Monthly fall in corporate insolvencies as businesses await impact of rising interest rates

Tess Egginton
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Monthly fall in corporate insolvencies as businesses await impact of rising interest rates

A month-on-month fall in the number of corporate insolvencies in England and Wales is not an accurate reflection of the current tough trading conditions, with rising interest rates likely to be another blow for struggling businesses later this year.

This is according to the Midlands branch of the UK’s insolvency and restructuring trade body R3 and comes on the back of figures published [16/5/23] by the Insolvency Service which show that corporate insolvencies decreased by 31.8% in April 2023 to a total of 1,685 compared to March’s total of 2,471, and by 15.2% compared to April 2022’s figure of 1,988.

Despite this, corporate insolvency levels increased by 82.2% from April 2021’s total of 925 and by 18.2% from pre-pandemic levels in April 2019 (1,426).

R3 Midlands chair Stephen Rome, director of law firm Thursfields in the region, said: “Despite the monthly fall in corporate insolvency figures, total numbers are still above pre-pandemic levels. The key reason for this is that Creditors’ Voluntary Liquidations are higher than they were in 2019.

“After three years of disturbed trading and a choppy economy, it’s clear that directors have simply had enough or have realised the time is right to shut down their companies while the choice is still theirs to make.

“The business climate is still tough. Firms right across the supply chain are trying to manage increased costs without passing this on to their customers, and with inflation remaining sticky, this is likely to become ever more challenging as the year progresses.

“We are also waiting to see the real impact of rising interest rates, and may not see their cumulative impact until later in the year when fixed term credit arrangements end. Potentially, businesses could face a credit cost shock just as inflation is predicted to ease, leading to a one step forward and two steps back situation, rather than a sustained improvement in the trading climate.

“Given the climate, it is crucial for business owners to be alert to the symptoms of corporate distress and to seek advice from a qualified source if there is any significant sign of trouble.

“Increasing stock levels, decreasing cashflow and struggles to pay rent, bills, taxes or staff all indicate that it’s time to seek appropriate support. Doing so as early as possible will give more potential solutions than acting only when the problem becomes more severe.” 

Mitchells appoints first female equity partner

Tess Egginton
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Mitchells appoints first female equity partner

Laura Pain has been appointed as an equity partner at Mitchells Chartered Accountants and Business Advisers – the first female equity partner in the company’s 155-year history.

A Fellow of the Association of Chartered Certified Accountants (FCCA), Laura has been with the Chesterfield-based accountancy firm since 2008 and became an associate partner in 2021. She now joins fellow equity partners Tim Leeman, Tony Hornsby and Andrew McDaid in leading the business.

She said: “Becoming an equity partner coincides with my fifteenth year with the firm, making it an incredibly special milestone for me. I am honoured to be the first female equity partner at Mitchells Chartered Accountants and Business Advisers.”

As equity partner, Laura will continue to lead the firm’s team of digital accountants who specialise in advising start-ups and small businesses leverage the power of Cloud Accounting to automate their business processes and reduce costs.

Laura brings extensive experience to her role at Mitchells, boasting a 23-year career in accountancy.

Her appointment as equity partner recognises her contribution and leadership within the business. Senior partner Tim Leeman said: “Tony, Andrew and I are delighted that Laura is now an equity partner. Her experience and passion for the business and clients is very much valued and will be instrumental in helping us grow the business further.”

Laura added: “I look forward to contributing to the continued growth and success of Mitchells in the years to come.”

East Midlands business owners step up employee support in cost of living crisis

Stuart Pearcey
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East Midlands business owners step up employee support in cost of living crisis

Business owners in the East Midlands have been stepping in to support their employees as the cost of living continues to put financial pressure on individuals, according to new research from Rathbones.

Research indicates that 30% of business owners in the East Midlands have provided their employees with regular financial support, while a further 20% have given a one-off lump sum to their staff to help with rising costs.

Inflation soared again in February by 10.4%, and with the cost of everyday groceries the main driver, many households are feeling the strain on their finances. Some business owners have therefore stepped in to support.

