TOURISM SECTOR
Both the RHS Malvern Spring Festival and Royal Three Counties Show saw increased visitor numbers in 2024, up nine and six per cent respectively. Advance sales for the upcoming Autumn Show are running twelve per cent ahead year to date, with hopes that good weather will help deliver another successful event. Venue hire bookings remain strong with several contract extensions under negotiation. Despite economic uncertainty elsewhere, the local tourism sector, particularly at the Showground, continues to perform well.

AGRICULTURE AND HORTICULTURE SECTOR
Blue Tongue cases remain limited to Devon, Cornwall and one in Lancashire, although England remains designated as high risk. Dry weather has caused poor yields across the Three Counties and sporadic bird flu cases continue, making farming conditions challenging. The horticulture sector faces new RHS rules from next year requiring peat-free growing for nurseries and exhibitors. Some concessions have eased the transition but many nurseries, especially those sourcing from the Netherlands where no restrictions apply, may choose not to participate in RHS shows due to these changes.

INSURANCE SECTOR
Worcestershire businesses face growing risks and new opportunities as extreme weather events increase insurance claims, highlighting the need for stronger risk management and business continuity planning. With winter approaching, proactive maintenance such as clearing gutters and inspecting heating systems can help prevent costly damage. Cybersecurity remains a key concern, particularly for SMEs which often lack resources to recover from attacks, underscoring the importance of investment in digital security and staff training. On a positive note the insurance market is softening, offering businesses improved coverage options at lower premiums, helping them to protect assets and build resilience.

LOGISTICS SECTOR
The logistics sector continues to face a challenging operating environment. While driver shortages have eased since the COVID crisis, recruitment for warehousing and technical roles remains difficult, compounded by an ageing workforce. Costs remain high due to volatile fuel prices, insurance and increasing regulatory compliance. Recent cyberattacks on major supply chain partners such as M&S and Microlise have disrupted operations, emphasising the growing need for cyber resilience. Regionally Jaguar Land Rover’s slowdown is impacting logistics providers in the Midlands. Infrastructure pressures from congestion and poorly coordinated roadworks continue to cause delays, but opportunities remain for operators offering flexible, compliant and secure services particularly for irregular freight and seasonal supply chains.

IT SECTOR
The IT sector continues to grow with strong demand for managed IT and security services. Windows 10 upgrades to version 11 are accelerating ahead of the mid-October deadline, with extended support expected to be costly for those delaying migration. Recruitment is positive with new hires joining from competitors signalling a post-COVID recovery. Tariff changes have not yet significantly affected stock but may do so in the future. Cybersecurity remains a priority following high-profile attacks such as Jaguar Land Rover’s. Upcoming Chamber and EBC events on Cyber Security and AI are recommended. Overall demand remains high for managed IT, communications and support services as clients move away from poor service providers.

HOSPITALITY SECTOR
The travel and hospitality sector remains strong nationally, driven by rising domestic tourism, staycations and increasing digital adoption. Inbound tourism is forecast at 43.4 million visits with £33.7 billion in spending expected for 2025. While overall travel spend increases, domestic rail demand is falling and business trips are becoming shorter and simpler. Challenges include labour shortages, high energy costs and inflation. Locally Worcester and Worcestershire’s visitor economy contributes £939 million annually and supports over 19,000 jobs. No major new hotels have been confirmed although Debenhams may convert to serviced apartments and Fownes continues to be used for refugee housing. Tom Collins MP has sought advice on effective event sponsorship pitches for local businesses.

CONSTRUCTION SECTOR
The UK construction sector saw modest growth of half a per cent in the third quarter, led by private housing repairs, maintenance and infrastructure contributing between two and a half and four per cent. Residential new builds remain weak due to slow planning, funding uncertainty and cautious developer sentiment. Smaller builders face tight margins, rising finance costs and weaker demand. Labour and skills shortages persist, limiting capacity amid infrastructure growth. Material prices have stabilised although wage and compliance costs remain high. Forecasts predict 1.6 per cent growth in 2025 rising to 3.3 per cent annually from 2026 to 2029 driven by infrastructure, energy, utilities and industrial sectors. The solar sector is booming with new regulations from 2025 requiring solar panels on most new builds. Solar generation has increased by around a third year on year with nearly 48 per cent of Britain’s electricity coming from zero carbon sources in July 2025. Removal of planning permission for EV chargers in quarter three has eased installation processes supporting the clean energy transition despite ongoing net zero challenges.

EDUCATION SECTOR
Skills policy has shifted with ‘Skills England’ moving from the Department for Education to the Department for Work and Pensions under Secretary of State Pat McFadden while Jacqui Smith remains Skills Minister across both departments. Responsibility for education and training for those under nineteen remains with the Department for Education although apprenticeships may soon move to the DWP. The University of Worcester recently celebrated 1,700 graduates and is welcoming 3,500 new students with modest international growth in Nursing, Business and Education. The Help to Grow programme has supported 100 regional SMEs with a new cohort starting on 2 October followed by the Worcester Executive MBA launch. Dale Parmenter, CEO of DRPG, was awarded an Honorary Fellowship in recognition of his contribution to the region.

LEGAL SECTOR
The legal sector is evolving rapidly amid changing client expectations, technology advances and economic pressures. Clients are seeking clearer and more personalised services prompting investment in training and tools such as document and matter management systems. Many SME firms are streamlining back office functions and adopting automation in high-volume areas such as conveyancing and probate to free up fee earners for complex work. AI is emerging as a key driver enabling faster data analysis and reducing errors. Economic challenges are accelerating consolidation with many small firms under financial pressure. Regulatory changes including SRA reviews on interest income add complexity while recruitment and retention remain pressing issues driving pay rises for qualified staff.

REAL ESTATE SECTOR
Recruitment remains challenging with strong competition and salary pressures making it hard to attract newly qualified surveyors. August was quiet with some improvement in September but overall conditions remain difficult. Uncertainty around the Autumn Budget is causing delays in decision making while planning issues continue to hinder progress. Housing development is slow and heavily reliant on government funding though commercial development locally is steadier with reasonable demand.

RECRUITMENT SECTOR
The recruitment market presents a complex picture with vacancies decreasing month on month but skills shortages presenting supply side problems that continue to hamper growth. Concern is rising around the Employment Rights Bill that will start to come into effect next April which will bring major changes to how businesses need manage sick pay and unfair dismissal, on top of existing worries about fixed costs following the increase in NI in April 2025. Temporary staffing remains strong but permanent placements have softened, most likely due to Autumn Budget uncertainty. An HR conference in November aims to support businesses through these challenges.

HOUSING SECTOR
The housing sector faces regulatory pressures and rising National Insurance costs forcing cost reductions, lower bidding and increased investment in existing stock. Funding for housing associations remains positive with shared ownership steady. Skills shortages particularly in construction trades continue to challenge the sector. Two regeneration schemes are currently underway reflecting ongoing efforts to navigate these difficulties and drive progress.

The post Worcestershire Area Council Updates for September appeared first on Herefordshire & Worcestershire Chamber of Commerce.

IT Sector:
Positive growth continues with new clients adopting end-to-end managed IT services. Momentum builds for Windows 11 upgrades ahead of the October deadline. Sales cycles remain short, and post-financial year Capex spending hits record highs.
Recruitment is strong, especially in Sales Support and Technical Engineering, with steady monthly hires. Interest grows from candidates, notably ex-Wavenet staff after their offshore move.
No direct tariff impact yet, though stock depletion may change this. Cybersecurity remains a priority after high-profile breaches (M&S, Harrods, MOJ, Co-Op), prompting some customers to reconsider practices despite general apathy. A Knights of Old director’s LinkedIn interview highlights real cyber risks and business impact.

Construction & Property Sector:
Despite ongoing challenges, our business maintains a strong order book with several major projects underway. Bank funding appetite remains limited, often undervaluing completed commercial properties—typically around 70% of development cost. While understandable for bespoke builds, this undervaluation is less justified for standard warehouses, which continue performing well. The BP Pulse facility, sold above build cost, shows ongoing demand for quality assets. The sector faces a shortage of skilled subcontractors and reliable labour. Recruitment is difficult, and training often lacks value due to unqualified providers, resulting in high costs and poor outcomes.
Rising taxes add strain, and many feel enterprise is undervalued under the current Labour Government, seen as prioritising revenue over commercial understanding—threatening investment, innovation, and growth.

