The Bank of England has held interest rates at 5.25%.
The Bank of England’s Monetary Policy Committee (MPC), which sets monetary policy to meet the 2% inflation target, voted by a majority of 6–3 to maintain Bank Rate at 5.25%.
Three members preferred to increase Bank Rate by 0.25 percentage points, to 5.5%.
It marks the third interest rates pause following a run of 14 increases as the Bank tries to get inflation under control. Looking ahead, the MPC noted in a statement that “monetary policy is likely to need to be restrictive for an extended period of time.”
David Bharier, Head of Research at the British Chambers of Commerce, said: “While a cut in the interest rate could have provided some relief for firms ahead of Christmas, today’s decision to hold at 5.25% was expected and allays fears of further rises.
“UK businesses have been faced with the twin shock of an inflation crisis and increased borrowing costs. Around half of the businesses we survey report a direct negative impact from the current interest rate, while only around one in ten see a benefit.
“The BCC’s latest Economic Forecast expects only a 0.25% point cut in the interest rate for the whole of 2024, although businesses need to be prepared for any unexpected changes given the uncertain policy landscape.
“SMEs have been operating in an uncertain climate for too long, with policies constantly chopping and changing over the past few years. They need to see clear direction from decision makers, creating a roadmap for business that boosts confidence and investment.”
Rolls-Royce and Deutz AG are in positive discussions for the sale of the off-highway engines business in the lower power range up to 480 kW to Deutz AG for a price in the high double-digit million Euros.
This relates to diesel engines and engine systems using Daimler technology which are developed and manufactured by Daimler Truck AG for Rolls-Royce Power Systems to its specifications and used mainly in agricultural vehicles and construction machinery, not in rolling stock or in military vehicles.
Rolls-Royce recently presented its strategy to become a high performing, competitive, resilient and growing business to investors. In the Power Systems division the focus will be on the strategic growth areas of power generation, governmental, marine, service and the future field of battery energy storage systems.
Tufan Erginbilgic, CEO, Rolls-Royce plc, said: “This is a clear illustration of our strategy in action. Becoming more focused on the markets where we know Rolls-Royce can win.
“Power Systems is an integral part of our organisation with a strong brand and real advantage in power generation, governmental and marine end-markets, where we see the strongest demand and an opportunity for better returns from our power-dense and reliable solutions.”
Dr. Jörg Stratmann, CEO of Rolls-Royce’s Power Systems, said: “As we evolve our strategy, we are also constantly analysing our product portfolio. As a result, we will be concentrating largely on higher-powered systems in the off-highway engine sector, primarily from our in-house production.
“We have therefore decided to transfer our successful lower-power-range engines business, which uses Daimler technology, to a partner.”
A new survey from Acas has found that eight out of ten employees (80%) in the East Midlands are not aware that they will have a right to request flexible working from their employer from day one of their job next year.
All employees who have worked for their employer for 26 weeks or more currently have the right to ask if they can work flexibly. A new change in the law will make this a right that applies from the first day of employment.
Acas Chief Executive Susan Clews said: “There has been a substantial shift in flexible working globally, which has allowed more people to better balance their working lives and employers have also benefitted from being an attractive place to work.
“It is important for bosses and staff in the East Midlands to be prepared for new changes to the law around the right to request flexible working, which will be coming into force next year.
“Acas has just consulted on a new draft Code of Practice, which strengthens good practice on flexible working and addresses important upcoming changes to the law. The final new Code will be published next year.”
The day one right to request flexible working will come into force on 6 April 2024. Additional law reforms on flexible working that are outlined in the Employment Relations (Flexible Working) Act 2023 are expected to come in at the same time.
Work on Nottinghamshire County Council’s new low carbon, all-electric office, north of Hucknall along A611 Annesley Road, has now begun as part of a major investment in the area.
The new office is designed to help bring long-term savings for the taxpayer and environment as part of a wider project to move more front-line council services into cost-effective, energy saving buildings.
It also marks a key milestone for the site which is planned to be regenerated into a new community which will include 805 new homes. The site is on council-owned land which has been earmarked for development for more than a decade.
Nottinghamshire County Council Leader, Councillor Ben Bradley MP, welcomed the start of work on site. He said: “This a key milestone and shows we are looking to the future. The decision-making function of this Council will be based in the very heart of our county and will help to bring jobs, skills and investment into the wider Hucknall area.
“In going down from 17 offices to 9, we’re saving local taxpayers millions, and ensuring that we can prioritise delivering services rather than just running expensive buildings. We’ve got a plan to make local services more sustainable for local people, for the long term.”
