- A reversal of the recent rises in National Insurance
- A VAT cut, especially on energy bills
- An overhaul of the business rates system and an increase to £25,000 in the rateable value threshold for relief (in England)
- Help on energy prices for small businesses, by including them in the price cap, and offering relief via discretionary funding as well as through the business rates system
- A cut in fuel duty
- Making corporate boards directly accountable for late payments to suppliers, which put an untimely end to thousands of otherwise-viable small firms every year.
Growth off the menu for small firms as cost crunch bites deep, new report finds
Hopes of a small business-led economic recovery from the pandemic may be under threat, according to the Small Business Index (SBI) report for Q2 2022 from Federation of Small Business (FSB), which is published in full today.
The combined proportion of small firms who predict that they will stay the same size (38.7%) or downsize or even close their business (14.7%), at 53.4%, outweighs the 46.6% who predict they will grow in the coming 12 months.
The results differed by sector, with a better outlook for businesses in the information and communication sector, where 62.9% of businesses expected to grow in the next year, compared with only 33.9% of wholesale and retail firms, and 34.9% of hospitality sector businesses.
Small firms’ anaemic growth predictions coincided with the highest-recorded proportion of firms saying their costs are higher than a year ago, at 89.0%, and with the highest level of producer price inflation for four decades in June.
Fuel (cited by 64.2%) and utilities (63.5%) were the most-mentioned causes of this increase in costs, both up notably from the first quarter (60.1% and 58.0% respectively), and far higher than this time last year (Q2 2021: fuel cited as a cost increase factor by 25.9%, and utilities by 27.6%).
Of those businesses which expect to grow in the coming year, two thirds (65.1%) cite the domestic economy as a potential barrier to expansion, a figure which has risen from 58.6% in the Q1 report.
Lack of access to appropriately skilled staff was also noted as a significant worry, mentioned by 33.9% of businesses which expect to grow as a limiting factor. With ONS statistics showing there were 1.3 million vacancies in Q2, many firms are not able to find the staff they need, putting normal operations and usual opening hours – let alone plans to grow – in question.
Yet Q2 2022 also saw more small businesses reporting a fall in employee numbers than growing their payrolls, the first time this has happened since Q1 2021. One in ten small businesses (10.8%) grew their number of employees over the previous quarter, but were outnumbered by the one in seven (14.4%) who saw staff numbers fall over the same period.
More positively, a net balance of 7.2% of respondents anticipate that their employee base will increase in size in Q3, although this is around half the figure who predicted the same ahead of Q2 (14.5%), and many may find it tricky to get the people they need on board.
Natalie Gasson-McKinley, FSB development manager, said: “The fall in GDP in the second quarter and the record-high inflation figures show the scale of what small businesses are up against, with our second quarter Small Business Index uncovering warning signs in many different indicators, from overall confidence to staff numbers and growth aspirations.
“Longer-term, those hopeful of solving the UK’s long-running productivity puzzle will not find much cause for cheer in this report, with small businesses held back from growing and investing by numerous factors.
“A healthy business ecosystem requires businesses of all sizes to be able to realise their ambitions – from one-person start-ups with a great idea, through the small and medium-sized businesses which form the bedrock of the economy, right up to the largest companies, who rely on countless smaller suppliers and service providers.
“With our research indicating that smaller firms’ intentions to grow are muted at best, with businesses planning to grow outnumbered by those expecting to stay the same size, shrink, or even close their business, a key driver of economic recovery is threatened.
“Inflation is higher than at any point for the last four decades, and is also acting as an inhibitor to investment – machinery, parts, software, tools, rents, and employment and operating costs in general are all increasing in price more rapidly than small businesses can run to keep up. It’s a toxic recipe for the future health of the economy.
“If the next Government wants to be able to level up the country, small business considerations must be at the heart of its thinking. Our members are looking for concrete help.”
FSB’s small business manifesto:
Lack of IT support negatively impacting manufacturing workers’ attitude to technology
A lack of support from their company’s IT department is having a detrimental impact on manufacturing field workers’ attitudes towards – and confidence with – technology, while also endangering the success of digital transformation initiatives, new research has found.
