Britain’s brewers toast continued growth In volumes, as positive impact of beer duty cut continues

– Total beer sales up 0.8% in Q4 2013.

– Pub beer sales down 2.2%.

– Big boost for off trade, with sales up 3.9%.

British beer sales have increased for two consecutive quarters – the first time in 10 years – according to the latest quarterly Beer Barometer figures from the British Beer & Pub Association (BBPA). The increase in sales follows the Chancellor’s cut in Beer Duty in last year’s Budget – and strengthens calls for a duty freeze in the March Budget, says the BBPA.

Overall beer sales rose by 0.8% in the quarter, some 15.3 million extra pints on the same period in 2012. Beer sales in pubs declined at a lower rate, falling by 2.2%. Sales in the off-trade continued to grow, with the final quarter increase of 3.9% contributing to 2013 off-trade sales beating 2012 levels.

The renewed confidence felt by brewers will be further evidenced this week with the opening on Friday of a new £7m bottling plant from Burton-based Marston’s.

Brigid Simmonds OBE, chief executive, commented: “These figures demonstrate that cutting beer duty helps increase beer sales, stimulates industry investment and saves jobs.’

“We hope the Chancellor takes note and freezes beer duty in his next Budget to give a further boost to British beer and pubs.”

Chris Williamson comments on UK GDP data from the ONS

“The UK economy continued to grow at a robust pace in the final quarter of last year, confirming that the country is seeing the best period of growth since 2007. Further robust expansion is also likely for the first quarter, with the recovery also becoming more broad-based and sustainable-looking.

“The economy was 0.7% larger than in the third quarter, according to the initial estimate of gross domestic product from the Office for National Statistics. The expansion follows strong growth of 0.8% seen in each of the second and third quarters, and means the economy grew by 1.9% over 2013 as a whole; its best year since 2007.

“The initial estimates come with a major health warning, tending to be revised, often substantially, when more information on the full quarter become available. But in this case the likelihood is that the initial estimate understates the pace of growth seen in the closing quarter of the year. Recent past GDP estimates have tended to be revised away (remember the double-dip that we then leaned never actually occurred?), moving more into line with the signals from business surveys such as the PMI. The PMI has been running at levels consistent with GDP growth of approximately 1.0% in the fourth quarter, with surging rates of expansion seen in manufacturing, services and construction.

Strong growth to be sustained

“There seems every reason to believe that robust growth will be sustained into 2014, not least because of the promise of ongoing ultra-loose monetary policy stance from the Bank of England and additional stimulus such as the Funding for Lending and Help to Buy schemes.

“Looking at factors such as the supply and cost of credit, inflation, the exchange rate and financial market volatility, financial conditions are also currently the most supportive of growth than at any time since 2007.

“Similarly, economic uncertainty is running at its lowest since 2007, reflecting reduced concerns about a number of key issues, including the banking system, redundancies, corporate default, the collapse of the euro and the US debt crisis.

“Both economic uncertainty and financial conditions were both clearly drags on the economy since 2007 and key reasons why the recovery has been so bumpy and disappointing to date. However, with both now supportive of stronger growth, the outlook for the sustainability of the economic recovery has improved, as has the likelihood of growth being fueled by business investment rising alongside consumer spending.

“Higher business investment is already being indicated by the PMI survey’s indicator of new orders for investment goods such as plant and machinery, which is rising at the fastest rate for at least 15 years.

“UK households are meanwhile starting to feeling less downbeat about the outlook as inflation falls, house prices rise incomes start to recover and employment prospects improve. Markit’s Household Finance Index signalled a further upturn in confidence in January to match the previous pre-crisis high.

As good as its gets for a while?

“There remain factors that may well limit growth as 2014 proceeds, however, and the growth spurt that we saw in late-2013 may be as good as its gets for a while. Wages continue to fall in real terms, which will put a cap on consumer spending growth. The Bank of England may also seek to use macro-prudential tools to cool the housing market. There are also growing suspicions that the Bank will need to raise interest rates earlier than it had previously envisaged, with many commentators starting to talk of a hike before 2014 is over.

