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BUSINESS REVIEW Spotlight on issues affecting business
Spending Review – a ‘missed opportunity’? The digital skills gap – and how to fix it Tougher tiers threaten business survival Black Friday – a permanent shift towards e-commerce? Small businesses benefit from new initiatives Making Tax Digital for Corporation Tax Employers – reward staff and support local businesses No Christmas party for 30% of workers
December 2020
BUSINESS REVIEW
Spending Review – a ‘missed opportunity’?
The digital skills gap – and how to fix it
Tougher tiers threaten business survival
On 25 November, Chancellor Rishi Sunak presented his latest Spending Review to the House of Commons.
Research from Microsoft reveals that the ‘digital skills gap’ is widening, with almost seven in 10 (69%) of UK business leaders admitting their organisation currently has one.
Businesses who have moved straight from lockdown back into the UK’s newly toughened three tier system will struggle to survive, the Confederation of British Industry (CBI) has warned.
With £280bn already spent on the effort to combat the economic impact of COVID-19, government borrowing is expected to reach its highest ever peacetime levels. While acknowledging that this level of borrowing and spending was unsustainable, Mr Sunak maintained that “the costs of inaction would have been higher”. Among Mr Sunak’s announcements were a welcome boost to the National Living Wage (NLW) and National Minimum Wage (NMW), rising to £8.91 hour and £8.36 per hour, respectively. The NLW will also be extended to 23 and 24-year-olds for the first time. Meanwhile, public sector workers (aside from frontline health workers and those earning less than £24,000 per year) will see their pay frozen. Reacting to the Spending Review, Federation of Small Businesses (FSB) National Chairman Mike Cherry stated, “This Spending Review was a missed opportunity to help small business owners – not least those who have been excluded from support measures.” He continued, “Our hopes of recovery will hinge on the success of small businesses. We need to see far more from this Government where reducing tax on enterprise, facilitating start-ups and bringing down operating and employment costs are concerned.” Business Review
The findings also show that the majority of business leaders (80%) agree that investing in digital skills is key to economic recovery from the pandemic. The pandemic has widened the gap, with many businesses struggling to adapt to the pace of digital change. When asked about the barriers holding them back from addressing the skills gap in their organisation, a lack of budget (37%), a lack of skills investment strategy (28%), and a lack of knowledge regarding the best skills to focus on (23%) were the reasons most cited by businesses. The report suggests that businesses should focus on developing workers’ ‘productive’ digital skills, i.e. technical skills that allow workers to create digital tools and systems. However, with just 17% of workers currently able to deploy such skills, businesses should also look to develop so-called ‘Next Gen Workers’, with high ‘consumptive’ skills (i.e. proficiency in using digital tools created by others) and basic productive skills, which should be nurtured by advanced digital training.
While non-essential shops and gyms are now permitted to reopen, many businesses have not been so lucky. Matthew Fell, Chief UK Policy Director at the CBI, warned that “for other businesses, the ongoing restrictions in tiers two and three will leave their survival hanging by a thread.” Toughened restrictions are set to hit hospitality businesses in tiers two and three the hardest, with tier two pubs and restaurants now only allowed to serve alcohol with substantial meals and those in tier three permitted to remain open for takeaway and collection only. While the UK’s vaccine hopes have never been higher, struggling businesses still face a long wait for a reprieve. Mr Fell said, “For many businesses in England, going into toughened tiers while waiting for a vaccine will feel like suspended animation.” The CBI has called upon the government for clarity about the financial support that will be available to businesses in the run-up to spring, as well as to establish transparent trigger points for exiting higher tiers.
Quirky Quote:
“Managing our stress and our rest is a sign of living wisely. Refuelling as a way to find joy, to create pleasure, and to celebrate life in the midst of all its demands fills our hearts with renewed hope. When we take the time to breathe, listen, and rest from the daily grind to see miracles bubbling up in our lives.”
OTHER
NEWS Making Tax Digital for Corporation Tax
– Sally Clarkson, author
An HMRC consultation on Making Tax Digital for Corporation Tax (MTD for CT) has concluded that the initiative will not come into force until 2026 ‘at the earliest’. MTD is a government initiative aiming to ‘make it easier for individuals and businesses to get tax right and keep on top of their affairs’, with the aim of eventually going completely paperless.
Black Friday – a permanent shift towards e-commerce?
Small businesses benefit from new initiatives
Ahead of Black Friday on 27 November, the stakes had never been higher. With non-essential shops closed in three of the UK’s home nations, many were hoping Black Friday would draw in much-needed online sales.
Consumers can now find over 2.5m businesses listed in Yell’s directory by asking Alexa, following a collaboration between Amazon and Yell.
