News
Keeping You Informed - February 2010
Monday, March 01, 2010
THE MANUFACTURING CLIMATE
2009 A BAD YEAR FOR INDUSTRY
Suffering drastic falls in output, the manufacturing sector was the second hardest-hit UK industry in 2009, representing 17% of total
administrations, following the property andconstruction sector, which accounted for 20%.
.… HOPES OF IMPROVEMENT IN 2010 AFTER A SOAR AWAY JANUARY
2010 will not be without its challenges, but the UK end of the recession was officially announced
Thankfully, UK manufacturing activity soared in January, expanding at its fastest pace since 1994, according to the latest purchasing managers survey by Markit, which showed the Purchasing Managers’ Index (PMI) was 56.7 in January, compared with December’s revised figure at 54.6, the highest since October 1994,
raising hopes for a swifter recovery.
Although the manufacturing sector now represents a smaller proportion of total UK GDP
than 10 or 20 years ago, it is still a very important part of the economy.
…. BUT IT WILL BE A LONG SLOW HAUL
Britain’s manufacturers are expected to see a muted recovery continuing in 2010 before posting stronger growth in 2011 on the back of export-led growth, a weaker pound and a pick up in world trade.
Strong export demand has been a key factor in the pick-up, he suggested, and is likely to continue to drive the recovery. (See Export News.)
But, while a stronger global economy and weaker exchange should help pull the UK back to growth, benefiting manufacturers in particular, the recovery is fragile and there are concerns that things could still go wrong bringing about a double dip in the economic growth, forcing more manufacturers into administration. Tightening of fiscal policy, the return of VAT to 17.5%, continued difficulties accessing finance and the unwillingness of consumers to spend are all potential threats.
… BUT SMALL FIRMS SURVIVE
As the country edges out recession, conditions will still feel pretty challenging for smaller manufacturers who have been pinning their hopes on the relative weakness of sterling to boost overseas orders and offset weak demand at home conditions.
Optimism is broadly unchanged, but almost 10% of small and medium-sized manufacturers are reporting that credit or finance constraints are likely to limit output or export orders in the next quarter.
Smaller companies are continuing to reduce their employment levels, albeit at a slightly slower rate and firms are continuing to de-stock, and 66% of firms are working below capacity as
domestic orders continued to decline, but at the slowest rate since April 2008 (-10%).
Manufacturing production did stabilise in the last quarter of 2009, helped in part by the modest improvement in exports. While domestic orders are likely to remain depressed, continued export growth is expected for SMEs in the coming months, engendering the most upbeat mood about export prospects for fifteen years.
FINANCIAL NEWS
UK ECONOMY COMES OUT OF RECESSION
After contracting for six consecutive quarters, the UK economy grew by 0.1% in the final quarter of last year, meaning that the country had officially come out of recession, according to figures released by the Office for National Statistics.
But the UK was one of the last major economies to exit recession and the 0.1% growth much weaker than the 0.4% rise that economists had predicted.
In January, the Bank of England decided against further quantitative easing (QE), the policy designed to stimulate growth in the UK economy.
Under QE, the Bank pumped £200bn of new money into the economy by buying assets such as government bonds, as a way to boost lending by commercial banks.
…. & KEEP INTEREST RATES LOW
Although there had been some talk about changes, the Bank of England Monetary Policy Committee decided not to change interest rates – holding the base rate at 0.5pc for the eleventh consecutive month.
The bank first cut interest rates to 0.5% in March in an attempt to boost the UK economy, and it is widely expected that the rate will not be increased until at least the second quarter of 2010. However, some business leaders feel that an interest rate rise is likely, perhaps as early as April.
… BUT INCREASING INFLATION THREATENS
Britain experienced the largest ever increase in the annual rate of inflation in the fourth quarter (Q4) of 2009, and rose to 99.2 in January, a significant increase compared to October 2009’s reading of 93.8.
Inflation in the eurozone rose to 89.6 in January from 89.2 in October.
FREE HELP WITH GOVERNMENT CONTRACT BIDS
An online public procurement course designed to help smaller firms bid for the £220 billion of public sector contracts awarded annually has been launched.
"Winning the Contract" shows participants how to identify business opportunities to supply goods and services to the public sector, explains the public procurement process and demonstrates how to submit tenders. It includes hints and tips to guide and inform businesses on the bidding process and explains where to find public sector contract opportunities.
It is recognised that SMEs play a vital part in the UK’s economy and as such they are encouraged to harness the spending power of government to grow their businesses and create jobs.
This new free course is designed to help those businesses, regardless of size and sector, to compete effectively for government contracts,
locking in the recovery and strengthening businesses throughout the country.
The course is part of a series of joint initiatives by the Office of Government Commerce (OGC) and Department for Business, Innovation and Skills (BIS) aimed at making the procurement market clearer and simpler.
