Decline in East Midlands business activity slows to softest since July 2022
The headline NatWest East Midlands PMI® Business Activity Index – a seasonally adjusted index that measures the month-on-month change in the combined output of the region’s manufacturing and service sectors – posted 47.3 in January, up from 45.4 in December.
The latest data signalled a solid decline in business activity, albeit the slowest since last July. Lower output was often attributed to weak client demand and reduced customer spending amid strong inflationary pressures. A softer contraction meant East Midlands firms bucked the wider UK trend which pointed to a faster decline in activity.
Private sector firms in the East Midlands recorded a further decline in new orders at the start of 2023. The fall in new business was solid overall and among the fastest of the 12 monitored UK regions, slower than only Scotland and Northern Ireland.
Lower client demand was often linked to economic uncertainty and reduced customer spending amid strong inflation. Nonetheless, the rate of contraction eased to the softest since last July.
Expectations regarding the outlook for output over the coming year across the East Midlands private sector strengthened in the opening month of the year.
The degree of confidence picked up to the highest since May 2022, but remained weaker than the UK average. Nevertheless, greater positive sentiment was often attributed to planned investment and hopes of the acquisition of new customers and stronger client demand.
Workforce numbers at East Midlands private sector firms expanded in January, following back-to-back contractions in November and December. Where a rise in employment was noted, firms linked this to efforts to expand capacity. That said, the rate of job creation was only fractional overall and well below the average for 2022. The UK average, however, signalled unchanged staffing numbers on the month.
Data for the opening month of 2023 signalled another monthly contraction in the level of outstanding business at East Midlands private sector firms. The decrease in backlogs of work was commonly attributed to sufficient capacity to process incoming business. The rate of decline eased notably from that seen in December, but was quicker than the UK average.
East Midlands private sector firms indicated another marked rise in input prices in January. The increase in cost burdens was reportedly due to greater fuel, energy, wage and material bills. The region saw the sharpest uptick in input costs of the 12 monitored UK areas, despite the rate of inflation softening for the second-month running to the slowest since April 2021.
Private sector firms in the East Midlands recorded a further substantial increase in selling prices during January. The rate of charge inflation was quicker than the long-run series average and broadly in line with that seen across the UK as a whole. Anecdotal evidence stated that greater output charges stemmed from the pass-through of higher input costs to clients. That said, the pace of increase in selling prices was the slowest since August 2021.
Rashel Chowdhury, NatWest Midlands and East Regional Board, said: “2023 started in a muted tone across the East Midlands private sector as firms continued to record solid contractions in output and new business. High inflation squeezed customer spending further, with the region registering one of the fastest downturns in new orders of the 12 monitored UK areas.
“Nevertheless, companies were buoyant in their expectations for future output, as business confidence strengthened. At the same time, firms registered renewed job creation, albeit only fractional overall.
“Although inflationary pressures remained historically elevated and continued to place downward strain on demand conditions, rates of increase in costs and selling prices cooled in January. The ability to pass-through any cost savings to customers will likely provide hope to businesses of a pick-up in customer spending as the year progresses.”
Stilton producer gets share in £12m from Government to cut emissions and energy costs
Melton Mowbray’s Long Clawson Dairy is to get a share in £12m funding from the Government’s Industrial Energy Transformation Fund to help cut carbon emissions and energy costs.
It’s one of 22 winning projects across England, Wales and Northern Ireland which will be able to clean up their industrial processes and improve their energy efficiency – benefiting industries including pharmaceuticals, steel, paper, and food and drink.
Long Clawson has been making cheese for over a century, running over 31 farms in the Leicestershire, Nottinghamshire and Derbyshire areas. The production of cheese is an energy intensive process involving both heating and cooling activities. Through IETF funding, the company has created a new thermal storage system, using revolutionary high temperature heat pumps to reduce overall energy by 27% and saving 34% carbon emissions, with the ambition of moving to a purely electrically powered in the long term.
Iain Grant, Operations Director, Long Clawson Dairy, said: “The production of our Stilton cheese is an energy-intensive process involving both heating and cooling activities. With the investment in this project, it has enabled the dairy to take a more cost-effective approach to energy consumption, alongside a clear carbon emission reduction. This is a substantial investment for a business of our size, and would not have been possible without the support of the IETF grant funding.”
It is estimated that industry is currently responsible for producing 16% of the UK’s emissions and will need to cut emissions by two thirds by 2035 in order for the UK to achieve its net zero target.
