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Reading Time | < 1 min 05 Feb 2016

Enterprise Bill moves to second reading

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The Enterprise Bill has been drafted for a second reading.

The government aims to provide businesses with an environment for growth and job creation.

Deregulation and trading

The bill will extended the deregulation target for businesses to include statutory regulators. 

The primary authority scheme has also been extended to give more businesses access to reliable, consistent regulatory advice.

Small Business Commissioner

An established small business commissioner will be introduced to handle complaints by small businesses about payment-related issues with larger businesses.

Apprenticeships

The government has committed to 3 million new apprenticeships by 2020. 

A new apprenticeship levy will be introduced in April 2017. The levy will be charged at a rate of 0.5% of an employer’s pay bill.

Business rates

Business rate rises will be capped while new legislations will be placed to pave way for better information sharing between local government and the Valuation Office.

The bill will sit alongside a range of legislative changes already introduced:

  • reducing corporation tax 
  • cutting business rates and doubling the small business rate relief
  • half a million employers no longer have to make national insurance contributions
  • supporting 30,000 businesses with start-up loans
  • launched a 5-year programme to help businesses with export opportunities around the world.

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Reading Time | < 1 min 04 Feb 2016

London Help to Buy scheme launches

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The new Help to Buy scheme for London has launched, allowing residents to buy a new home with a 5% deposit and a mortgage as low as 55%.

First-time buyers in the capital can purchase a new home with a deposit backed by a 40% interest equity loan for the first 5 years.

The new scheme is an extension of the current Help to Buy scheme launched in 2013.

Under the current scheme, loans of up to 20% were made available to first-time buyers on new homes worth up to £600,000. 

The new scheme will allow loans for London residents to be doubled up to 40% when purchasing a new home in London.

Equity loans have also been extended to 2021 with a further £8.6 billion, aiming to help 145,000 more people take steps towards owning their first home.

Communities Secretary Greg Clark said:

“We’re determined to make home ownership a realistic aspiration for hard-working young people, wherever they are in the country.

“Our multi-billion pound investment will open the door to thousands of Londoners wanting to own their own home, following in the footsteps of nearly 270,000 people who have already bought through government-backed schemes.”

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Reading Time | 2 mins 03 Feb 2016

‘Skill-shortage vacancies’ a challenge for businesses

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The challenge that many businesses are facing in trying to get the right people for their workforce has been detailed in a UKCES Employer Skills Survey.

Of the 91,200 employers surveyed, 19% had a least one vacancy, up from 15% in 2013.

“Skill-shortage vacancies” (vacancies that are hard to fill due to a lack of skilled applicants) present a growing challenge for business owners looking to fill their vacancies. 6% of employers had at least 1 skill-shortage vacancy, an increase from 4% in 2013.

86% reported that they had a fully proficient workforce, while the impact of skill gaps continued to affect smaller businesses. The remaining 14% have a current gap in skills in their workforce, and UKCES estimates this equates to around 1.4 million staff not being fully proficient in their role.

The survey also found:

  • 8% had difficulty retaining staff in specific jobs
  • 2 million workers reported to be under-utilised, leading to missed opportunities to increase performance and productivity
  • 66% had funded or arranged training and development for their staff
  • total employer expenditure on training increased by 6% between 2013 and 2015, from £43.0 billion to £45.4 billion.

Seamus Nevin, head of employment and skills policy at the Institute of Directors, said:

“Businesses are committed to training and developing their staff, but with demand for skills on the rise, we need to make sure that the apprenticeship levy has the flexibility required for firms to continue to train according to their needs.

“In the short-term, the government needs to ensure that employers can continue to get access to the skills they need from abroad. In the longer run, schools need to get careers guidance right so that young people and parents are aware of the opportunities in new and emerging sectors of the economy.”

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Reading Time | < 1 min 02 Feb 2016

Buyout activity for SMEs at 5 year high

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Investment for SMEs is at its highest level for 5 years, according to research from Lyceum Capital and Cass Business School.

