LATEST ECONOMIC BRIEFING – PRECIS

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ECONOMIC BRIEFING – PRECIS

Headlines

The latest figures published by the Government (19th May 2020) show:

  • 8 million jobs have now been furloughed, with £11.1bn claimed so far through the Coronavirus Job Retention Scheme.
  • 2 million Self-Employment Income Support claims have been submitted, worth £6.1bn.
  • The Bounce Back Loan Scheme has seen 464,393 approved loans so far, worth £14.18bn.
  • The Coronavirus Business Interruption Loan Scheme has seen 40,564 loans worth £7.25bn approved so far.
  • The Coronavirus Large Business Interruption Loan Scheme has seen 86 approved loans totalling £0.59bn.

The latest Treasury compilation of independent economic forecasts show:

  • GDP growth of -7.9% in 2020 (6.0% in 2021)
  • Employment growth -3.8% (1.2% in 2021)
  • Unemployment rate 7.3% (5.9% in 2021).

Figures published this week by the ONS have shown that the number of people claiming unemployment benefits in Britain rose by 856,500 in April, to 2.097 million (a 67% increase), the biggest ever month-on-month jump.

The latest DWP statistics on Universal Credit for April 2020 (counted 9th April) provisionally show 50,407 claimants in Leeds, an increase of 14,957 (42%) from March. UC claimants can be both out of work, and in-work (claiming top-up allowances).

This week we are seeing clear indications that the easing of the lockdown is taking effect. On average, traffic flows were up 10% on last week (21% more at weekends), with city centre footfall and public transport use also showing modest increases. We expect this to continue, and rail services across Leeds and Yorkshire will be increased from c. 50% of the normal timetable to 70% from next week. This week saw an increase in passengers by between 5% and 8%.

The number of people hurt in collisions on the roads in Leeds plummeted in the weeks after the city went into lockdown on 23rd March 2020. Provisional data for the first 20 weeks of 2020 reveals that the number of casualties (regardless of severity) fell by 44% compared to the same period in 2019 (713 to 401); those Killed/Seriously Injured have reduced by 40% (126 to 77) from 2019 to 2020.

British retail sales fell by a record 18.1% in April as many stores were closed. The drop in April worsened from a fall of 5.2% in March, when the Government first introduced lockdown measures.

The Digital Enterprise Covid-19 Survey received 350 responses and these have now been evaluated. Overall, all sectors and sizes of businesses have been impacted by the COVID-19 crisis and subsequent lockdown, although particularly smaller firms. The main impacts upon businesses related to falling customer numbers; profitability; turnover; and cash flow. An easing of the lockdown will help many businesses recover their customers, but diversifying sales channels using digital technologies will become an even higher priority for many businesses with outdated web portals or inadequate web presence. The need of businesses to embrace digital transformation has become the highest priority for many firms

Leeds Teaching Hospital Trust has joined 170 NHS hospitals in recruiting COVID-19 patients to participate in a new study of the disease, performed in partnership between the GenOMICC Study Consortium and Genomics England. The study will help to understand the virus’ varied effects on individuals and support the search for treatments. The study aims to sequence the genomes of 20,000 people who are severely ill with COVID-19. 2,000 patients have been recruited to the GenOMICC study already.

The Manufacturing Recovery Plan has been developed in partnership with key strategic partners, including LCR’s LEP and the LCR Manufacturing Supply Chain Programme and the Employment and Skills Service, providing a coordinated approach to delivering comprehensive support for manufacturing SMEs as well as building resilience. Further details are available on the website: https://www.manufacturing-recovery.co.uk/.

The Council continues to pay out grants to those who qualify either through the Small Business Grant Fund or the Retail, Hospitality and Leisure Grant Fund immediately. The latest figures available (Thursday 21st May) indicate a total of 10,915 grants valued at £134,860,000 had been paid. The Council is continuing to work through the more complex cases ensuring monies are paid as quickly as possible.

On 20th May Leeds City Council was notified that the Discretionary Grant Fund would amount to a minimum amount of £7,795,000. The criteria for those businesses eligible for the scheme is currently being finalised and the Council will make an announcement early next week setting out the next steps.