Manufacturing Sector:
The British manufacturing sector faces significant challenges. Rising employment taxes and business costs have led many to halt recruitment and investment. Domestic and export orders have declined, reducing output.
This contraction is the first in a decade, underscoring the tough economic climate. Yet, the sector remains resilient, focusing on financial stability and streamlining operations to manage high raw material, energy, and labour costs. Innovation and adaptability remain crucial to navigate these times.

Heating Industry:
The UK heating industry is shifting as government pushes for Net Zero by 2050. With 22 million fossil fuel boilers in homes and 1.4 million sold annually, change is urgent. In contrast, only 98,000 heat pumps are sold yearly.
Government plans target 600,000 heat pump installs annually by 2028, banning new fossil fuel boilers by 2035, and introducing penalties for manufacturers missing heat pump sales targets. However, heat pumps require home upgrades like better insulation and radiator changes.
A multi-technology approach, including hybrid heat pumps, is more practical. Trials show hybrids achieve 80% heat pump use, enabling faster, broader decarbonisation than full replacements alone.

Travel and Hospitality:
The 2025 outlook for business travel, events, and hospitality is challenging, with stagnation or slight decline likely. Maintaining current levels may be success, while real growth depends on government support and investment. Profit margins are tight, labour costs are set to rise 7–10%, and conference revenues grew only 1.6%. Energy costs remain high despite easing.
Overseas bookings show modest gains but momentum is weak. Worcester MP Tom Collins offers promising regional support. Coordinated action across government, industry, and local leaders is essential for future resilience.

Education Sector:
University offers for September 2025 rise across all institution types, especially high-tariff universities. Despite a 1.2% national applicant increase, UCAS warns mid- and low-tariff universities may struggle to fill places. West Midlands applications fell 1.4%, but Worcester saw a 14% rise, with all schools except the Medical School up on last year.
International student numbers remain low due to visa changes; Worcester received 7,000+ applications, with 25% leading to offers. Congrats to HOW College and RGS Worcester on HW Chamber Business Awards. The High Court dismissed a challenge against VAT on private school fees. The Help to Grow Management course is running summer 2025 cohort, with October applications open, alongside Worcester Executive MBA registrations. TDM partners with Worcester Business School to validate digital degree apprenticeships from September 2025.

Finance Sector:
UK businesses face major regulatory and fiscal changes affecting accounting, audit, tax, and financial planning in 2026. A key revision to FRS 102 from 1 January 2026 introduces new revenue recognition and requires operating leases on balance sheets, affecting tax liabilities, audit thresholds, and tax-advantaged schemes like EMI.
Audit thresholds rise from 6 April 2025, cutting compliance costs but possibly reducing oversight. Increased National Insurance and tighter employment regulations push businesses toward AI and automation investments. A possible Capital Gains Tax hike from 24% to 30%+ in October 2025 may trigger early asset disposals. The Cash ISA allowance could drop from £20,000 to £4,000, limiting tax-free savings. Careful planning and expert guidance are crucial.

Food Sector:
Vertical farming grows crops in stacked indoor layers using controlled environments like warehouses or urban buildings. Technologies such as LED lighting and hydroponics enable year-round, soil-free cultivation, producing much more per square metre while using up to 95% less water and cutting transport emissions.
This benefits the UK by boosting local leafy vegetable supply, reducing imports, and lowering pesticide use. Challenges include high energy costs, costly infrastructure, limited crop variety, and technical complexity. Sustainable scaling requires renewable energy, skilled workers, and supportive policies.

Visitor Attraction/Tourism Sector:
The RHS Malvern Spring Festival (May) and Royal Three Counties Show (June) saw significant visitor increases in 2024, building on 2023’s growth. Trade stand bookings were oversubscribed, allowing rejection of lower-quality stands. Venue Hire attendances were strong, notably Tractor World in February. New conference/event bookings remain robust.
The main challenge is securing medium to large sponsors (£10k+), as budgets remain tight.

Agriculture/Horticulture Industry:
Livestock movements are disrupted by Blue Tongue. A North-South line in England requires animals east of it to have tests and licenses to enter the west. England becomes fully restricted from 1 July. Wales and Scotland ban entry of animals from restricted zones, effectively blocking English livestock and severely impacting Royal Welsh Show entries. Skepticism exists about the decision’s logic and effectiveness.
Sporadic poultry flu outbreaks limit poultry displays to birds from single suppliers/farms.

Defence:
Global instability creates opportunities in Defence. The ongoing Ukraine war remains the primary focus and is expected to continue for decades with no imminent ceasefire. Many non-Defence firms seek to enter the sector, seeing it as lucrative.
The Government’s Strategic Defence Review (June) is vague, lacks funding clarity, and has met scepticism. MOD spending is restricted and preparations for the Defence Industrial Strategy (delayed since last April, expected July) stall progress. A 3-Star-led Defence Reform initiative is underway, with unclear outcomes ranging from no change to radical reform.
Industry hopes it will address procurement inefficiencies, increase agility, improve communication, and balance spending between large multinationals and UK SMEs. The Government aims to boost exports and innovation investment.

Insurance Sector:
After premium rises, the insurance market is easing, with many seeing stable or reduced premiums and wider insurer appetites. Liability, commercial combined, and professional indemnity premiums show most movement; home insurance premiums remain high.
Recent cyber attacks on major retailers highlight cyber insurance’s importance. M&S had £100m cyber cover but faced £300m profit losses; Co-Op and Harrods reportedly lacked cyber insurance. The National Cyber Security Centre urges businesses to strengthen resilience and recommends Cyber Essentials certification.
The FCA reviews regulatory burdens, which account for about 8% of broker costs and impact premiums.

Retail (Equestrian):
The UK equestrian trade is stable, with satisfactory turnover despite economic conditions. Traditionally trade-focused, the business has expanded into direct-to-consumer retail via a new website, selling at full recommended prices. Initial feedback is positive with no concerns from retail partners, indicating direct buyers are loyal.
In the US, operations face challenges from tariff reintroductions under the Trump administration. A 145% tariff on Chinese goods caused shipment delays; resulting price increases (~30% on Chinese goods, 10% on others) are passed to US consumers. This affects the entire industry but maintains parity among competitors. The situation reflects ongoing trade volatility.

Property Sector:

The commercial market is slowing due to geopolitical uncertainty, though demand for high-quality industrial and warehouse assets remains strong amid limited supply. Office demand is mixed, with urban ESG-compliant spaces performing better than provincial areas. Retail is rebounding, attracting investment due to relatively high returns, and there’s growing activity in data centres and life sciences. In the housing market, signs of improvement are emerging, though demand is uneven and pricing sensitive. A potential base rate cut from 4.25% to 4% could boost affordability, with mortgage advances already rising. Housebuilding is supported by national policies, despite local resistance, and recent government funding is set to enhance affordable housing delivery.

Recruitment/Labour Market:

The UK labour market remains mixed, with national uncertainty contrasting with a more buoyant picture locally. Nationally, employer confidence is subdued, with economic sentiment and hiring confidence remaining pessimistic according to the latest Jobs Outlook from the REC. While unemployment sits at 4.6% and vacancy numbers have declined year-on-year, workforce participation has been growing, and pay is still rising—albeit more modestly.

Locally, however, the Midlands stands out for its resilience. According to the latest Midlands Report on Jobs, it was the only English region to record growth in both permanent placements and temporary billings in May 2025. Temp vacancies rose for the first time in nine months, and pay for both permanent and temporary roles increased, indicating healthy demand. Staff availability continues to rise due to redundancies and shifting job seeker behaviour (more the latter), giving employers more hiring options.

The REC’s Jobs Outlook reinforces this positive local sentiment, with mid-sized firms in the Midlands showing strong short- and medium-term hiring intentions—particularly in temp recruitment. Whilst UK employers are cautious, regions like ours are quietly powering forward, proving that confidence and opportunity still exist amid wider economic noise.

The post Joint Area Council Meeting Notes (20/06/2025) – appeared first on Herefordshire & Worcestershire Chamber of Commerce.

Business is steady with one month up and the next month down, but it could be much worse. We have been affected this year by a shortage of stock caused by moving production of some items from China to India, although some of these issues were internal, not allowing enough time for the new suppliers to build up production. It is a lesson learnt!

Going into next year stocks will be much better and hopefully retailers will have sold the overhang of stock they inherited from the Covid period. All we need is demand to hold up, unless of course the Chancellor kills it.

Freight rates are fairly steady but the sterling exchange rate is slipping against the dollar so that may push up our import costs.