Based on private equity investments in 2015 with an enterprise value between £10 million and £100 million, the analysis shows that volume transactions increased by 12% last year, with 87 investments totalling £3.43bn.

Total deal volumes remained between 30%-40% but investments are expected to continue in 2016 with investors focusing on SMEs with perceived earning quality and a good potential for growth.

Investment activity was highest during the second half of 2015. The value of acquisitions in the £25-75 million range grew by 52% to £2bn, indicating an improvement of investor confidence for established SMEs.

The business services and industrial sectors also saw investment increase by 84% and 66% respectively, while the healthcare sector showed a 33% decrease in 2015.

Andrew Aylwin, partner at Lyceum Capital, said:

“In a global economic market plagued with uncertainties ranging from falling commodity prices to volatility in the Far East, it is encouraging to see that the outlook for entrepreneurs and medium sized companies has never looked stronger. 

“We expect these businesses to continue to attract increased amounts of investment and grow into industry champions over the next 12 months.”

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Reading Time | 2 mins 01 Feb 2016

Insolvencies continued to fall in 2015

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The number of people being declared insolvent was at its lowest level for a decade, according to the Insolvency Service show.

A total of 79,965 individual insolvencies were reported in 2015, a 19% decrease compared to 2014 and the lowest since 2005.

3,495 companies entered insolvency in the last quarter of 2015, 2.7% less than Q3 2015 and over 10% less than Q4 2014.

Personal insolvencies

The continued fall in individual insolvencies was mainly driven by a decrease in individual voluntary arrangements (IVAs). 

33,993 IVAs were reported in 2015, a 23% decrease from 2014.

The number of bankruptcies was the lowest since 1990 with a total of 15,767 bankruptcy orders in 2015, 22% lower than in 2014.

The number of debt relief orders decreased by 9% to 24,175.

Phillip Sykes, president of the insolvency professionals trade body R3 commented on the latest statistics:

“Continuing low inflation and a growing economy have helped people pay down or service debts. The return of real wage growth has put a big dent in insolvency numbers.

“Quarterly insolvency numbers have been boosted by October changes to debt relief orders, which have made the insolvency regime more accessible to people in financial trouble.”

Business insolvencies

Compulsory liquidations decreased to the lowest level since 1989 with 583 companies subjected to a compulsory winding-up order in Q4 2015.

2,484 businesses entered creditors voluntary liquidation in Q4 2015, a 1.2% decrease on the previous quarter and 3.0% lower compared to the same period in 2014.

350 businesses filed for administrations in 2015, while the liquidation rate in the 12 months ending to Q4 2015 was 0.44% of all active companies.

 Mr Sykes said:

“The falling price of a barrel of oil has helped businesses to bring costs down. However, it is causing a considerable degree of difficulty for those in the sector.

“While many oil and gas businesses are currently undergoing a period of restructuring, if they are unable to cut costs sufficiently we may see a wave of insolvencies in the sector in future quarters particularly among the smaller firms.”

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Reading Time | < 1 min 29 Jan 2016

Self-employed not paying into pensions

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Only 17% of self-employed people are saving into a pension, according to the Office for National Statistics (ONS).

A report by Citizens Advice has found that the self-employed consider investing their money into a savings account, cash ISA or property a better option.

Based on a survey of 650 people, 3 key issues are preventing the wider adoption of pension saving by the self-employed:

  • lack of understanding – 67% do not understand the tax breaks with 25% wrongly thinking that an ISA offers better tax breaks than a pension
  • lack of trust – 50% do not trust pensions as a safe place to invest their money
  • lack of information – 27% have never received any information or advice about pensions.

Since 2001, self-employment has increased by 32% to 4.5 million. However, the number of self-employed people paying into a pension has halved, falling from 1.1 million in 2001/02 to 450,000 in 2013/14.

Gillian Guy, chief executive of Citizens Advice, said:

“A lack of information and understanding on how paying into a pension can provide an income in retirement means self-employed people are turning to other options to fund their future, with many people not saving enough.  

“While property or cash savings may be viable options, people could also benefit from being in a pension scheme.

