LEGAL
Financial year ended on 30 April 2024 and showed overall growth; and growth across most divisions but some contraction in property related divisions. Staff turnover is fairly high and we are sustaining increased staff costs in that regard. However very recent activity shows an increase in new property related instructions and more consumer confidence across the sectors, including property. For example, in May 2023 the residential property team in Kidderminster opened 42 files; this May, after 16 days it already had 44 new instructions. In terms of corporate work including M&A, there is as one might expect a keenness to get transactions over the line before any political changes following 4 July 2024.
INSURANCE
Insurance premiums continue to rise, increases of 50% or more are not unusual for car and home insurance, thankfully commercial insurance premiums appear to be stabilising. Claims figures show a significant increase in weather related claims – flood, storm, subsidence, etc. As a result more policyholders are finding it harder to get flood insurance. The FloodRE scheme enables most residential homes to get cover but this scheme does not cover recently built homes and is due to come to an end soon. There is evidence of lenders and mortgage providers insisting upon full flood insurance, which could leave some locations unsalable. A tribunal has found an insurance broker and freeholder guilty of charging leaseholders premiums for their own financial benefit. Regulation prohibits insurers, brokers, freeholders and managing agents from conspiring to select insurance based on their own income to the detriment of the leaseholder or tenant. https://www.insurancebusinessmag.com/uk/news/property-insurance/tribunal-hands-down-seismic-ruling-on-leaseholder-insurance-489970.aspx?hsmemberId=15012&tu=2b9f7ba2-4cce-4979-a071-54b9d2e9e9d0&utm_campaign=&utm_medium=20240521&_hsmi=307978022&utm_content=2b9f7ba2-4cce-4979-a071-54b9d2e9e9d0&utm_source=
The National Cyber Security Centre announced that when comparing cyber insurance claims between organisations who are certified to Cyber Essentials and those who are not, they found certified organisations were 92% less likely to make a claim, which demonstrates the effectiveness of Cyber Essentials. (H&W Chamber members are eligible for discounted certification, see website)
Martyn’s Law is still passing through Parliament and has cross party support. It s expected that any location, event or organisation which has a capacity of 100 visitors or more will have to comply with the regulation, requiring them to take steps to minimise the risks associated with terrorist attacks. This will be relevant to a wide range of organisations including retail, events, education, charity, etc.
EDUCATION
At a national headline level there have been two significant reports out in the past few days, which shines a light on the challenges facing Universities and Colleges:
Yesterday (Thursday 23rd, the UK government has announced a further “crackdown” on student visas including new measures targeting “rogue” recruitment agents and “tougher compliance standards” for institutions but has stopped short of making changes to the graduate route.
The Home Office said the visa – which allows overseas graduates to stay for between two and three years after studying – would be kept under review owing to concerns it was “not attracting the highest earners who contribute to our economy”. The Home Office said that a future “package of robust measures” was intended to ensure the “UK’s world-leading higher education sector is used for education, not as a gateway to immigration” and “options to go further” remain under consideration.
By contrast, earlier last week the Office for Students issued a headline grabbing report on the state of UK Universities and Colleges, entitled Increased pressure on higher education finances. This report has found increased pressure on higher education sector finances, and cautioned universities against being too optimistic about future student growth, citing a decline in financial performance in 2022-23, with declining surplus levels, cash flow and net liquidity. The report, focuses on five key risks facing post 16 education:
- continuing decline in the real-terms value of income from UK undergraduates combined with inflationary and economic pressures on operating costs.
- A recent apparent reduction in applications from UK and international students after years of strong growth, especially from international students.
- A higher education financial model that has become reliant on fee income from international students, with a particular vulnerability where recruitment is predominantly from a single country.
- The affordability of necessary estates maintenance and development and the significant cost of investment needed to reduce carbon emissions as part of providers’ commitments to achieve net zero.
- Cost of living difficulties for students and staff, which challenge both student recruitment and the support needed by students during their time in higher education.
There is considerable variation in the surplus and deficit levels reported by individual providers. In 2022-23, 43 providers (16 per cent of the sector) reported surpluses that exceeded 10 per cent of income, whereas 93 providers (35 per cent of the sector) reported deficits. Providers have forecast this to increase to 108 providers (40 per cent of the sector) in 2023-24, with 43 of these expecting to report a deficit for three consecutive years (2021-22, 2022-23 and 2023-24).
Worcester’s UK and international numbers are expected to be lower than last year.
Across the sector, NMITE is showing positive signs of growthy having recruited Professor David Oloke as a new Chief Academic Officer. They are currently expanding their portfolio of programmes and Worcester Business School is in early discussions with NMITE about cross country collaborations with short-course and potential future joint Masters Programme Development.
Following the arrival of Michelle Dowse as HOW College’s new Principal, Simon Kibble has been recently recruited as Deputy Principal and further additions are planned to bolster their senior management team, as they prepare to launch a new business hub in their All Saints Building, providing a facility for boardroom-type meetings that could be hired out from September onwards.
Worcester business School is also in talks with another Worcester training provider – TDM – on future degree apprenticeship collaboration. TDM recent became a Patron Member of the HW Chamber.
And finally, good news for H&W small businesses as the H&W Spring Help to Grow Programme launched in April with 16 new business leaders and managers participating. Worcester Business School has already opened up the registration platform to launch this Autumn’s programme, starting on 3rd October, for which we are already in receipt of a number of registrations. Further details can be obtained from Joanne Murphy, the Business Development Manager at the University of Worcester (Joanne.murphy@worc.ac.uk)
RETAIL
Retail sales projected to growth this year, back to pre-pandemic levels. Rain influencing some businesses, but now into the summer and other events going on could increase spend. Consumer confidence improved but perhaps on lower value products rather than luxury. E-Commerce sales strong. Continuing growth and ease/speed of mobiles supports this. AI supporting personalisation sales and purchases via social media becoming growth area. Buy now pay later rather than credit cards seeming more popular. Augmented reality and voice commerce also supporting increased sales.
FINANCE
Lending is waiting for base rate to drop. Buy to let landlords selling. CBALS payback next year. Average £250k. Bounce backs can have 10 year payback. Droitwich Lloyds branch closing next year. Pershore moved to Banking Hub concept.
RECRUITMENT
Jobs Outlook and Report on Jobs (industry reports) – more positive outlook in hiring intentions, than last report. Temp activity showing growth which can be indication of business growth and confidence. Focus on tech and ai to take admin costs out of business. Won’t replace recruitment consultants, but will replace consultants that don’t embrace! Reading CV’s objectively, rather than key word. Labour gov – workers/employees relations, Day one rights. “Right to disconnect” laws being discussed. Could be future changes in employment law, depending on election outcome
ACCOUNTING
AI in accounting making data capture easier, but useless for tactical advice. Ai policy has been written. Workday platform introduced in June, many advantages. 100 apprenticeships on board. Helping with overall workforce planning. Tax changes afoot. Capital Gains for sure. R&D tax credit disputes ongoing, mediation panel useful
BANKING
Lending is waiting for base rate to drop. Buy to let landlords selling. CBILS payback next year. Average £250k. Bounce back loans can have 10 year payback. Pershore branch moving to Banking Hub concept with other bank brands.