The e-learning tool was originally launched in 2007 and previously cost £49.99, but following an evaluation early last year, it has been radically refreshed and revised to cover all aspects of the procurement process. The Government has removed the fee to ensure accessibility for all businesses.
The course is free of charge, and is available via:
http://www.businesslink.gov.uk/procurement.FABRICATED METAL PRODUCTS
Environmental Guidance for Your Business
NetRegs provides free environmental guidance for small and medium-sized businesses in the UK. We will help you to understand what you need to do to comply with environmental law and protect the environment. We may even help you to save money by showing you ways to use your resources more efficiently
This environmental guidance is for businesses that cut, shape, cast, join or assemble raw materials to manufacture metal products, including:
structural metal products for use in construction and metal buildings, eg bent metal sections, metal doors, metal window frames, shutters and gates.
Does your fabricated metal products business need a permit, licence or exemption? For controlling environmental impact
If your business carries out other metal activities such as:
i Metals Production & Processing
i Surface Treatment of Metals
i Machinery, Electrical Equipment &
Electronics
… see related metals guidance at: www.netregs.gov.uk.
BUSINESS NEWS
NEW BANK HOLIDAY ANNOUNCED FOR 2012
Small business owners must be aware that they will have to give staff an extra day's holiday to mark The Queen's Diamond Jubilee in the first weekend of June 2012.
The government has announced that the extra bank holiday on Tuesday the 5th of June has been created to provide a focal point for the celebrations.
In addition, the traditional Bank Holiday at the end of May will in 2012 be moved to the 4th of June to make it a four-day weekend.
PLAIN ENGLISH GUIDE TO DATA PROTECTION FOR BUSINESSES
Written with businesses and organisations in mind the Information Commissioner's Office (ICO) has produced a simple guide to data protection.
Intended to help businesses understand their legal obligations under the Data Protection Act it covers the basics as well as well as things like how to process data fairly and lawfully. Essential reading for any business handling customer or client data.
The guide can be found at:
http://www.ico.gov.uk/for_organisations/data_protection_guide.aspx
THE LAST WEEKS OF THE CAR SCRAPPAGE SCHEME
The government has announced that the Car Scrappage Scheme will end on March 31st and will not be extended.
Since the scheme began in May last year, 355,000 new vehicles have been ordered where drivers were given £2,000 off of the price of a new vehicle in return for scrapping their old one.
GRANTS OF UP TO £8k TO HELP YOU CUT COSTS & IMPROVE RESOURCE EFFICIENCY IN YORKSHIRE & HUMBER
‘Low Carbon’ is the new currency for manufacturers – to remain competitive you need to consider not only the carbon footprint of your products, but also your processes, equipment,
materials and resources.
The Business Resource Efficiency Improvement Grants (BREIG) scheme can help you take a positive step towards sustainable manufacturing,
A grant from BREIG can deliver immediate savings to your bottom line, improve your resource efficiency now and in the future, AND reduce your impact on the environment.
Through BREIG, your business could be entitled to:
- A Capital Grant of up to £8,000*
towards purchasing equipment or
technology that will reduce your
environmental impact, cut down on
waste, energy or water usage or help you
improve your recycling capability.
*not exceeding 20% of the overall
equipment cost.
- A Consultancy Grant of up to £2,000* towards a consultancy project that will improve your resource efficiency, reduce wasted energy or water usage. *not exceeding 50% of the overall consultancy cost.
A Training Grant of up to £500*
towards staff training on resource efficiency or environmental issues that will lead to resource efficiency improvements for your business. This could include CIWM waste awareness, EMS training or in-house training delivered by an external provider.*not exceeding 50% of the net training cost.
Who can apply?
BREIG grants are open to virtually any small/medium enterprise based in Yorkshire & Humber, as long as you have a productive capability.
Certain restrictions may apply – contact BREIG for details.
The BREIG scheme is commissioned by CO2 Sense Yorkshire, jointly supported by Yorkshire Forward and the European Regional Development Fund (ERDF) and managed by YFM Business Development.
To find out more about the application process and to request an application form, please contact Leanne Adams on % 0113 368 5232, )
breig@co2sense.org.uk or visit www.breig.co.ukHELP FOR SOUTH EAST BUSINESSES TO GO GREEN
The South East England Development Agency (SEEDA) has allocated £3.8 million to help businesses throughout the region become more environmentally friendly and also established a £4 million sustainability loan fund.
The £3.8 million will pay for 2500 businesses to develop initiatives within a framework of six sustainability-led projects.
These will focus primarily on waste reduction, sustainable procurement and the development of sustainable technologies. Qualifying businesses will be given training and undergo environmental audits in order to establish methods that boost profits through energy reduction.