This is despite many businesses, and in particular SMEs, also facing a significant uptick in costs, supply chain issues and the tailing down of the Energy Bills Support Scheme this month.

Nationally, 43% of business owners have offered regular financial support to their employees, with those in the East of England the most generous to staff with three quarters reporting to have offered regular financial support in the last six months. Business owners in the North West (50%) and those in Greater London (42%) have also been providing considerable regular monetary support to their employees.

More widely, Rathbones’ research found that higher earners across the UK have also been stepping in to support their loved ones. Almost half (48%) of high net worth individuals in the East Midlands have helped their children or grandchildren over the last six months with regular financial support for bills, with a further 20% having provided a one-off cash payment. Many have also been regularly supporting extended family members such as aunts, uncles, and cousins (38%) and their close friends (32%).

Ian Tansley, Regional Director at Rathbones, said: “It is in challenging times where you feel the benefits of having your community the most. With times tough for many individuals, it’s encouraging to see so many business owners stepping in to support their employees. Whether it’s regular financial support or a one-off payment, the help provided by business owners or higher earners will make a real difference in many people’s lives.

“However, it’s vital that business owners are also protecting their businesses and their personal finances throughout this time too. With limited support for SMEs currently available, many could see their costs rise significantly in the coming months. SMEs account for 99.9% of the UK business population and play an important role both as an employer across the UK and to our economy. Ensuring your business is equipped to handle whatever comes next is therefore important.”

Contractor search continues for redevelopment of Matlock’s former Market Hall as second tender exercise concludes without appointment

Tess Egginton
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Contractor search continues for redevelopment of Matlock’s former Market Hall as second tender exercise concludes without appointment
The conversion of Matlock’s former Market Hall into a two-screen cinema has hit a new hurdle after a second tender exercise concluded without a contractor appointment. Derbyshire Dales District Council says this reflects “the significant challenge of delivering the proposed scheme within the current volatile construction market, which is impacted by high cost inflation.” Derbyshire Dales District Council went out to tender in November 2022 and again in February this year after securing planning permission and completing the detailed design for the proposed development. This key regeneration project also includes enclosing part of the existing bus bay area to provide a new food & beverage/retail unit, enhanced public realm and new public transport arrangements. An officer from the District Council’s Regeneration & Place Team said: “Following evaluation, unfortunately the second tender exercise has concluded without a contractor appointment, illustrating the significant challenge of delivering the proposed scheme within the current volatile construction market, which is impacted by high cost inflation. “The positive news is that both the team at the District Council and the proposed cinema operator remain committed to working together to pursue this scheme for Matlock. “Options, including more value engineering of the scheme and revisiting the programme with a view to a further tender or other procurement exercise in the near future, are currently under review. A further update will be provided in due course.”

Gove visits future Mansfield Connect hub following successful Levelling Up bid

Tess Egginton
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Gove visits future Mansfield Connect hub following successful Levelling Up bid

Secretary of State for Levelling Up, Housing and Communities, Rt Hon Michael Gove MP, was in Mansfield yesterday (Thursday 18 May).

