Economy

economy Coming out of the pandemic: how will businesses fare?

It’s safe to say that businesses have been hit hard by the pandemic. All but essential companies were forced to temporarily close due to three national lockdowns and, in many cases, revenue streams and profits were impacted severely. Now, however, as businesses begin once again to open their doors, there’s hope that the hugely successful vaccination roll-out means that, finally, the hardship of the last yearand-a-bit can be consigned to the history books.

Let’s Talk Business gets the views of three high-profile individuals on the challenges facing local businesses as they attempt to engineer a sustained economic recovery…

Cllr Steve Curran, leader of Hounslow Council

“In 2019 Hounslow was among London’s fastest-growing economies with growth in transport, distribution and accommodation, and information, media and communication.

“COVID-19 slammed the brakes on, with aviation, retail, hospitality and leisure hardest hit. Over 25,000 residents furloughed; more than 4,000 jobs lost (with young people twice as likely to suffer job losses as the over50s). An estimated 11.3% drop in GVA (London’s seventh highest). Previously unimaginable job losses at Heathrow and associated businesses – concentrated in lower-skilled roles - hit women, those on low-incomes, the unemployed and those from BAME communities hardest.

“Following the pandemic, the future is daunting for many of our businesses, but the council is committed to providing support.

“Oxford Economics published a 2020 analysis of COVID-19’s impacts on west London’s economy. Now, with greater understanding, they say London’s GVA contracted by 9.4% last year with some of our biggest sectors – travel, hospitality, and leisure – severely affected.

Now it’s about putting the plan into action. Work to renew local economies, tackle local inequalities, empower local residents and reimagine local places, while meeting environment and climate change challenges in a businessfriendly borough has begun.

“Hounslow lost an estimated 3,700 jobs. Another 5,200 may be lost in 2021 with hospitality most exposed. Accommodation and food services saw GVA almost halve. Transportation and storage may see GVA fall by 19% – demonstrating Hounslow’s exposure to Heathrow’s activity reduction. These two sectors alone will account for half of all job losses through 2020 and 2021.

“To some extent Hounslow’s economy is protected by information and communication activity. This sector accounted for over a third of GVA and a quarter of employment before the pandemic, and is among the least exposed, with a modest increase in employment expected. Hounslow is positioning itself to be at the forefront of inward investment in the sector.

“The easing of restrictions is expected to help partial economic recovery in London, but we won’t see employment return to prepandemic levels until at least 2023, with 26,400 additional jobs to 2025. “Against that backdrop, in March, Hounslow Council agreed a budget for a better future. With uncertainty about long-term government funding, the cost of COVID-19 and Brexit’s impacts, we’ll keep supporting those who need it and deliver our recovery ambitions without losing sight of those who face real barriers during the rebuilding.

“Now it’s about putting the plan into action. Work to renew local economies, tackle local inequalities, empower local residents and reimagine local places, while meeting environment and climate change challenges in a business-friendly borough has begun.

“We’re supporting a resilient, green economy and the establishment of an innovation district, encouraging green, creative and professional services businesses into town centre spaces and growth hubs. Naturally, we’re also supporting local small firms by promoting a “buy local” culture, and we’re looking to drive local entrepreneurship by expanding our support for start-ups.

“Meanwhile, our Reimaging Local Places campaign will redefine town centres and high streets to meet the challenges of communities, innovation, climate change and changing economic needs.

“We expect economic growth drivers to remain broadly as they were at the onset of COVID-19. We’re continuing to support aviation’s recovery and look forward to international travel resuming. We’re maintaining focus on our Creative Enterprise West, Creative Enterprise Zone, and strengths in film, TV and digital. Information and communication, professional and administrative services will be faster-growing sectors. Real estate activities and public services (particularly health and social work) will also contribute, supporting a growing population.

“Meeting the challenges, accelerating recovery and supporting our people and businesses through it is our prime focus. This was a very hard year, but with the right plans, good work and “One Hounslow” spirit, we’ll come through the better for it.”

Seema Malhotra, MP for Feltham and Heston and shadow minister for employment

“Thousands of businesses and industries across the country have felt the impact of COVID-19, which has hit jobs and livelihoods hard. Research shows that aviation communities have been worse hit. “A collapse in passenger numbers and cargo at Heathrow has cost jobs at the airport and threatened jobs within aviation supply chains, affecting people dependent on this industry and jobs associated with the airport. At its peak, Hounslow had the highest number of furloughed workers in the country.

“As lockdown measures ease, many businesses will start to open up. The hospitality sector will see some recovery, albeit slowly, and others such as aviation will have a longer recovery tail when international travel slowly picks up. It’s estimated that air travel will not fully recover to pre-pandemic levels until at least 2024.

