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Business Review June

REFORMS PROMISE FIRMS GREATER PROTECTION

A consultation has been launched on government proposals to enhance the role of Companies House, increase the transparency of UK corporate entities and help combat economic crime.

The proposed new measures are part of a substantial package of reforms to Companies House, designed to tackle misuse of its register. A clear aim of the reforms is to increase the transparency of company ownership and management, while providing business owners with greater protection from fraud.

Specific proposals include: a robust identity check for company directors and people with significant control; a cap on the number of directorships individuals can hold; enhanced systems to protect personal information held on the register; and the establishment of effective links between records held by Companies House and other government bodies.

Companies House Chief Executive Louise Smyth commented: “This package of reforms represents a significant milestone for Companies House as they will enable us to play a greater part in tackling economic crime, protecting directors from identity theft and fraud, and improving the accuracy of the register.”

One group that the government is particularly keen to hear from is company directors and officers of other corporate entities. The consultation period closes on 5 August 2019.

MARKETING LOW PRIORITY FOR MANY SMALL FIRMS

A new survey has revealed that almost six out of ten small businesses spend less than five hours per week on marketing, with stress being a major contributing factor restricting the amount of time business owners devote to marketing.

The report suggests the complexity of today’s small business environment is making marketing much more difficult. Indeed, with a bewildering range of marketing options available to businesses, it can be a stressful environment for owners who lack the resources to take advantage of these opportunities.

Conducted by OutboundEngine, the research found that a lack of finances (29%), time (22%) and marketing know-how (14%) were the factors most commonly cited by business owners as major hurdles in delivering an effective marketing strategy. While 58% of businesses spend under five hours per week on marketing according to the survey, 22% spend five to ten hours, and only 4% spend more than 20 hours each week.

However, the survey did highlight a clear correlation between spending more time on marketing and achieving business growth: more than 79% of respondents, who spent five to ten hours per week on marketing, experienced growth in 2018, compared to just 52% of those who spent less than five hours.

EMPLOYEES RANK HAPPINESS ABOVE PAY

A recent survey has revealed that over half of all UK employees are more concerned about being happy at work than the level of their salary.

The ‘Happiness Poll’ conducted by Wrike, surveyed 4,000 employees across the UK, France, Germany and the US, questioning respondents on issues relating to culture, pay and collaboration. It sought to identify what makes people happy at work and how that impacts on their productivity.

In the UK specifically, the findings suggest that levels of happiness are generally relatively high, although it was found that ‘doing meaningful work’ and feeling connected to a purpose was the most critical factor in terms of employee happiness, ranking even higher than pay. In addition, more than half of all UK respondents said they had taken a pay cut in order to accept a job that made them happier.

The research also corroborated other studies that have found a strong link between happiness and productivity, with this particular survey suggesting that 91% of happy employees felt they were ‘very productive’ at work. These findings therefore stress the need for employers to create a happy working environment if their workforce is to be truly productive.

CRUNCH TIME FOR LATE PAYMENTS REFORM

The Federation of Small Businesses (FSB) has urged Theresa May to use her final days in office to push through the late payments reforms package unveiled in the 2019 Spring Statement.

Chancellor Philip Hammond announced the package of measures designed to crack down on the scourge of late payments when delivering his Spring Statement on 13 March. The proposals will make the audit committee of every large business responsible for its payment practices; require listed companies to report their payment performance in their annual report; and strengthen the Prompt Payment Code.

And FSB National Chairman Mike Cherry is now calling on the Prime Minister to ensure her Government delivers on the promises made to the small business community, and to do so in June. Mr Cherry commented:

“As Theresa May’s time in office draws to a close, we are now at crunch time for the promised late payments package we have worked hard with the government to secure. We are fast running out of time for the outgoing administration to secure this as their lasting and transformational small business legacy. We cannot afford to have these crucial reforms lost at the last fence, as attention turns to the leadership contest, a new administration and the upcoming Brexit deadline.”

WAGE GROWTH SHOWS SIGNS OF EASING

Although the latest set of employment statistics once again shows that the UK labour market remains in a relatively robust state of health, the data did suggest that the recent growth in wages may have stalled.

According to data from the Labour Force Survey, the unemployment rate fell to 3.8% in the January to March period. This was the lowest reported figure since the three months from November 1974 to January 1975.

However, despite this drop in the unemployment rate, the data also revealed a slowdown in wage growth. Indeed, average weekly earnings including bonuses were reported to have risen by an annual rate of 3.2% in the three months to March, down from 3.5% in the previous three-month period. In real terms, total pay increased by 1.3% in the three months to March, down from 1.6% in the December to February period.

Furthermore, a recent industry survey has revealed that there is currently little upward pressure on wage growth. XpertHR, an organisation which specialises in analysing pay settlements, found that the median pay deal offered by major UK companies in the three months to April was 2.5%, around the same level that was reported earlier in 2019.

Commenting on the latest data, XpertHR analyst Sheila Attwood said: “Many of the current pay awards are lower than employees received in 2018, suggesting that there is little scope for higher rises this year.”

Last month the BoE said that it expects wage growth to ease back to 3% by the end of this year. While the latest official statistics do show that wages are still currently rising at a rate above this forecast level, the data also suggests that wage growth pressures may have started to ease.

 

It is important to take professional advice before making any decision relating to your personal finances. 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 investment advice and is for guidance only. Some rules may vary in different parts of the UK.

If any article in this market update has an effect on your finances and you would like professional advice, then please get in touch.

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