September 2017 Policy Update

 

No More A14 Delays in Suffolk

The Strategy Board for No More A14 Delays in Suffolk has intensified its campaign to secure government investment at seven pinch points along the A14 in Suffolk by taking full advantage on 15 September of a meeting with senior staff from Highways England and the Department for Transport to explain the impact of delays on local businesses.

Chaired by Bury St Edmunds MP, Jo Churchill, the No More A14 Delays in Suffolk Strategy Board, held at Suffolk Chamber of Commerce’s Ipswich office, brought together officials from these two organisations with local business and council representatives.

The Strategy Board had already submitted a business case why these pinch points need to be included in the second Roads Investment Strategy (RIS2) which will cover the period from 2020 to 2025 and so attract £850m of funding.

Aside from alleviating the real costs of delays and congestion at these points, this investment would contribute to a massive increase in key economic indicators – of real benefit to the local and national economy:

  • 7000 new jobs

  • £362m extra in Gross Value Added

  • Average of 13 minutes a day saved in travel time

Nick Burfield, policy director at Suffolk Chamber, said that “the officials were clearly really impressed by the first-hand accounts of the additional business costs and lost orders due to A14 delays. That is why we are still looking for more ancedotal evidence to add to the weight of our existing case.”

Matt Moss, commercial director at leading precast concrete manufacturer, Poundfield Products Ltd., based near Stowmarket, explained that “every delay for our lorries getting onto and off the A14 in Suffolk means lost time and increased costs for us.

“We are caught right in the middle of the A14’s pinch points. With clients all over the country, we extensively use both eastbound and westbound carriages of the road and so suffer at both the three western pinch points around Bury and the four circling Ipswich!”

To support the No More A14 Delays in Suffolk campaign, Poundfield Products is keeping a ‘delay diary, aimed at showing how the A14 costs the company in any given week.

Matt added “now is the time for every Suffolk business affected by the A14’s pinch points to do the same and submit the evidence to the campaign”.

Companies – and residents – are asked to share their experiences on twitter or by emailing news@suffolkchamber.co.uk

In support of the No More A14 Delays in Suffolk campaign you may wish to add the campaign image to your email sign offs and link it to the relevant page on our website. The campaign image is here and instructions on how to do this can be found here.

A new economic strategy for Norfolk and Suffolk

Over the past few months businesses represented by Suffolk and Norfolk Chambers of Commerce, local authorities, universities and colleges have been working together with New Anglia LEP to develop a new economic strategy for Norfolk and Suffolk.

Over 1000 people have also contributed through a series of business consultation events.   

The new economic strategy finds that the Norfolk and Suffolk economy contributes over £35bn to UK plc, and has grown by 9% since 2010, faster than many “powerhouse” areas.   We have higher than average levels of economic activity and rapidly growing sectors and businesses across our diverse economy.  Norfolk and Suffolk are well connected to Cambridge, London, European and global markets.  Given the significant opportunities ahead the economic evidence underpinning the economic strategy has been reviewed and a number of ambitions, priority places and themes have been identified to ensure future economic and business success.

The economic strategy has clear economic indicators and targets to measure success.

The economic strategy commits local authorities and other partners to work together to pool resources and coordinate activity in some key areas such as inward investment, skills, place marketing and infrastructure investment. This stronger collaboration and joint effort is vital if Norfolk and Suffolk are to get the investment this is needed to drive economic and business growth.

The executive summary of the economic strategy and the full document are now awaiting endorsement by partners but the final, designed, drafts of both documents are here

The evidence document underpinning the economic strategy is here

DfE Survey - Impact of Apprenticeship Levy Funding on Employers and Training Providers

DfE is running a short survey on how reforms to apprenticeship funding, including the Apprenticeship Levy, have affected employers and training providers.  The closing date is 3 October.

The link to the survey is here

Could a New Anglia Skills Deal benefit your company or sector?

If you have identified a skills gap for your adult workforce or cannot find training to help your business grow then Skills Deals may be able to fund you working with a training provider to create an innovative solution.

Grants are being offered of up to £500,000 and need to be match funded, but if you have an idea you would like to discuss then the Skills Deal team would like to hear from you.