Good News Stories

Leeds-based angel investors, connected to the NorthInvest network, along with other companies have invested in hand sanitiser dispenser start-up Handi. The touch-less dispense start-up was created to mobilise health technology in response to COVID-19 and to build the world’s largest cloud-connected network of internet-based hygiene technology. NorthInvest also recently invested in Promatica Digital Solutions to provide resource management services to the NHS.

Horsforth-based UX Global, a digital solutions provider, has created Auto-Q, a bespoke digital signage solution which allows retailers to measure the number of customers inside their store at any given time. It also provides a ‘traffic light’ system for automatic control of entry to the store, along with the additional ability to advertise key information to waiting customers. It operates using 3D sensors installed at the store entrance and exit points, which provide an accurate, real-time measure of exactly how many people are inside, with programmable email and push notifications alerting staff at key capacity thresholds. The digital display can also be used for advertising purposes and to communicate real-time store information to customers, such as estimated waiting times and safety guidance. The Auto-Q solution is immediately available to retailers.

Avacta Group (which has a site in Wetherby) has announced that it has entered into an exclusive distribution agreement with Medusa19 Limited for direct-to-consumer sales of a saliva-based rapid test for the COVID-19 antigen.

Shenward chartered accountants and business advisers, who have offices in Leeds and Bradford, have helped clients secure more than £10m of financial support during the COVID-19 outbreak. They provide business support and advice to clients in order to claim other available Government support, such as the Coronavirus Job Retention Scheme, grants and deferrals of VAT and income tax payments.

Business Intelligence

The Intelligence Hub has convened a weekly conference call to ascertain the main issues from businesses. This week these include:

  • Broad consensus on returning to work being contingent on schools reopening.
  • Businesses feel the government guidance on reopening is clear, with only 1 in 10 saying they would be unable to implement it and therefore not reopen – female sole traders may be disproportionately impacted where they act as primary carers.
  • City Centre Action Plan developed collaboratively with city centre businesses, including around the messages, social distancing, queuing and crime.
  • Businesses want the Job Retention Scheme to be more flexible as soon as possible, rather than waiting until August.

British Chamber of Commerce

The latest Chamber Coronavirus Business Impact Tracker, which serves as a barometer of the pandemic’s impact on businesses and the effectiveness of Government support measures, was conducted between 13th and 15th May 2020, after the Government’s furloughing scheme was extended until the end of October.

The majority of firms surveyed are in a position to partially restart operation as lockdown restrictions are eased with 83% reporting that they know some or a lot about Government guidance on working safely; 37% report they can implement the guidance and fully restart, with 45% reporting they can partially restart. However, 10% did not agree that they would be ready to implement guidance and restart operations, mainly citing social distancing as difficult. Some sectors still require greater clarity on when and how they will be allowed to reopen premises and restart operations, particularly in relation to Hospitality and Leisure companies, who will not reopen before July at the earliest.

70% of employers have furloughed a portion of their staff, with 85% of respondents having received payment from the Government’s furloughing scheme, an increase from last week (73%) and the week before (59%). The scheme continues to prevent firms having to make redundancies, with very few respondents making any. The extension of the scheme has been welcomed by employers, although it will be critical to introduce high levels of flexibility to phase employees back to work.

There has been encouraging take-up of the Government’s Bounce Back Loan Scheme, with 54% of those attempting to secure a loan being successful (an increase on last week’s 26%). However, the Chamber report that many firms are not in a position to take on debt, so they say Government must consider further expansion of grant schemes to ensure as many businesses as possible get access to the support they need.

LEP / WYCA analysis

Enquires relating to COVID-19 have begun to fall and there were fewer interactions to report this week (132 compared to 250 the previous week) and the number of web hits on COVID-19 related pages was also down by 25%. As with previous weeks, contacts continue to come most frequently from business-to-consumer sectors, wholesale and retail (44% of all contacts) and hospitality (7%), as well as manufacturing (15%). Two thirds of contacts discussed issues around cash flow or access to grants/finance.

Local authorities in the Leeds City Region (LCR) have paid out almost £575m in grants to 49,000 businesses via the small business rates relief and retail and hospitality support schemes. 78% of funding has been paid out so far. In West Yorkshire, £415m has been paid out to 36,000 businesses – 75% of total funding. 74% of funding has been paid out nationally.