“Bank lending also remains frustratingly weak. The eurozone is also still struggling to stage a convincing recovery, emerging markets are being hit as money is pulled out, repatriated to the US as the Fed taper intensifies.

“All are factors to keep a close eye on, but at present appear to be issues which may merely subdue the UK recovery rather than derail it.”

Economic recovery will enable SMEs to grow with the help of technology

Although the world is becoming ever more reliant on technology with most larger businesses operating on sophisticated IT systems, many smaller companies still do not make the most of what technology has to offer. Cloud computing specialist company, Qubic, say that SMEs who do not maximise the use of the technology are potentially restricting their own growth.

Managing director of Qubic, Chris Papa said: “Technology is crucial in helping businesses expand. Hosted solutions deliver ultimate flexibility and can help SMEs reach their full potential by relieving employees of time-consuming commitments”

With a 2.4% increase in economic growth expected this year, there will undoubtedly be a surge in demand for IT services as businesses find their feet. Not wanting to jeopardise their place in the market, enterprises will want take advantage of IT advances without tying-up large amounts of capital.

Chris continued: “We recognise that tying-up capital by investing in hardware and software is particularly difficult for businesses that have been hurt by the decline of the UK’s economy. We can remove the need for large, upfront costs traditionally associated with investment in IT. A hosted solution can help companies build their confidence and help them to expand”

Qubic champions cost-effective, innovative IT systems for small businesses and is able to douse any concerns they have about expanding. With frequent technology advances, it is becoming commonplace for businesses to be positioned in size categories not by the number of staff they employ, but by the maturity of their IT systems.

Inline with technology becoming more accessible, IT providers have developed inexpensive systems targeted at companies who have limited funding and staff. Subscription based plans for acquisition of hardware and software allow businesses to only spend what they need as and when they need to, instead of wasting money on expensive systems that they will not make the most of.

Chris concluded: “In order for SMEs to develop, it is imperative they have the proper provision in place. The correct systems will support the business as it grows, making it their day-to-day operations efficient. They need not worry about maintenance or troubleshooting as the system is hosted off-site and can be managed by a team of experienced professionals.”

High street on the up but lack of flood insurance could hit regional recovery

Demand for retail premises saw sizable increases right across the UK towards the end of last year as economic recovery began to gather pace. However, with the recent reading of the Water Bill determining that commercial property in flood risk areas will soon not be entitled to compulsory insurance cover, only time will tell what impact this has on regional recovery.

As 2013 drew to a close, demand for shops and industrial units experienced the most marked growth on record as increasing optimism about the UK economy and more accessible lending filtered through to the commercial sector (net balance 42%). However, with the Water Bill dictating that commercial premises will soon not be covered by the Flood Re scheme; it could be that businesses in flood risk areas will not be able to afford appropriate insurance. The consequences of this could see the economy suffer in certain parts of the UK with many businesses unable to afford to continue trading.

Turning to other parts of the commercial market, as demand from potential commercial tenants rose, the amount of available premises decreased, especially in terms of offices and industrial space. Significantly, this is the first time in almost nine years that every part of Britain has seen availability of commercial property dip. One concern raised by some members is the diminishing stock of offices as owners look to convert to residential in some areas. This is seen as having the potential to drive rents higher in parts of the country.

Looking ahead, expectations for rent levels over the course of 2014 revealed a net balance of 55% more surveyors expecting rent levels to increase throughout the year. Respondents forecast rents will rise by just under three percent in the office sector, roughly five percent in the industrial sector and just over two percent in the retail sector.

