FSB wants firmer action from Ofgem

Research conducted by the Federation of Small Businesses (FSB) has found that utility bills remain the key driver of rising costs for a majority of small firms.

The FSB has once again pointed out that business tariffs are not protected by Ofgem’s energy price cap and that this is resulting in many small firms still having to cope with higher utility bills. Indeed, data from the FSB’s latest Small Business Indexshows that just under six out of ten firms cited utilities as the main cause of rising business costs in the third quarter of the year.

This, according to the FSB, illustrates the need for firmer regulatory action in order to protect the small business community from mis-selling and being trapped on unaffordable tariffs. Specifically, the business group is calling for access to energy contract cooling-off periods and a standing charges freeze.

FSB National Chair Martin McTague said, “Giving microbusinesses the flexibility to cancel a contract through a 14-day cooling off period would deter pressurised sales tactics and help avoid some of the difficulties we saw last year when small firms found themselves trapped on high fixed tariffs. Freezing standing charges is another way to help. We therefore welcome Ofgem’s consultation on potentially changing the standing charges system.”

 

Employee-owned firms productivity boost

Analysis released by the Employee Ownership Association (EOA) shows that the UK employee-ownership sector is outperforming across multiple dimensions including productivity, employee wellbeing and fair pay.

These findings were based on a survey covering more than 9% of the country’s 1,650 employee-owned businesses (EOBs) along with comparable results from a control group of non-EOBs. The study found that EOBs are around 8-12% more productive than their non-EOB counterparts on a gross value added per employee basis.

As well as being more productive, the research found that EOBs return twice as much in bonuses and dividends to employees, are twice as likely to hold accreditation for fair pay and five times less likely to have made people redundant in the last three years. Additionally, they provide more supported access to private healthcare, mental health resources and flexible working, and are more likely to offer volunteering days and have a net-zero strategy than non-EOBs.

The EOA concludes that, by investing more in their people, these businesses are driving the kind of growth that the country desperately needs: growth that promotes a stronger and fairer economy, more resilient communities and a cleaner planet.

Digital revolution priorities

The British Chambers of Commerce (BCC) has called on policymakers to work in partnership with the business community to ensure SMEs can take full advantage of opportunities afforded by the digital revolution.

BCC Head of Insight David Bharier said the digital revolution is advancing at “a seemingly exponential rate,” with the last 12 months witnessing leaps in the development of AI technology, particularly in relation to large language models and deep learning. However, he warned that poor infrastructure, a lack of skills and limited guidance on what technologies are most appropriate is resulting in many SMEs missing out on this revolution.

Research recently published by the BCC suggests less than a third currently use AI technology. The BCC is therefore urging the government to work with business groups to develop a clear digital ambition for the country so SMEs can benefit from wider technology adoption.

Mr Bharier said, “The digital revolution should be an enabler for businesses, not another barrier. Broadband is now a vital utility and the foundation for all tech adoption, but coverage is still patchy in many parts of the UK. Every firm should be confident getting fast and reliable connectivity and infrastructure planning should always have that in mind, both locally and nationally.”

Business owners’ most common sacrifices

A new survey has revealed the sacrifices entrepreneurs typically make in order to devote sufficient time to achieving their business goals.

The research, commissioned by Capital on Tap, found that almost a third of UK-based small business owners admitted taking ‘uncomfortable and difficult decisions’ in their personal lives to ensure the success of their business ventures. It also highlights the toll long hours can take on business owners’ wellbeing, with over a third saying their mental health has suffered due to the time and energy spent running their company. 

Perhaps unsurprisingly, missing events with friends or family was found to be the most common sacrifice, with more than a third of respondents admitting they had skipped important moments because of work. Around a third also said they had spent less time with their family than they would have liked due to business commitments.

The authors of the study emphasised that entrepreneurs need to ensure they take care of themselves and offered a number of tips for maintaining a healthy work-life balance. These include establishing a daily routine; being realistic about what can be accomplished in a day; delegating tasks; setting clear boundaries and switching devices off for a while every day.

 

 

Rethinking Christmas rewards

Research suggests attendance levels at this year’s traditional office Christmas party could be relatively low leaving both employers and employees questioning whether they remain the best way to reward staff for a year’s hard work.

While opinion on the issue is divided, a LinkedIn poll conducted by People Management did find that a majority of employees will not be attending a work Christmas party this year. In total, 53% of respondents said they would not be going to a workplace festive bash with the remaining 47% saying they would.

