Latest Regional Growth Tracker survey data from NatWest signalled only a slight upturn in business activity across the East Midlands private sector in November. The headline NatWest East Midlands Business Activity Index dropped to 50.1 in November, down from 50.4 at the start of the fourth quarter. The latest data indicated a broad stagnation in output across the region’s private sector, with the headline figure well below the series average. Growth in output was linked by firms to orders for specialised products and stockbuilding. Weighing on the expansion, however, was economic uncertainty which dampened customer demand, according to panellists. East Midlands firms indicated a further contraction in employment midway through the fourth quarter. Although companies noted that planned redundancies and cost management solutions drove the decline in workforce numbers, the pace of decrease was only fractional. Average cost burdens increased at a steeper rate during November. Moreover, the rate of inflation was the joint-fastest since July (equal with September). Despite subdued demand conditions, East Midlands businesses increased their selling prices again. Output charge inflation was reportedly driven by the pass-through of higher costs to customers. Lisa Phillips, Regional Managing Director, Midlands and East, Commercial Mid Markets, said: “East Midlands firms signalled sustained efforts to expand business activity in November, despite demand conditions weakening. “Efforts to support output and hopes of growth in activity in the coming year led to a much slower pace of decline in employment. Moreover, the pace of job shedding was the softest in 2024 so far. “Encouragingly, firms were able to raise their selling prices again, and at a solid pace. Although margins were squeezed by a faster uptick in costs while output charges increased at a softer rate, companies were able to partially pass-through higher input prices to customers.” Performance in relation to UK Of the 12 monitored UK regions and areas, only six signalled a Business Activity Index reading above 50.0 in November. Of these six, the East Midlands recorded the slowest upturn. Nevertheless, the UK average only indicated a marginal expansion in output at the national level. November data indicated a second successive monthly fall in new orders at East Midlands firms. The pace of decline quickened to the fastest since June, but was only marginal overall. Anecdotal evidence suggested that the decrease in new business was due to weaker domestic and foreign client demand, and economic uncertainty. The fall in new orders contrasted with the UK average, with only Wales and Northern Ireland recording sharper declines. Nonetheless, East Midlands companies continued to anticipate an increase in output over the coming year in November. Panellists hope for stronger demand conditions over the next 12 months, although the degree of confidence dipped to the lowest in 2024 to date. As has been the case since October 2022, East Midlands firms recorded a decrease in backlogs of work in November. The pace of decline quickened to the joint-fastest since September 2023 (alongside June 2024). That said, the rate of job shedding was the slowest in 11 months and weaker than the UK average. Meanwhile, the pace of input cost inflation was quicker than the UK average, as companies noted that greater input prices were due to higher material, wage and utility costs. The rise in selling prices was slower than the series average and the UK trend, however.

A company has been fined after it failed to manage the risk of legionella bacteria in the hot and cold water systems at HMP Lincoln. The Health and Safety Executive (HSE) investigation followed the death of an inmate. Amey Community Limited has now been fined £600,000 after pleading guilty to a health and safety offence. Graham Butterworth died on 5 December 2017 after contracting Legionnaires’ disease while serving a prison sentence at HMP Lincoln. Water samples from Mr Butterworth’s cell and nearby shower blocks tested positive for legionella days after the 71-year-old died. HSE guidance states any risks of exposure to legionella needs to be identified and managed. The investigation, carried out by HSE inspector Aaron Rashad, found Amey Community Limited, which provided facilities management services at HMP Lincoln, failed to act on a risk assessment carried out in 2016, failed to put in place a written scheme for preventing and controlling legionella risks, failed to ensure that appropriate water temperatures were maintained and failed to monitor water temperatures in the water system in October and November 2017. This allowed legionella bacteria to multiply rapidly. Amey Community Limited pleaded guilty to breaching Section 3(1) of the Health and Safety at Work etc. Act 1974. The company was fined £600,000 and ordered to pay £15,186.85 in costs at Lincoln Magistrates’ Court on 3 December 2024. HSE inspector Stacey Gamwell said: “There is a legal duty to keep workers and inmates safe in prisons. The occupants of HMP Lincoln had been put at risk of legionella bacteria and developing Legionnaires’ disease because of Amey Community Limited’s failures. “Companies such as Amey Community Limited need to ensure they have identified any risk of legionella and have suitable and sufficient arrangements in place for managing the risk and control measures they have implemented.” This HSE prosecution was brought by HSE enforcement lawyer Andy Siddall and supported by HSE paralegal officer Helen Jacob.