Mr Gove came to Mansfield to hear directly from local leaders about their ambitions to transform the town’s former Beales building into ‘Mansfield Connect’. The visit follows an announcement in January, which saw Mansfield District Council successful in its bid to the Government’s Levelling Up Fund for £20m to regenerate the site. The ring-fenced funding will see the old retail building in the town centre revitalised into a multi-agency hub – Mansfield Connect – that will house key partners in the district and become a one-stop shop for residents to access key services. Following the whistle-stop tour around the future hub, the minister then held a working lunch with council representatives, the Mayor and local stakeholders, including Mansfield BID and the Place Board, to discuss the challenges and opportunities through the forthcoming Levelling Up Partnership. Secretary of State for Levelling Up, Housing and Communities Rt Hon Michael Gove MP, said: “One of the reasons I’m here today is to see how the Levelling Up Funding, the £20m secured to transform the Beales building site, is being spent. “Levelling Up means giving a town like Mansfield, which has a great heritage and a town in which its residents take enormous pride, it’s giving it a vote of confidence from the central Government. It’s giving it the extra cash required in order to attract high-paying jobs. One of the challenges we have got in this country is that in the past previous Government’s have tended to put their investment in London and the South East; we want to make sure the East Midlands plays its full part in the economic life of the country. “Today’s visit confirms that the £20m we’re spending will help transform this site and give the town centre that hub that it needs. New jobs, new investment from the public and private sector.” The Mansfield Connect scheme forms a vital part of the council’s ambitious long-term town centre regeneration plans, and it is hoped the repurposing of the building will then have a knock-on effect, stimulating the local economy and encouraging private-sector investment into the wider Mansfield district. Executive Mayor of Mansfield, Andy Abrahams, said: “Today gave us the opportunity to highlight our vision and aspirations for the heart of our town centre in Mansfield, as well as the economic challenges we face too. “We are unable to bring about regeneration change alone. We need funding, support and partnerships to make the very most of the opportunities afforded to us through initiatives such as the Towns Fund and Levelling Up Fund to help further encourage inward private investment to Mansfield.” Upon leaving Mansfield, the Secretary of State then went on to visit Infinity Park in Derby to discuss the upcoming devolution deal for the region and the possibility of Investment Zones.

Strike action to hit Derbyshire glass firm

Tess Egginton
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Strike action to hit Derbyshire glass firm
GMB members at Pilkington Plyglass will down tools next week in a dispute over pay. GMB union has announced two days of strike action at the glass manufacturer. Workers at the firm produce specialist glass materials, including for the building of Dubai’s Palm Tower and the Stonehenge visitors’ centre. The union says the strike comes after workers at the site “were offered real terms pay cut for a third year in a row.” The company have been criticised for disparity in pay between Pilkington sites, with workers in Derbyshire reportedly offered a pay package £750 less than counterparts in other parts of the UK business. Workers will strike on Wednesday 24 and Thursday 25 May. Norma Kerr, GMB organiser, said: “GMB members at Pilkington Plyglass undertake essential and highly skilled work producing glass for iconic buildings across the world. “This is a multi-national company, offering workers here in Derbyshire less than those a few miles up the road. Our members have been forced to the picket line to fight for the fair pay they so clearly deserve. “If Pilkington top brass thought GMB members were going to accept this sitting down; those expectations are about to be shattered.”