With the nature of their work meaning that they are rarely at the office, digital solutions can be an effective way of improving field workers’ communication with the rest of the business, as well as improving efficiency and productivity.
However, the data, published in WorkMobile’s The Forgotten Workforce report, revealed that although 63% of manufacturing professionals use some form of digital technologies while out in the field, many remain unconvinced of their usefulness.
When asked to describe their feelings towards the roll out of new technologies many seemed apprehensive, with more than a third (46%) saying that they are generally reluctant to embrace them, and 22% believing that they can cause problems if they’re not implemented carefully.
Some of this may be linked to a lack of support from the business during the roll out, with 27% of those surveyed saying that they don’t feel they are given enough help and support when they are expected to start using a new piece of technology or digital solution.
Not only is the lack of attention having an impact on employee morale, but it also means that the technologies used are not necessarily having the desired impact on business operations, rendering any attempts at digital transformation within field service less effective than they should be.
Very few manufacturing field workers (14%) said that technology enhances their day-to-day life, and 18% even said that it prevents them from doing their job to the best of their ability. Just over half (55%) said that they improve efficiency and productivity – two of the key benefits of carefully chosen and implemented digital solutions – and under one in 10 (9%) think that it positively impacts customer relationships.
However, the good news is that only 5% of manufacturing field workers think that the traditional way of operating is more effective, while 41% of respondents said that they appreciate the benefits of new technologies, suggesting that the situation could be improved, provided the right tools are implemented with a good level of support and guidance from elsewhere in the business.
Colin Yates, chief support officer at WorkMobile, said: “It’s important to remember that while digital transformation should make companies more profitable, enhance the customer experience and enable them to keep up with competitors, it should also always improve the employee experience.
“If a new technology will not ultimately make the daily responsibilities of manufacturing employees simpler or more efficient (following the appropriate training), then it is not the right technology for that business and will likely not be a success in the long run.”
Apprenticeships still overlooked
Misconceptions around apprenticeships are still influencing the decisions of young people in their career paths, according to new research from accountancy and business advisory firm, BDO.
The survey of more than 1000 people across England found that more than half (51%) of people aged between 18-24 still believe that a university degree makes you more likely to earn a high salary than doing an apprenticeship.
The research also found that almost half (49%) believe that apprenticeships are better suited to those who don’t get high enough grades to go to university.
Looking at career progression, the survey found that some say an apprenticeship could have a negative impact. More than a third (34%) believe you are less likely to reach the most senior positions within a business if you do an apprenticeship rather than a university degree.
The survey also looked into attitudes of education providers and parents and guardians. Almost two thirds (62%) of respondents said their school or college encouraged them to go to university rather than apply for an apprenticeship.
More than half (55%) of respondents said their parents or guardians would prefer or have preferred them to go to university over an apprenticeship. The percentage of parents encouraging the university route increased for those from a Black or Asian heritage. Almost three quarters (71%) of those from a Black heritage and 63% of those from an Asian heritage said their parents or guardians would prefer or have preferred them to go to university.
Whilst many believe that an apprenticeship may not lead to as highly paid job as a university degree, almost two thirds (64%) of those surveyed do believe that an apprenticeship is more likely to result in a permanent job once completed compared to a university degree.
Sarah Hillary, a partner at BDO commented on the findings: “Despite school leaver apprenticeships being a well-established route into many well-paid professions, including accountancy and law, our research demonstrates that there are still misconceptions about this career path. It is also concerning that more than a third believe doing an apprenticeship rather than a degree could be a barrier to reaching the most senior positions within a business.
“Whilst a university education is still a highly regarded achievement, it can also bring a significant amount of debt and additional costs. As the cost-of-living crisis continues to take hold, university may not always be the most attractive or accessible route for young people, particularly those from a lower socio-economic background.