Capacity of the East Midlands Railway cleaning facility in Derby has been more than doubled in a £5m project competed by a company from Hull. The capacity of the train company’s Under Frame Cleaning centre at the Etches Park Depot has ben more than doubled, with capacity up for two cars to five. As part of the £5m project, employees of Hull-based Spencer Group also built a two-storey, 30 sq m staff welfare facility housing a canteen, locker rooms, changing rooms, meeting rooms and office space. Tony Cairnes, Spencer Group Site Agent said: “Working on a live depot is always challenging and access is very restricted, so collaboration between all parties is essential for a project like this. “Having more than two decades of experience in the rail engineering sector, Spencer Group is highly experienced in working in tightly-restricted environments such as this and we are trusted by clients to work efficiently with other teams, suppliers and contractors to deliver projects to the highest quality, on time, and with as little disruption as possible to the wider site operations. “Throughout the project we’ve worked closely with the client to adapt to their needs and we’ve been on a design journey with them to implement changes to ensure the facility meets the needs of the team members who will be working there.”  

Michael Ball, tax partner at Streets Chartered Accountants, considers the impact of upcoming changes to National Insurance contributions and minimum wage. The first Labour Budget in 14 years was supposedly billed as being one to drive growth, though it is hard to see how this will come about as from next April, businesses face increased costs of employing people with the rise in the national minimum wage to £12.21 an hour and employers’ National Insurance from 13.8% to 15%. Furthermore, the threshold at which employees’ earnings are liable for employers’ NIC will drop from £9,100 to £5,000. Whilst employers are set to benefit from the change in the amount of employers’ allowance that they can deduct from their bill from £5,000 to £10,000, the overall cost for most is set to rise significantly. By way of an illustration, a business employing 100 workers working 40-hour weeks at minimum wage, from next year will face an extra £103,000 in NI and an extra £160,000 in salary. So, a total extra cost of £263,000, though if you are a company the corporation tax relief available brings it down to £197,000. It is widely reported and acknowledged that whilst the changes to NIC will affect all businesses it will be especially hard hitting for those in the hospitality and care sectors and all of those for which staff costs are the greatest cost. Measures to manage the impact of the hike in employers NIC are likely to include:

• consideration to reducing head count
• reducing hours and the staffing mix
• replacing labour with technology
• holding off recruitment and even a freeze on pay or reduced pay awards in 2025.

Perhaps one of the more common approaches to soften the blow is offering a salary sacrifice scheme, whereby employees agree to reduce their gross salary in exchange for a non-cash benefit, such as additional pension contributions, tech schemes, electric vehicle schemes or bike-to-work schemes. However, care must be taken to ensure the overall package remains attractive to employees. For those employees who are company directors, it may be worth considering looking at alternative remuneration and paying a portion of their income as dividends instead of salary, as dividends are not subject to NICs. However, this approach requires the business to be profitable to make such payments. For others it might be a good time to look at taking on an apprentice, as employers who employ apprentices under the age of 25 pay a lower rate of National Insurance contributions. Under certain conditions, they may be eligible to pay no employer NICs on apprentices’ earnings up to a certain threshold. Whilst April may seem some time off, all employers and especially those with a larger number of employees and/or those for whom their payroll is the greatest cost, will need to assess and consider the impact of the pending changes. Assessing the potential increase in both your wage and NIC bills is paramount, as is talking to your accountants and their tax teams about any strategy to manage the situation. It is vital that any steps or actions taken do not fall foul of HMRC’s rules and regulations. Non compliance can lead to penalties, fines, and even reputational damage. There could also be a risk that any action taken, whilst seeming to save on tax, could lead to another unintended tax liability. See this column in the December issue of East Midlands Business Link Magazine here.