Nottinghamshire County Councillor Keith Girling, Cabinet Member for Economic Development and Asset Management, added: “This new, carbon-neutral office provides good value and is part of our wider plans to reduce the number of council offices as we modernise the way we work which will save taxpayers’ money in the long term.
“One of the many advantages of this new building is that Morgan Sindall’s local supply chain will benefit from this, which is great news for the economy.”
The first phase of works for the new office includes site clearance and creating a safe access to site. Construction work is due to start in the New Year and due to be completed in early 2025.
As well as the Council’s civic, democratic and leadership functions, it will be the new home to two key frontline services, the Multi Agency Safeguarding Hub (MASH) for vulnerable children and adults, and the council’s customer service centre, which handles all public enquiries.
Meanwhile, construction of a new section of road and roundabout within the site, which began in September 2023, is progressing well and expected to be completed by Summer 2024. The aim is to improve access to the new office and ultimately help traffic flow ahead of planned new housing due to be built on the wider site.
The new office is being designed, project and cost-managed by Arc Partnership and delivered through Arc’s construction partner, Morgan Sindall Construction, with opportunities for their own local supply chain as the development takes shape.
Earlier in the summer, the majority of county councillors voted to eventually move out of County Hall in West Bridgford and move the Council’s civic, democratic and leadership functions into the new office.
County Hall is too expensive to operate and maintain with a cost of more than £1.7m each year. It also requires essential maintenance costing more than £30m over the next 12 years, plus an additional £28m would be needed to bring the building up to modern environmental standards. And with the rise of home working, it is too large to meet council needs.
Operam Education Group – the BGF-backed education recruitment specialist – has completed its first acquisition in the further education (FE) sector in the latest in a series of strategic acquisitions.
The company has acquired Nottingham-based Provision Recruitment for an undisclosed sum in a deal supported by HSBC and BGF.
Founded in 2004, Provision Recruitment has built up a strong reputation in the FE sector, supporting colleges with the recruitment of lecturers. It is the third Midlands-based acquisition by Operam, joining Teachers UK and First for Education.
The latest deal not only strengthens its regional footprint, but also enables the specialist education recruitment group to further expand into the FE sector across the UK, complementing its expertise in primary, secondary, SEND and tutoring recruitment.
Operam CEO Eddie Austin said: “Traditionally, the business has focused on mainstream and SEND education, as part our buy-and-build growth ambitions. This is our first acquisition in the further education sector which enables us to broaden our reach, both from a geographical and sector perspective, integrating a well-established businesses into the group that has real potential to scale across different locations in the UK.”
He added: “This latest acquisition is hugely complementary to our existing suite of services and means we now have the ability to support those in education right from primary school settings through to further education.”
Last year, BGF committed a further £2.5 million in follow-on funding to support Operam’s buy-and-build growth strategy, alongside £2.5 million of senior debt from HSBC.
BGF investor Rob Johnson added: “This is another exciting addition to the Operam portfolio – one which will further diversify both our service offering and client base. We look forward to welcoming Provision into the group, as we continue to cement Operam’s position as one of the leading education recruitment services providers in the UK.”
Operam Education Group were advised by Squire Patton Boggs (legal), and Connect CF (deal origination).
Provision Recruitment Limited were advised by Nelson Solicitors (legal).
Olympian Homes and Housing Growth Partnership (HGP) have formed an equity Joint Venture (JV) to deliver a 790-bed Purpose Built Student Accommodation Scheme (PBSA) in Nottingham city centre. The scheme, which will also include 19 affordable homes, has a Gross Development Value of c. £120 million.
Known as ‘Forest Mill’, the PBSA scheme will comprise 790 beds across three buildings. Features will include a Café & Co-Working Space, games area with table tennis, air hockey, fussball, shuffleboard, private dining, gym, yoga studio, cinema room, gaming booth and a garden terrace.
Located on Alfreton Road, the site is a 13-minute walk from the Nottingham Trent University campus, a 12-minute bus ride from the University of Nottingham Jubilee Campus and a 16-minute walk from the city centre.
The site adjacent to the PBSA blocks will see the delivery of 19 affordable homes. The three-bedroom family homes will contribute to the Council’s housing delivery targets and crucially provide accommodation for residents on low incomes.
Having acquired the site in September 2021, Olympian secured planning in June 2022. RG Construction has been awarded the build contract for the PBSA element and Tanbry Construction the affordable housing element. Enabling works began in July 2023 and main construction will start in December 2023, with completion scheduled ahead of the 2025/26 academic year.
