Policy Update 20th August 2024

Welcome to this week’s policy update.

As ever please do get in touch with me, [email protected], if you’d like to discuss the following, or other, business issues, put forward your views and/or provide real life examples that we can use in advocacy activity.

You’ll see below that it’s been a busy time for publication of data! ? We’ve now been given the go ahead by the Department for Education to publish our June 2024 LSIP Annual Progress Report. You can read it here. If you’d like to discuss anything or get involved please do get in touch with me, [email protected] or Kev Warman, our LSIP Engagement Manager, [email protected]. ?

The next quarter of Chambers’ Quarterly Economic Survey fieldwork began on Monday. Please do be sure to participate in this to enable ever more accurate data, increase our ability to advocate effectively and, not least, ensure Cumbria is well represented. The survey will be open until 15th September with results published week commencing 7th October. You can take part here: https://www.surveymonkey.com/r/2K6RTX9. ?

The August edition of the Cumbria Labour Market Briefing has now been published. The briefing contains the claimant and earnings data released by ONS, HMRC and DWP as well as the latest available data on NEETs, job postings, small business start-ups, Companies House registrations and growth performance. Thanks as ever to Ginny Murphy, Cumberland Council, for producing this. ?

Key headlines for Cumbria are:

• There were an estimated 225,525 residents in payrolled employment in July, up by 66 from June and by 2,167 from this time last year.? The rate of growth is slightly faster than for the UK as a whole (1.0% v 0.8%).
• Median monthly payrolled earnings in July in Cumbria were ￡2,288 which is 95% of the UK average, although they were higher than average in West Cumbria (former Allerdale, Barrow, Copeland) at 102% of the UK and lower in East Cumbria (former Carlisle, Eden, South Lakeland) at 91% of the UK.? Earnings growth year on year in Cumbria was 7.3% which is above the UK rate of 5.6% and this is the case both in West and East Cumbria.
• There were 7,160 claimants of JSA/UC actively seeking work in July, an increase of 695 from the June figure (+10.1%).? However this has been affected by an increase to the Administrative Earnings Threshold (AET) which means that claimants earning below the level (now ￡892 for single claimants, ￡1,437 for couples) are required to take steps to increase their earnings.? The change does not directly affect the number of claimants but it results in some moving between conditionality groups and thus into the claimant count.?The claimant rate in July was 2.5% in Cumbria, up 0.2 percentage points from June but still well below the national rate of 4.3%.? This is the case in all the former district areas, although rates for young adults remain above the national average in Barrow (6.5% v 5.2%).
• There were 41,096 claimants of Universal Credit in July (in work, out of work, not required to seek work).? This is an increase of 460 from June and 4,940 more than a year ago.?The number of claimants fell in the working conditionality group (-518) but rose in the searching/planning/preparing groups (+668) and the no work requirements group (+316) – see note above.?The claimant rate for all UC claimants was 13.7% in July compared to 16.9% nationally.? Almost three quarters of claimants had been claiming for more than a year.
• This month has seen a quarterly update to the UC Households dataset which showed there were 34,497 households in receipt of UC in May, up by 3,549 from a year previously.?There were an estimated 31,663 children living in these households which is 4,965 more than a year ago.
• There were 338 young people (aged 16/17) classed as NEET in June which is 1 fewer than in May.? There were 221 NEETs in Cumberland and 117 in Westmorland & Furness.?The NEET rate was 3.3% in Cumbria (3.8% in Cumberland and 2.6% in Westmorland & Furness) which is lower than the England rate of 5.3%.
• According to Lightcast, there were 9,007 active online job postings in Cumbria in July which is 105 more than in June.? The volume increased in the former district areas of Barrow, Carlisle and Copeland but decreased elsewhere.? Despite the number of active postings increasing, the number of vacancies newly posted during the month fell slightly.? The occupations most in demand were care workers, cleaners & domestics, sales assistant and kitchen & catering assistants.
• There were 537 small business start-ups in the quarter ending June which is 16 more than last quarter but 29 fewer than the same quarter last year.
• There were 199 new Companies House incorporations during June which is similar to last month and to a year ago.
• There were 30,712 active companies on the FAME database at the end of July, 159 fewer than in June and there were 201 businesses newly recorded as dissolved or in liquidation during the month.? Of the active businesses, 1,922 had posted results showing growth in employment and/or turnover whilst 1,474 had posted results showing a decline in one or both measures.
• In July, 5.1% of Cumbria’s total companies on the Red Flag database system were rated as having financial Red Flags which is lower than the national average of 8.0%.