The latest KPMG and REC UK Report on Jobs survey, compiled by S&P Global, pointed to a sixth decrease in permanent placements in the Midlands in as many months midway through the final quarter of 2024. The rate of decrease was marked overall, albeit slightly softer than that seen in October. This was in stark contrast to temp billings, which rose at a solid rate during November. Sustained falls in permanent staff appointments contributed to a further steep rise in candidate availability in November, notably with permanent candidate numbers increasing to the greatest extent since June. There was a softer increase in the rate of permanent salary inflation, meanwhile, which was at the lowest in the current sequence which began in March 2021. Steep decrease in permanent placements Permanent placements fell in the Midlands for the sixth successive month in November. The rate of decrease eased only slightly from October and remained robust overall. That said, the reduction in the Midlands was the softest of the four monitored English regions. Respondents indicated weak client confidence, lower demand for staff and uncertainty. Recruiters in the Midlands recorded a rise in temporary billings in the penultimate month of 2024. The increase was solid and the strongest in five months. Anecdotal evidence suggested that firms opted for temporary staff to fill roles in the absence of suitable permanent candidates. Growth in the Midlands contrasted with a fall at the UK level, with the remaining three monitored regions seeing temp billings decrease. Demand for permanent staff in the Midlands fell for the sixth month running in November. The rate of decrease was strong, and the most pronounced since June 2020. Moreover, the Midlands saw the second-steepest fall in vacancies of the four monitored regions, ahead of the South of England. The rate of decline in demand for temporary workers was little-changed from October and moderate overall. Moreover, the reduction in the Midlands was the softest of the monitored regions. Quickest increase in permanent candidate numbers for five months The number of candidates available for permanent roles increased markedly during November, with the latest rise extending the current sequence to 20 months. The improvement in the Midlands was the sharpest since June and the strongest of the four English regions. Panelists indicated that redundancies had been one of the main factors behind the rise in candidate numbers. Recruitment companies in the Midlands reported that a lack of available temporary jobs contributed to a further rise in temp candidate availability. The rate of increase eased slightly from October but was the second-strongest recorded in the past year. The Midlands posted the fastest rise in temporary staff availability of the monitored regions. Softer rise in permanent starting salaries Salaries for new permanent joiners continued to rise during November. That said, the rate of inflation softened from the previous survey period to the weakest since the current sequence of increasing salaries began in March 2021. Recruiters often indicated that higher salaried roles were being offered to attract suitable candidates, however this was partially offset by a wider pool of candidates being available. The rise in permanent salaries was slower than the UK average. Recruitment companies in the Midlands signalled a renewed decrease in temporary pay rates midway through the final quarter of the year. The rate of reduction was marginal, but the most pronounced since October 2020, with the Midlands the only monitored region to see a fall. Kate Holt, People Consulting Partner at KPMG in the Midlands, said: “While November’s drop-off in permanent placements may be less pronounced than in other parts of the country, declining levels of recruitment in the Midlands remains a long-term issue. “Indeed, many of those that paused their plans ahead of the Budget appear not to have accelerated them again in light of the increase to National Insurance and the cost of hiring next year. “Finding people with the right skills also remains a challenge but one that needs to be addressed if businesses are to pursue their growth plans. As businesses continue to grapple with both sets of challenges, we may well see the Midlands market continue to invest in temporary appointments to plug gaps within teams.” Neil Carberry, REC Chief Executive, said: “No one should be surprised that firms took the time to re-assess their hiring needs in November after a tough Budget for employers. The drop in vacancies nationally was led by private sector permanent roles, and slower permanent recruitment billings across the month also reflected this trend. “The real question now is whether businesses will return to the market as they go into next year with greater certainty about the path ahead. “The resilience of temporary recruitment offers some hope – private sector temporary hiring activity was almost flat across the country, by comparison with the drop in permanent hiring. And in the Midlands, the increase in temporary billings was solid and the strongest in five months. “Firms are likely to rest more on temps while they manage the current uncertainty, and that only serves to emphasise again the value of flexible forms of work to companies and people who need to find work quickly after redundancy. “For policymakers, ensuring new regulations support rather than weaken our flexible jobs market is vital – especially after the Budget. Ensuring rules introduced by the Employment Rights Bill are tailored to protect agency and temporary work really matters for people.”