This funding will play a crucial role in helping to clean up big-emitting industries as part of the UK’s green industrial revolution – decarbonising their industrial processes and reducing their reliance on expensive fossil fuels, such as gas, says Energy Minister Graham Stuart, the MP for Beverley and Holderness. He said: “Boosting the energy efficiency of industrial processes is a critical step not only in our transition to a lower-carbon economy, but also by helping businesses to cut their energy costs and protect valuable British jobs.
“That’s why the government has stepped in once again to support energy intensive industries, with a fresh funding round to unleash the next generation of green innovators who are re-shaping the way technology can reduce carbon emissions.”
So far, £34.8 million of funding has been awarded through the Industrial Energy Transformation Fund, which was first launched in June 2020.Plans in to revive derelict brownfield site with student accommodation
Plans to revive a derelict brownfield site in Nottingham with student accommodation have been submitted to the city council.
Cassidy Group are behind the proposals for 66-68 London Road, which occupies a prominent site within the Southside Regeneration Zone on the approach into the city centre.
The site is partially occupied by an empty three storey Victorian commercial building. The remainder of the site has been cleared.
Planning permission was previously granted on the application site in 2019 for the development of 150 residential apartments. The new development largely reflects the existing permission in respect of layout, scale, appearance, landscaping and access.
The new scheme however would provide 245 student bedspaces, across a mix of cluster bedrooms, studios, and accessible and premium studios. It would preserve the façade of the existing Victorian building and erect an adjoining part 3 part 8 storey building.
Home care provider to create 50 jobs after securing contract with Notts County Council
Your Home Care, a provider of home care services, has signed a contract with Nottinghamshire County Council to be an approved provider of home care in the Mansfield & Ashfield area.
The agreement is initially for a 3.5-year term.
With this new contract, Your Home Care plans to create 50 new jobs in the area over the next 12 months.
“We are thrilled to have been selected as an approved provider of home care services in the Mansfield & Ashfield area,” said Paul Pitchford, director at Your Home Care.
“This agreement is a testament to our commitment to providing high-quality care to those in need and is a reflection of the hard work and dedication of Your Home Care’s care staff,” added Scott Marsh, director and nominated individual.
Derby Football Hub ready for kick-off
Plans to progress the development of a proposed community grassroots football and sport hub on Derby Racecourse will be discussed at next week’s Cabinet meeting.
The proposed Hub would seek to address the shortfall in the city’s football pitch provision and would include the development of three new full-size 3G football turf pitches (FTPs) on the site, as well as the refurbishment of an existing FTP and a new changing pavilion including a community café and meeting space. In addition to the improved pitch provision, the Hub development would include increased parking spaces as well as improved entry and exit to the site.
Derby City Council’s Cabinet are looking to approve a total budget of £11.902m to enable the development to kick off, with funding proposed from the Council alongside a pending funding decision from the Premier League, The FA and Government’s Football Foundation.
The pitch works would be delivered by a specialist contractor of the Football Foundation while the pavilion and car park aspects would be delivered by Alliance Leisure with plans for work to start onsite in Spring 2023.
Will Gardner, Alliance Leisure business development manager, said: “We’re delighted to be coordinating this project that brings together lots of partners to provide a first-class facility for the local community.”
Councillor Jerry Pearce, Derby City Council’s Cabinet Member for Streetpride, Public Spaces and Leisure, said: “This project is a worthy investment for the Council and will give our communities the grassroots football facilities they deserve. I’m very much looking forward to seeing the Football Hub take shape over the coming months.”
A decision will be made on the plans at February’s Cabinet meeting on Wednesday 15 February.
UK narrowly avoided recession at end of 2022
The UK managed to narrowly avoid a recession at the end of last year, but that is unlikely to be the case in 2023, with both the Office for Budget Responsibility and the Bank of England forecasting a return to recession this year.
ONS GDP data shows that GDP in Q4 2022 was flat, after a contraction in Q3, with weak trade offset by rising consumption and investment.
As a result, the UK has recorded the fastest growth of any G7 economy in 2022 (4 per cent), while still being the only G7 economy not to have returned to its pre-pandemic size (down 0.8 per cent since Q4 2019).
Federation of Small Businesses (FSB) policy chair Tina McKenzie said: “While it is positive that the UK has technically avoided a recession in the second half of last year, the news will come as cold comfort to many thousands of small businesses.
“In particular, the 0.5% fall in GDP in December is a red flag showing the economy stalled at the end of 2022, just when small firms were hoping for a traditional festive boost.
“Looking ahead, the IMF and the Bank of England both predict a contraction in the size of the UK’s economy this year, leaving small firms facing a long period without growth. Just next month, many small firms who fixed their energy bills last summer as prices rocketed are worried that they will see three- or four-fold increases when the Government’s Energy Bill Relief Scheme shuts down, making a number of them unviable.