? Key national headlines are:

• The early estimate of payrolled employees increased by 24,000 on the month and by 252,000 on the year, to 30.4 million.
• The UK employment rate for April to June was 74.5% which is a slight increase but remains down on a year ago.
• The UK unemployment rate (including non-claimants) decreased slightly to 4.2% and is below estimates of a year ago.
• The UK economic inactivity rate (those not seeking work) was largely unchanged over the quarter but is above estimates of a year ago.
• The estimated number of vacancies (measured via a business survey) was 884,000 in the quarter May to July, a decrease of 26,000 from Feb to April.? Vacancy levels fell in 10 of the 18 industrial sectors.
• Annual growth in regular earnings (excluding bonuses) was 5.4%, the lowest for 2 years, whilst annual growth in total earnings (including bonuses) was 4.5% (the latter is comparing with a period when NHS one-off bonuses were paid).? When adjusted for inflation, regular earnings growth was 2.4% and total pay growth was 1.6%.

British Chambers of Commerce (BCC) continue to be busy on your behalf. Engagements last week included:

• Anne-Marie Martin, Director of Memberships UK and International, William Bain, Head of Trade Policy and Stuart Morrison, Research Manager, meeting with HM Trade Commissioners, briefing them on latest research and insights from Chamber members and discussing priority growth markets for goods and services exports.
• Jane Gratton, Deputy Director of Policy, meeting with? Jonathan Reynolds MP, Secretary of State for Business and Trade and Angela Rayner MP, the Deputy Prime Minister, on Making Work Pay.
• Jane Gratton and Adam Szpala, Head of Public Affairs meeting with the Department for Work and Pensions.
• Speaking to the National Audit Office on the best approaches to deliver effective support for export growth.

The BCC will be at this year’s Party Conferences to hear from our new Government as they approach their first 100 days in power and from the Opposition as they take steps to elect their new leader. Chamber activities will include panel discussions, including BCC Director General,?Shevaun Haviland, Secretary of State for Business and Trade,?Jonathan Reynolds MP?and the Shadow Secretary,??Kevin Hollinrake MP, alongside?Julia Pyke?from Sizewell C,?Paul Nowak from the Trades Union Congress (TUC) and?Ryan Shorthouse of think tank Bright Blue.

BCC has published Chambers’ latest SME Procurement Tracker, in partnership with Tussell. It showed many businesses are still struggling to get public sector deals. Here are the headlines from the data.

• Only 20% of direct public sector procurement spend was with SMEs in 2023?
• ￡39.7 billion was spent by Government directly with SMEs last year?
• Median earning per SME has grown since 2020 and is now at ￡32,000 ?
• Local Government is the part of the public sector spending the most with SMEs, ￡15.8bn in 2023?

You can read the full data here: PowerPoint Presentation (britishchambers.org.uk). While it’s welcome the value of SME procurement contracts is continuing to increase, government deals remain out of reach for too many businesses. It is vital that public bodies always consider SMEs when tendering contracts. ?Central government can learn lessons from local authorities who are consistently spending more on SMEs deals. We’d welcome further devolution of decision-making to allow more procurement contracts to be awarded at a local level. The Procurement Act coming into force at the end of October has the potential to make the system simpler and more transparent for businesses. In addition, it’s crucial we hear more from the new government on their pledge to give SMEs greater access to contracts.? Businesses up and down the country want to see a reformed process in which they can properly compete.”

In the run up to changes to public sector procurement?Cumberland Council have issued the following update. If you currently supply goods, works or services to the council, or hope to do so in the future, then you need to know about the forthcoming changes. In October a new Procurement Act will come into force that will benefit suppliers of all sizes, but particularly start-ups, scale-ups and small businesses. Some of the benefits are:

• There will be a central digital platform for all suppliers to register and store their details on so that they can be used for multiple bids, and see all opportunities, from all public sector organisations, in one place.
• Simplified bidding processes will make it easier to bid, negotiate and work in partnership with the public sector.
• Commercial frameworks will be more flexible, so prospective suppliers are not shut out for long periods of time.
• The Act will remove bureaucratic barriers and level the playing field for smaller businesses so they can compete for more contracts.
• There will be prompt payment for more businesses in public sector supply chains.
• And a stronger exclusions framework will take tougher action on underperforming suppliers.
• Buyers will have to consider the barriers facing smaller businesses and that obstacles will be removed around provision of accounts and insurance at the bidding stage.

These changes will drive innovation, deliver better outcomes and embed transparency right through the commercial lifecycle, so everyone can access procurement data and see how money is spent. To learn more please watch the supplier knowledge drops on the?UK Government website. Cumberland Council will be updating their webpages?over the forthcoming months to give you further advice and guidance on the new Act on doing business with the council. ?

The Office for National Statistics UK?trade data?for June revealed an increase in both goods and services exports volumes, contributing to export growth across the second quarter of the year. Read our?comments?on the new data and what it means for businesses. ?