James Lindridge, Development Director at Olympian Homes, said: “We are thankful for the pragmatic nature of Nottingham City Council in supporting our vision and addressing the supply/demand imbalance of PBSA and affordable homes within Nottingham.
“We look forward to commencing works onsite, engaging with local stakeholders and contributing to Nottingham’s ambitious growth plans. The transaction is our second Olympian PBSA funding completion of 2023 and demonstrates the high level of investor confidence in the UK PBSA sector despite the turbulent macro-economic backdrop.
“We have enjoyed working with HGP and believe this will be the start of a strong, long-term partnership.”
Mark Slatter, Chairman of Olympian Homes, said: “This is a great place making opportunity for a landmark high quality Student Accommodation scheme alongside much needed Affordable Homes and many thanks to all our stakeholders for making this happen in very challenging times.”
Colin Bennett, Investment Director, HGP, added: “Forest Mill is a bold, high specification scheme, with strong amenity that will bring economic growth to the area and create further regeneration opportunities in the city; whilst also supporting the provision of much needed affordable homes.
“We have built a strong partnership with the Olympian team and look forward to working with them in delivering this scheme and future opportunities.
“Forest Mill is landmark transaction for HGP, representing our third, and largest, equity investment in the PBSA sector to date. Having recently supported new developments in Glasgow and Dundee, we have strong appetite to grow our exposure in the sector, supporting the delivery of high quality schemes in critically undersupplied UK university cities.”
Laurie Marsh, Senior Director at JLL Living Capital Markets, which advised on the both the JV debt and equity financing structuring, said: “We are delighted to have supported the Olympian team on capital raising for another significant PBSA transaction this year.
“Advising across the capital stack allowed us to think creatively in sourcing best in class partners to help bring Forest Mill forward. The JV creation further evidences the attractiveness of the Living sector for investors and the positive momentum we are seeing building into 2024.”
Olympian Homes was advised by JLL Living Capital Markets and Freeths and HGP was advised by Shoosmiths.
Demolition has begun ahead of the next round of construction at Castleward.
Site preparation works for Phase Four – the penultimate phase – of the major city-centre regeneration scheme will pave the way for construction work to begin in 2024.
These site preparation works will include the demolition of the former Derbyshire County Transport and Tarmac sites that were transferred to developer Compendium Living earlier this year.
This latest phase, which was given the go-ahead by planners in May, will provide 112 new homes in a mix of two-, three-, and four-bedroom houses, and one- and two-bedroom apartments.
In all Castleward will deliver around 800 new homes, alongside green spaces, commercial units, and a new gateway to the city, in what is one of Derby’s largest regeneration projects.
Demolition for Phase Four is the latest milestone for the scheme, after the full completion of Phases One and Two, including the construction of a brand new primary school – Castleward Spencer Academy – and the opening of showhomes at Phase Three.
Councillor Nadine Peatfield, Cabinet Member for City Centre, Regeneration, Culture and Tourism, said: “It’s great to see work progressing so quickly at Castleward as we continue to encourage people to come and call the city centre their home.
“It’s exciting to know that while Phase Three is still in the final stages of construction, work is already well under way for Phase Four and we will be able to celebrate the opening of even more city centre homes in the near future.”
The Ashbourne Reborn programme has taken another significant step forward as Ashbourne Methodist Church’s planning application for the development of church buildings into a multi-purpose community hub has been approved unanimously.
Derbyshire Dales District Council’s Planning Committee voted in support of the Planning and Listed Building applications for the Link Community Hub.
Work can start on the church next year subject to meeting conditions relating to ecology, the protection of wildlife and flood risk.
This project forms an important part of the Ashbourne Reborn programme and will see the building of a new foyer linking three current buildings into one accessible suite, creating a flexible performance, events and worship space.
Meeting rooms of various sizes will be developed for community and business use, and the Gateway Centre will be remodelled to provide affordable quality visitor accommodation. The Cornerstone Coffee Shop will be upgraded and a community garden created with ramped access.
Work is anticipated to start in June 2024, and be completed by summer 2025.
Speaking after the meeting, Tony Walker, leader of the Link Development Team of Ashbourne Methodist Church, said: “We are absolutely delighted to have received planning permission for the full scheme as envisioned in the Ashbourne Reborn proposals.
“Our vision is to provide a seven-days-a-week community, arts and church resource which contributes to our town for decades to come. With this approval, and the funding we have, we can look forward with confidence to this vision becoming a reality.”
Image courtesy of Derbyshire Dales District Council
Leicestershire County Council is considering how to deliver services differently as forecasts show its budget gap could top £85m by 2028.