Please email skills@newanglia.co.uk or click here to see more details on what has been funded, and the criteria outlined in the Skills Deal Prospectus.

Claim your funding before it runs out

Recent changes to European funding rules mean that Business Energy Efficiency Anglia is able to offer energy saving grants to more businesses.  SMEs across Suffolk and Norfolk can get 28% off a huge range of capital projects. See what others have done, including purchasing new machinery, installing insulation or replacing lighting systems - all measures that save the business money every year.

Thanks to the changes, shops are now able to access this funding for the first time and a much wider range of measures can be supported (almost anything that cuts energy or carbon is likely to be covered) and for lighting upgrades the application process has been hugely simplified.

But this EU fund runs out next year, and money is being allocated on a first come first served basis; ensure your business benefits, act now! You can speak to an adviser on 01473 350 370 or email beeanglia@groundwork.org.uk to find out how you could benefit. 

Read more here.

Other funding sources are listed here.

Suffolk Skills Show 18 October 2017

There is still a small number of stands available and would like to encourage drop-ins on the day to come and learn about Suffolk’s employers and what your future could hold!

To book a stand, or a group or individual visit please go to our comprehensive website www.suffolkskillsshow.com

Brexit and future customs arrangements  

The UK Government has published a position paper on future customs arrangements and there is an excellent summary of the issues at stake from the UK Trade Policy Observatory here.

The UK Government wishes to maintain minimal customs checks between the UK and the EU – whilst also signing trade deals with other countries. They suggest two options to do so:

  • A “customs arrangement” in which there is a new customs border with the EU, but which is ‘streamlined’ through technological solutions, strong cooperation and ‘trusted trader’ schemes. This option makes it more straightforward to sign new trade deals with third countries, but requires significant investment from the UK Government, and may involve significant adjustment for business;

  • A new “customs partnership” with the EU – a type of customs union, though not ‘the’ customs union – where the UK continues to act as the external customs border for the EU, where goods entering the UK are destined for the EU. In this scenario, there is no customs border between the UK and the EU, but this would require either rigorous tracking mechanisms for goods, or traders would need to apply for tariff reimbursements if there is a difference between the EU external tariff and that of the UK.

Both options need to be tested with the EU Commission.

GCSE Changes

The grading scale in GCSEs in England is changing, and has started with English and Maths this summer. To increase awareness with employers and those who work in education, the Department for Education has released a factsheet and further information can be found on their website

2017 Aviva Community Fund now open2 September 2017

The Aviva Community Fund offers the chance to get funding from £1,000 up to £25,000 for an important cause in your community. All you have to do is enter a project for your community organisation – even if you took part previously – and tell us what a difference these much-needed funds could make. You can enter your project in one of the four following categories: Health & wellbeing; Skills for Life; Inclusivity; and Community Support.

To find out more go to the Aviva Community Fund website.

Levy transfers on the apprenticeship service

From April 2018, levy paying employers will be allowed to transfer up to 10% of their levy credits to other employers or Apprenticeship Training Agencies (ATAs) using the apprenticeship service.

The service is developing the details on how transfers will be implemented. To support this work, they are looking for feedback from a wide range of groups to understand what they would need from a transfer service, and to help design the functionality to meet those needs.

British Chambers of Commerce / DHL: Exporters concerned economic conditions will dampen performance

The British Chambers of Commerce (BCC), in partnership with DHL, has published its latest Quarterly International Trade Outlook, which shows that while many exporters continue to put in a solid performance, wider economic factors are a cause of concern.

The BCC/DHL Trade Confidence Index, which measures the volume of trade documentation issued by accredited Chambers of Commerce for goods shipments, fell by 2.25% on the quarter – but still stands at the third highest level on record.

The survey, based on the responses of over 3,500 exporting businesses, shows that while export sales remained steady during Q2 2017, there are a number of economic factors that are giving businesses cause for concern.

As the pound continues to fluctuate, the findings of the survey show that 68% of manufacturers who export consider exchange rates as a concern to their business.

Recruitment difficulties are high for exporters in both sectors, with 67% in manufacturing and 51% in services reporting problems finding the right people. Access to skilled manual or technical labour was a particular issue for exporters in the manufacturing sector (69%).

