Business

Osborne budget bashes business

George Osborne

The overwhelming analysis of George Osborne’s latest budget has surrounded the planned changes to welfare spend, with an inevitable focus on the scrapping of working tax credits, the introduction of a ‘living wage’ and an ambition to make everyone who is under the age of 25 continue in education, get an apprenticeship or find a job!

By and large, the political classes have split into the traditional left-right fashion to which we have become accustomed, with Labour screaming ‘foul’ and Tories claiming that they are only doing what has been asked for by an increasingly weary debt ridden electorate.

Politically all this has played out very well for the chancellor, as he has been able to concentrate on the savings to the government and UK Plc, accrued on the back of those he claims are overly reliant on ‘hand outs’ – rather than addressing the very real challenges that the business community is about to face in trying to pay for those savings.

I was a long-time advocate of the minimum wage and my instinct is to be equally supportive of the introduction of a living wage. Indeed it is something that we practice at Downtown and we are pleased to be able to do so.

However, I am equally aware of the pressure many small businesses face when thinking about rewarding good staff in order to retain them through pay increases; the challenges they still face in terms of cash flow and dealing with their banks; the masses of red tape and bureaucracy they have to plough through; and negotiating with an increasingly aggressive HMRC.

To have to facto in additional salary costs at a time when many are still replenishing their own bank balances having come through a tough and lengthy recession hardly feels ‘business-friendly’.

There is then, of course, the ticking time bomb of the introduction of the new auto enrolment pension provision – a further cost to business, and one that many will not have adequately planned for or, sadly, be able to afford.

The net result of these demands on business may not be wholesale bankruptcies, closures and redundancies. However, I believe it will prove to be a barrier to growth. Those who have a vision of growing their business by employing more staff will be thinking twice and possibly three times before agreeing to an expenditure bill that is going to be so much higher in eighteen months’ time.

Of course, people will point to the reduction in corporation tax and indeed personal tax allowances too. Unfortunately, many of the smaller businesses and business owners that operate in the UK will benefit little from these changes.

George may have been unkind to the working poor. He has done few favours for the working entrepreneur either.

The budget may be positive for the chancellor in the short term. I wonder whether the impact of that budget in the longer term and the ultimate judgement of it will be quite as kind.

Let’s stick together

Power to the North

“If you’re in this city, the competition can be Everton versus Liverpool. If you’re in my city its City against United. In business terms we often see the competition as Manchester versus Liverpool. But then if the cockneys start make disparaging remarks about the North, we all bond together and have a go back at London. Then if the French slag off England, we unite with London to fire back at France.”

The delivery of this excellent observation came from Mr Deansgate, Nik Maguire, addressing the digital forum which was part of the series of excellent Liverpool Business Week events hosted by Downtown this week.

It was a point that was well made at a time when, in trying to compete in a global market and establish a Northern Powerhouse, the necessity for us to identify common goals rather than focus on traditional rivalries is increasingly obvious.

The good news is that, a few notable parochial internal spats in Lancashire and Merseyside notwithstanding, our regional business and political leaders have taken note.

The degree of co-operation taking place between Leeds, Manchester, Lancashire, Liverpool and the other core cities of the north on transport infrastructure is significant.

Equally, arguably the greatest of city rivalries between Liverpool and Manchester, has been put aside on many occasions over the past eighteen months, with the cities sharing platforms, marketing collateral and policy development in a whole range of areas. The London based MIPIM UK property festival in October will see Manchester and Liverpool share exhibition space for the second consecutive year.

And, as Liverpool gears up to host the UK International Festival for Business in twelve months’ time, the man tasked with making a success of this unique three week jamboree, Max Steinberg, is reaching out to the rest of the country, in particular other parts of northern England, to help showcase what is the best of British.

The festival is a great opportunity for businesses from across the country – but also a chance to show that we can genuinely establish a Northern Powerhouse where our great cities and counties work together when needed for the greater good.

The ‘Powerhouse’ isn’t just about the North

Northern powerhouse

It is very easy for us folk ‘up North’ to get carried away with the notion that re-balancing the UK economy means closing the North-South divide, with Manchester in the vanguard of securing the type of devolution deal that will hopefully be rolled out across the region, parochial politicians permitting.

However, the idea of ‘powerhouses’ and big, influential Combined Authorities, is not simply exercising the minds of Manchester, Liverpool, Leeds, Newcastle et al. Everywhere located this side of the Watford gap are beating a track to Whitehall and shouting ‘Me too.’

No more so is this the case than the city that in modern times had managed to claim, and lose, the title of undisputed ‘second city’ – Birmingham.

Aesthetically, it is not the easiest on the eye, Brum. Indeed, you could go as far as to say that she is as ugly as she has ever been, as the city currently boasts a backdrop that could be happily used by Hollywood film makers for movies set in a war torn location of the Middle East.

However, there is good, and positive, reason for that. Birmingham is experiencing a long overdue facelift. A wholesale regeneration of the place is happening that will create a £2 billion plus ‘paradise’ project that cannot help but breathe new life into the economy, the night time economy in particular.

Additionally, the investment that has been confirmed by HSBC, the crucial role Birmingham will have in delivering HS2 and the fact that its city region takes in a population of 4 million people signals that this is a sleeping giant that has well and truly been awoken.

