19 January 2024 | Business Sector Updates
Accountancy
Currently the company is very busy, particularly with regard to buying and selling businesses, tax planning and audits. The budget takes place on 6 March and Bishop Fleming are partnering with the Chamber at an event at the Business Expo the following day. We are expecting some surprises in the budget and will compare these to Labour policy. Transfer pricing between companies could become a tax issue for smaller businesses. Our sustainable business impact report has just been finished and we are in our 3rd year of monitoring. We are currently looking to commercialise this experience and expertise as a service. There are still concerns over HMRC investigations. We are taking on more graduates and apprentices to train staff internally in order to address staff and skills shortages. Our focus is still on staff retention.
Education
Latest national and regional updates on issues impacting on Higher education in the UK include student recruitment, international students, training and development for businesses, and news about new arrivals to the region. This time of year, the higher education sector braces itself for the January 31st UCAS applicant deadline – the point at which most universities get a reasonably clear idea of how their likely undergraduate applicant situation is shaping up. These figures do not reflect the full picture as there are likely to be additional umbers of international students who apply through different routes and those last-minute additions and departures during the summertime clearing season.
Each year universities and colleges tend to us comparative applicant data from previous years and, when adopting this approach, the overall trend across the sector in the UK is that UCAS University applications are down, by approximately 7.5%; and more worryingly across the West Midlands numbers are down by almost 14%. This could be masked by the number of international students heading into the West Midlands this year and yet our ‘January arrival’s’ data at Worcester Business School presents a mixed picture. On the one hand international undergraduate (UG) arrivals are up on last year, whilst international postgraduate (PG) arrivals are significantly down on last years’ figures. This was largely anticipated as the UK Government visa restrictions on international arrivals bringing dependents to the country came into force in January 2024. This was expected to impact the PG sector more than the UG applicants. Despite this, Worcester will be welcoming at least 100 new international arrivals over the forthcoming days, many of which will be studying in the county for three to four years and some will be looking for placements among businesses in the county.
In other news, December marked the conclusion and graduation of the first cohort from the Herefordshire & Worcestershire Help to Grow programme – the UK Government funded short course programme to support growth for leaders and managers of SME’s in the county. In the same week, the University of Worcester was pleased to discover that they have been awarded a further allocation of at least two Help to Grow programmes for the next fiscal year. With the first course commencing in April 2024, with the next cohort of the Worcester Executive MBA for business leaders starting a couple of weeks later.
Finally, education is not all about degrees and executive courses, the University of Worcester has successfully been awarded a very significant grant from the Office for Students to further promote apprenticeship provision for the Worcestershire region, which it is expected will enable a growth in level 6 apprenticeship provision across a range of different sectors, including health, education, business and digital.
Insurance
Premiums continue to rise. There are concerns about an increasing number of people not having insurance. Houses are being built on flood plains and continuing extreme weather conditions are putting pressure on insurance, leading to further price increases or insurance companies pulling out of certain markets altogether.
Property
There was a property rates revaluation in 2023. Office rates have remained static but industrial rates have risen by 25%. Environmental sustainability has become a key topic, in relation to decarbonising buildings among other things, with buildings needing to meet specifications, especially in the letting market. By 2027 all buildings are expected to be EPC rating band C, and EPC rating band B or above by 2030. There is a strong demand for freehold properties, there are significant retail vacancies and residential turnaround. A further increase in activity is expected. Office space is a particular challenge as there is continued emphasis on home working, but enquiries relating to office space are beginning to increase. We are positive about the year ahead but are still finding senior level recruitment difficult.
Retail
The price of containers has increased recently due to challenges in the Red Sea area which has also led to more delays on shipments (currently over 14 days). This has affected costs and led to shortages of most imported items. We are optimistic on sales for 2024 and any upcoming general election may further influence this. There are more platforms than ever for retail sales. Achieving B Corp status has helped future product development. We use GBT for customer services and all customer replies feed into this and has helped to improve providing the correct answers. This will eventually also link into emails.
Tech Sector
Busy end to Qtr 4 which is traditionally the norm within the sector, with capital budget expenditure from clients prior to year-end. Seeing no let up in demand for IT transformation and Unified communications solution as the messaging increases around the BT network closure. What we are seeing is the large communication suppliers now increasing pricing significantly on old legacy services, by way of encouragement to make the change…(T minus 23 months for closure). That’s aid, BT have announced a mediated service as an interim step, as there is a backlog of 300+ use cases to work through. Still seeing strong demand for networking solutions within offices (WiFi – Print – Switching – high speed internet connections) which indicates and underpins recent press articles about a return back to office based working, as opposed to working from home.
Cyber remains a key focus for EBC and we are seeing the demand ticking up for SOC/SIEM prevention services, again pressure from the insurance companies and underwriters is stimulating the demand, along with education from a range of sources. Staffing pressures have definitely dissipated; and we have a full complement of staff. Wage and hybrid working demands are not the main conversations based on recent hires which is a positive step in the right direction. In fact, we now have candidate choice which is a radical shift from 12 months ago.
Still seeing vendors come through with constant price increases and FX adjustments, mainly from US suppliers. Although kit supply is near on demand now from stock. EBC have a planned Cyber Security event in March at Worcester County Cricket Club – focus is on prevention with an audience of CEO/CFO/CTIO’s to understand risk appetite and hardening of security posture for businesses. Recent experience of CTS (BBC news) would highlight the risk and need to do something, as the consequences of CTS were catastrophic to the Legal Sector.
Utilities
Decarbonisation and sustainability are now at the forefront of businesses minds. Reducing carbon emissions increases the bottom line. New developments and construction are slowing, warehouse demand is also slowing but there is boom growth in EV charging. We are also using AI to help understand energy consumption. There are future areas of growth with companies generating their own electricity, switching from gas to heat pumps, fleet vehicles switching to EV (there are increasing demands for EV charging at premises at all locations enroute), battery storage. All of these will lead to increased electricity usage and there may be difficulties getting load from the grid.