Just over a third of exporters are concerned about inflation (36% in manufacturing and 33% in services). The results also show that 39% of exporting manufacturers expect the price of their products to increase over the next three months. Of these, 81% say this is due to the pressure from the cost of raw materials.

Key findings from the report:

  • The balance of manufacturers reporting improved export sales rose to +27% from +26% in Q1, the highest level since Q4 2014. In services, the balance of firms reporting improved export sales rose to +13% from +10% in Q1, which remains below the historical average of the sector;

  • The balance of manufacturers reporting improved export orders fell to +20% from +22% in Q1, while in services it rose to +9% from +5%;

  • The balance of exporting manufacturers who expect their prices to rise stands at +39%, and raw materials were the cause of price pressures for 81%;

  • 68% of exporting manufacturers cite exchange rates as a concern to their business, and 49% in the services sector;

  • 36% of manufacturers and 33% of services firms view inflation as a concern; and

  • The BCC/DHL Trade Confidence Index, a measure of the volume of trade documentation issued nationally, fell by 2.25% on the quarter. The Index now stands at 123.72 – down 2.54% on Q2 2016 – but stands at the third highest level since records began in 2004.

British Chambers of Commerce forecast: fall in sterling failing to lift UK growth

The British Chambers of Commerce (BCC) has slightly downgraded its medium-term outlook for the UK economy over the next few years. While the BCC has slightly upgraded its UK growth forecast for 2017 from 1.5% to 1.6%, its growth expectations for 2018 and 2019 have been cut from 1.3% to 1.2%, and 1.5% to 1.4% respectively.

The slightly upgraded forecast for 2017 is driven by a moderately stronger outlook for consumer spending growth in 2017. While inflation remains elevated, it is expected to peak at 3% by the final quarter of 2017. However, inflation is still forecast to outpace average earnings until 2019, eroding real wages and weighing on consumer spending, a key driver of economic growth, in future years.

A weaker contribution from net trade and more subdued consumer spending growth were the main reasons for the slight downgrade to the BCC’s growth forecast for 2018. While the outlook for export growth remains unchanged, the rate of import growth is expected to increase, with little evidence that customers are switching from imported goods despite their rising cost. Falling real wages, and a slight weakening in labour market conditions, will see consumers rein in their spending in 2018. The slight downgrade for growth in 2019 reflects a lower contribution from net trade and weaker investment compared to our Q2 forecast.  

The UK economy is expected to remain on a slow-growth trajectory for the forecast period, which reinforces the need for decisive action to boost the domestic business environment. BCC argues that the Government must use the Autumn Budget to alleviate the burden of upfront costs facing companies, incentivise investment, and improve infrastructure.

Key points in the forecast:

  • UK GDP growth forecast for 2017 is upgraded to 1.6% from 1.5%, and is expected to slow to 1.2% in 2018 (downgraded from 1.3%), before rising to 1.4% in 2019 (downgraded from 1.5%);

  • Inflation of 2.7% is forecast for this year, and 2.9% and 2.5% in 2018 and 2019 respectively.  The previous forecasts were for 2.9%, 2.8% and 2.5% respectively. Inflation is expected to peak at 3% in the last quarter of 2017, lower than our previous forecast of 3.4%, due to the slowing growth in input costs;

  • Export growth of 3.1% is forecast this year, and is expected to slow to 2.9% in 2018 and 2.8% in 2019. This is unchanged from our previous forecast;

  • Import growth forecasts have been upgraded to 2.9% in 2017, 1.5% in 2018 and 2.0% in 2019, from 2.5%, 1.3% and 1.8% respectively;

  • Consumer spending growth has been upgraded for 2017 from 1.3% to 1.5% but is expected to slow to 0.8% and 1.3% in 2018 and 2019;

  • Business investment growth has been revised slightly upward for 2017 and 2018, to 0.4% and 0.8% respectively, but has been downgraded for 2019 from 1.2% to 0.9%, with some firms expected to bring some investment decisions forward; and

  • Our new forecast is that the first increase in UK official interest rates, to 0.5%, will occur in Q3 2018. This is two quarters later than predicted in our Q2 forecast.