The South East Sustainability Loan Fund will provide additional support for businesses that contribute to reducing the region’s ecological footprint.
Between £20,000 and £200,000 will be available to every business that wishes to improve its green credentials with the expectation of increasing the competitiveness of micro-, small- and medium-sized businesses in the region.
More information can be found at
http://www.seeda.co.uk/.TAXING ISSUES
PAYE ATTENTION, EMPLOYERS WARNED
HM Revenue and Customs (HMRC) has issued what it describes as an urgent alert to employers to be prepared for the coming changes to PAYE .
HMRC has written to all employers this month to remind them that, from this year, they must file their Employer Annual Returns online by the 19th May deadline and that there is no longer a paper filing option for small employers with fewer than 50 staff.
This means that if you file your return on paper, even if it’s before 19th May, you could receive a penalty.
To comply, employers must register with HMRC’s PAYE Online service at
http://www.hmrc.gov.uk/paye.Smaller employers can then use HMRC’s own free software to file their employee data securely online, while larger employers can purchase a range of commercial software. Alternatively, an intermediary can file on an employer’s behalf.
New Penalties
From May 2010, HMRC is introducing new penalties for late payment of PAYE — this includes Income Tax, National Insurance Contributions (NICs), student loan deductions and Construction Industry Scheme (CIS) deductions.
Under these changes, employers may incur penalties if they fail to make PAYE payments on time, and in full.
The penalties will be calculated as a percentage of the amount paid late, and, for in-year payments, the percentage charged increases as the number of late payments in the year increases.
EMPLOYMENT& LEGISLATION
OBLIGATORY PENSION PROVISION
Currently, under the Welfare Reform and Pensions Act 1999, employers with five or more employees, who do not already contribute 3% of gross pay to a pension for their employees, must offer a stakeholder pension to their employees.
This obligation applies where the employee earns at least the lower earnings limit (currently £95 per week) and has been employed for three months. Employees do not have to join the scheme, and employers do not have to make contributions to the employees’ stakeholder pensions if they do not wish to do so. This has been the case since 2001. Offering a stakeholder pension scheme can just be a way of directing employees to make their own investments for retirement.
However, in 2012 this is all set to change: pension obligations will extend to the smallest employers. Under the Pensions Act 2008, all employers that do not offer a suitable
alternative workplace pension will be required to enrol their employees into the new Personal Accounts pension scheme. The obligation applies to employees aged over 22, earning between £5035 and £33,540. Employers will be required to contribute to the pension scheme.
Contributions will be phased in, starting at 1% and increasing gradually on an annual basis to the minimum level of 3% of earnings, to help employers and employees adjust to the costs.
The total minimum contribution for eligible employees will eventually be 8% of the band of earnings. This will be made up of employer contributions (3%), employee minimum contributions of 4% and around 1% in the form of normal tax relief. The employers’ duties and how they will be implemented will be specified by secondary legislation.
The reforms will be introduced in stages from 2012. The Department for Work and Pensions estimates that approximately 670,000 employers currently not offering a pension will need to offer a qualifying scheme under the new rules. Contributions are expected to cost businesses £2.5 billion a year. In addition, employers face administrative costs of £152 million in the first year and £98 million each year thereafter. Very small firms will bear the brunt of these costs as 69% of employers with fewer than five employees currently offer no pension provision at all. Even though the final nuts and bolts of the legislation are still to be introduced, employers, particularly small ones, will have to consider factoring in some additional pension costs from 2012.
FIT NOTE TO REPLACE SICK NOTE
Small and medium-sized businesses must be aware that a new ‘fit note’ will be introduced on 6th April this year replacing the traditional sick note.
The new fit note will allow doctors to give an employer a more detailed account of the employee's capabilities while ill. They can offer advice on the effects of the health condition and whether the patient would be able to work if temporary changes such as reduced working hours or amended duties could be accommodated.
It is felt that employers will welcome this change as the fit note will allow doctors to tell employers whether somebody can do parts of
their job, as opposed to all of it, reducing sickness absence.
The DWP have produced and employer guide, which is available at
http://www.dwp.gov.uk/docs/fitnote-employer-guide.pdf .NEW RIGHT TO REQUEST TRAINING
Small business owners have been advised that new guidance has been issued by the government to inform employers about the new right of staff to request time off for training.
The right of staff to request time off for training will come into effect on the 6th of April this year, although the introduction of the right will be phased.
Many businesses and organisations recognise the benefits of having a highly skilled and motivated workforce, but only two thirds of businesses do actually train their staff.
The right will be made available to staff in organisations with 250 or more employees from April 2010 before being extended to all employees from April 2011. This will give smaller organisations and businesses more time to prepare for its introduction.
Guidance for employers is available via the Business Link website at:
GUIDE ON FLEXIBLE WORKING
The Equality and Human Rights Commission has produced guidance to help business managers discover and implement innovative working practices which improve productivity and customer services.