Simon Rubinsohn, RICS chief economist, commented: “The economy ended 2013 on a much more positive note and this was reflected in stronger demand from tenants for shops, offices and industrial space. The more upbeat picture is even beginning to filter through to rents although the improvement in still fairly tentative in most parts of the country. However, if economic momentum continues to gather pace we would expect the recovery in the commercial property market to gain further traction particularly given our suspicion that interest rates will remain on hold for a while to come.”

Jeremy Blackburn, RICS UK head of policy, commented: “While signs are much more positive for the commercial sector it was disappointing to see that the government are going to allow the Water Bill to pass without reference of commercial premises and business owners’ rights to affordable insurance cover. Due to the government’s failure to bring in adequate insurance provisions to protect the likes of shops and offices in flood risk areas, we could well see smaller local economies hit hard.”

74% of SMEs’ websites are not mobile friendly

Mobile phone and tablet ownership is growing incredibly fast; research shows that tablet ownership has more than doubled in the past year with 63% of smartphone users using the internet on their phones multiple times a day. Businesses simply cannot afford to ignore this trend.

We know through speaking with our customers that getting a website set up the way you want can be a daunting task, even without adding the complexity of making it mobile-friendly. If you’ve put off making your website optimised for mobile, you’re not alone. Over the past few months we’ve audited 1,000 UK SMEs’ websites, across 10 different industries to find out how many are mobile-friendly and the findings reveal many small businesses haven’t looked at this area yet.

The research shows that almost three quarters (74%) of UK SMEs’ websites are not set up to enable customers to research and make purchases on mobile devices. It also found that a huge 88% of SMEs’ websites do not support viewing on the iPad (4th generation).

Small businesses have a great opportunity to gain a competitive edge if they are willing to take on the mobile challenge. For more advice about ensuring your business has a mobile-friendly website contact the hibu team.

The media alert providing an overview of the findings is available upon request by emailing: hibuUK@atomicpr.com.

London leads residential construction growth in the UK

Residential construction continued to grow in London at the end of 2013 according to a report released today. However, experts fear that the rate of house building will not keep pace with increased demand created by schemes such as Help to Buy.

The value of residential construction contracts in London totalled more than £506m in December, accounting for 31.2% of the overall contracts awarded for the sector – an increase of 11.7% from the same month last year. This is largely attributable to key projects such as the The Glebe, a £300m housing complex in Chelsea, the Tidal Basin Road scheme near Royal Docks worth £55m and the £30m Putney Plaza development.

These latest figures, taken from Barbour ABI’s Economic & Construction Market Review, are reflective of the sharp upturn in activity in the UK’s residential construction sector throughout 2013. UK-wide, the value of residential construction contracts has increased by a significant 88.2% in the last 12 months, with the total value of projects totalling £1.86bn in December.

On the findings of the report, Michael Dall, lead economist at Barbour ABI, commented: “Residential construction continued to grow in London at the end of 2013 and is a positive sign as we head into the first quarter of 2014. Private housing projects dominated the sector, accounting for three quarters of residential contracts awarded in December, while only a minority were for housing association or local authority projects.

“It is clear that, on a national level, Government initiatives such as Help to Buy and other measures designed to boost the private housing sector are clearly having a strong impact, with demand for secured lending for house purchases at its highest level since 2007. However, there is a concern that the demand for affordable homes in the public housing sector is outpacing the rate of construction, and at this rate, it is difficult to see how the Government will meet its aim of delivering up to 150,000 new affordable homes over the spending review period.

“Furthermore, while the increase in residential construction activity has had a positive impact on house prices elsewhere, the rise in prices for properties in London was recorded at 11.6% – nearly double the UK average. This has led some senior business figures to declare that Help to Buy is increasing demand for housing at a disproportionate rate, bumping up prices in the capital and fuelling concerns that the North-South housing divide is widening.”

The Economic & Construction Market Review is a monthly report designed to give valuable, current insight into UK construction industry performance. The Review is compiled from Barbour ABI’s records of construction data for every UK planning application, and key indicators, such as the Office for National Statistics’ Construction New Orders data.