Digital Enterprise COVID-19 Survey results

The Digital Enterprise team felt it was important to engage with businesses to learn more about how business priorities have changed during the coronavirus pandemic and how the team can ensure they are providing the help needed. An online survey was carried out so that the digital requirements of business could be obtained. The responses received will help the team to develop their programme so that it is suitable for both current and future needs.

350 responses to the survey were received and these have now been evaluated.

  • Overall, all sectors and sizes of businesses have been impacted by the COVID-19 crisis and subsequent lockdown, although particularly smaller firms.
  • The main impacts upon businesses related to falling customer numbers; profitability; turnover; and cash flow. An easing of the lockdown will help many businesses recover their customers, but diversifying sales channels using digital technologies will become an even higher priority for many businesses with outdated web portals or inadequate web presence.
  • The need of businesses to embrace digital transformation has become the highest priority for many firms – requiring a need to fundamentally revise business models and modes of operation (using cloud-based technologies and platforms) in order to operate flexibly and to build business resilience.
  • Business support interventions will need to consider greater funding support and higher intervention offers for firms struggling with cash flow constraints and lacking any business confidence.
  • Investment in cloud-based technologies and hardware for staff will grow for many firms (particularly smaller firms) so that they can build business resilience and flexibility, particularly if further lockdowns are required.

The views of businesses are already being incorporated into the Digital Enterprise team’s programme of webinars and the team is busy devising new funding support too – in particular the introduction of a Digital Resilience Voucher which can be used by businesses to ensure they are able to continue to operate, both now and in the future, in the event of another crisis.

NP11 meeting of Leaders from across the North

Leaders from across the North have met virtually to discuss the impact of the ongoing pandemic on the region’s economy and business community. The NP11-hosted venture heard from the Minister for Business and Industry, Nadhim Zahawi MP, together with the Minister for Regional Growth and Local Government, Simon Clarke MP.

The meeting provided the opportunity to put forward questions and comments on how industries across the North could rise to the challenges and prepare for a strong recovery. Discussion points covered the current application processes for new loans and repayments, the potential for retraining and reskilling employees across key sectors and options for existing and further devolution of place-based investment models.

Chair of the NP11 and LCR Local Enterprise Partnership Roger Marsh stated that the NP11’s network of northern LEPs have been working with the Government and regional partners to accelerate new business support mechanisms and unlock further funding where possible. He acknowledged that ongoing insight from the North’s business community is vital to help ensure collaborative working to create new opportunities to rebuild the northern economy.

Independent economic forecasts

The latest Treasury compilation of independent economic forecasts show:

  • GDP growth of -7.9% in 2020 (6.0% in 2021)
  • Employment growth -3.8% (1.2% in 2021)
  • Unemployment rate 7.3% (5.9% in 2021).

UK inflation fell to lowest level in four years in April 2020

The Office for National Statistics (ONS) has said that inflation in Britain fell to just 0.8% in April 2020, its lowest level in four years. The ONS pointed to the coronavirus lockdown as the reason for this, as it sent oil prices crashing and transport costs fell, as well as a fall in the cost of clothing and secondhand cars, which also depressed average prices. Consumer groups had been reporting that the prices of many goods have increased during the lockdown, but the ONS said shop prices stayed level between March and April 2020.

Huge rise in people claiming unemployment benefit – Office for National Statistics (ONS) and Reuters

Figures published this week by the ONS have shown that the number of people claiming unemployment benefits in Britain rose by 856,500 in April, to 2.097 million (a 67% increase), the biggest ever month-on-month jump.

Reuters reports that the increase would have been even sharper without the Government’s furloughing programme.

The ONS said emergency changes to the welfare system meant the claimant count number included more people who were still actually in work than normal, but the scale of the rise in claims showed the hit to the labour market.

Separate ONS figures showed UK unemployment rose by 50,000 to 1.35m in the three months to March. The unemployment rate was estimated at 3.9%, slightly down on the previous quarter. Before the lockdown, employment had hit a record high.

The Resolution Foundation – disproportionate impact of coronavirus on the youngest, oldest and low-paid

According to research by the Resolution Foundation, younger and older workers have experienced the brunt of the hit to jobs and pay during the coronavirus pandemic. One-third of 18 to 24 year old employees (excluding students) have lost jobs or been furloughed, compared to one-in-six prime-age adults, with these experiences also more common among employees in atypical jobs.

