Joshua Leigh & Co

‘Historic opportunity’ to build a stronger economy

The UK should seize the chance to emerge from the pandemic with a stronger, fairer and more resilient economy.

The Government has “a historic opportunity for a reset” in the post-pandemic economy, according to a member of the Covid Recovery Commission upon the release of its final paper.

Titled Ambition 2030: A Partnership for Growth, the independent commission’s third report urges greater cooperation on policies from Government, businesses, universities, and communities. Rapid development of the AstraZeneca Covid-19 vaccine is cited as an example of what can be achieved through such collaboration.

The authors propose a National Prosperity Plan capable of delivering economic growth and boosting UK living standards.

“The benefits are multiple, but most importantly you get the parts of the economy doing what they are best equipped to do. Look at the vaccine – university innovation, combined with big business investment and scaling, combined with supportive Government procurement and regulation,” says Covid Recovery Commission member Manoj Badale, co-founder of UK-based digital venture builder Blenheim Chalcot.

“We have a historic opportunity for a reset, and the post-pandemic growth challenges are immense.”

The report identifies five immediate national imperatives:

1. Creating the conditions for innovation and value-added growth
2. Investing in the skills of the future
3. Investing in and delivering world-class infrastructure
4. Decarbonising energy demand to deliver net-zero
5. Building personal and community resilience

From the wide range of recommendations, Badale identifies innovation as being the key driver of future economic growth.

Large sections of the report are dedicated to ‘levelling up’ regions of the UK. The recommended creation of catapult quarters involves dedicated regions focusing on innovations in specific industry areas. Despite the existing presence of community-based investment zones such as freeports and university-led innovation areas, Badale believes these need to go further.

The report examines the wider role of businesses in local communities. The authors suggest that companies should have their contribution to the area they operate in measured and graded. Badale says that businesses should also look to value people instead of just profits.

“We need businesses to be more purpose-led, with clear scorecards of their local contribution, and the ability to start measuring the human balance sheet – not just the financial balance sheet,” he adds.

Implementing recommendations from the report will take significant Government investment, which will increase public debt further after the billions already spent on responding to the pandemic. This follows a decade of austerity in the UK after the 2008 global banking crisis.

The post-Brexit trade arrangements create further uncertainty. Alongside this are the challenges in meeting carbon emission reduction targets in line with net-zero commitments.

To make the UK more competitive globally, the report recommends addressing national skills shortages. By 2030, this gap is predicted in areas such as digital services, management, science, technology, engineering, and mathematics (STEM).

On top of this are fears that the unemployment rate could surge once furlough ends in September, with as many as 2.2 million people potentially unemployed by the end of 2021.

The commission proposes introducing lifelong learning and a ‘Help to Train’ policy to halve the 2030 skills gap. Everyone aged over 25 would have an individual learner account, providing them with the option to retrain and gain new skills for future jobs.

Badale suggests a focus on digital and data skills “not just for young people – but retraining large parts of the workforce.”

New guide to “help tackle the toxic issue of late payments”

Major business bodies have this week launched a new supply chain guide in an attempt to address the worsening late payment crisis.

The Federation of Small Businesses (FSB) and British Services Association (BSA) said the guide will “highlight challenges faced by smaller firms” and “identify routes to collaborative working”.

Recent research revealed that small businesses were owed more than £23 billion in outstanding invoices in 2020, while late payments were directly attributed to the collapse of some 50,000 small businesses every year.

The BSA said the new guide, found here, will help the smallest and largest organisations come together to benefit from a “healthy and more diverse supply chain” through “partnership working”.

It also highlights the significance of the Prompt Payment Code, aligning objectives, social values, and building relationships.

“Everyone needs to contribute in full if the UK is to recover quickly, sustainably and equitably,” said Mark Fox, Chief Executive of the BSA.

“That means the public sector, and private sector and VCSE organisations large and small, together in harness, working towards the same common goals.

“This Statement sets out some examples of what has been achieved. But we are all on a journey, and we recognise that much more needs to be done. We hope this Statement will highlight examples which all larger businesses can learn from and adopt.”