“With this in mind, it is important to not just increase the number of quality apprenticeship positions but also raise awareness of how this type of training can create meaningful, sustainable careers whilst giving the opportunity to ‘earn while you learn’. This would be a step in the right direction to improving social mobility in the UK.”
A separate survey by BDO recently revealed that apprenticeships could be starting to be seen as a more appealing recruitment strategy with almost a third (29%) of the UK’s medium-sized businesses planning to hire more apprentices in a bid to attract more talent.
Sarah added: “It is promising to see more businesses offering apprenticeship positions to attract more talent. We must now continue to ensure that young people from all backgrounds, as well as those influencing their career decisions, are aware of the wealth of opportunities and career progression that quality apprenticeship programmes can provide.”
New affordable houses underway in Thirsk following land deal
Tolent has completed a land-led deal in partnership with Karbon Homes, which will see the design and construction of 64 affordable houses in Thirsk, North Yorkshire.
The 2.07 hectare site was identified by the North East-based contractor with development partner Karbon Homes approached at a later stage to discuss the potential of owning stock in the area.
Karbon and Tolent, together with a team of architects and engineers, reviewed constraints and developed a suitable masterplan for the site, culminating in an offer for the land.
The site was later purchased by Karbon Homes and a construction contract was agreed with Tolent.
Groundworks have now commenced on site and currently Tolent’s team is undertaking site establishment works and infrastructure works. The project will see construction of 64 houses, divided between 2, 3 and 4 bedroom units of which 17 houses will be of 2 bedrooms; 32 houses of 3 bedrooms; and 15 houses of 4 bedrooms.
The site is located on Back Lane in Sowerby and is well connected to a range of facilities including a GP practice, primary and secondary schools, and a shopping complex, all within a walking distance – making the land an attractive option for housing.
The land is also at the edge of the Thirsk and Sowerby conservation areas, which has been factored into the character and detailing of the project’s design to reflect and maintain the heritage of the town.
Harry Bell, development director at Tolent, said: “We are a multidisciplinary contractor, with experience and competence in development management including budget establishment and management, which has paved the path for us to get involved in fantastic projects throughout the years. We are also working on another remarkable project at South Seaham Garden Village, except we were also the landowners in the arrangement who eventually sold the land to three other parties including Karbon Homes.
“We are especially thrilled to work on this project as it feels more personal. We had been involved in this from the get-go and have had a grand vision for this development since the time we identified the land.”
Zoey Hawthorne, assistant director of development delivery at Karbon Homes, said: “We’re pleased to be partnering with Tolent to bring these much-needed affordable homes to the Hambleton area. It is a beautiful place to live and as a result, there is a high demand for the good quality housing options that this development will provide.
“We’ve designed a development that meets the needs of the local community, ensuring a mix of property types and sizes which provide options for a range of households and help create a mixed community. We hope local people will welcome these new homes.”
The site is set to be completed by mid 2024.
Nuclear reactor vessel project will be first job for 3D scanning firm at Nuclear AMRC
Metrology specialist 3D Scanners UK has joined the Nuclear AMRC to help manufacturers improve their performance through digital transformation.
Established in 1998, the company provides metrology and 3D scanning software to a range of industries. The Warwick-based company is UK master distributor for PolyWorks software and associated metrology services such as training, support and consultancy.
MD Nick Alimaris said: “As the leading metrology software, PolyWorks is the first single-vendor enterprise solution that supports all manufacturing 3D measurement processes, from measurement planning by design and manufacturing, through to facilitating the company-wide sharing of 3D measurement data and results.”
“We believe the digital transformation of manufacturing is essential for reducing organisations’ operational costs, thus increasing profits. Digital technologies can drastically transform 3D measurement processes through managing such information digitally and enabling access to all that require it.
“We are thrilled to join the Nuclear AMRC in helping manufacturing SMEs take steps towards such innovation through deploying PolyWorks as their smart 3D metrology digital ecosystem.”
As part of its tier two membership, 3D Scanners will provide software and support to the Nuclear AMRC’s metrology researchers.