We have been successful in securing two grants, one of £21,000 towards a new heating system we are installing and another of £25,000 towards the costs of exhibiting at a trade show in Germany in February.

A lot of time has been spent at our warehouse in the US. We are finding staffing a real problem here in New Hampshire. There seems to be pretty well full employment and people are very picky about the job they take. On the other hand the US staff we have do a good job. There seems to be quite an upbeat mood about the new President taking over in January although people are concerned about the imposition of tariffs which they seem fairly sure will happen.

What I am really concerned about are the proposed changes to IHT for business owners. There is such a lot of noise about farmers and I fully back their protests, but there seems to be very little noise from the business community. Why aren’t there more protests from the business community?

Retail (2)

Trading from shows are up. Retail is strong, predominately online. Although very weather dependant in this business.

Regarding the political changes, the press has a large part to play.

Transformational year for retail in general – preorders, paying with phones, click collect. Those who have done well are those that been agile, adapted and moved with the technology.  AI will be next and this will help with internationalisation. The introduction of chat bot has been good for when resource is not around, alongside using semi-automated email replies using human knowledge base. Voice activated AI customer services will also be next. These changes enable resource to be used on more proactive, fulfilling, value add roles. Innovation key to future.

Education (1)

Budget

The UK Government announced in its recent Autumn budget that Day to day spending on the NHS and education in England is set to rise by 4.7% in real terms this year, before a smaller rise in the following year.  When you delve into the small print of the 170 page accompanying budget report, you see that spend on education is actually predicted to grow by 3.4%.  The report include plans: “To raise school standards for every child, the core schools budget will increase by an additional £2.3 billion next year, increasing per pupil funding in real terms. This further supports delivery of the government’s pledge to recruit 6,500 teachers.”

Other announcements included:

expanding the government’s commitment to skills by providing an additional £300 million for further education to ensure young people are developing the skills they need to succeed. In addition, the government is:

1. investing £40 million to help deliver new foundation and shorter apprenticeships in key sectors, as part of initial steps towards a reformed Growth and Skills Levy.
2. committing to delivering the Lifelong Learning Entitlement (LLE), with a revised launch date of January 2027. The LLE will expand access to high-quality, flexible education and training for adults throughout their working lives.

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.

Following announcements at September’s Labour Party conference that VAT will be added to private school fees within 100 days despite some opposition from families arguing they will be penalised, it was later confirmed in the budget that starting January 1, 2025, private school fees will be subject to a 20% VAT rate.  Early responses to the Budget include an announcement of legal action by private schools to challenge the government’s plans for VAT on private tuition fees.

Apprenticeships

The government’s focus on a revised skills levy and a focus on new foundation and shorter apprenticeships in key sectors, looks to be offset by reducing support for higher level apprenticeships including most Level 7 apprenticeships.  FE week reported earlier this month that the axing of level 7 apprenticeships from levy funding will be “pretty widespread”, according to Jacqui Smith, the skills minister in a warning to the sector at the AELP Autumn Conference.  She suggested a blanket ban on public subsidy for the programmes is coming and argued that “we’ll be asking more employers to step forward and to fund level 7 apprenticeships outside of the levy.”

This has raised significant concerns for training providers, universities and employers who fear that removing all level 7 apprenticeships from the levy will disproportionately hit the NHS, schools, councils and the civil service which often spend their levy on these apprenticeships.  The Chartered association of Business Schools, CBI, UUK and CMI have collectively lobbied government on the wisdom of this claiming that 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.

Very recent plans at the University of Worcester to develop customised pathways for the Level 7 senior leadership apprenticeship to provide developmental opportunities in education and healthcare have now been shelved.

Help to Grow

Surprisingly, Help to Grow, the DBT-funded mini-MBA programme that was the brain child of Rishi Sunak (whilst Chancellor), has received a small mention in the budget and looks set to survive the anticipated cull of previous government’s ventures.  Worcester has been surprised to welcome agreement of an additional funded allowance by DBT to run a 4^th Help to Grow programme next year commencing Feb 2025.  There are more than 50 Herefordshire and Worcestershire SME business leaders represented in recent alumni from this programme some of whom have subsequently progressed onto the Worcester exec MBA programme.  If we are successfully in having confirmed fourth cohort allocations for financial year 25-26, then we will be looking to co-develop a Help to Grow programme with our friends here at NMITE for a Herefordshire based programme.

Education (2)

HEI is still a tough gig.  Student recruitment is a primary focus, juggling this against the changes to international student recruitment.  Initially circa 40% HEI’s were forecasting a deficit, this has now increased to over 70% of Universities are expected to be in deficit in 2025.

Increased costs: energy, Salary, Increase NI – all impacts the sector.

NMITE continues to focus on portfolio development and commercial growth to mitigate some of these challenges. Increase in collaboration with local businesses and organisations.

Flooding – Holmer Yazor Brook.  Jesse has written to Secretary of State for education and I am meeting with the leader of the Council.

Education (3)

c.50% of school leavers got to vocational roles. The college has had a rising number of vocational students for a number of years, including plumbers, construction, electricians. But these are space hungry qualifications to run. There has also been a steading increase in HND/HNC technical areas, levels 6 and 7.

New space has been dedicated to Sustainability qualifications to ensure the current are qualified in modern sustainable technology.

The apprenticeship levy should be able to be used for all training, including higher level qualifications.

More recently there has been a greater requirement for those with special needs, which does increase costs and resources.

Increases from the budget will be a big impact as 2/3 of the Colleges costs are staff costs.

Food, Drink and Agriculture (1)

Hospitality now coming into the seasonal busy pre-Christmas and Christmas period and currently trade remains reasonably positive and buoyant. However, serious issues for the sector came out of the recent budget namely business NI increases,  minimum wage increase, further duty increases and a reduction in business rates relief – which could have significant implications for the sector. The changes will almost certainly lead to price rises across the sector as with slim margins already being experienced there is little if any room to absorb further costs. Growth across the sector both in investment and labour may be somewhat curtailed at least during the first half of 2025 as businesses adjust to the new tax regimes etc.

As no doubt everyone has seen the agricultural sector is in turmoil mainly due to the change in IHT announced in the last budget coupled with continual cost pressures in a sector that also operates on thin margins. The underlying atmosphere is one of betrayal, mis-understanding of the sector and militancy – the farmers’ disappointment will no doubt lead to further protests and demonstrations. Coupled with this is the significant wet weather conditions of late, which again has caused issues.

So both sectors both hospitality and farming will continue to have significant ongoing challenges as the year draws to an end and budget changes start to bite in the first half of 2025.

Agriculture, Horticulture, Farming, Tourism (2)

The Three Counties is a Showground used to promote agriculture, farming, rural skills and crafts via fundraising shows and showground hire This year over 850 businesses have exhibited and the year has been outstanding.

The business is driving higher volume ticket sales, whilst holding prices. They have been oversubscribed on trade stands. The venue has been hired for 63 events, most weekends of the year. Costs have increased but these have been pushed back where over and above inflation. Employers NI is a huge challenge.

In terms of agriculture – the farmers union have responded directly to the budget, trying to debunk some of myths around changes. In horticulture, the Royal Horticulture Society are pushing peat free at shows in 2026 which will have an impact on nurseries and their desire to participate in shows.

Defence

Defence is a mixed bag. Exports are good for those offering niche capabilities (such as night vision, specialist munitions, and drones) or commodity capabilities that are in short supply/high demand (such as medical kits) – with the destination being one of the many global conflict hotspots. Domestic defence procurement remains frustrating, inefficient and inconsistent. By my calculation MOD has had a spending freeze imposed upon it for about 50% of the FY – whilst the larger companies will survive, expect several small companies, or those still trying to manage debt from the COVID period, to disappear over the next 12 months.

Trump won convincingly, as predicted, and this will affect the Defence industry over the next few years.  If he does what he says, then he will force a settlement between Russia and Ukraine, which will obviously have an impact on UK Defence exports to that region.  However, he will also put pressure on NATO countries to commit appropriate GDP allocations to their defence budgets – and this will create demand for local defence companies, particularly in those areas where UK leads or excels.