Record number of companies raising money through Enterprise Investment Scheme

Tess Egginton
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Record number of companies raising money through Enterprise Investment Scheme
New figures published by HMRC show that the number of companies raising money through the Enterprise Investment Scheme (EIS) grew to a record high of 4,480 in 2021/22, a 19% rise compared to the previous year, with funding increasing to £2,305m, up by 39% over the same period. The figures show that usage of the EIS bounced back following the pandemic and even surpassed the levels prior to the pandemic. In 2019 to 2020, 4,215 companies raised a total of £1,905 million of funds under the EIS scheme. EIS investment in 2021/22 was largely concentrated in the Information and Communication sector which accounted for £785m of investment (34% of all EIS investment). The Enterprise Investment Scheme (EIS) offers tax reliefs to individuals who subscribe for new shares in a qualifying company. This allows EIS companies to raise up to £5m each year to grow their business, up to a maximum of £12m over a company’s lifetime. There are a number of qualifying rules for EIS. For example, the scheme applies only to companies that have a permanent establishment in the UK, are not listed on the stock exchange and do not have gross assets worth more than £15m before the EIS shares are issued (and not more than £16m immediately afterwards). The relief also only applies to new or relatively new companies, as EIS investment can only be received if it’s within seven years (10 years for knowledge intensive companies) of a company’s first commercial sale. The new data also shows a similar trend with respect to start-up companies raising funds under the Seed Enterprise Investment Scheme (SEIS). The number of companies raising money through the SEIS also grew to a record high of 2,270 in 2021/22, an 8% rise versus the previous year, with funding increasing by 16% over the same period. The Seed Enterprise Investment Scheme recently received a boost with increased limits from 6 April 2023. Under the SEIS, companies up to three years old (previously two years old) can receive a maximum of £250,000 (previously £150,000) of investment. Companies wishing to benefit from the SEIS must not have gross assets over £350,000 (previously £200,000) when the shares are issued and have fewer than 25 full-time employees. SEIS funds raised in 2023/24 are therefore expected to increase still further to provide valuable support for start-ups and young companies. Commenting on the new figures, David Brookes, tax partner at accountancy and business advisory firm BDO, said: “The latest figures show an encouraging rebound in the numbers of companies benefitting from the Enterprise Investment and Seed Enterprise Investment Schemes. Both offer valuable funding opportunities for new and growing businesses, particularly in the tech space, which are so crucial in helping to drive economic growth. “However, there are growing numbers of advance assurance applications for both EIS and SEIS that are being rejected which is a cause for concern. While it’s absolutely right that the tax authorities are alert to any attempt from parties to benefit from tax reliefs they are not entitled to, there is a growing sense that officials are being a little over-zealous in their interpretation of the rules which is hindering spin outs and follow-on funding for older companies. “The complexity of both schemes and their qualifying criteria are also barriers to greater take-up, and there is a strong case for reform. For example, although the gross asset limit for SEIS companies has increased from 6 April 2023, the gross asset test for EIS qualifying companies remains at £15m. This was a figure first introduced 25 years ago. Raising this threshold to take account of inflation could provide an important source of EIS funding for ambitious and growing mid-market businesses that are currently unable to access growth capital.”

Derbyshire science firm helps engineering charity carry on solving problems to help those with disabilities

Tess Egginton
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Derbyshire science firm helps engineering charity carry on solving problems to help those with disabilities
Scientists at a Derbyshire firm are helping out fellow engineers who have left the world of work and are now using their skills to help people with disabilities by making free bespoke aids. Through its charities and communities committee, Lubrizol – whose UK headquarters is based at Hazelwood near Belper – has once more given annual financial support to the highly innovative charity Remap, which makes specialist aids provided free to people with disabilities. Remap’s skilful volunteers are mainly engineers who like nothing better than to find solutions for people with disabilities who are having a specific problem for which there is no commercial solution. Over the years, Remap’s volunteers have kept their brains and hands busy coming up with a series of brilliant one-off devices to help people, including a book page-turner for children in Royal Derby Hospital who were in wheelchairs and not able to use their hands; a fork holder to help someone cut meat, who previously did not have that ability, and a specially built swimming pool staircase for a girl with a motor impairment who had become too heavy for her mother to carry. Mike Banks, a former Rolls-Royce engineer who now volunteers his skills with Derby, Burton & District Remap, said: “Engineers like nothing more than a challenge and then to solve it. If that challenge is going to restore a capability to a disabled person, then it’s three times as pleasurable!” Not only do Remap’s engineers use their creative minds to achieve results for people who have lost a specific capability, they are also highly resourceful at recycling odds and ends lying around the workshop. The book page-turner features clever use of a toothbrush and geared electric motors from two old screwdrivers, while Mike said another device he made for a person to be able to use a washing machine used the lifting mechanism taken out of an old bath seat. However, the charity also needs financial support to buy materials when a recycled solution cannot be found. There are also costs incurred when volunteers travel to get what they need. On average, each pound donated to Remap produces twenty pounds’ worth of equipment. Mike said: “I volunteer for Remap because I have received my education for free. I’ve got an engineering degree and it didn’t cost me a penny, but these days students have to pay an awful lot of money to get their qualifications. I really feel I have a duty to feed the knowledge that I have gained back into the community. It’s the way I feel about it. Being an engineer, we are able to provide this help to people who otherwise wouldn’t get help.” Clients are referred to Remap’s services if they require a solution for a problem and there is nothing available on the market that would fix it. The charity helps many people each year by making specifically tailored aids ranging from simple furniture additions to highly complex devices. Mike said the support from Lubrizol meant Remap was able to help more people referred to its services. He said: “We get a huge kick out of seeing what our work does when someone gets a competence back that they may have lost years ago, or even gains a competence that they have never had from birth. “It’s thanks to companies like Lubrizol that we’re able to continue to do this work, and we’re grateful to our fellow engineers for seeing the value in what we do at Remap and supporting us.” Tom Grazier, technology deployment manager at Lubrizol and co-chair of its charities and communities committee, said: “The work that Remap does is just fantastic. It just shows that once you’re an engineer, you’re always an engineer! “We have an engineering department here at Lubrizol and it’s great to see people who are no longer working as engineers continuing to use their professional skills in doing something so important for people who really need it. We support Remap every year and we’re delighted to carry on doing so.”