“Our headline Small Business Index confidence tracker fell deeper into negative territory in the last quarter of 2022, at -46 points – far lower than it was during the Omicron lockdown, and only just an improvement from the depth plumbed during the second national lockdown in the final quarter of 2020.
“That’s why we’re greeting today’s news with a strong dose of caution.
“Inflation is still a concern, and its effects will linger in the economy even once it falls back into a range we are more used to seeing. Interest rates remain high in the fight to curb inflation, with small businesses caught between elevated prices and greater debt costs.
“On the plus side, financial markets are performing well, and the reopening of China’s economy will help improve general global economic conditions.
“We want small firms to be in a position to take advantage of any improving economic conditions – and to create a groundswell of growth which will boost the overall economy. Setting them up for growth must be a key focus of the newly-created business and trade department, and we are looking to the Budget in mid-March to set out a positive agenda for small businesses and the self-employed.
“Late payment must be tackled, to get small suppliers the funds they are due in a timely fashion. The day-one taxes – like business rates – that take a chunk out of budgets before small firms make a penny in turnover should be examined, while the VAT threshold should be increased to encourage revenue growth.
“The cuts to R&D tax credits should be reversed, given the huge contribution to overall R&D made by small firms, and the Government’s own newly-reaffirmed focus on science and technology. More people should be helped to reskill and upskill, while bringing in Help to Green vouchers would allow small firms to cut their emissions and their energy bills, while boosting the economy.
“We know what will help, and now need the Government to work with us and turn an economy with GDP in the doldrums into one galvanised by a dynamic and growing small business community.”
Ben Jones, lead economist, CBI, said: “We may have avoided a technical recession late last year, but we probably won’t avoid one this year. While we expect that the downturn will be shallow, if we act now, we can make the recession even shorter than predicted.
“All eyes are on the Chancellor’s March budget, when businesses will be looking for a bolder approach to tackling labour and skills shortages and falling business investment. In particular, firms will be looking for a permanent replacement to the super-deduction, as well as a focus on innovation and the green economy, to help boost economic growth in the years ahead.”
James Smith, research director at the Resolution Foundation, said: “The UK avoided a rapid return to recession last year by the narrowest of margins. But it is not out of the woods yet, and families are still living through a living standards downturn.
“The longer-term picture is more worrying, with the UK economy yet to return to its pre-pandemic size having suffered a prolonged period of weak growth since the financial crisis.
“However, falling wholesale gas prices offer hope for households and the wider economy – with inflation on track to fall sharply later this year.”
Three arrested in suspected PPE fraud worth millions
Three people including a husband and wife have been arrested in a National Crime Agency (NCA) investigation linked to international PPE fraud.
Officers carried out searches at two properties in Loughborough and one in Lytham St Annes, where they made the arrests and seized a number of high value items, including a car, jewellery, watches and digital devices.
Evidence of significant cash purchases was also recovered.
The male, from Loughborough and in his fifties, is suspected of setting up a UK company solely for running a fraudulent scheme that would allow him to profit from PPE (Personal Protective Equipment) shortages during the height of the coronavirus pandemic. His wife is suspected of helping to launder the proceeds.
Investigators believe the company brokered sale agreements to supply nitrile gloves to companies in the USA and Germany worth over $35 million.
An upfront fee was paid to the UK company to cover initial costs and secure the contracts, but paid into a holding account being managed by a third party.
The holding account provided assurances that funds paid in would only be released upon conditions of the contract being met.
However, it is alleged that the couple were able to access and personally benefit from the initial sums paid without ever satisfying the sale terms.
The third person arrested, a 39 year-old man, is suspected of aiding the scheme.
Together the group may have defrauded the companies by almost £1.9 million pounds ($2.35 million).
All three suspects remain in custody and interviews are ongoing.
NCA Branch Commander Mick Pope said: “During the pandemic, both individuals and businesses were impacted by criminal opportunists. The NCA prioritised and tackled a range of serious organised crime threats, including fraud.
“False business agreements that turn out to be fraud, damage the reputation of the UK and hurt our economy.
“We continue to treat this as a priority area and thank Leicestershire Police for their ongoing support. Work is underway with law enforcement partners in the US and Germany to further this investigation.”
Developer appeals refusal of major Beeston mixed-use scheme
An appeal has been submitted to Broxtowe Borough Council after its planning committee refused proposals for a mixed-use scheme of student accommodation and commercial space in Beeston.