“When planes start flying again, this will have a knock-on effect on related sectors and supply chains. That’s why I’ve been advocating working closely with the airport and local businesses for measures to help get planes flying safely again. We need to do all we can to protect jobs and ensure skills are in place for when things change. In addition, for those who lose their jobs, we need support for upskilling and reskilling. That’s why I’ve been coleading a project with Unite and employers – the Unite Learning Hub @ Heathrow – on what skills are needed for future jobs and how to get easy online access to learning with face-to-face learning to follow.

“We also need to think about the future. As we look to a lowcarbon future, we need a new vision for our airport and local industry. We need to lead the way in achieving zero-carbon aviation

and reimagine the Heathrow area as a global hub for innovation and a green economic powerhouse.

“That’s why I have been working alongside West London Business and Hounslow Chamber of Commerce and West London Local Chambers of Commerce and local Councils, schools, universities and businesses on a new initiative as part of a place-based response to rising unemployment, and to launch the new London West Innovation District.

“West London is uniquely positioned to leverage its history and tradition of transport innovation. Over time, we want to see the new innovation district become the Silicon Valley of aviation, connecting people and places across the UK and internationally, nurturing new skills, new products and reshaping services.

“Aviation will be a key driver of our economic recovery – but it’s also an enabler of other sectors and industries. Innovation to drive forward our green ambitions to achieve net zero by 2050 and create the businesses and jobs of the future is where our focus should lie.”

Ruth Cadbury MP for Brentford & Isleworth

“The last 12 months have been so tough for so many businesses across Hounslow as I know from the emails and messages I’ve received, with some businesses sadly forced to lay off staff and others being forced to close.

“While the coronavirus vaccine and the continued and gradual lifting of restrictions offers hope for many businesses, it’s equally important that politicians and the government don’t take their eye off the ball when it comes to the challenges facing businesses.

“While the coronavirus has impacted many, here in Hounslow some sectors have been hit particularly hard – whether that’s the 600 hospitality businesses here or the large number of businesses in the Heathrow supply chain.

“I’ve been particularly concerned about the lack of specific action to support communities that rely heavily on aviation for jobs and investment. That’s why I’ve been calling on the government to provide sector-specific support both to the aviation industry and to communities like Hounslow who have been hit hard by job losses. Back in 2020, the shadow transport secretary, Jim McMahon, called on the government to step in and support communities such as Hounslow; however, the government has sadly failed to act.

“I’ve also been concerned to hear that the strict restrictions on financial support have meant that some businesses have been unable to get any support. This has meant that businesses, from live events companies and catering suppliers to river-based boat businesses, have been unable to get the support they need. I have made sure to raise this issue several times directly with the government.

“Moving forward, local businesses across Hounslow have told me that they want to make sure that their voices are heard when important decisions are being made by the government.

“One way to do this is for the government to work closely with groups such as the West London Business, who’ve held useful forums for business leaders, council leaders, MPs and others to come together and discuss the important issues facing our economy locally. Last October I attended the Blue Skies Conference 2020, and which saw individuals across the sector come together.

It has been inspiring to be involved with the development of plans such as the Hounslow Recovery Plan where partners work together. Strengthening businesses, and ensuring that employees and employers have the skills they need.

“Additionally, a central part of strengthening businesses over the next year must come through ensuring that employees and employers have the skills they need.

“Colleges and further educations schools such as West Thames College in Isleworth have played a leading role in ensuring that young people locally have workready skills. On top of that, we need to ensure that those who’ve been made redundant have the chance to learn new skills or receive high-quality training to get back into work quickly. I know that Hounslow Chamber of Commerce has been acting as a gateway for the new apprenticeship program and I welcome the news that the first trainees are being recruited.

“Likewise, I hope that the government puts forward a bold, ambitious plan for our high streets. I know that many businesses have found that the business rates system is complex, confusing and arbitrary – with some shops paying much higher rates than others, for no obvious reason.

“I’m also pleased that the shadow secretary of state for work and pensions, Johnny Reynolds MP, has outlined a bold, ambitious plan to ensure that every young person who is out of work has access to either a high-quality apprenticeship, job training or further education.

“It’s also vital that we ensure that crucial sectors of our economy such as engineering, IT and manufacturing are put at the centre of this.

“Likewise, the government needs to ensure that we focus on jobs in sectors that will be crucial in our efforts to reach net zero carbon emissions – whether that’s electric car battery plants or businesses helping to improve the energy efficiency of homes.

“As we continue to lift restrictions, businesses will play a huge role in ensuring that people locally have jobs, in providing a place for people to shop and spend money locally, and in ensuring that Hounslow remains a vibrant, thriving place in which to live.”

