SMEs urge ministers to bridge support gap – business news 29 June 2021.
James Salmon, Operations Director.
SMEs urge ministers to bridge support gap, Firms owe councils £2.5bn in unpaid business rates, UK poorest nation per capita in NW Europe, Let staff watch matches, House prices, Brexit and more business news.
Small businesses urge ministers to bridge support gap
Small firms need more help to bridge an 18-day gap as pandemic-related restrictions continue but financial support packages wind down, the Federation of Small Business (FSB) says. While lockdown restrictions that were previously set to be lifted in England on June 21 have been kept in place until July 19, a number of measures aimed at helping firms – such as a business rates exemption and deferred VAT payments – will end on July 1, while the contribution to furlough payments employers make will also increase. The FSB is concerned that there will be a gap in financial support that will put more pressure on businesses that are already struggling. “With freedom day delayed and business support now peeling back, we are worried for those who suddenly face new costs, but are unable to raise revenue to pay for them. Some may now cease trading and let staff go”, FSB national chairman Mike Cherry said. The FSB has also warned that small businesses will be further hit on July 1, with changes to EU trading rules coming into effect. Mr Cherry warned that “unless the Government acts now, it risks a serious economic flashpoint” on July 1.
Firms owe councils £2.5bn in unpaid business rates
Analysis of official data by real estate advisers Altus Group shows that companies owe English local authorities almost £2.5bn in unpaid business rates, with the pandemic and subsequent restrictions driving up debt piles. The increase in rates arrears comes despite the Government offering retail, leisure and hospitality companies a rates holiday since the onset of the crisis. The report shows that councils collected £14.88bn in business rates from firms not eligible for the holiday in the year to March 31, 2021. Altus says £1.18bn in rates arrears accrued over the year, taking total rates debt, including existing arrears, to £2.49bn. The report comes as MPs prepare to debate legislation in Parliament which could rule out coronavirus-related business rates appeals. Robert Hayton, UK president of property tax at Altus, said: “Removing the appeal right from firms is a crushing blow to business”. He went on to describe a replacement scheme as “wholly inadequate”, arguing that it “won’t deliver enough support quickly enough and will exclude those firms still trading under restrictions”. The Rating Surveyors Association say that the overall value of appeals due to coronavirus are worth around £5bn to firms in England.
Economy grew more than estimated pre-pandemic
Office for National Statistics data published yesterday shows that the UK economy grew more strongly than previously thought in the year prior to the pandemic, with GDP up 1.7% in 2019. A previous calculation had growth down at 1.4%. The report says that average annual growth over the decade hit 2%, up from the 1.8% previously calculated. Average annual GDP growth between 1998 and 2007 was 2.7 %, down from previous estimates of 2.9%. The revisions come as part of a review that looked at factors including double deflation, a method of calculating gross value added designed to better reflect the prices of goods and services used in the production process.
UK poorest nation per capita in NW Europe
Analysis by the House of Commons research library based on International Monetary Fund data shows the UK is the poorest country in north west Europe based on wealth per head of population, falling behind all of its closest neighbours when it comes to per capita wealth. The 2021 figures show that the UK has a GDP income per head of £31,038, falling far below Luxembourg, where a figure of more than £80,000 means it has the highest GDP per capita in the region. The report also reveals that while the UK’s GDP per capita was below the average for northwest Europe by around £5,000 in 2000 – 7.6% below the average, the gap has since increased to around £10,000 – 16.3% below the average.
Restrictions lifting
Prime Minister Boris Johnson said people in England are “very likely” to be able to return to “pretty much life before covid-19” on 19 July. It was “sensible to stick to our plan” of having a “cautious but irreversible approach” to lifting the remaining covid-19 restrictions, he added. The final stage of easing lockdown measures was previously put back by four weeks from 21 June by the PM. New Health Secretary Sajid Javid will update MPs later on the restrictions. At the same time other nations are adding further restrictions to travellers from the UK as the delta variant continues to drive the number of new cases higher. Portugal and Spain imposed new curbs on U.K. visitors and Germany is pushing for a more coordinated response.