The first job for the new software will be in measurement planning and validation projects for modular nuclear reactor vessel manufacturing, where the ability to capture, analyse and report inspection data from a diverse range of instruments will bring real value to our customer.
Leeds firm pumps more cash into TV visual effects company
Leeds-based YFM Equity Partners has made an additional multi-million pound investment in the UK-headquartered film and TV visual effects company Outpost VFX through its British Smaller Companies VCTs, enabling the business to continue its rapid scale-up by investing in high calibre artistic talent, company culture and its tech infrastructure.
The VFX house partners with global streaming platforms such as Netflix, Amazon, and Apple, and with major Hollywood studios including Universal, Paramount, CBS, and Lionsgate. Recent high-profile projects include Thor: Love and Thunder, House of the Dragon and Westworld. Recently, the company has been nominated for two Emmy Awards for The Man Who Fell to Earth and for Foundation, and a Visual Effects Society Award, for News of The World.
Since YFM first backed Outpost VFX in February 2021, the business has seen rapid growth, delivering 150% revenue uplift in its first full year of trading since investment. It has continued to build its team which has increased almost four-fold to service continuing growth, including strengthening its management with a number of key appointments such as Robin Shenfield who joined the board as chair, leadership teams for each of the new geographies, while also strengthening the team in the UK studio. The most recent of these hires being Rachel Matchett, as managing director in the UK and Tim Chauncey as global CTO.
In addition to funding growth capital, the initial funding from YFM has accelerated the development of Outpost’s production management IP, further developed its training and career pathways IP, and helped it to build out a unique global IT architecture. The latest funding round will enable the company to continue to develop its IT infrastructure and accelerate its global cloud transition, in order to be fully transitioned within the next 12 months. This will not only help with the business’ ongoingcommitment to providing even better service to clients, but will also help Outpost to continue to differentiate itself as an employer of choice.
Duncan McWilliam, founder and CEO of Outpost VFX, said: “YFM has been a supportive partner, initially investing in us post-pandemic when others were cautious. We appreciate their ongoing support and value the fact that they share in our vision and ambitions. In addition to growing our artistic talent and tech infrastructure, further developing our company culture and scaling it globally is a priority as we, like YFM, recognise that it is our people who differentiate us. Our ongoing cloud investment will not only improve our service to clients, but will also enhance the working experience of our people. We will continue to invest in the cloud, along with integrating sophisticated project management software and training programmes.
“With demand for quality visual entertainment continuing to be high across the globe as both streaming and film production surges, there is an exciting opportunity for us to accelerate growth. We are increasingly seeing larger projects enter our facilities and we are encouraged by the visibility of a strong pipeline of work, supporting our ambition to scale our offering to support our clients and our people better. It’s great to see YFM’s confidence in our plans and we are enthused by the opportunities that the follow-on investment will enable us to pursue.”
Roux Brits, portfolio director for YFM, added: “This is our second investment in Outpost VFX in under 18 months and demonstrates not only our belief in the management team’s vision, but also YFM’s readiness to support investee businesses to take advantage of ever evolving opportunities to accelerate growth. With YFM this year celebrating its 40th anniversary, we have supported over 300 high-growth businesses and look forward to supporting many more.”
The YFM investment team comprised Roux Brits and Charles Winward. With thanks to YFM’s advisors including Evershed-Sutherland LLP (legal), Igor Boshoer (technical) and Kreston Reeves (financial).
Yorkshire firms have claimed 66% less govt innovation funding than some parts of UK
Businesses in Yorkshire have not been claiming their share of government innovation funding — settling for 66% less than some parts of the UK, a study by innovation funding specialist Catax shows.
Businesses across the UK have enjoyed £12.3bn of grant awards from government innovation agency, Innovate UK, since 2003.
However, in that time, companies in Yorkshire & Humber have received less grant cash than all but five regions, when adjusted for business population.
Businesses there received the equivalent of £2,204 each — 14% less than the national average of £2,563, while the North East has come out on top, netting the equivalent of £6,504 per company. Applicants in Yorkshire & Humber have been awarded £754 million in total.