The labour government is unlikely to prioritise defence over other more ‘left voter leaning’ departments, and the recent budget did nothing to help MOD. Yet, Labour realises that they need to maintain a defence industrial base – remembering that the first role of government is to protect its people! It seems to want to do this by driving exports, and I expect the UK Industrial Strategy paper (due Apr 25) to articulate guidance. There is logic to this – UK is home to 7 million businesses but only 132K of them export anything (across all sectors). Additionally, there are countries that are investing in defence and attempting to move away from a reliance on Russian military technology (as the supply chain is no longer viable) – these include Vietnam, Korea and Thailand. This creates export opportunities and the Government is trying to sign agreements with other friendly nations to smooth the export process (a recent example being a G2G agreement with Singapore).

Geo-politics will shape everything. Expect Trump to ‘back’ Israel in the short term, most likely telling Netanyahu to ‘get it done quick’ – that will bring its own issues and undoubtedly create problems between the West and the Arab nations. China’s activities in the South China Sea are causing issues for ASEAN countries, and whilst China is the dominant regional power, Indonesia and Japan are significant players. The Taiwan situation is not getting better, and it is reasonable to assume an inward-looking Trump government is not going to commit forces to protect sovereignty issues in Asia. Russian and Ukrainian activity is showing signs of escalation, and neighbouring states are nervous about what happens next, noting that Ukrainian forces are an ideologically disparate group.

Building and Construction (1)

As of Nov 2024, residential construction-starts rose 1% on the preceding three months but fell back 8% on 2023 figures. Private housing is performing well, and social housing has stabilised. Non-residential project-starts grew by 2% against the preceding three months and stood 1% up on a year ago. Hotel & Leisure was the vertical that was the strongest growing 50% against the preceding three months and almost doubling (+93%) compared to the same time a year ago. Material prices fell by –0.7 between September 2023 and September 2024. Changes to the planning system, along with increased funding and making local housing targets mandatory, will improve the number of construction starts, according to the government.

The UK manufacturing PMI (PDF) in October 2024 was 49.9, down from 51.5 in September. This is the first time the PMI has fallen below the neutral mark of 50.0 since April.  Although manufacturing output increased in October, the increase was slight, with reduced intakes of new work, owing to a lack of market optimism, slower economic growth, stretched supply chains and concerns at the time about the impacts of possible announcements in the UK Budget.

Overall the level of orders remain steady. Our industry as others, are however considering how to tackle the increases in living wage and NI contributions.

Glenigan Index of construction starts to end of October 2024 | Glenigan

Manufacturing: Key Economic Indicators – House of Commons Library

London affordable homes: Construction of new properties down 88%.

Building and Construction (2)

Lots contact with farmers recently around the latest budget Farm Inheritance Tax changes. Numbers from Government are different so it’s difficult to see what the true extent of this issue is, but it is absolutely desperate for some, possibly manageable for others. The Government should focus on investors and not on small farms who barely make a living. The imposition of IHT on farmers represents a complete lack of understanding of the detail or lack of proper consultation.

Flooding in Ewyas Harold 4 times in 5 years. This is a combination of the floods and the Environment Agency’s unwillingness to dredge rivers.

The local Planning Authority seems challenged at present to cope with the many layers of bureaucracy imposed on it and their over cautious systems.

Transport

National insurance – ouch! £58k impact

Increase in minimum wage an issue due to the narrowing of the gap

Haulage company insolvencies: 2023 = 494, 2024 (six months) = 170. Average fleet size has increased 36% over ten years.

People with HGV licences decreased by 5% between 2023 and 2022

Currently 33% of companies considered at maximum risk

81% of domestic freight is moved by road by tonne-kilometres (175 billion). 12% water and 7% rail.

Now over 1.1m zero emission vehicles (all types) but still a relatively small take up with HGVs

32 million empty seats in vehicles on the morning commute, apparently.

Despite the conflict in the Middle East, fuel costs seem relatively stable with national average around the 107ppl mark. A strengthening of the $ will affect this, however.

Snow, ice and floods has been a challenge and added to our costs over the last couple of weeks.

Locally, discussions have recently taken place with MHDC regarding parking and access to the businesses on Spring Lane, Malvern, following two accidents. They have responded, promptly, and are discussing internally.

Life Sciences

The long-term demand environment remains strong, with trends starting to stabilise after a prolonged period of slower demand. Contract Research Organisations (CROs) are still observing a strategic shift as clients focus on reprioritising pipelines and optimising budgets. Larger clients are channelling more resources toward commercialising late-stage programs.

Gross book-to-bill performance remains robust, supported by steady new business awards. While net book-to-bill has continued to be softer due to some cancellations, this reflects an industry-wide effort toward budget optimisation and focused pipeline development.

Although IPOs and new biotech company formations have slowed, venture capitalists remain committed to investing, taking a more targeted and phased approach; this slowing the development and timelines of new products.

Overall, the budget highlighted the government’s recognition of life sciences as a critical sector for economic growth, signalling stability and long-term investment. However, concerns remain about whether tax increases and a lack of additional investor incentives might hinder progress in an innovative industry with significant risks.

Insurance

Regulation is becoming an increasing burden in the insurance sector with it now taking up a significant operating cost. The government have stated they want to look at pricing of car and home insurance. The FCA are unhappy with how some providers are charging inflated amounts for instalments, disproportionately high commissions and conflicts of interest in the supply chain – the clamping down on bad practice is welcomed but needs to be targeted, proportionate and without detriment to smaller policyholders.

Premiums for home & Car remain high but commercial insurance premiums are softening with some, such as professional indemnity, coming down.

Cyber insurance continues to be a focus, ransomware and fraud being the main areas of claim. Cyber Essentials is now 10 years old and statistics show policyholders with cyber essentials are 92% less likely to make a claim. All organisations should therefore look at achieving Cyber Essentials.

Climatic and weather events are having a tangible impact. More properties in the region are becoming difficult to insure against flooding. Globally 2024 looks like being the most expensive year for claims on record due to the numerous devastating weather and climate related events.

Real Estate

Year dominated by general inertia, it’s been sluggish with many transactions being delayed as parties waited, first for the general election and then, the budget. This was followed by a spike in activity during October as transactions were undertaken in advance of the budget at the end of the month.

Whilst the recent cut to the base rate was expected and helpful, the upshot of the budget would appear to be that the changes made will be inflationary and it seems to be widely expected that there may be limited, if any, further cuts for the time being. That being said, there is arguably stability now in terms of a newly elected government where the ‘rules of play’ are now known (if not necessarily agreed with!) and as such businesses in particular can start to plan for the future (to a greater extent than they have been able to in recent years). We hope that this will stabilise the market and deliver confidence such that transactional activity picks up across all sectors of the market.

There is a significant amount of money (in particular from the Middle East and North America) wanting to deploy in UK real estate and, in particular, into Industrial and Warehouse stock where there continues to be perceived rental and capital growth potential. Availability of buildings within this sector at a local and regional level remains constrained despite availability of space increasing nationally with retailers and 3^rd party logistics providers relinquishing space taken up during and after the Pandemic. Speculative development has reduced in line with falling economic confidence so available space is principally limited to existing buildings.

Planning – waiting for government to confirm changes to the National Planning Policy Framework (NPPF). Huge issues persist in local planning departments (lack of staff), not helped by issues for the large house builders in terms of higher construction costs, increased building regulations (particularly for higher buildings post Grenfell) and a reduced appetite from Registered Social Landlords to take on affordable housing due to reduced funding. These factors have combined to substantially reduce the volume of new homes being delivered nationally. We expect much activity in this space in 2025 as the trajectory for local plans is set through the implementation of the new NPPF which will, in turn, put pressure on most local authorities to identify more land to deliver housing.

IT Tech

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.

Decision making and sales cycle timelines has improved significantly.  Price based decisions making appears to be the main discussion points currently vs the opportunity to attain a better, future proofed solution.

Recently doubled our sales force and some of the support functions to grow the business. Recruitment and staffing very buoyant.

Microsoft Windows 10 – 11 Oct ’25 upgrade – get in quick as process are escalating by the month from vendors (HP & Dell).

Cyber remains a key focus in the industry…..yet another AIM listed midland company got compromised with 550 employees down and non-operational.

Recent survey from McKinsey / Garner suggested that IT and Telecom sector 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.

Summary – still lots of demand for good technology, reliable services and faster networking , office moves still quite prevalent – and a  good book of business through qtr 1 / 2.

Legal

The recent budget caused a significant amount of consternation for clients both before and after it was announced.

The expected changes to CGT and other tax implications resulted in a significant increase in transactions being undertaken or expedited in order to ensure matters completed before 29 October 2024. That resulted in an extremely busy period for the legal sector and other related professional services between the general election and the 29 October 2024.