Moving forward, local businesses across Hounslow have told me that they want to make sure that their voices are heard when important decisions are being made by the government.

Focus on Finance

New business grants & loans

There are plenty of government grants available for small businesses- saving you money, lowering startup costs and helping grow your business. Small businesses can get support grants and loans worth several thousands of pounds in grants and loans.

The pandemic has hit firms hard. For a business loan, you will have to pay back within an agreed timescale or with interest. While, a grant is cash support that one doesn’t need to pay back.

Shankar Devarashetty, Managing Director of Oasis Accountants, sharing his financial expertise explains how new businesses look out for grants & loans.

Businesses are able to get financial support from the government or council, so it’s worth reaching out for help. Look for ways to diversify the business, help with cutting costs or support on managing your financial health.

Most small business grants are awarded to help launch a startup- new business, aiming to generate jobs and stimulate the economy.

Types of new business loans & grants

Start Up Business Loans – Much like the grants, these lower interest rate loans offer more liberal terms than varied lending arenas. Backed by the government, the Start Up Loans Scheme offers personal loans of £25,000 with a 6% interest rate, business support and mentoring within first year of trading.

Small business startup grants

A range of startup business grants are available depending on the sector you want to go into. For example:

Innovate UK provides government grants to “develop and realise the potential of new ideas, including those from the UK’s world-class research base”.

Research and Development

tax reliefs support companies seeking to research or develop an advancement in their field (even if the project is unsuccessful).

Plus, you can ask your local authority about grants available in your region and funding specific to your industry.

Small business grants for young people

The Prince’s Trust supports, funds, trains young people aged 18 to 30 to start and run their own business. One can apply for low-interest business loans between £500 and £5,000, and small business grants in special circumstances.

New Enterprise Allowance

This gives you mentoring and an allowance if you want to start, or develop, a business if over 18 years of age. Your mentor will need to approve your business plan, with allowance of up to £1,274 over 26 weeks.

Grants for taking on an Apprentice

You can get financial help from the government to train an apprentice in your small business. If your pay bill is less than £3 million a year, you won’t pay the apprenticeship levy, getting five per cent towards the cost of training.

Kickstart Scheme

This gives funding to businesses who create new job placements for 16 to 24 year olds on Universal Credit who are at risk of long term unemployment. You can get 100 per cent of the living wage for 25 hours a week for a total of six months, along with pension and NI contributions.

Hounslow Chamber of Commerce is a Kickstart Gateway.

Mortgage Matters

Choosing the apt mortgage and dealing with the conveyancing process when buying a property can be a complicated process. More so if it’s your first time, hence there are some vital additional factors to get to grips with.

Shankar Devarashetty, Managing Director of Oasis Wealth, shares his financial expertise explaining all things ‘Mortgage’ and ways to get help to get onto the housing ladder.

If you’re planning to get a first toe on the property ladder, here’s what you need to consider to make your finances fighting fit.

Affordability

When home-hunting, you need to know how much you can borrow.

Previously, lenders worked on the source of income, however now they look at affordability in totality. Taken into consideration are regular outgoings such as commuter costs, childcare costs and other loans, plus lifestyle, so you are not too stretched with interest rates changes. Typically, a lender may offer 4 or 4.5 times your income, if buying alone or jointly.

Consider loan to value

To avail any fixed-rate mortgage, one currently requires a deposit of 10% of the property value, and 90% loan to value deals. The lender puts up 90% of the property value. The lender accepts a lot of risk hence it comes at higher interest rates than dip LTV alternatives offered to those with higher deposits. With low earnings, the value of loan could be less. So, a larger deposit can help, widening choice of properties.

Deposit

With sky-rocketing property prices, perhaps the prime challenge is to build a deposit of 10%. Many rely on the bank of parents to help.

Otherwise, save hard, by snipping your bills, cutting back on nonessentials and rental costs.

Under 40’s can try set up tax-free Individual Savings Account to put your deposit money, saving up to £4,000 a year into either cash, stocks or shares with the government topping 25% when you buy your first home. Remember, to hold it for a year and use the money for property.

Check credit score

When finding a home, applying for a mortgage, be ready lenders will gauge your credit history. Each lender has an individual scoring model, with an external credit check.

If your number is high, it specifies you’ve managed credit well, lenders will be agreeable in future.

First, make sure you have registered to vote and having a credit card will work in your favour.

Take a longer mortgage term

Struggling to meet your monthly mortgage repayments on a mainstream with a 25-year term? You could opt for one that runs for 30, 35 or 40 years. If debt is spread over a longer period, monthly repayments are smaller, easing the pain when you start out.

Over time, your earnings are likely to rise, when you can afford it, makes sense to reduce your mortgage term, or try 10% overpayments yearly sans penalty.