Looking at sectors, manufacturing has been upgraded from 1.2% to 1.4% in 2017 and is expected to grow at 0.7% and 1.1% in 2018 and 2019. Construction has been revised upwards for 2017, from 1.1% to 1.3% and is expected to grow at 0.7% and 1.0% thereafter. The services sector has been upgraded from 1.7% to 1.8% in 2017, and is forecasts to grow at 1.2% and 1.6% in the following years.

Collaboration on Science and Innovation: A Future Partnership Paper

The Government has published a paper on science and innovation as part of a series of papers on the Government’s approach to the future partnership wanted with the EU. These papers are an essential step towards building a new relationship to promote shared interests and values.

As the UK leaves the EU, a core objective is to continue to collaborate with European partners on major science, research, and technology initiatives. This paper explores how the UK and the EU could achieve this objective. The UK believes that it is in the best interests of both the EU and the UK to continue to collaborate to tackle our shared challenges together and achieve our common goals.

Firms invest in local labour but still need foreign skills to plug shortages

Half of UK businesses have faced skills or labour shortages in the last year, but only a minority are actively looking overseas to fill vacancies, according to a recent survey by the British Chambers of Commerce (BCC) in partnership with Middlesex University.

The annual workforce survey, based on the responses of over 1,400 business people, found that 48% of firms had faced skills or labour shortages over the last twelve months. Of these, most sought to address the shortages by increasing investment in recruitment (35%), training (31%) and pay and benefits (29%). The survey found that only 8% of businesses target recruitment of non-UK nationals overseas.

According to the findings of the survey, two-in-five (40%) of UK businesses have employees from other EU countries on their workforce, while 23% have employees from outside the EU. 38% of businesses say future restrictions on the rights of EU nationals to work in the UK would have a negative impact on their business.

The results challenge the myth that UK firms are ignoring local workers in favour of overseas labour. With a softening economy and slowing immigration, the BCC is calling for action to ensure business growth isn’t hampered by labour shortages. Business communities need the government to provide clarity on the process for hiring EU nationals during and after the Brexit process, and to ensure the UK’s future immigration system is economically responsive, so companies have access to the skills they need.

Other key findings of the survey are:

  • When trying to fill vacancies, UK companies are most likely to rely on word of mouth (51%) and posting adverts on job search websites (43%);

  • 50% of businesses receive job applications from EU nationals and 30% from non-EU nationals;

  • Firms report that their non-UK workers have diverse skills sets: 42% skilled manual/technical, 37% professional/managerial, 35% un-/semi-skilled and 23% clerical/administrative; and

  • 20% of businesses say they would respond to potential future restrictions on EU nationals to work in the UK by focusing recruitment on UK workers, while 15% don’t know how they would respond

4 in 5 businesses hit by rising employment costs

The BCC and Middlesex University survey  also reports that around 4 in every 5 businesses have seen their costs increase this year through changes in employment legislation.

BCC’s annual workforce survey reveals that pensions auto-enrolment, the National Living Wage and the Apprenticeship Levy have increased the cost base of businesses, and could lead to reduced opportunities for investment and wage growth.

The rise in the National Living Wage (NLW) in April of this year has increased employment costs for one-in-two companies (50%) in the UK. There appears to be a North/South divide, with firms in the North of England (55%) and the Midlands (51%) more likely to be impacted by the National Living Wage than firms in the South (43%).

For the UK to remain an attractive and competitive environment going forward, action is needed to prevent unsustainable rises to the cost of doing business. The BCC is calling on the Government to ensure no new upfront costs or taxes – which sap investment, growth and recruitment potential – are imposed on business for the remainder of this parliament.