The effect of government policy changes and supporting the needs of the region’s business community were among topics discussed by business leaders and academics at East Midlands Chamber’s State of the Economy Conference on 5^th December, in partnership with the University of Leicester. Held at the University of Leicester School of Business, a series of talks and panel discussions sought to reflect on the performance of the East Midlands economy throughout 2024 and define support needed to enable growth in 2025. East Midlands Chamber Director of Policy and Insight Richard Blackmore shared analysis from the Chamber’s latest Quarterly Economic Survey and chaired panel discussions. Speaking afterwards he said: “The East Midlands is uniquely placed as a Centre of Trading Excellence with a wealth of growth potential, yet 2024 has seen significant economic events that directly affect considerations businesses must make as they plan ahead. “The impact of factors like interest rate changes, regional and national political change and the first Industrial Strategy in years underline the need to identify economic risk but also explore growth opportunities. “The research we conduct in our Quarterly Economic Survey gives the strongest indication of pressure points experienced first-hand by businesses in the East Midlands, how they react to challenges and secure their future. “Bringing business leaders and academics together to share their insight at this conference will be really beneficial in shaping how to best support business as we head into 2025.” East Midlands Chamber President Stuart Dawkins opened the conference. Afterwards he said: “Conferences like this are important. There’s an intersect between academia and business, yet you get business not quite understanding academia and academia not quite understanding business. “Against the current economic pressures and issues, I think there’s more feeling of togetherness now. “What was really interesting was the backdrop; the conference has come at the end of a period of instability locally, nationally and in the world with a lot of headwinds, particularly for businesses. “The overall sense was that there’s opportunity in the East Midlands. We are underfunded as a region, but we’re extremely positive, and in our use of government funding we have better return on investment than any other region. What we’ve not been as good at is in pulling together.” University of Leicester Dean of Research and Enterprise, Leicester School of Business, Mat Hughes participated in a panel discussion on what businesses want in the next 12 months.  Afterwards he said: “The government needs to give a positive environment and set signals to businesses that will encourage them to feel confident to invest and react. “Investment is not something that necessarily pays off immediately, but if we’re going to grow and change productivity, then businesses need to invest in human capital, they need to invest in digitalisation, technology and machines, in new opportunities or R&D. “Conferences like this are critical from many different points of views. You get lots of voices and stakeholders in the same room so they can understand and learn each other’s perspectives. “You get to get your finger on the pulse to see what the key priorities are, that we can then form strategies around to communicate with government, with associations and drive investment.”  Bank of England Deputy Agent for the East Midlands, Jamie Jordan gave a talk on the Bank of England’s views on the economy. Afterwards he said: “The insight you get from people on the ground collaborating together at a conference like this is of greater value than just being able to read the data statistically, and for us, it’s being able to answer why trends are emerging or changing and what the key issues are that we need to be thinking about to get to grips with the challenges and opportunities today. “We’re pleased with how the disinflationary process is going. A gradual approach towards monetary policy restraint is, we think, the most appropriate to ensure that we eradicate remaining inflationary pressure that exists in the economy, and that will help us get back to the 2% target. “We’re feeling more positive about where we are today, but there are clearly events and developments that we’ll need to take account of over time.” East Midlands Councils Executive Director Stuart Young gave a presentation on the role of EM Councils and the objectives of the All-Party Parliamentary Group (APPG). Speaking afterwards he said: “Business is the key. “Council leaders and MP’s have a direct route into government, but they need to hear from the business community. Growth can be driven out of our proposals and the alliance between businesses, MP’s and council leaders is absolute. “For our region, transport infrastructure investment is an enabler. It delivers growth, in terms of construction, but enables growth and longevity of growth. For our region that’s important. You shouldn’t work in isolation; you need conferences like this where you get a chance to mix it up and have a candid discussion.” Turner and Townsend Director and Chair of the East Midlands Chamber Derbyshire Members Forum, Mark Deakin took part in a panel discussion on economic performance and prospects. Speaking afterwards he said: “Stability is a big issue because we’ve had such turmoil through changes, U-turns and an inability, prior to the election in making decisions. “There’s not really been stability now for maybe two years, and that means everyone has had to guess where their plans are and how they will structure their business going forward. “What we’ve now got has a bottom-line impact but at least people can plan and the stoic behaviour of UK businesses should get us through that. “That’s the kind of positive of the negative position. Nothing works in isolation. Getting people talking at this conference, working together and public sector intervention will drive people talking to try and work through it.” Murphy and Son Managing Director Charles Nicholds took part in a panel discussion on what businesses want. Afterwards he said: “Stability is what’s needed for growth. We need to make sure that decisions are being made with small sized businesses in mind, and I don’t always think they are. “Some stability and clarity around what rules and regulations are would help, as we can work with most things, providing they listen to us.” Loates Business Solutions Director Sarah Loates was on a panel discussing the wants of businesses. She said: “It’s really interesting to have a mix of businesses and academia because they come at it from two perspectives. “The key for me is collaboration. It’s all about ideas and about relationships. The conversations that happen between the talks is invaluable.”

