IT
A further continuation to the positive growth since the start of the year with a steady number of new logos added to the business taking Managed IT solutions and cyber security-protection. Interesting feedback from funders and some of the supply vendors, suggesting their book intake is significantly down on new business at the half year point which is an interesting optic.
Two of the major banks have engaged with EBC to help promulgate the message about Cyber Security and cascade to their clients, as they see a heightened impact with threats and actual attacks…..so predictions are correct with the intensity of threat actors disrupting business.
Still seeing the decision making and sales cycle outside of the normal profile which appears to be fluctuating monthly, as key events unfold (Election, Interest rate cuts, now the Autumn budget). It is hard to determine if this is for genuine reason or just delaying their investments. Price based decisions appear to be the main discussion points currently vs the opportunity to attain a better, future proofed solution.
Recruitment and staffing appear to be stable and churn rates are back to pre-pandemic levels with lesser demands for higher salaries and hybrid working. Candidate choice and proactive contacts from candidates is now very prevalent.
Whilst BT announced that the exchange closure programme will be delayed by up to 2 years, thus allowing businesses more time to plan for replacement services, the intent is still to keep momentum on switching off 30+ products. Alarm lines, PDQ machines and fax machines will have almost no alternative other than to change solution, so businesses need to keep focused on the dates and announcements.
Cyber remains a key focus in the industry, post the Crowdstrike issue last quarter, although this was not strictly Cyber related. It has focused the minds of business leaders as the fallout recognised worldwide has been really overt through press communications. It demonstrated the impact when things go wrong and services that can be affected through something relatively simple.
Recent survey from McKinsey suggested that IT and Telecom investment will see strong and continued investment from businesses with 80% companies overwhelmingly agreeing that better technology would help their employees do their jobs better and increase productivity.
However, most of the markets are downplaying the introduction of AI as the core stimulus for growth in businesses, recognising its adoption has slowed now the easy wins of repeatable mundane tasks have been addressed. Although this can be tempered by the fact that a lack of knowledge, use cases and availability of user-friendly products may be clouding the picture.
Summary – still lots of demand for good technology, reliable services and faster networking across all sectors but decision making and a fear of the choosing the wrong solution prevails.
EDUCATION
Schools
Education has been on the agenda at the Labour Party conference this week, with the Education Secretary Bridget Phillipson announcing on 25th Sept that VAT will be added to private school fees within 100 days despite some opposition from families arguing they will be penalised.
There was also confirmation that the first new nursery places in primary schools in England will be rolled out from next year, along with breakfast clubs.
The government also announced further changes including new report cards on schools and a new mix of subjects to be taught in England’s schools.
Universities and Colleges
Universities and colleges across the UK have welcomed their new students over the past 2-3 weeks, with more than 2000 new students arriving in Worcester for undergraduate, postgraduate, doctoral and apprenticeship courses. These numbers are similar to those arriving last year, but the mix is different with fewer overall international students arriving, following government changes to the international visa system.
Earlier this month the Vice Chancellor from the University of Worcester went on Midlands Today to highlight the challenges facing the whole Higher Education sector in England and Wales with student fees fixed for many years and university costs rising. Universities UK reported that more than 40% of UK universities will be presenting a deficit in its annual reporting this year. The Department for Education responded earlier this month, stating that it will create “a secure future for our world-leading universities”.
Apprenticeships
Earlier this week, the Prime Minister and Education Secretary announced a new growth and skills levy which will replace the existing apprenticeship levy and include new foundation apprenticeships. Details are currently sketchy but the expectation is that this will see a focus on apprenticeships for younger entrants and a likely restriction on funding for Level 7 apprenticeships, such as the senior leaders apprenticeship, of which there were 17,490 Level 7 business and management apprenticeship starts in 2022-23. According to the CMI 60% of Level 7 management apprentices are in public services such as the NHS, social care and local government. The Chartered Association of Business Schools, CMI, UUK and CBI have met this week to provide a response to this, urging the Government to consult further with employers, apprentices, business schools and universities before progressing with this proposal.
RECRUTIMENT
As the final quarter of 2024 kicks off, data released by the Recruitment & Employment Confederation (REC) shows the labour market is still facing some challenges amidst economic uncertainty, fluctuating demand, and cautious hiring practices. The REC’s Report on Jobs showed that permanent placements have continued to fall, with August marking the sharpest decline in seven months, largely due to employer hesitancy and a slight softening in the number of vacancies. Temporary billings, on the other hand, have shown resilience, particularly in the Midlands, where demand for temporary workers has grown for five consecutive months.
In Herefordshire & Worcestershire it is a similar picture regarding temporary demand with this leading the way in terms activity. Interestingly, Permanent recruitment has also remained buoyant despite the wider national view, with Hewett Recruitment seeing a quarter of significant hiring activity…the acid test of how long any labour market recovery continues will be how businesses react to the first significant policy decisions of the new government.
When do look ahead, the REC’s Jobs Outlook had looked to paint a prettier picture with regards to the future, as employers’ hiring and investment intentions consistently improved month on month through to July. However, whilst still in positive territory, this dropped back significantly in August / September as employers assess what a new government means to their business. Labour’s “New Deal for Working People” is still to be fleshed out past the headline grabbing manifesto promises and the upcoming budget will no doubt have a significant impact on the decisions that business make moving forwards.
INSURANCE
After a few years of price rises and restricted cover there appears to be some stability and also a broadening of appetite.
This is not true of all types of insurance. The severe weather across UK, Europe and the world this year looks likely to be another record-breaking year for claims. The consequence will inevitably be increased premiums and restricted cover, something that many policyholders are already experiencing. Insurers are taking climate change seriously and lobbying for long term thinking. The temporary government intervention via Flood-Re which takes a levy from policyholders and enables some households to get flood insurance runs out soon and there is no equivalent for commercial premises – this needs to be addressed. Some insurers have also volunteered to pay additional claim costs to add flood resilience as part of the ‘build back better’ scheme but this also needs more commitment. The drive for changes in planning is a concern if flooding is ignored.
Cyber threats remain a tier 1 threat at national level with cyber insurance increasingly becoming a requirement in supply chain contracts.
Private Medical insurance sales continue to surge as the NHS struggles to meet demand.
REAL ESTATE
Property sector hinging around budget. After summer, usually September is busy but this has not been the trend this year. Many waiting for the first labour budget.
Draft National Planning Framework policy – more housing development. Potentially big changes in our area as we are a large green belt area, may see the boundaries change. Plan also includes 100’s more planning officers, but is this practical?
Also possible changes with capital gains tax may make decision impacts for some in the future. Impact of inheritance tax will be of interest to rural land owners.
Residential market challenging, pricing hasn’t been adjusted but reality is market has dropped. Commercial – shortage of supply of industrial and logistics, but seeing some increase. Demand subdued, so dynamics will change. Office availability still huge, businesses still uncertain of needs.
ACCOUNTANCY
Good growth, 75 new hires/apprentices/graduates, ranked outstanding in first Offstead review.
Accountancy sector has challenges with HMRC, particularly around R&D tax credits. Seeing success through alternative dispute resolution, but people shouldn’t have to use this to sort out queries.
Good news that HMRC are cracking down on multi national groups and transfer pricing.
Discussion around inheritance tax for farming.
Advise, keep good records and keep claiming tax relief. Put money into ISAs and pension, to ensure you are getting personal relief.