Union boss: Let staff watch matches
Frances O’Grady, general secretary of the TUC, has suggested employers should make arrangements to allow workers to watch Euro 2020 games, urging bosses to “talk to their staff and try and let people who want to watch the games do so, either at work or at home, and then claim back their time afterwards.” With some games kicking off at 5pm, including tonight’s England v Germany clash, the TUC said staff may want to finish early, adding that many of the 5.6m people who work evenings and weekends may also want to catch fixtures. Ms O’Grady said whether it’s a major sporting event, attending a medical appointment or picking up children from school, “allowing people more flexibility in how and when they do their work makes them happier. It cuts absenteeism and raises productivity.”
House prices
House Price Growth swelled 13.4 per cent in the UK in June, the highest rate of annual growth since November 2004, according to Nationwide. London house prices grew just 7.3 per cent in this quarter, seeing some of the weakest growth in the UK, just behind Scotland. The average price for a home in the capital is now £509,935. Although the annual increase lags behind every other English region, it is still higher than the annual 4.8 per cent change in the last quarter
Research from estate agent Savills shows that house prices in prime markets outside London have risen by 8.5% year-on-year, marking the steepest climb since 2010. While outside the capital prices have surged, property price growth in prime central London stands at 0.5% year-on-year. Lucian Cook, Savills’ head of residential research, said: “Demand has continued to outstrip supply in many of the most sought-after prime regional markets and this has led to rapid price growth, most notably in markets that had long lagged London in their recovery over the past decade”. He added that while it remains a seller’s market in many areas, greater price sensitivity is expected through the rest of the year.
Brexit
An extension was agreed to the transition period for French vessels around Jersey, avoiding a return to the fishing rights war, ahead of the grace period on chilled meats products transported from Great Britain to Northern Ireland, also being extended from its current date of June 30 too.
CBI: Ease staff shortages by relaxing immigration rules
The Confederation of British Industry (CBI) has called on the Government to relax post-Brexit immigration rules to help companies struggling with staff shortages to hire more workers from overseas. The CBI said the Government needed to immediately update its “shortage occupations list” to include several areas where employers are finding it difficult to recruit staff, including butchers, bricklayers and welders. Warning that there was a “perfect storm” of staff shortages as lockdown restrictions are gradually removed, it said failure to take action would put the UK’s economic recovery from the pandemic at risk.
Business interruption insurance
Hiscox has agreed a settlement with a group of around 400 policyholders over business interruption losses due to lockdowns during the pandemic. Thousands of businesses tried to make claims with insurance companies at the start of the pandemic but many refused to pay out. But a test case at the UK Supreme Court in January this year found that seven major insurers should make payments totalling around £1.2 billion. The Hiscox Action Group, representing the 400 businesses, also participated in the hearing and announced on Monday that a settlement has been reached.
HMRC investigates 13,000 Covid scheme claims
HMRC has launched 12,828 investigations into use of the Government’s pandemic-related business support schemes, looking into potential fraud and other non-compliance with rules. Analysis by law firm BLM shows there were 7,384 investigations related to the job retention scheme, 5,020 linked to the self-employment income support scheme and 424 related to Eat Out to Help Out. A spokesperson for HMRC said: “It is vital we support businesses to recover by ensuring a level playing field so the majority are not undercut by the few who tried to cheat the system.” HMRC data also shows it received 28,444 reports of potential furlough fraud as of the start of June.
Directors targeted in governance overhaul
Sarah Thomas, a partner in Addleshaw Goddard’s global investigations team, says corporate governance in the UK is “about to undergo its biggest transformation in a generation”, with the Government consultation into the powers held by the new Audit, Regulation and Governance Authority closing next month. She describes some of the proposals it puts forward as “seismic”, pointing to plans that would see directors held personally liable for financial or audit failings. Ms Thomas notes that the White Paper asks whether regulators should be able to access legally privileged material shared with auditors, with the Financial Reporting Council claiming it needs this to assess audit quality. She warns that there is “no guarantee the material won’t then be obtained by third parties and used against directors or the company in question.” This could see firms less willing to share privileged information with auditors, making it harder for them to do their job.
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