The largest grant in Yorkshire & Humber over the last five years went to the University of Sheffield, which used £126.8 million to establish the High Value Manufacturing Catapult in order to provide world-class R&D facilities for UK businesses.
Three highest grant awards in Yorkshire & Humber in the past five years
Other regions trailing the national average are the North West (£1,039), Northern Ireland (£1,465), Wales (£1,623), the East of England (£1,922), and the East Midlands (£2,084).
The national disparity has improved only slightly in the past five years and is still cause for concern. The North East was still the biggest recipient (£2,586 per business) between 2017 and 2022, while the North West continued to benefit the least (£473 per business).
Yorkshire & Humber has fallen two places in the table over the past five years, receiving £840 per business more recently, while the North East remains in front with £2,586. For Yorkshire & Humber, it means the gap has marginally widened to 67.5%. Grant funding nationally equalled £1,093 per business over the past five years.
The results of the study serve as a wake-up call to businesses across the UK to ensure they are taking advantage of funding opportunities on offer, as a lack of awareness continues to hold back applications.
Karen Taylor, group head of grants at innovation funding specialist Catax, says: “Yorkshire & Humber has not been making as much use of government innovation funding as it should be and it’s disappointing to see its position sink further behind more recently.
“Grants are a vital source of funding for businesses, giving many the financial resources they need to invest in new research and innovations. It might be that there is still a prevailing lack of awareness of these grants in the region, and this needs to be addressed.
“These findings should serve as a call to action for businesses in Yorkshire & Humber to take a look at what grants are on offer which could help them get their project off the ground.”
|
Grant recipient |
Location |
Award offered |
Description |
|
University of Sheffield |
Sheffield |
Two grants totalling £126,830,000 |
To establish the ‘High Value Manufacturing Catapult’, which aims to provide access to world-class R&D facilities for businesses. |
|
Glass Futures Ltd |
Sheffield |
£16,000,000 |
To create Glass Futures, a global centre of excellence dedicated to making glass the low carbon material of choice. |
|
Crop Health and Protection Ltd |
Ryedale |
£13,780,000 |
Providing funding for CHAP, one of four UK Agri-Tech Innovation Centres, which aims to advance global crop productivity and yield. |
Work starts on new £4.5m facility at Whiston school
Work has started on a new £4.5 million state-of-the-art facility to replace the Upper School buildings at Newman School in Whiston, Rotherham.
The Council’s Cabinet gave the go-ahead to the investment in November 2020, alongside the creation of a new school for children with Social Emotional and Mental Health needs (SEMH) in Dinnington.
The former pre-World War II rest sheds at Newman School have been demolished and will be replaced by six new classrooms, toilets, personal care rooms, group rooms, a library, soft play rebound room and a reception area, which will be ready for use next August.
The rest sheds were built in 1939 and used in the war effort before the first children were admitted to Rotherham’s oldest special school in 1948.
Newman School specialises in provision for children and young people with a range of learning difficulties and particularly those with complex medical needs. The new facilities include a focus on providing quality therapeutic and educational environments and will further enhance the school offer.
Cllr Victoria Cusworth, Rotherham Council cabinet member for children and young people services, said: “Rotherham Council is working hard to improve the range of places across the borough so these not only meet the needs of children and young people with special educational needs and disability but further enhance the learning environment.
“Newman is a much-loved and long-established school which has enriched the lives of thousands of local children for almost 75 years. This exciting new building will provide much-needed classrooms and associated facilities for Newman’s pupils and staff and a modern, vastly-improved learning environment, which will enable our children to achieve their full potential.”
Refurbishment of Ossett Town Hall gets underway
Work has commenced to refurbish Ossett Town Hall.
The project will relocate the library from its current, temporary home on the ground floor, to a larger, refurbished and more suitable location on the first floor. This will enable a better and more efficient library service for the local community. Works also include the installation of a new lift allowing access for all to the first floor.