The latest trade figures published by the ONS show that June was a strong month for UK trade, with goods exports to the EU experiencing a double-digit rise, rounding off a second quarter of 2024 with growing exports and imports. Services growth was steady for the month, and throughout the last quarter.? The data reflects the strengths of the UK’s export portfolio in professional, travel, financial and business services as well as manufacturing, chemicals, pharmaceuticals and transport goods.?? ?

To keep up this momentum, Chambers are looking to work with the Government on its forthcoming Trade Strategy. It must ensure the UK has the right framework in place to increase exports and improve the efficiency and security of its supply chains.?This must include a focus on improving trading terms with the EU, to cut the costs of doing trade and sustain June’s welcome sales growth in our largest export market. ?

Imports from the EU across Q2 rose by 3.6%, in seasonally adjusted value terms, principally through stronger trade in machinery and transport equipment (cars, ships and mechanical machinery). On non-EU goods imports, there was a larger rise of 10.4%, driven by higher fuel (refined oil from India), and machinery and transport equipment (aircraft from the US and ships from China).?Exports growth was smaller across the quarter than imports, with EU goods rising by 1.1% in seasonally adjusted value terms (driven by higher chemicals and manufactured materials). Non-EU goods rose by 1.5% (due to chemicals, machinery and transport equipment).? ?

Services imports rose by 3.3% compared with the first three months of the year, on the seasonally adjusted values basis, with strong performance from business, intellectual property and construction services.??Exports grew by 2.8%, with business services, travel, telecoms and IT services doing particularly well.? ?

You can read more detail on the data here: UK trade - Office for National Statistics (ons.gov.uk). ?

The European Commission revised its?Q&A?on reporting requirements within its carbon border adjustment mechanism, affecting UK exporters. As expected, default values in reporting cannot be used after?1st August?this year and actual emissions must be reported after 1st July. Additional flexibility has been put in place by the competent authorities in Germany, Austria and the Netherlands. ?

The latest GDP figures published by the ONS show that the UK economy got off to a good start this year, and the provisional data for Q2 shows that positive?story is continuing. It’s clear that a strong performance in the services sector powered growth in the quarter. ?Alongside this Chambers’ research shows business confidence has improved in recent months and last year’s shallow recession appears fully in the rear-view mirror. However, without a boost in both business investment and export levels, future growth is likely to be restricted.?Our latest economic survey?shows the majority of firms (75%) are still struggling to boost investment. This month’s interest rate cut should give companies some?welcome breathing space, but further stimulus is needed. For example, an industrial strategy that gives businesses greater certainty on the direction of travel and places green innovation at its core.? ?

The ONS has also published data on inflation. An increase was expected, with Chambers’ forecast (which you can read about here?PowerPoint Presentation (britishchambers.org.uk)) suggesting inflation of 2.3% in Q4 2024,?with the trend in lower rates likely to persist.?This has already brought a welcome interest rate cut from the Bank of England earlier this month, and we expect at least one further reduction this year.?Concern about inflation among the businesses Chambers represent nationally has been falling since the beginning of the year. However, with nearly half of businesses?still citing it as a worry, companies remain vigilant about the impact of price rises.?You can read more on our Q2 Quarterly Economic Survey here:?PowerPoint Presentation (britishchambers.org.uk). ?

Save the date for BCC’s Global Annual Conference 2025 which will be at the QEII Conference Centre, London on?26th June,?once again convening the breadth of British business at the leading business-political event in the calendar. With over 600 attendees and extensive media coverage the Global Annual Conference offers a unique platform for sponsors; to showcase expertise, spotlight their brand and shake hands with current and prospective customers and collaborators. ?

If you’d like to find out more about what to expect you can watch the highlights as well as some of our key speakers from 2024 here: BCC Global Annual Conference 2024 - Highlights (youtube.com) and read a round-up here: BCC PGAC PDF (britishchambers.org.uk). ?

And if you’re interested in learning more about how you can get involved in our Global Annual Conference, let me know, [email protected], and I’ll put you in touch with the team. ?

During the Global Annual Conference, the Business Council participated in private roundtables with Secretaries of State for Business and Trade past and present, Jonathan Reynolds MP and Kemi Badenoch MP. Following their keynote and thought-provoking ‘in conversation’ sessions with Rachel Sylvester of The Times, the Business Council had the opportunity to propose questions in the run up to the general election. If you’re interested in learning more about the Business Council, and potentially becoming a member, again please let me know, [email protected]. You can read more about Business Council activity here: BCC_FLYER9366_BUSINESS_COUNCIL_A4_V6-1.pdf (britishchambers.org.uk) ??

Suzanne Caldwell, Managing Director