“It is really important that self-employed people are offered up front information about how pensions can work for them so they can make an informed choice as to the best retirement savings plan.” 

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Reading Time | < 1 min 28 Jan 2016

Businesses underestimating risks of cyber crime

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More than a third of businesses have fallen victim of cyber crime such as hacking, phishing and pharming.

However, according to research by Aviva, 2 in 5 (44%) business owners don’t believe they are likely to be victims of cyber crime, whilst a quarter (23%) admitted to not knowing what to do to protect themselves from cyber crime.

24% of the businesses surveyed are currently taking steps to protect themselves from cyber crime. 

When asked about the different types of cyber crime, phishing was ranked highest at 77% followed by identity theft (69%) and hacking (66%). 

43% were aware of ransom demands being made to them by criminals to access their information. Businesses were also aware of pharming (46%) and cyber attacks (38%) that prevent access to their internal systems.

When asked if they knew what to do if they faced up against cyber crime, more than a third of business owners (34%) admitted they don’t know, while 27% were not sure.

Angus Eaton, MD of commercial lines at Aviva, said:

“Protecting your business from cyber crime is good business because your customers want the reassurance that their data is safe in your hands. If you haven’t done so already now is the time to put cyber risk on your agenda and take action to help prevent your business becoming a target.”

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Reading Time | 2 mins 27 Jan 2016

Money worries impact workforce productivity

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1 in 8 (13%) workers say that money worries have affected their productivity in the workplace.

The number of workers reporting financial difficulties has doubled over the last 10 years, according to a report by the Social Market Foundation (SMF). The report analyses data from both the Understanding Society study of over 40,000 households and the British Household Panel survey. 

The report also found that:

  • 4 in 10 workers (40%) say money worries have made them feel stressed over the last year
  • 24% of workers say they are “just about” managing their finances
  • 25% say they have lost sleep over money worries
  • 48% are not putting any money aside for anything more than regular bills.

Katie Evans, SMF economist and report author, said:

“This low financial resilience is a problem across industries – and it’s getting worse. The proportion of workers reporting that they face financial difficulties nearly doubled over the decade to 2013/14.

“These money worries have a clear impact on how people feel and behave as they go about their day-to-day lives and jobs.”

Monica Kalia, co-founder of employee benefits provider Neyber, commented:

“The fact that these issues are apparent across all sectors of the economy means that we have consistently failed to recognise some of the key drivers of poor productivity in the UK economy.”

The report has found that workers in well-paid industries are also having financial difficulties. The SMF has suggested some solutions to tackle the problem:

“Workplace pensions have already been introduced to build financial resilience later in life. One option is to extend auto-enrolment policies to include short-term savings or income protection insurance as well as pension savings.

“New financial mutuals, providing affordable savings and credit products using bonds of trust between those in particular professions, could be one way of building a culture of financial resilience through the workplace.”

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Reading Time | < 1 min 26 Jan 2016

Public sector borrowing drops

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Public sector borrowing, excluding public sector banks, closed 2015 £4.3 billion lower than in December 2014.

In the current financial year to date (April 2015 to December 2015), public sector net borrowing was £11 billion compared with the same period in 2014, according to the Office for National Statistics (ONS).

Public sector net debt at the end of December 2015 was £1,542.6 billion, equivalent to 81% of GDP.

David Kern, chief economist at the British Chambers of Commerce, said:

“After November’s setback, the marked improvement in December makes it likely that public finances will show an overall improvement in the current financial year.

“There is still no room for complacency, and the task ahead remains huge. The weaker financial sector and depleted oil and gas output mean that the UK’s ability to generate tax receipts has experienced a long-term decline, and we must adjust our public spending plans to this reality and do more to boost our tax base.”

Ross Campbell, ICAEW director for public sector policy, commented:

“While public sector borrowing looks in better shape than where we were last year, there are still questions about whether the government can achieve a surplus of £10.1 billion in 2019-20.

“Getting the best outcomes for the public finances in challenging times means being supported by modern financial management. “

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