Welcoming the guide, Small Business Minister Paul Scully added: “This welcome statement from the BSA highlights the importance of businesses working together and paying their partners on time, and builds on the government’s work with the Small Business Commissioner to tackle the toxic issue of late payments.”

Earlier this year, it was revealed that the Prompt Payment Code payment period would be slashed in half, from 60 to 30 days, to protect small businesses.

For help and advice with related matters, please get in touch with our expert team today.

SME leaders optimistic towards post-Covid recovery time

Small and medium-sized enterprise (SME) leaders are optimistic about post-Covid-19 recovery time, suggesting it will take an average of 12 months for their businesses to make up for the lost revenue.

Chirag Shah, CEO, Nucleus Commercial Finance, who commissioned this research, comments, “it’s encouraging to see such optimism among SMEs about their projected finances as they return to business as usual.”

With consumer demand accelerating after the easing of lockdown restrictions, over half a million SMEs suggest it will take between 10-12 months to make up for the loss caused by Covid-19.

Research indicates that medium-sized businesses are most confident about their recovery, with over a quarter believing it will take between seven to nine months to return to their pre-Covid-19 financial state. However, small-sized businesses believe it will take them between 10-12 months.

Whilst some of these predictions are hopeful for the future, several companies expect the lost revenue to have a long-lasting impact – with one in five sole traders concerned that they will never recover. 

Research reveals that 23 per cent of younger business owners, between the ages of 18-34, hope to see a recovery in the first four to six months, while 24 per cent of owners aged 55 plus don’t see their business recovering for at least one to two years. SMEs also expect to spend an average of £97,000 to help their businesses grow in 2021.

The route out of lockdown will not come without its challenges. Having experienced the effect that lockdown easing has had on business sales already, SMEs are showing a much more optimistic outlook than a few months ago. 

The research also found that London and the South East SMEs are the most optimistic about business recovery – almost a quarter of SME leaders in the South East predicting a 10–12-month recovery span and a quarter of those in London hoping between seven to nine months.

With 50 per cent of SME leaders within the North West and South West of England predicting a longer one to two year recovery time, it is clear that not all are feeling so confident. 

Shah highlights that “[the] Government and industry must collectively raise awareness of the varying support measures available to aid these businesses in their longer-term recovery, ultimately providing a much-needed boost to our economy.”

For help and advice with matters relating to post-Covid recovery, please get in touch with our expert team today.

UK tech sector continues to grow despite Covid-19 disruption, study reveals

The UK tech sector has continued to grow despite the impact of Covid-19 and lockdown restrictions, a major study has revealed.

The data – shared by Companies House this month – shows how the coronavirus pandemic has helped carve out a bigger slice of the economy for tech businesses.

According to the figures, some 14,301 technology-focused businesses incorporated in the UK in 2020 – representing a 13 per cent increase compared to the 12,696 start-ups registered in 2019.

It will come as no surprise that London was the number one destination for establishing a technology business, recording 7,480 incorporations over the 12-month period.

The South East of England followed, recording 1,520 new tech start-ups, while the North West placed third, recording 888 new incorporations.

Regionally, however, it was the West Midlands that recorded the largest percentage increase. According to the data, cities such as Birmingham, Coventry and Wolverhampton recorded 821 new incorporations – representing a 40 per cent year-on-year increase.

Scotland, Northern Ireland, the North East, the East Midlands, and the East of England all also saw annual growth in incorporations.

The figures come after the publication of the latest Tech Nation report, which revealed that the UK attracted over $15 billion (£10.8 billion) in investment in 2020 and placed third internationally for tech incubations ahead of all of Europe and behind only the US and China.

Commenting on the figures, Digital Secretary Oliver Dowden said: “With record levels of investment secured and UK listings gaining momentum, this report shows Britain’s tech sector continues to go from strength to strength, solidifying our position as one of the world’s top tech hubs.

“We want to bring about a golden age of UK tech through a raft of supportive measures and funding to help businesses thrive. This will help fuel a booming tech sector – creating jobs and improving services so that we can build back better from the pandemic.”

For help and advice with related matters, please get in touch with our expert company formation team today.