The guide ‘Working Better: A Manager’s Guide to Flexible Working’ covers:
- The business benefits that can be achieved
- Key principles for introducing flexibility
- Advice on creating a flexible workplace
- The key management skills required
- Case studies;
- Q&A for challenging situations.
-
For more information, visit:
EU MINISTERS AGREE TO LONGER PARENTAL LEAVE
It was announced in December that under new rules agreed by EU Ministers, parents will have the right to longer parental leave.
The revised Parental Leave Directive will give each working parent the right to at least four months leave after the birth or adoption of a child (up from the present three months).
New fathers will be able to take advantage of additional paternity leave and pay during the second six months of the child’s life, if the mother wishes to return to work with maternity leave outstanding.
The new directive also provides for better protection against discrimination and a smoother return to work.
While the new rights will apply to all workers, regardless of their type of contract (including fixed-term, part-time and agency workers), the possibility of a qualification period of maximum one year is maintained.
All matters regarding the income of workers during parental leave are left for Member States and/or national social partners (in the UK, the CBI and the TUC) to determine.
In order to give employers time to prepare adjust to the obvious costs involved, but also the management of entitlements between the two parents, two employers and HM Revenue & Customs The changes are set to be introduced for parents of children due on or after 3rd April 2011.
ACRRUAL OF HOLIDAYS WHILE ON SICK LEAVE
Last summer the House of Lords ruled that employees on long-term sick leave would be entitled to take all holiday that they have accrued when they return to work.
Small business owners criticised the ruling, which could mean that someone who had been on sick leave for two years would be entitled to around 40 days of paid holiday on their return.
There were concerns that this ruling would have a serious impact on many small companies and may lead to some employees taking advantage by falsely reporting sick whilst on holiday.
Some new clarification on this has come to light: if an employee requests holiday while on sick leave and receiving SSP, the company should allow the application and pay the due holiday pay on top of SSP. If, for any reason, the employer does not agree to this the employee can then accrue the holiday and take it after the period of sickness.
EXPORT NEWS
.
FIRST SIGNS OF EXPORT-LED RECOVERYIt is encouraging that export orders for small and medium-sized manufacturers are now stabilising after seven quarters of decline.
… HITTING 13-MONTH HIGH
According to data released by the Office for National Statistics, UK exports in November
reached their highest rate in over 13 months, rising to £20.2bn, the most since October 2008, driven by sales of consumer goods and chemicals.
….. STRENGTHENED BY WEAK POUND
The weak pound has fuelled the UK’s export market to such an extent that British exporters are now more confident about future export growth than their counterparts in the eurozone.
Latest data shows the euro has gained around 7% in value during a period when the Bank of England’s monetary policy has been a factor in devaluing the pound by around 22% against the currencies of the UK’s main trading partners.
This has resulted in UK exporters having a significant competitive advantage over their European rivals, with UK exporters far more optimistic, boasting a 1.2 point rise in optimism over the last 3 months, compared to a 0.4 point rise in the eurozone.
HEALTH & SAFETY MATTERS
WEEE LESSONS FOR SOUTH WEST
3rd March – The X Centre, Commercial Road, Exeter
10th March - The Green House, Chelson Meadow Recycling Centre, Plymouth
Companies in the South West that need to comply with regulations relating to the Waste Electrical & Electronic Equipment (WEEE) regulations are being invited to two free surgery-style events.
It is important that businesses comply with the producer responsibility regulations for packaging, WEEE and batteries as some electrical waste contain hazardous substances such as mercury and lead and must be disposed of correctly.
The Environment Agency is offering free and impartial advice with staff from the Agency available to answer questions from businesses on their responsibilities relating to WEEE, the disposal of batteries, packaging or hazardous waste.
Pre-booked half-hour sessions will be available to help companies decide if the regulations do apply to them
Companies that may be interested in this event will include manufacturers, re-branders or importers of electrical and electronic equipment or companies that add packaging to products, or handle hazardous waste.
To attend or book an appointment, contact Rosalind Keenan on % 01392 316180 or
)
rosalind.keen@environment-agency.gov.ukAppointments vary in time according to needs and are available on a first-come, first-served basis.
TRAINING MATTERS
APPRENTICESHIPS EMPLOYERS’ BADGE
A new scheme has been launched for businesses that employ apprentices. Recent research showed that 64|% of consumers would use a register which enabled them to choose a business that hires apprentices, and 80% of people are more likely to use a business if it offers Apprenticeships to young people.
The Apprenticeship Employers Badge can be displayed by businesses to highlight their commitment to Apprenticeships, and their logos will then be displayed on the Apprenticeship website.
To find out more about Apprenticeship or to download the badge, visit:
www.apprenticeships.org.uk.
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