Another survey, this time conducted by employment law and HR consultancy firm Worknest, suggests the cost-of-living crisis has had a significant impact on attendance. According to the study, half of all businesses holding Christmas parties this year were concerned employees would not attend for financial reasons.

A Christmas party can still clearly be a great way to reward employees for all their hard work during the year as well as an opportunity for teams to socialise and build good relations. However, it is perhaps becoming increasingly important for employers to seek and consider the views of their staff before deciding on the most appropriate Christmas reward.

Other News

New Companies House service

At the end of last month, Companies House closed both its Companies House Direct (CHD) and WebCHeck services. They have been replaced by the free-to-use ‘Find and update’ service which provides users with access to a number of features including advanced company searches; dissolved company searches; company snapshot reports; alphabetical name search; and an ordering facility for certificates, certified documents and missing images.

Crack down on crypto tax evasion

The government has announced details of a ‘historic’  joint statement with 48 countries to help combat criminals using crypto-assets to evade tax. The new Crypto-Asset Reporting Framework is the Organisation for Economic Co-operation and Development’s latest flagship tax transparency standard that will require crypto platforms to start sharing taxpayer information with tax authorities and allow international authorities to exchange information in order to enforce tax compliance.

Digital confidence disparity

A new report from business software firm Advanced has identified a disparity in digital confidence between the youngest and oldest groups of business leaders. For instance, while 43% of young business leaders felt their leadership had a strong strategy for digital enablement, the figure dropped to just 22% for those in the over-55s category. The report concludes that further digital education is required to instil Gen Z’s technological confidence across businesses.

Quirky Quotes

“Coworkers are like Christmas lights. They hang together, half of them don’t work and the other half aren’t so bright” – Anonymous

Autumn Statement 2023

During the Autumn Statement on 22 November, Jeremy Hunt announced 110 measures aimed at creating the right conditions for the private sector to thrive. These included:

  • The ‘full expensing’ tax break for businesses has been made permanent, at a cost of £11bn a year – representing “the largest business tax cut in modern British history”
  • Delivering energy security and the net-zero transition by removing barriers to investment in critical infrastructure
  • An extension to the 75% business rate discount for retail, hospitality and leisure businesses
  • The simplification of Research & Development (R&D) tax reliefs and lowering the threshold for additional support for R&D intensive loss-making SMEs
  • To unlock investment, support levelling up and enable the UK to seize growth opportunities through the transition to net zero, the government is making £4.5bn available in strategic manufacturing sectors – automotive, aerospace, life sciences and clean energy – from 2025 for five years.

Small business community

As he announced a package of measures designed to support SMEs across the UK, Mr Hunt said, “I have always known that every big business was a small business once.” Following consultation with the FSB, Mr Hunt argued that tougher regulation was needed to stop the “scourge of late payments.” Businesses bidding for large government contracts over £5m will now have to prove they pay their invoices within an average of 55 days, reducing progressively to 30 days. And on business rates, he announced a freeze on the small business multiplier for a further year, amongst other measures.

Other measures

The government will increase the National Living Wage for individuals from £10.42 an hour to £11.44 an hour, with the age threshold lowered from 23 to 21, effective from 1 April 2024.

Changes to National Insurance contributions (NICs) were also revealed:

  • The main rate of Class 1 employee NICs is to be reduced from 12% to 10%. This will provide a tax cut for 27 million working people. Instead of taking effect on 6 April 2024, this will take effect from 6 January 2024
  • To simplify NICs for the self-employed, from 6 April 2024, self-employed people with profits above £12,570 will no longer be required to pay Class 2 NICs (currently £3.45 a week), but will continue to receive access to contributory benefits, including the State Pension. In addition, Class 4 NICs will be cut by 1 percentage point to 8% from April 2024.

The Chancellor reinforced his Back to Work Plan – worth £2.5bn over the next five years. In addition to helping over a million people with long-term health conditions, disabilities and long-term unemployment issues to find and stay in work, the Plan also imposes tough sanctions on those who can work but choose not to.

Business reaction

The Chancellor’s statement was warmly welcomed by the business community.

“Jeremy Hunt has taken very welcome action on late payments, small businesses’ rates, and self-employed taxation. This game-changing small business package shows the prioritisation of pro-growth measures where they will do most good” 

Tina McKenzie, FSB Policy Chair

“We are pleased the Chancellor has listened to our calls to help businesses deal with the current economic challenges. The statement provided some welcome remedies at a time when businesses of all sizes need certainty and security from the government in the difficult months ahead”

Shevaun Haviland, BCC Director General

All details are correct at the time of writing (11 December 2023)

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