By comparison, the sector now feels quite calm and quiet. That said, during its first 100 days, the Government has announced a significant amount of legislative changes which will affect businesses and which are due to come into force over the next 18 months, with one of those changes – the duty on employers to take all reasonable steps to prevent sexual harassment I the work place, including third party harassment having already taken effect. The scope of the impending changes to employment legislation in particular, is the widest in a generation and, coupled with the intended increase in employer national insurance contributions, many businesses are concerned and are understandably in a period of review and reflection in order to plan for the changes. Likewise the changes to IHT and agricultural property relief have caused significant concern, particularly for smaller local agricultural clients.

The post Joint Area Council Notes appeared first on Herefordshire & Worcestershire Chamber of Commerce.

The Worcestershire Area Council meets four times a year, and is comprised of up to fifteen sector specialists who represent the majority of business sectors in the county.

Council Members provide insights into their sector and discuss the opportunities and challenges businesses currently face. The feedback is then used to formulate Chamber policy on the most important business issues in the region.

We are currently seeking representatives from any of the following sectors, on the Worcestershire Area Council:

• Automotive
• Health and Social Care
• Marketing and Media
• Power/Utilities
• Food and Drink
• Construction
• Manufacturing
• Retail
• Transport

The eligibility criteria for candidates for election to an Area Council are:

• Must be a current Chamber Member
• Must hold a senior position within the Member business, such as Business Owner, CEO or Senior Director
• May only seek election to the Area Council in which their business is located, or in which they live
• Must align to the Chamber’s values and culture

The key responsibilities of Area Council Members are:

• To maintain close contact with Members at a local level to help provide sector information on behalf of Members at Area Council Meetings
• In conjunction with the Executive to maintain close contact with local key partners such as Members of Parliament, Councillors, Council Officials etc
• To ensure that local networking activities are taking place and to support those activities
• To identify key policy issues that need to be taken up by the Chamber
• To actively support Chamber membership recruitment and retention initiatives
• To approve new Member applications
• To recommend the termination of membership because of inappropriate behaviour
• To bring business issues/concerns in the wider sector community to the attention of the Chamber
• To regularly attend Area Council meetings at Member’s premises

If you would like to apply for a position, please fill in the self-nomination form which can be downloaded here.

The deadline for receiving applications is 4pm on Wednesday 27^th November 2024.

If you have any questions please contact our Policy department at policy@hwchamber.co.uk

Voting for these positions will take place on November 29^th and all candidates will be informed of the results by 6^th December 2024.

The post Join our Worcestershire Area Council appeared first on Herefordshire & Worcestershire Chamber of Commerce.

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.

The post Worcestershire Area Council Updates appeared first on Herefordshire & Worcestershire Chamber of Commerce.

After a difficult start to the year for hospitality/pub sector, mainly due to cost of living crisis coupled with poor weather, the succession of major sporting events (football, tennis, cricket) has seen an improvement in the 2nd quarter of the year. Hopefully, this will continue across the summer as we come into the busy holiday season. However, cost pressure remains a constant as do staffing issues. 62% of “cider” value is in the on trade (pubs etc) so this sector needs to remain strong. The average pub serves approximately 5000 pints of cider per annum and hence the pub market remains critical to the sector. After a steady decline in the overall cider market since 2010 the market is now seeing a small increase mainly due to growth from the  “craft sector” and now represents approximately 5% of total alcohol sales (Beer 36%, wine 24%, Spirits 32%). Consumers are certainly looking for quality over quantity. There continues to be a movement towards lower product ABV% with producers looking to capitalise on the HMRC Duty benefits of lower strength products i.e. the lower the ABV% the lower the duty paid.”

A new term is being used in the press, ‘UPF’ (Ultra Processed Food) and their possible link to early-stage cancer and disorders in young people. UPF’s are manufactured from industrial substances and contain additives such as preservatives, sweeteners, manufactured colours, flavourings, and emulsifiers. UPFs vary but tend to have higher levels of added sugars, saturated fat, as well as less fibre, protein, and nutrients. These foods are widespread in our diets often because they are time saving and convenient.

Studies of food diaries of adolescents showed the consumption of UPFs was highest among those from deprived backgrounds, those of white ethnicity, and younger adolescents in families with food poverty. Adolescents eat or drink on average a diet containing 66% of UPFs.

Dr Yanaina Chavaz-Ugalde, from the Medical Research Council (MRC) Epidemiology Unit said “Adolescent’s food consumptions purchases, and practices are influenced by many factors, including their home environment, the marketing they are exposed to and the influence of their friends and peers. Adolescence is a crucial time in our lives where behaviours begin to become ingrained”. They hoped the findings could help towards contributing to more effective policies to combat the negative effects of UPF consumption among young people and the ripple effect this has on public health.

UPFs have been suggested as one of the key drivers in the global rise in diseases such as obesity, type 2 diabetes, allergies, and cancers (often related to digestion).

The ten worst ultra-processed foods:

Energy Drinks

These legal stimulants combine sugars in the form of glucose and sucrose with ingredients like caffeine to boost metabolism and increase alertness. Although said to sharpen our focus when consumed regularly they make the heart work

harder and faster and may have serious health implications especially when consumed by children and young people.

Mass Produced Bread

This is the type that covers most supermarket shelves and is classed as a UPF. As well as the staple bread ingredients (flour, yeast, salt, and water), it typically includes additives for the purpose of speeding up the manufacturing process and extending shelf life. Examples include emulsifiers, preservatives and sugars. Mass-produced bread is said to make up as much as 11 per cent of the calories we eat, so if this is relevant to you, buying the best you can afford, with minimal additives, may make a useful reduction to the amount of UPFs you consume.

Breakfast cereals

Many popular cereals are classed as UPFs because they contain highly processed grains as well as additives, such as invert sugar syrup, salt, preservatives, and colourings.

Hot dogs

Processed meat, like sausages, are thought to carry a greater risk, as they contain additional nitrates as well as high levels of saturated fat and salt. Long-term consumption of red meat, and particularly processed meat, is associated with an increased risk of all-cause mortality, heart disease and type 2 diabetes in both men and women.

Vegan ‘meat’

These highly engineered products are designed to mimic the texture, flavour, and appearance of conventional meat. For example, a clever use of the carbohydrates known as ‘reducing sugars’ (such as dextrose, xylose or arabinose) and colourants can create the effect of a colour change from ‘raw’ red-pink to brown during cooking.

Other additives, like methylcellulose, are used to create a meat-like bite, while carrageenan improves the slice-ability when served cold. Flavour enhancers like monosodium glutamate as well as emulsifiers, stabilisers and fillers are also used to adjust the taste and texture of the plant protein. As these chemicals have varied effects on the body, they shouldn’t be consumed regularly.

Chicken nuggets

Although we might assume they’re made from lean breast meat, chicken nuggets are likely to include other parts of the bird, including tendons, skin, bone, collagen and fat. Other ingredients include starch, salt, oil, egg powder, glucose syrup as well as stabilisers and colourings.

Reformulated potato snacks

Reformulated potato snacks, such as Pringles, are made from dehydrated processed potato, refined vegetable oils, rice and wheat flour, emulsifiers, salt, and colouring. Depending on their flavour, they may also include monosodium glutamate, hydrolysed protein powders and glucose syrup.

During manufacture the ‘dough’ is rolled, pressed, and cut into stackable shapes; these are then fried in hot oil and coated with flavourings. The high temperature potentially generates a substance called acrylamide, exposure to which may be carcinogenic.

Margarine

Often marketed as ‘heart healthy,’ these spreads are highly processed. They typically combine different vegetable oils that undergo a process called hydrogenation – this solidifies the oil, so it acts more like a solid fat. It’s this process that creates ‘trans-fats’ which are now known to be as harmful to the heart as some saturated fats. Margarines also contain emulsifiers to improve their spreadability and colourings and flavours to mimic the appearance and taste of butter.

Vegan ‘cheese’

Often made from a plant-sourced, saturated fat like coconut oil, these ‘cheese’ alternatives rely on the addition of starch, stabilisers, colourings, and flavourings to create a product that mimics real cheese. They usually contribute little (if any) protein, and no calcium. They are also typically high in fat, saturated fat, and salt. Unlike other plant-based alternatives, vegan ‘cheese’ is not typically fortified with vitamins and minerals, and as such has a poor nutritional profile.