Of course, like all modern UK cities, it faces challenges, none more so than the crushing austerity programme imposed on the city council by central government, that has seen exciting initiatives such as an iconic new library and community facility turned into an albatross around civic leader’s necks.

At some point I hope the chancellor recognises that great cities can only continue to thrive and grow if they are allowed to maintain a level of service provision and activity that is relevant to the 21st rather than the 19th Century. But more of that post- Osborne budget statement.

Nevertheless, despite these challenges, Birmingham has so much else going for it that it is difficult to imagine that it is not approaching a period of huge renaissance.

I have spent the past eighteen months going down and up the M6 meeting a good number of Brummie businesses, entrepreneurs and decision makers to know that these guys and gals mean business.

Talk about energy – it is incredible. Commitment – in abundance. Determination – as Ed might say – hell yeah!

Coupled with this vibrant business community, a pragmatic public sector leadership that is keen to engage with the new up and coming business leaders of the future, whilst maintaining a strong relationship with its traditional commercial sector, makes Birmingham more than a little bit interesting.

All of this leads me to one conclusion. A city with so much attitude needs a business club to match. Downtown Birmingham in Business? We launch there in September, and I can’t wait.

It’s Hard

Office Move

Downtown recently held a fantastic half day conference in association with the government’s flagship business support initiative Growth Accelerator.

The event was entitled ‘Limitless – developing a hyper-growth Mind-set’ and focussed on how successful business leaders and entrepreneurs from across the UK had ‘done it’.

Inevitably the contributions from the speakers were upbeat and positive, but almost to a person, every keynote speaker and panel member warned would-be growth ambitious businesses that taking your company forward is challenging, at times frustrating, and it’s hard!

Downtown has been evolving and growing, relatively steadily, for just over a decade now. On Monday we are moving offices, so that the team at our Liverpool HQ have a better working environment. It is also a facility that provides us with space and collateral to offer our members a more diverse range of events and business support services.

In 2015, you would think that an office move would be relatively simple. However, we have needed to find additional hours and resource from our existing team, and use some external help too, over a period of a few months, to make it happen. Telephones, internet services, the office fit out and new furniture are among a long list of things that were on the ‘to do’ list, and I can’t say I’m looking forward to the actual physical move next week. I’m sure though that the old adage ‘short term pain for long term gain’ applies here.

This is the latest ‘hard to do’ in my personal business growth journey and it would be nice to say that UK Plc, with its love of an enterprise culture and entrepreneurial spirit, has at least been there to help me through it.

Sadly not. There is no ‘one-stop-shop’ for a small business to seek guidance on who the best suppliers are when you’re moving office. There is no robot within HMRC who will accept that moving office to grow your business and secure, hopefully create, jobs, is deserving of some lee-way in terms of tax returns and VAT payments. There is certainly no business book, manual or course that can take you through the ‘office move’ project – or indeed many of the other issues you will face as an ambitious business owner.

This is why business support initiatives such as Growth Accelerator, and a few others that are genuinely private sector led, are so invaluable. It is also why public sector agencies, quasi-public sector organisations and failed middle managers should not be allowed anywhere near business support – but that is a rant for another day.

For now, I will get on with the latest ‘challenge’, and simply take on the chin the hefty fine imposed on me this week by HMRC for my VAT payment being a day late!

MP’s should be forced to do Work Experience

Work Experience

The more I listen to Westminster politicians talk about business, the more I realise how little they understand or appreciate the challenges entrepreneurs and business owner’s face. In particular, they are clueless about small and medium sized companies, basing much of what they say on business growth and business policy around the issues that impact on the Jaguar Land Rover’s and BAE’s of this world.

The Prime ministers call last week for private sector bosses to give their staff a pay increase because we had experienced seven months of growth following seven years of recession was actually beyond clueless, and he should hang his head in shame in what was clearly blatant electioneering speak.

This week Ed Miliband, no doubt trying to be helpful, suggested that training and apprenticeship budgets should be handed directly to employers. Again that is fine if you have an army of people around you, but for the vast majority of firms the red tape and bureaucracy that surrounds anything to do with ‘public money’ is an absolute nightmare. Far better to let registered providers and colleges manage these funds, and support businesses through the complex and complicated processes. As Downtown Liverpool chairman David Wade-Smith often says the most expensive ‘free’ money is public sector cash!

Part of the reason why our political leaders are failing to engage effectively with us is that an increasing number of them are professional politicians who have never worked outside of the fantasy land that is the Westminster bubble.

You only have to spend a day in the House of Commons to appreciate how easy it is for an MP to get caught up in stuff that, within that environment, seems to be the most important thing on the planet, whilst to the rest of us it is usually hot air and bluster.

Politics has been ‘professionalised’ and I see little chance of that dramatically changing anytime soon. We will therefore need to find a way of helping our MP’s get some real life experience.

I would suggest, as a starter for ten, six weeks work experience programmes that are compulsory for all MPs to participate in. They could help on the shop floor, attend board meetings and spend a day working alongside a business owner. The only other stipulation I would make is that any company they worked with are companies with a turnover of no higher than £10million.

The disconnect between our elected representatives and the community – business and otherwise – is getting wider, and it needs to be addressed.