The decision in July 2022 came despite the scheme being recommended for approval by the planning officer.
The 419-student bed space scheme from Midlands-based developer Cassidy Group was planned for Station Road, next to the Arc Cinema.
Cassidy previously said that the scheme at the edge of Beeston town centre would breathe new life into a derelict site and bring increased footfall and economic benefit to local retailers. They added that it would also free up much-needed housing in the town, currently occupied by students, for family homes.
Detailing why the plans were refused, the planning committee noted that while it “applauded the applicant’s commitment to energy efficiency” there was “concern about the amenity of students living in the accommodation because the rooms were very small, and the intensity of occupation was too high for the size of the site.”
It was also highlighted that there would be an impact on neighbour amenity because of the lack of car parking provided on the site and because the students would only be in occupation for part of the year. The design of the building was also considered to be “unimaginative and inappropriate as a gateway building to Beeston.”
The refusal of the controversial development was praised by Beeston Civic Society, who, in response to the appeal, have set up a petition to uphold the decision. At time of writing, the petition, which is to be sent to the Planning Inspectorate, has 579 signatures.
New man appointed to lead HS2 in the Midlands and North
Sir Jonathan Thompson will be taking on the mantle of HS2 Ltd Chair and the responsibility of driving forward Europe’s largest infrastructure project in the north and Midlands.
In his role, Sir Jonathan will be providing strategic leadership, oversight and accountability for the HS2 programme, ensuring it is delivered on time and in budget while continuing to create jobs, boost local economies and provide much-needed railway capacity.
Sir Jonathan has previously served as the Permanent Secretary at both the Ministry of Defence and HMRC, as well as overseeing huge landmark moments HS2 has already achieved during his time as Deputy Chair, including providing 1,000 apprenticeships and the completion of the first mile of tunnels at Long Itchington Wood.
Transport Secretary Mark Harper said: “HS2 goes far beyond simply making journeys quicker. It is a world-leading project that is already having a huge impact by regenerating communities and creating tens of thousands of jobs across the country.
Sir Jonathan said: “This monumental project has already achieved some incredible milestones and I’ve seen first-hand how it will transform not only journeys but the lives of people across the country. I look forward to working with our first-class stakeholders and partners in my new role, to ensure it this once in a lifetime opportunity fulfils its pioneering potential.”
Also appointed is Elaine Holt, as Deputy Chair of the HS2 Ltd board. Elaine is an existing non-executive director and an expert in both transport and the service industries. She will support the Chair in leading the board.
Dozens of creative businesses apply for £1.3m Create Growth East Midlands
Fifty creative businesses have already applied for places on East Midlands Create Growth – just weeks after the £1.3 million programme went live.
East Midlands Creative Consortium (EMC²) began accepting applications from high-potential creative businesses on January 23 after winning Government funding.
The free programme of support will ultimately work with 100 regional businesses to help them accelerate business growth, create jobs, and prepare for investment.
It will run across four cohorts between this Spring and 2025. Successful applicants will be based in Leicester and Leicestershire, Derby and Derbyshire, Lincoln and Greater Lincolnshire, and Rutland.
The initial response to the new EMC² website was outlined last night during a sold-out event in Leicester for creative businesses staged as part of this year’s Leicestershire Innovation Festival.
HQ Recording Studios hosted a packed event about how to build an agile creative community.
It outlined work being done at HQ to tackle the sector’s scale-up challenge through forming a collective of creative entrepreneurs working together to bridge the gap between microbusiness and SME status needed to tap into growth funding.
As well as live performances from singers Harri Georgio and Ffion Rebecca, speakers included HQ Managing Director Yasin El Ashrafi BEM, who described the vision to build a creative community that could collectively pitch for larger projects and work.
Also speaking were Dr Allan Taylor, Associate Professor of Media Production at De Montfort University Leicester, who outlined the creative opportunity in the East Midlands, and Stewart Smith, Head of Skills and Employment at the Leicester and Leicestershire Enterprise Partnership (LLEP), who summarised Create Growth.
The creative industry is worth more than £100 billion to the UK economy and accounts for 2.3 million jobs. The vast majority of regional creative jobs are with microbusinesses and the programme is intended to help them to grow and provide further employment.
EMC² was created to lead the Create Growth East Midlands programme after a LLEP-led consortium provided one of six successful regional bids for Government funding. It is backed by a coalition of partners including regional universities, Innovate UK, local businesses, and non-profit organisations.
Apply now for Create Growth at https://bit.ly/EastMidsCreateGrowth. Leicestershire Innovation Festival runs until February 17.