Ready meals

Most of us are short on time, so it is tempting to fall back on shop-bought ready meals. But with convenience comes cost, and not just a financial one; these meals typically contain preservatives and other additives frequently used in UPFs to make them last longer and look and taste good. Research suggests supermarket ready meals fall short on nutritional contribution, with many being high in saturated fat and salt.

What does this mean for my health?

UPFs are typically designed to be easily eaten, with a high calorie density and additives that tend to confuse our “I am full” trigger. This gives them a moreish, addictive quality, meaning we are likely buy and eat more. Their main ingredients – oil, sugar, salt, flour, and starches – makes UPFs high in fat, sugar, and salt and low in vitamins and minerals, while also being devoid of the protective plant compounds found in many whole foods.

Education

This week, the new UK government has signalled its response to the current financial challenges facing the universities sector, with the OfS warning that up to half of all universities are likely to be declaring a deficit in their finances this year.  The government has continued to echo its support for the current ‘graduate visa route’ which enables international students to study at UK universities.  As ‘Student Clearing’ fast approaches, there remains a small but significant reduction in domestic applications to UK universities, which is similarly reflected across the West Midlands.

Closer to home, Worcester Business School is collaborating on a future possible partnership with NMITE to develop a Masters in Engineering and Project Management, bringing together different skillsets from both institutes into one new programme.  The largely government-funded H&W Help to Grow programme is open for applications for its October intake, with more than half of the spaces already booked by SME leaders and managers.  The Worcester Exec MBA for business leaders also returned for new registrations this September, with Skills Boost funding opportunities for bursaries of up to £1500 towards the first year’s course fees.

Sir Keir Starmer visited the University of Worcester’s nursing students as part of his pre-election campaign (see https://www.bbc.co.uk/news/articles/c2xxzekkldno) and it might be interesting to note that in 2013 he received an honorary degree from the University.  Similarly, Baroness Jacqui Smith, Minister of State for Skills, Apprenticeships and Higher Education studied for her PGCE at the University of Worcester.  Alongside current challenges facing universities, there is likely to be further investment in the development of apprenticeships with the Labour Party expressing a commitment to ‘High-quality apprenticeships and specialist technical colleges’ as part of its manifesto commitment to ‘Breaking down barriers to opportunity.’  The University of Worcester is currently working on future collaborations with Chamber Patron member TDM, to improve educator support for digital apprenticeships across the region.

The other labour-related education headline relates to removing tax emption from private school fees, predicted to raise more than £1bn of additional government income through taxation.  Commentators are speculating this week that Labour’s plan to end tax breaks for private schools could begin as soon as next January, as the government looks to include the measure in their first autumn budget.

Generally in Higher Education – lots of discussion around ongoing funding and lots of concerns still. For example, tuition fees (frozen since 2016), although this has been offset by recruiting overseas students, however this is now challenged now with immigration rules around this. NMITE – still UK student based, recruiting 75 students for next academic year. Keen to see new Government future plans and policies.

Insurance

Insurance premiums in many areas of motor, property and liability continue to rise. Insurers declared 2023 the most difficult year for motor claims in over a decade. However, professional indemnity rates are showing signs of easing.

Martyn’s Law which was initiated during the last Government was resurrected in the king’s Speech and will require venues and locations that can hold 100 people or more to take steps to reduce terrorism risks.

The worldwide IT disruption in the middle of July was found to be related to a fault in a software update released by Crowd Strike, not a cyber-attack as initially feared. Many cyber insurance policies provide cover for this kind of business interruption and a large volume of claims is expected.

Retail

Over June and July retail has continued to be challenging.  Despite a UK wide 2.9% rise in retail sales in May sales fell by 1.2% in June.  This has been put down to the poor weather, which has certainly affected us and of course – the run up to the election. Despite the result being pretty much known from day one it still seems like there was uncertainty in people making big purchases.

This seems to have now gone and we’re seeing more stability, especially with currency (we got $1.30 to the £ last week).  It’s also clear that in this Summer it’s been non-food sales that we’re hit the most – with a 2% fall.  Again, we’ve seen similar during the summer months.

June, compared to May, was also slower when it comes to online sales although June this year compared to last year we still 2% up according to retail sales.

In terms of three big trends that we’re following and are definitely big UK wide:

Integrating AI and other technologies is prime for most retailers.  In bricks and mortar people are loving NFC tags in products – small trackable stickers that be used for wireless payment or for ‘staff free’ stores – like Amazon Go.  AI is now being used far beyond customer services and marketing but increasingly is creating more bespoke shopping experiences for people.  Online we’re looking at how this means AI can show the right things at the time to the right people and also help and advice as needed making a shopping experience so much easier.

The Circular Economy is a growing trend.  Collecting old items, repairing them and re-purposing where it’s not possible to repair is being adopted by a larger majority of retailers.  Patagonia where a real trendsetter on this and we’ve been doing this a while alongside our Loan and Go scheme but it’s crossing into all retail.

And loyalty schemes, usually driven by ‘gamification’ (for example collection points through purchases) is becoming a must have.  We’re looking into possibilities that work for everyone (for example – recommend a friend and we’ll give them 10% off their next order and you 20% or £20 – that kind of thing).  Food retailers like McDonalds and Greggs are doing very well with these and it’s growing – but we can’t be quite as attractive as a free vegan sausage roll or birthday donut.

So – using Technology, the circular economy and loyalty schemes are all to watch.

Whilst people focus on ‘essential purchases’ this all helps. It helps to maintain competitive in a more difficult market .

Medical science

Access to finance still an issue with part of the sector who have assets to develop but do not have the funds to run projects.

Other sectors are focussing on late stage developments getting products to market so reducing the overall number of project being run currently.

The market continues to be depressed with fewer assets being developed at the early stages of regulatory projects.

Price competition is prevalent with discounting evident to win work.

Limited recruitment with no specific issues.

Defence

Labour won, the strategic review has been initiated, Starmer claims to be committed to 2.5% of GDP being allocated to Defence – but like all of Labour plans, the question remains ‘how are they going to pay for it’?  Allegedly the plan is to be complete by mid-2025.  The military will probably remain quite stable in terms of shape and size, but there is a drive to increase ‘lethality’ of our forces – what that means is yet to be articulated, but it will require new equipment based capabilities, and that generates opportunities for industry.

The political instability and upheaval caused by a general election has unfortunately extended the period of military procurement paralysis, and so most defence companies are increasingly reliant on exports – at some stage UK MOD will have to start buying stuff and I suspect most small UK defence companies are sat waiting for that day…

The Ukraine war continues, and the next major event will be the US elections – if Trump wins then he has said the funding stops – and logic would suggest that will force some form of negotiation to end the war – as currently it is arguably reliant on US dollars….. whilst that may end the formal conflict I would then expect many years of civil war and regional unrest.

Transport

Like most sectors, a challenging time as we enter into the holiday season, especially for organisations that have a high agency dependency.

The Road Haulage Association has launched a blueprint document to support ‘A partnership for growth between Government and the logistics industry’. Like most bodies, putting effort in to get closer to their new ministers.

Insolvencies continue, albeit at a slightly slower rate.

Direct Vision Standards for London has had a six-month enforcement extension until May 2025 to enable equipment to be sourced and fitted (cameras and sensors).

Fuel has stabilised with the national average the same as at the beginning of the year, 113p and peaked at 119p.

General market conditions are generally challenging with a glut of vehicles (despite a higher level of cancelled orders, for new vehicles, than would normally exist). Increased costs and customers under financial pressure.

Many fleets have shrunk so it will be interesting to see how the industry copes if we have a usual Christmas peak.

Accountancy

Previous issues with recruitment have been address by the set up new Apprenticeship training programme internally, which is now paying dividends. Completed year end, with high growth. Labour budget, predicting early Oct. Looking out for income tax rises, capital gain tax, inheritance tax, pensions – full detail will be presented at local budget briefing. VAT on private school fees rumoured to be bought forward to Sept 2025, taking to Academy schools to understand impact on sector – could have an impact on state schools. Pensions, equity – take advice and advantage of any benefits before any changes. Keep watching brief on the future changes.

IT

A continuation to the positive growth since the start of the year with a steady number of new clients taking Managed IT solutions as well as cyber security-based products. Also successfully added the largest new contract signed with national coverage providing a complete portfolio of products.

Engagement with a number of large national financial institutes and underwriters,  to jointly present on Cyber Security and the inherent risk of not being protected, to their downstream clients. Month on month growth seen across the full portfolio of security.

