Snapshot of UK regional economic inequality

economy Jun 27, 2019

We hear a lot about UK regional economic inequality, so as part of our series of macroeconomic snapshots we’re taking a look at some of the data.

These are just a few examples of recent announcements of businesses facing closure or insolvency in the immediate or near term: British Steel, Scunthorpe (c.3,000 jobs), Honda UK, Swindon (3,500 jobs), Kerry Foods in Burton-upon-Trent (900 jobs). What they all have in common is that they are situated in the regions outside London.

Then, of course, there is the ongoing carnage in the High Street retail sector which according to the British Retail Consortium’s calculations has cost 75,000 jobs since the first quarter of 2018.

The long decline in UK manufacturing, initiated in the 1980s Thatcher era, has hit the regions of the north and Midlands, and S. Wales, particularly hard.

In January this year NIESR (National Institute for Economic and Social Research) calculated that since the mid-1990s regions that now have...

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SME owners need to pay more attention to their own mental and physical health

There is plenty of evidence that owning and running a SME leaves little spare time to pay attention to their mental and physical health.

Research by Opus Energy earlier this year revealed that SME owners in the UK work an average of 2,366 hours per year in order to make their business a success, working an average of 45.5 hours per week (compared to the average full time working week of 37 hours). More than half (56%) of owners reported working either six or seven days per week.

It also found that 14% percent of all entrepreneurs say that they don’t take any time off while a quarter (23%) claim that they have to work even when on holiday.

A survey by Yorkshire Bank in April found that a quarter of small business owners across the UK sacrifice time with friends and family and around 30% of UK business owners have sacrificed their work-life balance. This results in detrimental effects on their mental and physical health.

In May the FSB announced a partnership with...

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Why are businesses not taking advantage of the new apprenticeship scheme?

The Government’s new Apprenticeship Levy scheme introduced two years ago set an ambitious target of creating 3 million new apprenticeships by 2020.

Under the scheme any business with annual payrolls exceeding £3million have had to pay a 0.5 per cent levy on their payroll to the Government which can be redeemed against the cost of staff employed under an approved apprenticeship programme.

But there is now very little confidence that the 3 million number will be achieved. Indeed, the numbers of new apprenticeships have been reducing and in January this year was revealed to be 15% lower than before the system was introduced two years ago.

In May the Public Accounts Committee said that the DfE’s “poor execution” has created “serious longer-term problems” for apprenticeship programmes.

Yet UK businesses have been for some time facing serious problems in finding appropriately skilled candidates for jobs, particularly in engineering,...

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Is an Employee Ownership Trust the way forward to show your workers they are valued?

In May this year Julian Richer gave his employees shares in the company through an Employee Ownership Trust (EOT) whereby they will own 60% of the business.

Announcing the decision, Richer said that he felt it was better to do it now he had reached the age of 60, than to wait until his death, as originally intended. This way, he said, he could ensure the transition would go smoothly.

Richer Sounds, the hi-fi and TV retail chain, since it was set up in 1978 has survived the last five recessions and is regarded as one of the best companies to work for.

Julian Richer’s success as founder and owner can very much be attributed to his commitment to his employees which includes initiatives such as an extra day of holiday on their birthday, heavily discounted access to holiday homes for all employees with over six month’s service, a month’s use of the company Bentley to the store that has scored highest on customer service each month and chiropody treatment and massages...

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Evidence mounting that SMEs are more attractive to millennials

There has been a growing body of evidence and research over the last couple of years that millennials prefer working for and shopping with SMEs.

Too often we hear about the difficulties and obstacles SMEs face, such as excessive red tape and disproportionate taxation, but it should be remembered that they account for more than 99% of all businesses in the UK, and recently, Secretary of State for International Trade Liam Fox called UK SMEs “the future of the UK economy”.

As such, it would be foolish for millennials starting out on their careers to ignore the potential opportunities SMEs could offer, and indeed, according to research carried out by Sodexo, it seems that 47% of this young cohort see them as the ideal business size to work for compared to 19% who put their faith in larger companies.

Among the benefits they saw in working for SMEs millennials in the survey they cited flexible working hours, the ability to work remotely, career progression and a...

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What is the future for company audits?

