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Rising National Insurance Costs Lead to Hiring Freeze and Store Closures, Says The Entertainer CEO

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The Entertainer, a major UK retailer, has announced a hiring freeze at its head office due to increased operating costs, a decision linked to the government’s planned National Insurance (NI) rate hike. Chief Executive Andrew Murphy explained that the company’s financial outlook has been severely impacted by the changes, leading to a reevaluation of its expansion plans.

From April 2024, the UK government will raise the NI rate for employers from 13.8% to 15%, while reducing the tax threshold from £9,100 to £5,000. This policy change is expected to generate an additional £25 billion annually to help stabilize public finances after the previous government’s revenue cuts.

Speaking on BBC Radio 4’s Today programme, Murphy expressed understanding of the government’s long-term objectives but criticized the approach. “There’s no argument with the government’s ultimate goals… simply the balance with which they pursued them,” he said. Murphy also highlighted that the increased NI rates had altered The Entertainer’s financial viability assessments, forcing the company to scale back plans for new store openings, and ultimately leading to store closures.

The increased costs have raised concerns across the business sector, with other major companies, such as Sainsbury’s and Marks & Spencer, warning that the higher NI rates could lead to higher prices for consumers. Sainsbury’s CEO, Simon Roberts, said the supermarket chain would face an additional £140 million in costs, adding, “It is going to feed through into higher inflation.”

The Labour Party has defended the NI increase, with Chancellor Rachel Reeves stating that the move is necessary to ensure the country’s public finances are put on a more stable footing. “We’ve got to raise the money to put our public finances on a firm footing,” she said in response to business concerns.

As some businesses reconsider their operations, there are signs that rising costs could prompt companies to seek expansion outside the UK. Arnab Basu, CEO of Kromek, pointed to planned US corporate tax cuts and lower energy costs as factors making the US an attractive investment destination. Similarly, George Weston, CEO of Associated British Foods (parent company of Primark), suggested that tax increases could shift the company’s focus to growth outside the UK.

The Treasury defended the NI changes, emphasizing that they are vital for economic recovery. “This government is committed to delivering economic growth by boosting investment and rebuilding Britain,” a spokesperson said.

The Entertainer’s move highlights a growing trend of UK businesses reassessing domestic investments as they face rising operational costs and a changing tax landscape.

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UK Rental Prices See First Decline in Over Five Years, But London Sees Continued Rise

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Rents across the UK have experienced a slight dip for the first time in over five years, according to new data from Rightmove. While rental prices outside of London have decreased marginally by 0.2%, tenants in the capital are still facing record-high rates.

The national average rent outside London fell to £1,341 per month, a drop of just £3, marking the first decline since late 2019. Though the change is minimal, Rightmove describes it as a “key milestone” reflecting an improving balance between rental supply and demand. Despite the decrease, rents outside London remain 4.7% higher than a year ago, although this is significantly below the peak inflation rate of 12% experienced in 2022.

Colleen Babcock, Rightmove’s head of trade marketing, attributes the easing of rents to a 13% increase in the number of rental properties available compared to last year, while the number of prospective tenants has decreased by 16%. The northeast of England has seen the most notable growth in rental supply, and Babcock believes that some renters may have transitioned to homeownership, aided by stabilising mortgage rates and slower house price growth.

Despite the slight drop, demand for rental properties remains high, with each property attracting around ten applicants on average. Since the first lockdown in March 2020, rents outside London have surged by 64%, while London rents have risen by 28%.

In contrast to the national trend, rents in London continue to climb. The average rent in the capital has hit a record high of £2,695 per month, marking new highs each quarter since late 2021. However, London’s annual rent increase of 2.4% is the lowest seen in nearly four years, suggesting a cooling off in the once-heated market.

Alex Bloxham, head of residential lettings at Bidwells, noted that the market is showing signs of cooling, stating that further improvements in supply could lead to downward pressure on rents in the future.

Meanwhile, the UK government’s proposed Renters’ Rights Bill, aimed at enhancing tenant security and rights, may be introduced later this year. Although some landlords have expressed concerns about the reforms, Rightmove has not observed any immediate effects on the market as of yet.

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Amazon Moves Toward Same-Day Drone Deliveries in Darlington, UK

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Amazon is taking significant steps toward launching same-day drone deliveries in the UK, starting with its warehouse in Darlington, County Durham. The company is seeking approval from the Civil Aviation Authority (CAA) to operate drones in the airspace around the site, marking a potential breakthrough for its Prime Air service in the country.