Client decision making on deals has seen a more expeditious output over the last month for considered investment into new IT environments which may be a post-election bounce or renewed confidence but no obvious reasons. So, the sales cycle is definitely seeing a positive improvement. Efficiency gains and cost savings are the lead indicators.

Recruitment and staffing is being maintained at an optimum with choice now quite prevalent in the candidate market. Candidate contract demands have receded, and salaries are in line with market rates.

BT have recently announced that the exchange closure programme will be delayed by up to 2 years, thus allowing businesses more time to plan for replacement services for the 30+ products that will be switched off. Our advice is not to leave it to chance or the last minute as the intent remains the same, to close their networks and to do that quickly.

Continued strong demand for upgraded network solutions within offices (WiFi – Print – Switching – high speed Internet connections) which continues the trend for movement back to office-based working and new location expansion.

Cyber remains a key focus in the industry and with the recent Crowdstrike issue last week, although this was not Cyber related, it really demonstrates the impact when things go wrong and services are taken down through change events. The additional risk of cyber attacks whilst it was down also demonstrated that the threat actors take all opportunities to disrupt.

Recent survey suggested that 88% of companies will be investing in new technology this year, although 38% indicated that they were anxious of change and making the right decisions.

So, in summary, the sector remains strong with a lot of new enquiries being raised. Opportunities are on the increase and decision-making cycle in general has improved. All areas of our business have expanded to meet the demands.

Banking

More M&A work recently. Equity arm – first deal done to put equity into an SME. HP and leasing slow, suggesting investment down, because sales are down. Independent schools, extremely good in H&W – challenges and changes ahead but they will weather the storm. Branch closures continue.

Recruitment

The market continues to improve with Temp demand very much leading the curve and consistently increasing since March / April time. Perm demand had remained sluggish for the first 6 months of this year but July / August it is showing the first proper signs of following Temps lead. We anticipate this will continue now that the election is out of the way and we have some certainty in government…however, this in itself does bring about some potential issues for the recruitment sector and things that employers should consider moving forwards. The Labour Party’s “New Deal for Working People” covers a wide range of things including but not limited to – unfair dismissal rights from day one; enhanced redundancy rights; creating a single status of “worker”; repealing union laws; right to switch off; living wage aligned with cost of living.

Legal

Commercial property

A continuing lack of excitement in the high street to take on long leases of retail shops. However, there is some limited interest in local businesses venturing into this market to take on short terms leases for favourable rents and including tenant breaks.

A continued high demand for leases of small to medium light industrial units but with limited stock available with a more balanced approach to landlord and tenant obligations to those in the retail sector.

A more buoyant market in the letting of office suites but with tenants are still unwilling to take on longer leases without breaks.

Cash investor clients still wish to take the opportunity to invest further into light industrial units but continue to find it difficult to locate any such available property and struggle to find any local development land for such use to buy and develop. Investment in other types of freehold commercial property is not obvious from the type of work we are currently instructed to handle.

Employment

Uncertainty among employers over Labour’s new employment legislation

Day 1 right to unfair dismissal (but with a carve out for probation) – not sure exactly how this will work. Some employers looking at dismissing staff under 2 years’ service before the new laws come in where they are not 100% sure they are the right fit

Need for employers of all sizes to watch this space as we get the draft legislation and more details of how the changes will work in practice.

Private client

Slightly quieter; maybe to wait and see what changes may occur. Rumoured IHT increase but this only affects 4% of estates in any case.

Corporate

Busy in anticipation of possible CGT increase. Increasingly looking at alternative exit mechanisms such as employee ownership trusts etc to mitigate possible CHT issues and there are greater sources of financing available for these structures than a few years ago.

Education

Sector extremely busy, acquisitions of schools by PE/conglomerates picking up pace.

Residential property

Market is very tricky! Deals which are made by agents are fragile and messy.  Mortgages subject to unusual conditions and I have seen a couple withdrawn where previously there would have been extensions or retentions.

General

There is still much consolidation in the legal industry with aggregators, such as Knights and Gateley, acquiring smaller firms – a recent acquisition for Knights being Thursfields in Worcester.

Client confidence is still being affected by economic pressures, which translates to a pressure to limit legal fees, although there are some benefits to regional firms, winning work from there more expensive competitors in Birmingham and London.

Whilst improved from the beginning of the year, activity in residential property is fairly level, as is commercial property although we are focusing on specialisms such as renewables projects (in particular battery storage and solar projects).

Corporate has been boosted by seller anxiety in relation to CGT rises and possible diminution of tax reliefs – this has led to an acceleration in sale transactions and sales to employee ownership trusts.

Cyber security threats continue to be at the forefront of our minds, and we are increasing training and security initiatives in that respect.

We are also looking at ways of differentiating ourselves from competitors by focusing in particular on improving the client experience; and following up enquiries and other opportunities more efficiently.

Construction/Manufacturing

Reports suggest that the construction sector decline has showed signs of gradually levelling out, with the underlying value of project starts in Q2 2024 demonstrating a -2% reduction vs Q1 2024. Despite this, the sector is still down significantly vs Q2 2023 (-19%). Data suggests that social housing performance propped up the residential sector with the number of starts up +12% vs Q2 2023. Private housing continues to struggle with starts down -5% vs Q1 24 and -27% behind 2023 levels. With regards to non-residential, reports suggest that retail is the only sector to experience growth vs Q1 24 and 2023. Hotel & leisure, education and office starts continued to struggle.

The Labour government outlined their ambition to build 1.5M new dwellings alongside accompanying infrastructure within the first five years of government. In order to achieve such growth levels, the growing skills gap within the sector will need to be addressed. According to CITB, some 251K additional workers will be required in the next 4-5 years. The sector awaits further details regarding the governments plans for the Future Homes Standard and what it means for sustainability targets going forwards within the built environment.

Sources:

CITB:  https://www.citb.co.uk/about-citb/construction-industry-research-reports/construction-skills-network-csn/#uknations

GLENIGAN: https://www.glenigan.com/glenigan-index-of-construction-starts-to-end-of-june-2024/

Institution of Mechanical Engineers: https://www.imeche.org/news/news-article/labour-wants-to-build-1.5m-homes-this-tech-could-help-them-do-it

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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 23^rd, 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 3^rd 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.

The post Worcestershire Area Council Updates appeared first on Herefordshire & Worcestershire Chamber of Commerce.

Each Area Council meets four times a year. The Councils are comprised of up to fifteen sector specialists who represent the majority of business sectors in each county.

Council Members provide insights into their sector and discuss the opportunities and challenges businesses currently face. The feedback is then used to formulate Chamber policy on the most important business issues in the region.

We are currently looking for businesses in any of the following sectors to join our Councils:

Herefordshire:

• Sustainability
• Tourism
• Healthcare
• Construction
• Charity

Worcestershire:

• Tourism
• Agriculture/Food & Drink/Horticulture
• Construction

The eligibility criteria for candidates for election to an Area Council are:

• Must be a current Member
• Must hold a senior position within the member business, such as Business Owner, CEO or Senior Director
• May only seek election to the Area Council in which their business is located, or in which they live
• Must align to the Chamber’s values and culture
• Must be able to meet the time demands of the role on a voluntary basis

The key responsibilities of Area Council Members are:

• To maintain close contact with Members at a local level to help provide sector information on behalf of Members at Area Council Meetings
• In conjunction with the Executive to maintain close contact with local key partners such as Members of Parliament, Councillors, Council Officials etc
• To ensure that local networking activities are taking place and to support those activities.
• To identify key policy issues that need to be taken up by the Chamber.
• To actively support Chamber membership recruitment and retention initiatives.
• To approve new Member applications
• To recommend the termination of membership because of inappropriate behaviour.
• To bring business issues/concerns in the wider sector community to the attention of the Chamber
• To regularly attend Area Council meetings at Member’s premises.
• If Area Council Members fail to attend three consecutive meetings for no significant reason, this member may be removed from the Area Council.

If you would like to apply for a position, please fill in the self-nomination form which can be downloaded Here.

The deadline for receiving applications is 4pm on Friday 12 July 2024.

If you have any questions please contact our Policy department at policy@hwchamber.co.uk

Voting for these positions will take place on 26th July and all candidates will be informed of the results by 2nd August 2024.

The post Would you like to join Herefordshire & Worcestershire Chamber of Commerce Area Council? appeared first on Herefordshire & Worcestershire Chamber of Commerce.

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 3^rd 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 31^st 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.

