 months has been hard for business owners, with more than a third reporting an increase in the time customers take to pay invoices.

Fewer EU workers seek UK roles since Brexit

Figures from jobs website Indeed show that the number of EU citizens searching for work in Britain has fallen by more than a third since Brexit, with searches by EU-based jobseekers for work in the UK down by 36% in May compared with average levels in 2019.

Interaction with job adverts from non-EU countries fell by just 1%. Jack Kennedy, a UK economist at Indeed, said that while employers in higher-paying sectors are managing to offset falling EU jobseeker interest with staff from the rest of the world, “lower-paid roles are not receiving the same attention from foreign workers as they did only two years ago.”

Saying that domestic workers may be required to “fill the gaps”, he noted that with many sectors already struggling to recruit the staff they need, higher salaries may be required to attract UK workers to fill the roles.

Ministers could give employees WFH rights

The Government is reportedly set to consult on a plan that will give many workers the default right to work from home, with a new law potentially making it illegal for employers to insist on staff attending the workplace unless they can prove it is essential.

Chancellor hints at tax increase

Chancellor Rishi Sunak has signalled that he is preparing to raise taxes in a bid to help cover the nation’s coronavirus bill, claiming the “crisis phase” of the recession is now over.

In an interview with GB News, Mr Sunak was asked whether taxes would have to increase to fund extra public spending during the crisis. He told Andrew Neil: “That’s my job to do and the time to do it is at a spending review in the autumn.” Mr Sunak added: “I’ve got one eye on the future, I want to make sure we’re protected against risk.” He also insisted he would “invest in our children’s future, not have them paying for the spending of the past”.

The interview also saw the Chancellor say a pensions triple lock which guarantees that pensions will rise by the highest figure out of inflation, earnings growth and 2% “is still government policy”.

Inflation climbs to 2.1% in May

The UK inflation rate jumped to 2.1% in the year to May, with this ahead of the Bank of England’s (BoE) target of 2% and the highest level for almost two years.

Data from the Office for National Statistics (ONS) shows that the Consumer Prices Index (CPI) rose from 1.5% in April, with rising clothing and fuel prices driving the rate higher. The 2.1% rate recorded in May exceeds analysts’ expectations, with economists having forecast a rate of about 1.8%.

Core inflation, which excludes the price of food and energy, rose to 2% in the 12 months to May. The BoE has said it expects inflation to hit 2.5% by the end of 2021 as the economy reopens following lockdown restrictions, forecasting that any climb above 2% will be temporary.

Yael Selfin, chief economist at KPMG, reflected on the ONS report, saying that with price pressures expected to ease next year and inflation to stabilise around 2%, it is likely that the BoE will not raise interest rates before 2023.

Ian Stewart, chief economist at Deloitte, said: “The big question is whether price rises drive wages higher, creating a wage-price spiral.” He added: “That looks unlikely – but not wholly impossible.”

US Inflation and Interest rates

The Federal Reserve raised its inflation forecasts and indicated that its first post-pandemic interest rate hikes could come in 2023, sending the US stock market lower. Although the US central bank kept its current interest rate at the lowest possible levels for now, the majority of the Fed’s officials predicted at least two 0.25% rate rises in 2023. That is a year earlier than had previously been forecast, with the bank saying that the economic threat from the pandemic had now “diminished”. The U.S. dollar jumped as much as 0.9% in its biggest daily gain of this year

‘Mediocre’ male managers block progress of women in finance

A new study suggests “mediocre” male managers are blocking women’s development in the finance world, with women saying men are better at office politics and many managers “faked empathy” on diversity. The research from the London School of Economics and the Women in Banking and Finance campaign group polled 79 women in the City and saw respondents say they had to show sustained excellence in order to progress and faced more scrutiny than male peers. Report author Prof Grace Lordan said that while there has been a lot of progress since the overt sexism of the 1980s and 1990s, “the problem today is cronyism.” She added: “A poor manager can derail your entire career. We need a culture change and managers who really understand the benefits for diversity in organisations.”

House prices climb but growth slows

Office for National Statistics (ONS) figures show that house prices rose by 8.9% in the year to April, with this down on the 9.9% year-on-year increase recorded in March. The ONS said March’s increase, which was the biggest since 2007, may have been driven by buyers looking to complete deals before the original stamp duty holiday deadline of March 31.

Month-on-month, data from HM Land Registry shows that the average UK house price stood at £250,772 in April, around 1.9% lower than in March. Sam Beckett, head of economic statistics at the ONS, noted that with average prices falling, this ended eleven consecutive months of growth.

PwC economist Jamie Durham said the ONS figures suggest the market “remains hot” and believes forces driving it are likely to support price growth over the coming months, even as the stamp duty holiday tapers from the end of June.

Scottish retail sales remain down on pre-pandemic levels

While Scottish retailers have been boosted by the relaxation of lockdown restrictions, the Scottish Retail Consortium and KPMG sales monitor shows sales were down 3.6% in May when compared to May 2019. The value of Scottish retail sales in April was down by 15.6% on the same period of 2019. Paul Martin, head of retail at KPMG, said that while retail sales growth hoped for in May “didn’t materialise”, there are “positive signs for the months ahead.” He added that there will not be a clear indication of how shopping preferences have been impacted by the pandemic until lockdown restrictions have been fully lifted.

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 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

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.