Extensive and much needed restoration works will also be carried out to the roof, clock tower and stone repairs along the parapets. Funding has also been secured to install new lighting to the roof, clock tower and first floor decorative stonework, highlighting the restored features on this prominent local landmark.
Cllr Darren Byford, Wakefield Council’s cabinet member with responsibility for property, said: “The preservation of Ossett Town Hall is really important to our residents.
“Plans to make the building more accessible and relocate the library have already breathed new life into one of the town’s most prestigious landmarks and this further repair and refurbishment will enhance that experience further.
“We can create better use of space to accommodate community groups and local businesses and make the building more attractive for events and shows – we want to make the Town Hall the heart of the town centre and preserve it for future generations.”
Cllr Michael Graham, Wakefield Council’s cabinet member for culture, leisure and sport, said: “I’m pleased that work is getting underway to create an improved library service for the people of Ossett.
“The new lift will open the library service and first floor space up to everyone, making the Town Hall more accessible for all.
“Investing in the Town Hall will help sustain this historic building as well as giving residents a larger, refurbished library service in a more suitable location on the first floor.”
Ossett library will continue to open during its normal hours whilst the work takes place, except on a Wednesday when it will close. The activities that usually take place that day, the weekly story time, readers and craft groups will relocate to Horbury library, from 7 September 2022.
Customers whose events or services might be affected by the work will be contacted and the Council will work with them to minimise disruption. The flea market will remain open during the works.
The clock bell will be silenced during the works to ensure the safety of contractors. The chime will be restored upon completion of the roof restoration.
The library and lift works are expected to be finished by November this year, with the full building works expected to be completed by the end of year.
Yorkshire mid-market private equity deal activity above pre-pandemic levels in first half of 2022
Mid-market private equity activity across Yorkshire held firm during H1, with 33 deals with a total value of £1.9bn taking place across the region, according to new research collated by KPMG into UK private equity activity.
The study revealed that, while deal volume was exactly the same as during the first six months of last year, the value was up £0.2bn on H1 2021, and both were up on pre-pandemic levels.
Overall, the UK exceeded historic levels of both deal volumes and values during the first half of 2022 (excluding the unusual peak in activity during 2021), compared to the same period in both 2018 and 2019.
Bolt-ons accounted for nearly two-thirds (62%) of all mid-market deals – the highest half-yearly proportion on record – due to them being viewed as a low-risk strategy to support the growth of existing platform businesses. The aggregate value of bolt-ons in H1 2022 was £12.7bn, also notably higher than the levels seen in both 2018 and 2019.
Business Services and TMT maintained the top spots in terms of sectors with the most mid-market deals, accounting for 60% of private equity investments. The ongoing trend for hybrid working and digitally enabled services encouraged this trend.
Christian Mayo, corporate finance partner at KPMG in Yorkshire, said: “It’s encouraging to see Yorkshire scale-ups continue to attract private equity investment to support the next stage of their growth journey. These latest findings are testament to the region’s buoyant mid-market and investment landscape.
“Across the board, positive mid-market activity was driven considerably by fears of a probable Capital Gains Tax increase in early April that caused dealmakers to push deals through before the anticipated change. We have also observed a growing number of business owners who de-risked their personal asset portfolios as the UK slowly emerged from the pandemic and the general outlook improved.
“Existing factors such as high inflation, the Russia-Ukraine crisis and oil price rises will persist, and these will only increase banks’ discretion and perpetuate the slowdown in the number of mid-market deals in H2. On a brighter note, once oil prices level off and interest rate rises come through, the market should pick up again.
“TMT and Business Services will continue to dominate mid-market deals for the time being. However, once inflation is back under control, the more cyclical sectors, such as Consumer and Industrials, will see a fast-paced recovery and an uptick in private equity activity as a result.
“And as ESG climbs the corporate agenda, dealmakers will be on the lookout for deals that offer an ESG angle. Due to their shortage, the multiples of these deals are likely to skyrocket as dealmakers grapple with delivering on their ESG commitments.”