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Agriculture

Agriculture plays a vital role in the economy of Worcestershire and the United Kingdom as a whole, contributing to food security, rural employment, and environmental sustainability. However, like any industry, farming currently faces numerous challenges that impact its viability and long-term sustainability. Climate change and extreme weather events: Climate change poses a significant threat to agricultural production in the UK. Farmers are grappling with unpredictable weather patterns, including increased frequency and intensity of extreme events such as droughts, floods, and storms. These weather fluctuations disrupt crop cycles, affect livestock health, and damage farm infrastructure, leading to reduced yields, increased costs, and financial instability. Brexit and trade uncertainty: The UK’s departure from the EU has resulted in trade uncertainty for farmers. Changes in trade agreements, tariffs, and regulatory frameworks have disrupted established supply chains, affected exports and imports, and impacted farm incomes. Negotiations with trading partners, such as the EU, are ongoing, leaving farmers uncertain about future market access and the potential impact on their businesses.

Agricultural policy reforms: The UK’s agricultural policy has undergone significant reforms with the introduction of the Agriculture Act 2020. This transition from the Common Agricultural Policy to new domestic policies brings both opportunities and challenges. Farmers now face the complexities of adapting to new subsidy schemes, environmental regulations, and outcome-based incentives, requiring adjustments in farming practices and increased administrative burdens. Labour shortages: The agricultural sector relies heavily on seasonal and permanent labour from the EU. The changes in immigration policies post-Brexit have resulted in labour shortages for farmers. Reduced access to migrant workers has led to difficulties in recruiting and retaining skilled agricultural workers, particularly for labour intensive tasks such as fruit picking and processing. Labour shortages adversely affect productivity, harvests, and overall farm operations.

Environmental sustainability and regulations: The UK government has committed to enhancing environmental sustainability in agriculture through initiatives such as the Environmental Land Management Scheme. While these measures promote sustainable farming practices, farmers face challenges in adapting to new regulations, meeting environmental targets, and balancing productivity with conservation efforts. Implementing environmentally friendly practices often requires additional investments and retraining. Economic pressures and market volatility: Farmers are currently encountering economic pressures due to fluctuating commodity process, rising input costs, and market volatility. Uncertain market conditions, including Brexit related impacts, have led to price fluctuations and reduced profitability. Farmers must navigate these challenges while striving to maintain financial stability and invest in technological advancements and farm infrastructure. Technological advancements: The adoption of innovative technologies, such as precision agriculture, robotics, and data analytics, holds promise for increasing farm efficiency and sustainability. However, the high costs associated with acquiring and implementing these technologies can be a barrier for many farmers, particularly smaller operations.

The agricultural sector in Worcestershire and the UK generally, faces a range of challenges that threaten its productivity, economic viability and environmental sustainability. The impacts of climate change, trade uncertainties post Brexit, labour shortages, policy reforms an economic pressures collectively contribute to the difficulties faced by farmers. Addressing these challenges requires collaborative efforts among farmers, policymakers, researchers and industry stakeholders to support the development of resilient farming systems and ensure the long-term success of agriculture in the UK.

Banking

The latest update of the Business Barometer is available. The report is a propriety survey of 1,200 companies, produced to look at the confidence levels among UK businesses every month. It gives an insight into emerging economic trends. The report covers a range of standard monthly questions from business activity and economic optimism to staff levels, wages and process charged. The key highlights of this latest survey are:

1. Business confidence rises to an elven moth high of 33%, led by more optimism about the economy
2. Wage expectations tick higher as hiring intentions improve for a fifth month in a row
3. Share of firms planning to raise their prices remains elevated
4. Areas seeing biggest confidence gains include the East Midlands, the South West and Northern Ireland
5. Services confidence uplift led by hospitality and financial and business services.

There has been some interesting press coverage on financial products such as life insurance. The Daily Mirror wrote, one in ten adults has given up cover, such as life insurance and income protection, and a further one in five plans to stop policies to keep up with the cost of living. Latest figures from Scottish Widows reveal it handed out an average of £3.8 million per week, paying out more than 98% of life insurance and critical illness claims in 2022. Critical illness claims were up 11% in 2021.

Education

Higher education is grappling with several significant challenges in the current landscape. One key issue is the rising cost of tuition and student debt, which continues to burden students and their families, limiting access and exacerbating socioeconomic inequalities. Additionally, there is a growing concern about the value of a degree and the readiness of graduates for the job market, leading to questions about the relevance and effectiveness of traditional higher education models. Another pressing matter is the need for innovation and adaptation to meet the demands of a rapidly changing world. Technological advancements and the rise of online learning have disrupted traditional classroom-based education, requiring institutions to navigate the transition to digital platforms effectively. Moreover, the COVID-19 pandemic further accelerated the shift to remote learning, highlighting the need for robust infrastructure, equitable access to resources, and effective pedagogical strategies.

Diversity, equity, and inclusion remain critical challenges within higher education. Institutions are grappling with the need to create inclusive environments, address systemic issues and ensure equitable opportunities for underrepresented groups. There is a growing focus on lifelong learning and the need for continuous skill development in response to evolving workforce requirements. Higher education institutions must adapt their curricula and programs to provide students with relevant, practical skills that align with emerging industries and professions. And to close, this week the Chartered Institute of Business Schools held its annual learning and teaching conference at the ICC in Newport. Perhaps not surprisingly the two most talked about issues of the day were the challenges of growing numbers of international students studying in the UK often bringing their own dependents with them (which the government announced on Tuesday would now be addressed by removing the option for future international students to bring dependents with them whilst they study in the UK). The second issue is the use of AI in education and in particular the use of ChatGPT – an AI chatbot – which provides significant challenges for the ways in which students are learning and assessed for their learning.

Insurance

Surveys are showing that policy holders are reducing the amount of insurance cover they have as an attempt to save costs. The Insurance market remains hard with high premiums and reduced appetite but there are signs that it is stabilising. The CEO of the National Cyber Security Centre encouraged businesses to get Cyber Essentials Certification with evidence showing that certified companies are 80% less likely to have a cyber insurance claim.

Manufacturing

Overall, we can see a decrease in the speed of decision making. Projects take longer in general before customers commit. We don’t see a cancellation of investment planning, but more hesitation. The supply chain is continuing to ease, but it’s by far not back to normal. The delivery times (especially for critical technical components) are starting to come down. The increase of input prices has significantly slowed down in the last 2-3 months. The inflation of the industrial supply side seems to be under control now. We were able to achieve the first price decreases in negotiations.

Retail

Whilst inflation has dipped slightly the cost of goods continue to rise, not least due to wage rises with some major retailers, like Lidl, saying that they have increased wages three times in the last year. Wet weather has hit a lot of early year retail. It has certainly affected us in camping but also other retailers, and ones far bigger have been hit by the much wetter start to the year than 2022. It seems obvious but early season sales of outdoor furniture or garden specific products have seen sales fall. It has also hit events. Whilst retail has been tougher and there are signs that people have been hanging onto their money, key ways this has been overcome, as reported over and over is having value as part of pricing – so showing big discounts. People love discounts but it has got to be a clear saving and marketed as such. Those that do so are doing well. Key examples are TK Maxx and the fastest growing value retailer in the UK – The Works.

Online has been key but people still love to see products so having exhibitions, attending shows or even pop-up shops are really popular. People love an online store now – but people still like finding surprises and so ‘deal of the day’ or ‘Today’s arrival’ is important. Keeping it fresh online is key and we see this with good quality emails as well. It’s also key that emails and information is giving away content. For us, for example, it’s our ‘how to’ videos and blogs. Offering payment plans – people like these more than do taking our credit cards to pay for products so we see the continued rise of Klarna, and now Clearpay as well. Younger shoppers, in particular go this way, rather than credit cards.

And sustainability is a must now. A clear policy with actual action is key – it can’t just be waffle. For us we’ve battled the constant rain this year to bring in investment, we’ve continued to grow our international presence – now by employing a German speaking sales and business development member of staff to support our growing sales in Germany. We’re developing more product for 2024 after the launch of OLPRO camping Furniture this year and we’ve signed a deal with a major outdoor adventurer type to design and create their camping products which will be duel branded. The announcement will coincide with his new TV show which Channel 4 are showing in the autumn of this year.

We’ve also just had our first outdoor event at our premises showcasing all current products, which went very well and we’re now well into the festival season with OLPRO appearing a two shows most weekends. Finally, we’re now absolutely B-Corp accredited and the first camping brand in the UK (possibly Europe) to be so.

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