The Economic & Construction Market Review will be published monthly and is available to download at: http://bit.ly/1eUKB9P

Positive shift towards growth but money and time still an issue when it comes to training

The latest research by the Forum of Private Business reveals that small businesses are shifting their training priorities from replacing lost skills and are concentrating on areas essential for future business growth.

The report highlights an increase in the amount of growth-related training businesses are undertaking, particularly in areas such as strategic management and business development. In comparison to the previous year 2013 saw a 5% increase in training to build capacity and a significant increase in strategic skills development, rising from 16% in 2012 to 28% in 2013. Alongside these growth skills, the report revealed that the number of businesses engaged in efficiency training and skill replacement fell by 9% and 13% respectively, indicating fewer redundancies and a more stable workforce.

As business confidence has grown over the past year, satisfaction with training has also improved. Small business owners highlighted to the national business group that 75% of businesses were happy with the focus of their training in 2013 up from 58% a year ago.

Despite these positive signs Forum members did report a number of barriers to training and skills development indicating that not all businesses were able to take advantage of the improving economic conditions. Nearly a quarter highlighted time as a major barrier to skills development and about 20% noted cost.

Time management skills topped the list of skills negatively impacted by the recession. 12% of businesses reported these skills had grown worse over the last five years with owner managers forced to take on additional responsibilities as redundancies were made. 39% of businesses also reported senior management skills had been neglected with time and cost being the major reasons why.

With lack of time to dedicate to skills development and difficulties funding courses, the Forum’s research reveals that a fifth of small businesses do not know how to overcome the barriers they face to training.

This concerning statistic is timely given the government’s Growth Voucher scheme launching today. The scheme, that will part fund up to £2,000 worth of business support for small firms, will provide every eligible business with a diagnostic to identify what strategic support would assist their business develop and grow. Whilst not all businesses will receive a voucher, the Forum hopes to see the diagnostic provide small businesses with a clear understanding of the types of training they need to maximise their growth potential.

Commenting on the report chief executive of the Forum, Phil Orford said:

“Getting the right skills for your businesses is imperative for any firm to grow. Small businesses have faced tough conditions over the past five years but this report suggests they are beginning to lay the foundations for renewed growth.”

On Growth Vouchers:

“It is important now that we support our small businesses to use the tools available to develop and grow. Growth Vouchers will go part of the way to providing financial support for some businesses but it is essential we build awareness of the wide range of business support and advice currently available.”

The vouchers will be available in five key areas including employing staff, leadership and management and utilising digital technology.

Support the valuers to save the market

Lenders should help maintain the competitiveness of the valuation sector by instructing their solicitors to withdraw confetti letters to valuers, where no further action has been taken. This should help to make PI insurance premiums more affordable. Panel managers should also be bound to a code of practice to ensure market transparency, according to the independently chaired Commission into the future of the valuation profession.

The independent report, commissioned by RICS in response to acute concerns throughout the property industry, has announced a series of recommendations to help ensure that the future of the valuation profession is sustainable. The Commission chair, Dr Oonagh McDonald CBE, studied written and oral evidence submitted by representatives from across the insurance sector, banking community and property industry to address the balance of risk and reward, and how best to maintain high standards in valuation. These elements, at their core, are vital for underpinning economic stability and consumer confidence in the UK and overseas.

Further recommendations include:

• Valuers should be able to purchase PI insurance for individual valuations to help boost valuer numbers and better manage their risk

• Mortgage lenders should bear the cost of valuing a property during the purchase process

• Panel managers should be subject to an RICS-managed code of practice

Dr Oonagh McDonald, chair of the independent report, said:

“The commission was put together to make sure the property valuation market in the UK is fit for purpose and able to properly meet the needs of the general public. Having consulted extensively with people from right across the property, insurance and finance industries, I have come up with some recommendations to make sure this happens. I would like to see a change to the way that lenders charge for valuations and to ensure that those who actually assess a property’s worth are in a position to operate properly and are treated fairly. If valuation as a profession is going to be viable for years to come, lenders need to instruct their legal representatives to withdraw negligence claim letters if no action is being taken against those who value the property. Furtherm

An authoritative business banking report – huge choice and costs less than 20 years ago

An authoritative business banking report – huge choice and costs less than 20 years ago

In its 21st annual review of business banking, Business Money the industry journal in commercial finance and banking, has highlighted the wide, and ever growing, range of facilities available to the business owner/manager.