Key findings of the survey are:

  • Three quarters (75%) of respondents report an increase in costs as a result of pensions auto-enrolment, with nearly a quarter (23%) indicating a significant increase;

  • A fifth (20%) of businesses have seen costs increase from the introduction of the Apprenticeship Levy, and 8% from the Immigration Skills Charge;

  • Based on the forecast that the National Living Wage will increase to £8.75 per hour by 2020, 38% of respondents said in response that they would raise prices of products and services, with a further 25% expecting to reduce pay growth;

  • Consumer-facing industries were particularly affected by the rise in the NLW, with 73% of B2C sector firms – including wholesale, retail, accommodation and foods sectors – seeing an increase in costs. In comparison, 56% of manufacturers and 41% of B2B services report higher costs; and

  • 25% of businesses say they would respond to future planned increases to NLW by reducing pay growth for staff, 21% by reducing staff benefits and 20% by scaling back recruitment.

Automatic enrolment messages for employers – September 2017

Minimum contribution levels for automatic enrolment due to increase in April 2018 – make sure you’re ready

By law, minimum pension contributions are required to increase over time on set dates. These increases are planned in two phases – 6 April 2018 and then again on 6 April 2019. All employers will need to work out how these changes will apply to them and their staff, and what they need to do to meet their legal duties.

Recent research commissioned by DWP shows that 83% of staff see workplace saving as the norm and 79% welcomed contributions increases.

The Pensions Regulator is writing to all employers to let them know what action they need to take to make sure they’re ready for the first increase which will take effect from April 2018.

Make sure you and your staff are ready for these changes – The Pensions Regulator has online information and guidance that will help you, including template letters to help you explain the increases to your staff.

Received a letter from The Pensions Regulator? Don’t ignore it – you risk a fine

Whether you are a new employer and thinking about your automatic enrolment duties for the first time, or if you are approaching re-enrolment (which takes place every three years), if you’ve received a letter from The Pensions Regulator, don't ignore it. It means that the regulator is expecting you to take action.

As an employer, you hold the ultimate responsibility to meet your automatic enrolment duties – even if someone else is acting on your behalf – so make sure you know what you need to do and by when.

The Pensions Regulator has information and guidance to help you. Don’t ignore your responsibilities – you risk a fine.

Planning to take on your first member of staff? Make sure you know what you need to do about their pension. It’s the law.

 If you are thinking of taking on your first member of staff then, as an employer, you’ll have a number of responsibilities. As well as deciding what to pay them, and setting up a PAYE scheme with HMRC, you’ll also need to assess them from the first day they start working for you to see if you need to put them into a workplace pension scheme. This is called automatic enrolment and is a legal duty.

You should start preparing early to work out what you’ll need to do. The Pensions Regulator has produced a short video in their ‘James Explains’ series to help you.

British Chambers of Commerce Monthly Economic Review

The BCC Economic Review for September has been published, providing an easy-to-use commentary on the key domestic and international economic indicators for business.

This month's headlines:

  • UK GDP growth unrevised in Q2, as business investment and consumer spending slows;

  • While UK labour market remains strong, pay growth continues to lag behind price growth; and    

  • GDP growth strengthens in key UK markets, including the Eurozone and the US.

The full Review and previous editions can be read here.  

British Chambers of Commerce: UK labour market resilient but challenges remain

Commenting on the labour market statistics for September 2017, released by the Office for National Statistics, Suren Thiru, Head of Economics at the British Chambers of Commerce (BCC), has said:

“The continued rise in employment, coupled with falling unemployment, is further evidence that the UK jobs market remains resilient, with firms continuing to recruit despite a softening economic picture.

“That said, the labour market continues to face a number of major challenges. With pay growth unchanged, inflation continues to comfortably outpace earnings growth, which is putting the brakes on consumer spending, a major determinant of UK economic growth. However, the continued weakness in real wage growth should give the MPC sufficient leeway to keep interest rates on hold, despite the pick-up in inflation.

“It is concerning that the number of vacancies remains well above the historical average - a further indication of the continued skills shortage faced by business, which is weighing on productivity and growth prospects. Our latest research found that half of UK firms had faced skills or labour shortages over the past year.

“A key priority for the Autumn Budget must be to support firms looking to recruit and grow their business, including tackling the high up-front taxes and costs of doing business in the UK. As the Brexit process unfolds, a key focus must be on delivering a post Brexit immigration system that reflects the needs of the UK economy.”

To discuss these and other policy issues, contact:

John Dugmore on john@suffolkchamber.co.uk

Nick Burfield on nick@suffolkchamber.co.uk