The research also shows that young employees are most likely to have lost work due to furloughing, jobs losses and hours reductions. Around a quarter of 18- to 24-year olds have been furloughed and a further 9% have lost their jobs altogether – the highest figures out of all age groups.

Overall, the findings of the Resolution Foundation show the disproportionate impact of the coronavirus on the youngest and oldest earners. These employees are more likely to have lost work or been furloughed due to the crisis than those of prime age and have experienced the biggest pay swings with large proportions losing earnings. The Government’s furloughing scheme is helping many of these affects but as the crisis continues to unfold, comprehensive support across ages and targeted support for the very youngest workers will be essential to minimise the damage done, and especially to minimise long-term employment and pay scarring for the young. The Resolution Foundation says that the Government should prepare its response to the next phase of the crisis, which should include policies such as Job Guarantees for young people and broad fiscal stimulus to boost demand in the economy and raise household incomes.

COVID-19 impact on apprenticeships

A study by the Sutton Trust has found that almost two-thirds of companies with apprenticeship schemes have had to axe their programmes. The study also warns that the 7% decline in new apprenticeships at the beginning of the academic year would be exacerbated by the difficulties lockdown has caused for workplace teaching. Furthermore, just 39% of apprenticeships were continuing as normal in April and 44% of apprentices have been furloughed or made redundant, with 37% of employers reporting some apprentices as being unable to work remotely.

Surge in demand for Citizens Advice services

Citizens Advice has seen record-breaking demand for help during the coronavirus crisis. Between 16th March 2020 and 6th May 2020, its website saw a total of 13 million page views, an increase of 29% on last year.

 Employment and Skills Support

Leeds Trinity University and the West Yorkshire Consortium of Colleges are currently offering a series of free online digital courses during lock down. Users will receive one-to-one support from local tutors and industry professionals. Flexible to individual needs, the majority of courses are delivered in the evenings or at weekends.

Further details available at https://futuregoals.co.uk/reboot/.

 Universal Credit claimants

The latest DWP statistics on Universal Credit for April 2020 (counted 9th April) provisionally show 50,407 claimants in Leeds, an increase of 14,957 (42%) from March, the figures for Leeds roughly follow England and Yorkshire and Humber trends. The figures will not be finalised for another month but usually are within a 2% margin of error. Provisional figures do not show the breakdown of those in-work (but still requiring Universal Credit – for example they work a limited number of hours) and out of work. Historically for Leeds those in-work claiming UC make up one third of the total and those out of work, two thirds.

Business Support Measures – delivered locally

Grants

The Council continues to pay out grants to those who qualify either through the Small Business Grant Fund or the Retail, Hospitality and Leisure Grant Fund immediately. The latest figures available (Thursday 21st May) indicate a total of 10,915 grants valued at £134,860,000 had been paid. The Council is continuing to work through the more complex cases ensuring monies are paid as quickly as possible.

On 20th May Leeds City Council was notified that the Discretionary Grant Fund would amount to a minimum amount of £7,795,000. This is a baseline to provide the fixed minimum 5% allocation for each Local Authority, to give certainty. The value of the 5% allocation will increase in line with the amount we pay out from the Small Business Grant Fund and Retail, Hospitality and Leisure Grant Fund as we achieve a higher number of business hereditaments supported and grants awarded under those schemes.

The criteria for those businesses eligible for the scheme is currently being finalised and the Council will make an announcement early next week setting out the next steps.

Free webinars for businesses

The LCR LEP has recently released a series of free webinars to support businesses during lockdown. Topics covered include the impact of COVID-19, business development and skills. Further details are available on their website: https://www.the-lep.com/business-support/events/.

Free Yorkshire Mafia Business Directory listings for SMEs

Yorkshire Mafia are currently listing SME businesses in the Yorkshire Mafia Business Directory for free. Listings to appear in the Directory previously cost £200+ VAT; however this is currently being offered for free to provide support to small and medium-sized businesses.