A highlight of the review, sponsored in 2014 by the Forum of Private Business, was that business bank charges have actually reduced over the last two decades at a time when all other overheads have risen, in the case of a first class postage stamp, by 140%.

Interviews with senior executives, Steve Matthews from an established provider, RBS/NatWest, and Jason Oakley, from a feisty newcomer, Metro Bank, offer a sharp contrast, but emphasise the choices in a fiercely competitive market.

Business Money editor, Robert Lefroy, commented: “The business banking arena in the UK is being reshaped by crowd lending, a continual stream of new challengers like TSB, Williams & Glyn’s, Aldermore, Shawbrook and more are arriving all of the time along with a host of hi-tech card-only account providers, trade financiers and invoice finance houses. The technology that has driven down business bank charges is now making far more flexible and accommodating lending facilities available to companies. As it is, 70% of all bank loan requests are being met with an approval and nobody wants to see the reckless lending that would create another raft of toxic loans.”

For a copy of the report please contact Sophie Grove on 01458 253536 or sophie@www.business-money.com.

Broker battle for help to buy mortgages heats up

Prospective property owners across the UK have been given a significant boost this week as a number of new and attractive help to buy mortgages have been placed on the market for them to choose from. The new deals are part of a price war that is emerging between some of the country’s largest mortgage providers as the final phase of the Help to Buy initiative comes into play.

Barclays is currently top the list of new offerings with its 0% fee and three year, 5.35% fixed rate offering representing great value for all young prospective homeowners out there. For those who wish to fix in for longer, Barclays also have a 5.49%, five year deal that is set to be released this week, and will enable borrowers to attain up to 95% of their property’s value due to the bank being registered on the government’s Help to Buy initiative.

Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “The second stage has had a slow start, but as more lenders come on board, competition is driving a price war and pushing rates down. Lenders are offering more choice and improving the rates on offer, although they remain slightly higher than those for buyers with a bigger deposit.”

The second phase of the government’s flagship housing scheme was enacted back in October and has sought to revitalise a property landscape that has been stagnant since the start of the economic downturn back in 2008.

The scheme entails the government guaranteeing 15% of high loan to value mortgages given out to borrowers in return for banks lowering deposit requirements to 5% and distributing mortgages out of up to 95% of a houses worth. And its popularity and scale has increased dramatically in the past 3 months, with the initial 42 products being offered by banks expanding to 145 across a multitude of different financial organisations.

Another great Help to Buy deal is offered by Virgin Money, who at 5.39% for a three year fixed rate deal represent great value as well for anyone who wants to shield themselves from potential interest rate rises in the future. Similarly to Barclays offering there is no fee charged for acquiring the mortgage whilst a number of cash back incentives make it potentially more desirable that Barclays latest deal.

There a number of attractive offerings on the market currently that like Help to Buy have low deposit requirements. West Brom building society currently has a 90% loan to value offering that allows borrowers to fix in for two years at 3.64%, representing excellent value. Similarly Yorkshire building society offers a multitude of 95% loan to value mortgages with one particular 4.99%, zero fee, and three year deal particularly catching the eye.

The question however is whether you actually need a 95% loan to value mortgage, because whilst it might seem financially beneficial and viable right now, it might be far more difficult to uphold payments on time moving forward in the future. You should strenuously analyse your finances and see if you can contribute more from your savings when looking for a mortgage so you borrow less and end up paying less interest.