Published yesterday (Wednesday), the authority’s four-year proposals include investing £127m more to meet growing demand, mainly in social care, and an extra £113m to cover inflation and the National Living Wage increase.
A three per cent Council Tax increase for core services is planned for next year, generating £11m for front line services. A further £7m will be raised from a two per cent increase in the adult social care precept.
Spiralling social care prices, growing service demand and inflation are driving up costs for councils across the country and means that for the first time, it’s planned to use up to £12m of reserves to help balance the books next year.
Pressures include:
Surging cost of placements for children in care – with costs for just 10 children with complex needs now reaching £5m
A 56 per cent rise in unaccompanied asylum seeking children in care and care leavers since last year
Over £220m of net inflation and service pressures across the next four years – compared to £100m of increased income (including Council Tax)
Major redesigns of children’s and adults’ social care are already underway to bring down future demand and costs by millions-of-pounds, such as creating more new placements locally, rolling out new technology and helping more people live independently.
Controls around recruitment, procurement and other spend have also been tightened up to help bring down the council’s budget gap.
Declan Keegan, the council’s director of corporate resources, said: “Councils are facing their toughest ever budget challenge. Although we are not in crisis, we have to tackle the 20 per cent gap between expenditure and income, so need to deliver services differently.
“Supporting vulnerable people remains our priority. And with costs and demand rocketing, it’s crucial we continue to transform how we work whilst also getting people the help they need.
“We’re low funded, very efficient and high performing. But the Government’s autumn statement was dire for councils, with no extra funding and the national living wage increase alone adding £20m to our costs.
“From stepping up finance controls, to making sure we’re not subsidising other organisations’ services, we’re doing everything we can to bring down our significant budget gap. Using our reserves to help make ends meet is clearly not sustainable.”
The four-year budget plan includes:
A £12m budget shortfall next year – rising to £33m in 2026, £60m in 2027 and £85m in 2028
£127m more to support vulnerable people – to pay for more home and residential care, and support people with physical disabilities, learning disabilities and mental health needs
Major redesigns of services to manage future demand, including:
Special educational needs and disabilities – a new approach balancing growing demand for support with getting children the right help
Working with Barnardo’s to run children’s homes locally
Boosting ‘supported living’ – over 100 new placements created since 2020, enabling people with learning and physical disabilities and mental health needs to learn life skills and live independently
Rolling out ‘care technology’ – over 2,600 pieces of equipment, including falls detectors and GPS location trackers, installed over last year, benefiting over 1,000 people
£36m of savings – including redesigning services, reducing the cost of back-office support services by maximising digital technology and smarter procurement
A £445m four-year capital pot – for the cost of building roads, schools and other one-off projects linked to new homes being built across Leicestershire.
Closing the budget gap may lead to a reduction of about 200 posts over the next four years, the council notes – staff turnover and vacancy management will mean that the number of compulsory redundancies will be much lower.
The plan will be discussed by the council’s cabinet on Tuesday (19 December).
It’s that time of year, when Business Link Magazine invites the region’s business leaders to offer up their predictions for the year ahead. It has become something of a tradition, given that we’ve been doing this now for over 30 years.Here we speak to Kyla Bellingall, regional managing partner at BDO LLP in the Midlands.
2023 has been another year full of challenges for Midlands businesses – conflicting issues that have played a real part in how the regional economy has functioned.
Our bi-monthly Economic Engine survey of 500 mid-market businesses has consistently highlighted which pressures have had the greatest impact on businesses, with supply chain challenges, geopolitical events, and staff and skills shortages coming out on top in our latest report.
When you add into the mix high interest rates and borrowing costs, difficulty in accessing capital, changing customer behaviour, as well as the general cost of doing business, then you can begin to appreciate the significant task facing companies in the region.
While the outlook is beginning to improve, with inflation heading in the right direction, there is still a huge amount of uncertainty on the horizon with the Bank of England warning that the force of interest rates hikes is yet to filter through to all businesses, particularly those that are highly leveraged and those in sectors exposed to economic swings. Unsurprisingly, certain economists are predicting further financial woes in 2024.
As with many regions, there are still many factors at play in creating a favourable trading environment, not least of which is around Government support. An Autumn statement geared towards “removing barriers of investment” to help the economy grow, will go some way in appeasing those businesses fixed on expansion.
However, 2024 will throw up its own challenges, in the form of potential political change and more economic volatility. As such, businesses in the region must clearly define their priorities in the coming months – a focus that will undoubtedly centre on closing skills gaps, investing in efficiency, prioritising supply chain optimisation, while keeping operational costs under control.
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