Great British Railways in jeopardy

Tess Egginton
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Great British Railways in jeopardy
Plans to repair the fragmented rail system in the UK through Great British Railways (GBR) are in jeopardy, as legislation to give key powers to the organisation could be delayed, with GBR said to not be a priority for Prime Minister Rishi Sunak. It comes after Derby was chosen to be the national headquarters of the body in March 2023. Great British Railways is to be the new public body responsible for running Britain’s railways. It aims to deliver the most ambitious changes to our railways in a generation, working with the Government, across the rail sector and beyond. GBR would integrate the railways across the country, owning the infrastructure, collecting fare revenue, running and planning the network, and setting most fares and timetables. According to reports in The Times, however, GBR, will be left out of the upcoming King’s Speech, which sets out the legislative programme Government plans to pursue in the next parliamentary session, and thus not be given the legislative powers it requires to issue contracts and set fares – a major part of its role. The Times indicates that sources within the Department for Transport (DfT) have been told GBR is low on the priority list for Rishi Sunak. With powers not set be given to the body in the next parliamentary session, the publication notes that it is believed that a shadow GBR with less powers will be created. A DfT spokesperson, however, said the government is fully committed to reforming railways and will introduce legislation as soon as parliamentary time allows.

Derby visual marketing company receive Innovation grant to help boost business

Tess Egginton
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Derby visual marketing company receive Innovation grant to help boost business
A Derby business says it will use money received from a government grant to help grow organisations in the city and boost the local economy. Visual marketing agency Briight are recipients of an Innovate UK grant that was made available to “develop and realise the potential of new ideas, including those from the UK’s world-class research base.” Directors Rob Dawes and Drew Taylour-Davis will use the money – almost £30,000 – to make a creative impact on the area. “The demand on digital and creative industries is huge right now,” said Rob, who has been running an agency with Drew for more than eight years. “We want our studio in Jubilee Business Park to be a creative hub. We want to be able to develop our studio space to increase our capacity and scale of projects, and be a fully functional space that will be hired out to other businesses and creatives in need of a large flexible filming space.” Rob and Drew have worked with some popular local businesses as well as campaigns for household names, including the BBC, Microsoft, and, most recently, HECK; the North Yorkshire-based supplier of sausages to most major supermarkets. They want to share their expertise with the next generation of creatives and creative entrepreneurs by giving local people work experience that could eventually lead to permanent roles within the company. Drew added: “Our ambition at Briight is to host a creative space that can help nurture talent and produce great work. “We want to push people locally to be more ambitious, understand the power of great visual marketing, and apply it at all levels.” The pair believe that post-covid, most young people in the creative industries are wanting a base from which to work and the latest statistics from the Office for National Statistics (ONS) back this up. From September 2022 to January 2023, there was a rise in hybrid working among 35-44 year-olds, who were the most likely to work hybridly. However, 65% of 16-24 year-olds said that they couldn’t work from home, citing reasons including lack of home-office space and equipment. Drew said: “Most companies gave up their office space after covid but for creative businesses like ours, it’s still essential for growth and development. “Creatives need that space and those colleagues who they can bounce ideas off. We’ll use the grant to help us make our workspace even more of a fun and inspiring place to be and somewhere that we can organically grow our team.”
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