A public meeting is being held in Darlington this week to discuss the proposal, as Amazon works to gain the necessary permissions to begin drone operations. If approved, the service would allow customers within a 7.5-mile radius of the warehouse—excluding restricted flight zones—to receive packages by drone. However, before deliveries can begin, Amazon representatives will assess each customer’s property to ensure there is adequate space for the drone to land. Customers will also need to set up a lightweight landing pad in their gardens for the drone to identify and land safely.

This move comes after Amazon received CAA approval in August 2023 for beyond-line-of-sight drone testing at a separate UK location. The company has already conducted Prime Air deliveries in parts of the United States, such as Texas and Arizona, and in Italy. However, the service was temporarily halted after test crashes in Oregon led to a software update. Amazon had originally planned to launch drone deliveries in the UK and Italy by the end of 2024, but that timeline has since been delayed, and no specific launch date for the Darlington service has been set.

Amazon’s history with drone deliveries dates back to a successful pilot in Cambridge in 2016. However, its UK drone programme was scaled back in 2021, and subsequent trials in places like Italy, California, and Oregon have faced challenges, including two drone crashes in Oregon during rainy conditions. Despite these setbacks, Amazon insists that the accidents were not the primary reason for the service pause, and the company is addressing the issue with an updated software system.

The UK is actively supporting the expansion of commercial drone services. Royal Mail has been testing drone deliveries to remote areas, including the Shetland Islands, and has extended its programme in Orkney until at least February 2026. Additionally, BT has invested £5 million in creating a 165-mile “drone superhighway” across southern and central England, enabling beyond visual line of sight flights under new CAA regulations.

While Amazon has not specified a launch date for the Darlington service, the company views this development as an exciting step forward. With regulatory approval and infrastructure in place, Amazon hopes to move closer to fully launching its Prime Air service in the region, continuing its efforts to collaborate with local residents and authorities.

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UK SMEs Encouraged to Apply for Government Exporting Awards

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The UK government is urging small and medium-sized enterprises (SMEs) to apply for the Made in the UK, Sold to the World awards, a program designed to celebrate the success of UK businesses in international trade. Launched in 2021 by the Department for Business and Trade (DBT), the awards have become a significant platform for companies looking to expand their reach abroad, with previous winners citing the accolades as key in helping them secure overseas deals.

This year’s awards feature new categories, including ‘digital and technology’ and ‘export services’, in addition to established categories such as food and drink, education and edtech, and low-carbon energy. Winners will receive a free business membership to the Chartered Institute of Export & International Trade and an invitation to a parliamentary reception, offering valuable networking opportunities.

Tom Warner, co-founder of Warner’s Distillery, which won in the food and drink category in 2024, believes the recognition played a role in expanding the company’s distribution to Italy and New Zealand. “Distributors don’t say ‘we’re working with you because you won that award,’ but it’s part of your pedigree and due diligence… It gives distributors the confidence to have a go,” Warner said.

Poonam Gupta, founder of PG Paper, another winner from 2024, emphasized the credibility the award brought to her business. “It makes it easier for us to open new markets and sell to new customers,” she explained. PG Paper now exports to over 60 countries, with exports accounting for the majority of its sales.

Other winners, like Anna White, founder of Scotlandshop, have used the awards to expand further. After winning in 2023, Scotlandshop, which has been exporting tartan goods since 2002, opened a shop in Albany, New York. “The awards are a great way to meet other exporters, learn from each other, and showcase what your business does,” White said.

The 2024 award for electric vehicle manufacturer Munro Vehicles also helped the company start conversations about international distribution. CEO Russ Peterson noted that the win “kickstarted several conversations with businesses outside of the UK for vehicle supply.”

The UK’s push to encourage more SMEs to explore global markets comes as a report from the Centre for Economic Performance revealed a £27 billion drop in goods exports to the EU following Brexit. Gareth Thomas, Minister for Services, Small Businesses and Exports, believes the awards will inspire small firms to pursue export opportunities, highlighting the significant potential of international trade. “When small businesses export, it opens a wealth of incredible opportunities,” Thomas said.

Successful applicants receive more than just recognition. The DBT provides support for first-time exporters, offering guidance on the paperwork and requirements for entering overseas markets. Many past winners have shared that the experience not only validated their business credentials but also opened doors to new customers and increased their global sales.

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