Business Support Measures – delivered nationally

Latest Government figures relating to Government coronavirus support schemes

The latest figures published by the Government (19th May 2020) show:

  • 8 million jobs have now been furloughed, with £11.1bn claimed so far through the Coronavirus Job Retention Scheme.
  • 2 million Self-Employment Income Support claims have been submitted, worth £6.1bn.
  • The Bounce Back Loan Scheme has seen 464,393 approved loans so far, worth £14.18bn.
  • The Coronavirus Business Interruption Loan Scheme has seen 40,564 loans worth £7.25bn approved so far.
  • The Coronavirus Large Business Interruption Loan Scheme has seen 86 approved loans totalling £0.59bn.

Government Taskforces – Cultural Renewal Taskforce and funding boost announced

The Government has announced representatives from the arts, cultural and sporting worlds will join a new taskforce to help get the country’s recreation and leisure sector up and running again. Details of the representatives can be found here.

In total, five new ministerial-led taskforces have been set up to develop blueprints for how and when closed businesses and venues can reopen safely, following publication of the UK Government’s National COVID-19 Recovery Strategy. The five taskforces cover Recreation and leisure; Pubs and restaurants; Non-essential retail; Places of worship; and International aviation.

Government extends maximum loan size in Coronavirus Large Business Interruption Loan Scheme (CLBILS)

The Government has extending the maximum loan size available from the CLBILS from £50m to £200m. Loans under the expanded scheme will be made available to large businesses affected by coronavirus from 26th May 2020. Changes also mean companies receiving help through CLBILS and the Bank of England’s Coronavirus Corporate Financing Fund (CCFF) will be asked to agree to not pay dividends and exercise restraint on senior pay.

The extension of the maximum loan size will help ensure large firms who do not qualify for the Bank of England’s CCFF have enough finance to meet cashflow needs during the outbreak.

Coronavirus Statutory Sick Pay Rebate Scheme set to launch

 Employers will be able to make claims through the Coronavirus Statutory Sick Pay Rebate Scheme from 26th May 2020. A new online service is being launched for small and medium sized employers to recover Statutory Sick Pay (SSP) payments they have made to their employees.

Employers will receive repayments at the relevant rate of SSP that they have paid to current or former employees for eligible periods of sickness starting on or after 13th March 2020. They are eligible if they have a PAYE payroll scheme that was created and started before 28th February 2020 and they had fewer than 250 employees before the same date. The repayment will cover up to two weeks of SSP and is payable if an employee is unable to work because they have coronavirus; are self-isolating and unable to work from home; or are shielding because they have been advised that they are at high risk of severe illness from coronavirus.

Government’s launches Clean Growth Fund

The Government has launched a £40m Clean Growth Fund to accelerate early-stage green start-up businesses. The fund will be accessible to UK-based companies driving green technology across the power, transport, waste and building energy efficiency sectors. The Government will contribute half of the initial £40m funding pot, together with one of the UK’s largest charity investors, CCLA, to be managed by Clean Growth Investment Management.

Government’s Future Fund launches

The Government’s £500m Future Fund opened on 20th May 2020 for applications, with innovative and high-growth British businesses able to secure investment to help them through the coronavirus outbreak. UK-based companies can now apply for a convertible loan of between £125k and £5m to support continued growth and innovation in sectors such as technology, life sciences and creative industries.

The Government has made an initial £250m available for investment through the scheme and will consider increasing this if needed. Private investors (potentially including venture capital funds, angel investors and those backed by regional funds) will at least match the Government investment in companies.

The Fund will be open until September and is delivered in partnership with the British Business Bank.

Government announce £40m funding for cutting-edge start-ups

The Government has announced that innovative businesses and start-ups are set to benefit from a £40m investment to drive forward new technological advances. Projects to benefit from the funding include virtual reality training platforms for surgeons, virtual farmers’ markets and other innovations borne out of the coronavirus pandemic.

Funding comes from a £211m Government investment package to encourage businesses developing new technologies, part of wider investment package of £1.25bn for innovate UK businesses announced in April 2020.

Government unlocks £150m from dormant accounts for charities, social enterprises and vulnerable people

The Government has accelerated the release of £150m from dormant bank and building society accounts to help charities, social enterprise and vulnerable individuals during the coronavirus outbreak. This includes accelerating the release of £71 million of new funds from dormant accounts alongside £79 million already unlocked that will be repurposed to help charities’ coronavirus response and recovery. The funding will support urgent work to tackle youth unemployment, expand access to emergency loans for civil society organisations and help improve the availability of fair, affordable credit to people in vulnerable circumstances.