Uncategorized Jun 06, 2019

In principle, company audits must be carried out on any public body, FCA regulated business and most companies unless they are exempt. The exemption threshold means a company must have at least 2 of the following: an annual turnover of no more than £10.2 million, assets worth no more than £5.1 million, 50 or fewer employees on average.

The audit industry has been under review for some time and this scrutiny has intensified since the collapse of Carillion the construction and outsourcing firm in early 2018.

The industry is dominated by the “Big Four”, Deloitte, EY, PwC and KPMG, who audit almost all of the FTSE 100 largest companies. Despite their dominance other accountants have also come under the spotlight such as Grant Thornton who were auditors of Patisserie Valerie that went bust recently, apparently due to a £40 million fraud.

Mr Dunckley, CEO of Grant Thornton told MPs on the business, energy and industrial strategy committee “we are not...

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Investment decisions in a mature business cycle

A mature business cycle is one where the prevailing conditions are such that any economic slack is largely used up and assets are richly priced after a period of expansion.

Arguably this is the position in which the economies of the developed countries, such as the USA, UK, EU and Japan now find themselves, where there is a stable population and slowing economic growth. In this context a growth rate of 2% is seen as acceptable.

Arguably, too, mature economies are at a pivotal moment, in that a market economy is never static and there have been signs for some time that the situation is somewhat volatile, as a selection of headlines in any period illustrates.

For example, on April 28 a new report on global trends published by KPMG Enterprise suggested that increased activity from venture capital investors had been pushing up deal prices in the North of England, and the billionaire investor Warren Buffett told the Financial Times that he is “ready to buy something in...

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VOIP a phone solution for growing SMEs

As a SME develops and grows costs can quickly escalate, no more so than its phone and communication systems and yet there is a cost-effective solution called VOIP that some may not be aware of.

VOIP stands for Voice over Internet Protocol and is essentially a broadband-based phone service that can include a free switch board.

A business can make calls using laptops or PCs but equally using VOIP telephones, which cost very little and are the only additional piece of hardware needed if bought upfront since the exchange is either embedded in the phone or provided by the VOIP supplier who is normally also the broadband service provider.

A VOIP system allows the business to dispense with call handling and an in-house switching system, all of which can be set up and automated by someone familiar with IT systems. You can have unique phone numbers and set it up so that calls can be switched from one number to another.

With a phone-based service, you use VOIP the same way you use a regular...

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Why advice to aspiring women leaders may have been all wrong

The numbers of women leaders are not rising despite the growing calls to eliminate gender discrimination in the workplace.

There are just six female CEOs of the FTSE 100 companies and at the start of the year The Equality Trust revealed that they earn 54% of their male counterparts.

Some years ago, Sheryl Sandberg published her book Lean In, in which she argued that women should show more drive and determination, put themselves forward for daunting tasks, and showcase the same level of confidence conveyed by male leaders.

But either aspiring women leaders have been ignoring Sandberg’s advice or, if they have followed it, it has not resulted in promotion.

The “lean in” advice may even be wrong according to personality scientist Tomas Chamorro-Premuzic, an international authority on psychological profiling, talent management and leadership development who argues that it could actually be counter-productive.

It is more likely, he says, that if women mimic the accepted...

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What should be on the SME wish list from the new Bank of England governor?

economy leadership women May 23, 2019

The search has begun for a replacement for Mark Carney, Bank of England (BoE) governor, who is due to leave his post in January 2020.

So far, the speculated names in the frame have included Andrew Bailey, the chief executive of the Financial Conduct Authority, seen as a “safe pair of hands”, Ben Broadbent, the Bank’s deputy governor for monetary policy and Andy Haldane, the Bank’s chief economist.

But also included have been Shriti Vadera, chair of Santander, Janet Yellen, former head of the US Federal Reserve, and Raghuram Rajan, economist, and former head of the Indian Central Bank.

Chancellor Philip Hammond has reportedly said that Mark Carney’s “steady hand has helped steer the UK economy through a challenging period”.

In the light of the ongoing turmoil that is a still-not-finalised Brexit, political populist turmoil and US-inspired trade wars with China and potentially the EU, clearly another “steady pair of...

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