Business leaders and entrepreneurs from across the region have been appointed to the East Midlands Combined County Authority’s (EMCCA) Business Advisory Board. Following an extensive recruitment process, 11 business representatives have been recruited to the board, and they met yesterday for the inaugural meeting of the Business Advisory Board, which took place at Bolsover District Council in Derbyshire. The Business Advisory Board, chaired by David Williams, Chairman of Geldards and EMCCA’s Associate Member for Business, will provide strategy, advice and guidance to the EMCCA Board. The purpose of the Board is to strengthen the connection between EMCCA and local businesses in Nottinghamshire and Derbyshire. It will help ensure the experience and knowledge of regional businesses, large and small, is harnessed when making decisions on the economy, skills, transport, housing and the transition to net zero. At the inaugural meeting, members were provided with an overview of EMCCA’s recently launched Inclusive Growth Commission and discussed how the Business Advisory Board will inform its work. The advisory board members also discussed the current investment strategy and pipeline of development currently underway in the region, providing their input and feedback to the plans outlined. Members of the Business Advisory Board are: David Williams, Chair and EMCCA Associate Member for Business Private Sector Representation: Helen Bailey, Vice-Chair of the Institute of Quarrying Andy Byrne, Property Development Director, Devonshire Group Ian Cuddington, Economic Development Director, Rolls-Royce Jo Dilley, Managing Director, Marketing Peak District and Derbyshire Malcolm Hall, Founder and Managing Director, Hall-Fast Paul Harris, Chief Executive, Cheesecake Energy Natasha Johnson, owner, Global Entrepreneurs UK Scott Knowles, Chief Executive, East Midlands Chamber Shaun Lunn, Director, Atkins Realis Becky Rix, Marketing Director, Roadgas Nora Senior, Chair, East Midlands Freeport EMCCA Representation: Mayor of the East Midlands, Claire Ward Councillor Neghat Khan, EMCCA Portfolio Lead for investment Councillor Paul Hezelgrave, EMCCA Portfolio Lead for Skills and Employment   David Williams, Chair of the Business Advisory Board, said: “I was delighted to welcome members of the Business Advisory Board to our inaugural meeting earlier today. We had an excellent discussion and heard great contributions from our members, who provide good representation from across our region in terms of sectors, geography, and small, medium and large businesses.” Mayor of the East Midlands, Claire Ward said: “The Business Advisory Board is an important part of our collaboration with our local businesses and I look forward to hearing the views of board members going forward as we progress our work on the Inclusive Growth Commission, and our investment pipeline for our region.”

Businesses in qualifying areas of the East Midlands are being encouraged to take advantage of the fully funded business support on offer from the Accelerator project to help them improve energy efficiency and save costs. To date, nearly 1,200 businesses have attended the project’s energy efficiency and carbon reduction events and training courses, with 146 accessing the Premises Energy Audit consultancy service and 132 developing decarbonisation plans. The project, delivered by East Midlands Chamber on behalf of participating local authorities, is funded by the UK government through the UK Shared Prosperity Fund (UKSPF). It offers businesses:

• Premises Energy audits designed to help identify energy efficiency improvements and opportunities to reduce costs. Audits typically involve a one-to-three-day site visit (depending on the size or complexity of the business) to review energy usage assets and gas/electric consumption pattern (as well as fuel consumption for businesses with a large fleet of vehicles). Findings are collated into an energy savings report which not only helps reduce energy wastage but is useful supporting evidence for grant applications.
• £2,000 Growth vouchers towards the cost of specialist consultancy or bespoke training supporting the adoption of energy efficient practices that lead towards the development or implementation of a decarbonisation plan.
• Training, both in-person and online, to help businesses gain green business skills and plan their journey towards carbon neutrality, including the one-day certified course on Carbon Literacy taking place on Tuesday, 21st January.
• Energy reduction workshops at Toyota Motor Manufacturing offering practical demonstration and shop floor observations with Toyota’s energy specialists, the next of which takes place on Thursday, 13^th February.
• Access to online sustainability platform Zellar to help showcase the real-time environmental impact of activities and to produce a decarbonisation plan.

East Midlands Chamber Deputy Chief Executive Diane Beresford said: “The environmental benefits of reducing your carbon footprint are well documented but there are much wider advantages for your business. It helps you become legislation compliant, supports your procurement and tendering processes, builds resilience and, of course, reduces costs. “From bite-sized webinars to accredited training, premises energy audits and consultancy funding, the Accelerator project is helping businesses in very practical ways to save costs and energy and become greener and more resilient. For any business that has yet to take advantage of the Accelerator project, I would urge them to do so before the project ends in March.”