Prior to the event, Retail Assist’s annual Black Friday survey revealed that two thirds (67%) of Britons planned to take advantage of Black Friday discounts, with 55% looking to purchase clothes, 31% to buy beauty products, and 24% to snap up cut-price tech and gadgets. With lockdown barring access to physical retail spaces for a significant portion of 2020, online retailers have seen business soar. According to research commissioned by Luminati Networks, the number of shoppers planning to do most or all of their Christmas shopping online has doubled from 24% in 2019 to 51% in 2020. Or Lenchner, CEO of Luminati Networks, commented, “E-commerce adoption has skyrocketed this year, and now we have data to support that this shift will continue well beyond the end of the pandemic. We also know that holiday shopping days like Black Friday have changed significantly, and likely permanently, due to the pandemic, as the majority of customers now prefer to shop online.”
The former Yellow Pages and the multinational retail corporation have partnered up to do their bit for smaller businesses by allowing users of Alexa devices to discover the local businesses on their doorstep. Content available to consumers through voice search includes reviews, opening hours and other business information. Those with smart speaker devices using Apple’s Siri, Google or Microsoft Cortana won’t miss out. Yell already partners with these companies to provide local business information to users. Meanwhile, online marketplace start-up baggl is offering £1m worth of grants to help SMEs advertise themselves on television, supported by AdSmart from Sky. Three hundred small businesses will receive TV advertising grants of £3,500, which they will be expected to match-fund, bringing the total up to £7,000. Successful applicants will receive a 30-second TV advertisement, targeting customers within a 2.5 mile radius of the business’s desired postcode, which will be broadcast for 30 days across Sky’s premium channels.
Employers – reward staff and support local businesses Employers seeking to reward their staff this festive season after a long and difficult year are being encouraged to keep their money local this Christmas One way of achieving this is through Town and City Gift Card programmes, currently available in over 50 towns and cities throughout the UK. Recipients of these gift cards can choose between a wide range of retail and hospitality businesses while keeping their spend local. No Christmas party for 30% of workers Party season is looking very different this year due to ongoing COVID-19 restrictions. Nearly a third (30%) of workers don’t believe they will be getting a workplace Christmas party this year. However, with 54% expecting a virtual Christmas party, the Association of Tax Technicians is calling for clarity on whether an online party will be eligible for the tax exemption that usually applies to annual parties.
December 2020
Business groups collaborate on net zero carbon goal
The UK’s top five business groups have come together in a bid to achieve the UK’s net zero carbon target by 2050. The Federation of Small Businesses (FSB), the Confederation of British Industry (CBI), Make UK, the Institute of Directors (IoD) and British Chambers of Commerce (BCC) have penned a joint letter to the government, highlighting the need for a joined-up, effective and fair approach to going green – with an emphasis on ensuring smaller businesses don’t miss out. In a statement, the signatories said, ‘Big corporations have big budgets for green initiatives, but smaller firms need support to make sure they don’t get left behind. At a time when all political parties support the target that the UK should be carbon-free by 2050, it’s now down to the government to ensure businesses aren’t disproportionately hit.’
Employees adapting well to the ‘new normal’ Workers have seen their routines severely disrupted during 2020 as the pandemic led to the closure of many workplaces. Positively, however, around two thirds of those still working remotely say they’re coping well with the ‘new normal’. This is according to data from Cognito Learning, a digital learning and wellbeing app. Employees can use the app to answer questions on their wellbeing, as well as other aspects of their working life such as training and compliance. When asked how they felt more generally on a scale of one (negative) to five (positive), well over a third (35%) selected five, while just 14% opted for one.
Brexit – the countdown is on As the end of the year approaches, with so many uncertainties still remaining, it’s unsurprising that businesses are struggling to prepare for what lies ahead. To reassure businesses and solve some of the most serious outstanding issues, the government has set up a Brexit Business Task Force facilitating dialogue with various business sectors and offering clarity on rules outside of the European Union. For government guidance on preparing for the transition, visit www.gov.uk/transition
The plight of ‘forgotten’ business directors While the Self-Employed Income Support Scheme (SEISS) has enabled those who work for themselves to claim government grants covering a percentage of their profits, no such scheme exists for company directors. In response, a coalition of small business leaders, company directors and tax experts has written to the Treasury proposing a Directors Income Support Scheme (DISS). Georgina Broadhurst, one of the letter’s signatories and co-founder of ForgottenLtd, a campaign representing small business owners across the UK, said, “The furlough scheme has supported [directors’] 7.5 million employees, but without financial support for the directors and the companies themselves, there will be no jobs for staff to return to by spring.”
All details are correct at the time of writing (8 December 2020) Information within this document is based on our current understanding and can be subject to change without notice and the accuracy and completeness of the information cannot be guaranteed. It does not provide individual tailored advice and is for information purposes only. Some rules may vary in different parts of the UK. We cannot assume legal liability for any errors or omissions it might contain. Levels and bases of, and reliefs from, taxation are those currently applying or proposed and are subject to change; their value depends on individual circumstances. No part of this document may be reproduced in any manner without prior permission. Business Review
December 2020