Chamber News

New report by the BCC and Lloyds Bank finds three key changes needed to help business hit Net Zero:

• Government should review its support and advice to SMEs on moving to Net Zero
• Large businesses and institutions must continue to drive behaviour change in their supply chains
• Government should demonstrate commitment and consistency in its Net Zero plans

The recommendations are the result of a six-month deep dive by the organisations into the reasons holding firms back from reaching Net Zero. It followed an earlier BCC survey of more than 1,000 businesses, 96% SMEs, which found that nine out of 10 don’t fully understand what the Government’s target of making the UK Net Zero by 2050 means for them. There was also a substantial divide between firms with more than 50 employees and those with fewer than 50, in terms of understanding and progress. A total of 56% of the bigger firms had a ‘complete’ or ‘some understanding’ of the Net Zero target, compared to just 35% of the smaller ones. Almost twice as many firms with more than 50 employees (36%) had developed a plan for reaching Net Zero compared to those with fewer than 50 (19%). The research also showed that planning for the future skills needed to help businesses make the transition to greener and more sustainable operations has taken a backseat. Fewer than one in 20 firms (4%) had carried out a written assessment of the green jobs or skills they will need in-house over the next 10 years. One in five businesses (21%) also thought that, on balance, green technology will decrease the productivity of their company, while only 10% thought it would provide a boost.Reasons cited by respondents included the cost of green technology and the lack of available EV charging infrastructure. However, the survey also showed most firms were using new technology or adopting greener policies even if their overall understanding of reaching Net Zero was incomplete. The research showed that: 

• More than two thirds of SMEs (69%) have installed LED lighting  
• More than a third (34%) are investing in greener vehicles 
• Just under a third (30%) are using solar panels 
• Almost half (46%) are using recycling and waste reduction practices
• Over a quarter (28%) use renewable energy providers or tariffs 

In response to the findings, the BCC and Lloyds Bank brought together businesses in Chambers from Liverpool, Glasgow, North–East England, West & North Yorkshire and Birmingham to analyse what needed to change to get Net Zero back on track. It found a lack of consistency in Government actions and messaging is holding many smaller firms back, when cost and fears of betting on the wrong technology are big issues. Shevaun Haviland, Director General of the BCC, said: “All the businesses we spoke to understand the devastating impact climate change is having on our planet, and that sitting this out is not an option. “But many smaller firms feel lost in a fog of conflicting information and are reluctant to invest in new technologies when they fear betting on the wrong horse. “Mixed messages from Government on the importance of Net Zero are only compounding the problem, as well as a ‘stick’ heavy approach to enforcing change. “As other countries and trading blocs pour billions into low-carbon technology there is a real danger we will get left behind. “But in the midst of a cost of doing business crisis, firms are reluctant to sink their money into Net Zero technologies and energy efficiencies when the commercial pay-off appears uncertain. “Yet if we get this right then it will be a huge opportunity for UK Plc. To do that we need a coherent system of free support and advice made available for firms across the country. “Larger corporates also need to help the smaller businesses in their supply chains kickstart their Net Zero journey. “And, most importantly, Government needs to develop a long-term strategy which it can demonstrate it will stick to. That means supporting the development, and investment in, the infrastructure and skills needed to make Net Zero happen.” Paul Gordon, Managing Director, Relationship Management at Lloyds Bank said: “SMEs are the lifeblood of the UK economy and will play a critical role in our sustainable transition. Despite a challenging external environment and cost, time, and resource pressures, our research with the BCC shows that businesses are taking steps towards Net Zero, particularly where the commercial benefits are clearer – for example, reducing energy consumption to lower costs. “This report highlights the need for clarity from Government on the support available and reinforces the need to remove the barriers for investment such as greater EV charging infrastructure, giving SMEs the confidence to invest. “The private sector also has a significant role to play including ourselves as financiers along with business organisations and industry bodies, to continue to support SMEs with our knowledge and best practice to help them choose the right transition investments for them. “At Lloyds Bank, we are here to help, offering practical advice and financial support to firms, both as they develop their Net Zero strategies and for every step along their journeys, as we build a more sustainable future together.” The full report can be found here.

Reacting to the latest ONS labour market figures, Jane Gratton, Deputy Director, Public Policy at the British Chambers of Commerce said: “Today’s figures showing pay growing at a record annual pace highlight the unrelenting workforce pressures businesses are facing. In a tight labour market, employers are struggling to contain wage inflation as the expectations of their staff and job candidates continue to rise. “BCC research published earlier this month, shows only a slight fall in the number of firms facing recruitment difficulties. Businesses tell us that access to skilled workforce remains a major concern. “In the current challenging economic climate, boosting productivity is essential, and investment in skills is crucial to making that happen. We need the government to create the right conditions. For example, by reducing upfront business costs, enabling a more flexible apprenticeship levy and ensuring more access to rapid retraining courses. “Firms who cannot access urgent skills locally are finding themselves locked out of the immigration system because of escalating costs and disproportionate criteria. We need urgent reform of the Shortage Occupation List to include more roles at more skill levels, when there is evidence of a national shortage.” 

Norfolk & Suffolk Local Skills Improvement Plan (LSIP) has been approved by the Secretary of State for Education. The LSIP highlights the fundamental skills needs required in the key sectors of our region and provides a roadmap for us to help address the shortages we have been facing. As the Employer Representative Body (ERB) for Norfolk and Suffolk, Norfolk Chambers, in collaboration with Suffolk Chamber of Commerce will continue to work with businesses, educators and trainers and many other stakeholders in our region to deliver critical actions that will ensure business remains at the heart of the skills agenda. Commenting on the success of a fully approved Norfolk and Suffolk LSIP, Nova Fairbank, CEO of Norfolk Chambers said: “Our LSIP shows the ability of the Chamber network to bring together a wide range of partners and stakeholders to collaborate effectively and deliver what Norfolk and Suffolk need to upskill our workforce and support the growth of jobs and the regional economy.  We will continue to build upon the existing collaborations, strengthening them to help drive forward our Roadmap for Change.” John Dugmore, CEO of Suffolk Chamber of Commerce, when asked about what happens next, said: “A vast amount of work has already been carried out in a short space of time by our project team to deliver employer surveys and consultation events.  The Chambers are at the heart of our local economies, and we have engaged with hundreds of businesses within and beyond our networks to reach every sector and every size of businesses for a truly representative assessment of the challenges businesses face in the current economic climate. “Our journey to improve the skills of local people and increase the productivity of our local economies has successfully begun, and we are excited to move into the next phase where we will develop actions to deliver meaningful change, for greatest impact and value for money.” For further information and to view the approved Norfolk and Suffolk LSIP, click here: Link to Publish PDF of LSIP [currently being moved to front page]

Commenting on the Bank of England’s latest rise in the interest rate to 5.25%, Jack Weaver, Chief Operating Officer at Norfolk Chambers of Commerce, said: “Businesses across Norfolk will be hoping today’s rise in interest rates is the last they will see. “While many will have already factored this increase into their plans, it is clear the economic environment is becoming stacked against smaller firms which make up more than 80% of our membership. They are the ones with less cash reserves and greater exposure to the volatility we’re seeing. There are glimmers of hope however as data from our Quarterly Economic Survey (QES) shows that fewer than half (46%) of Norfolk businesses expect their prices to increase this quarter, down from 61% in the previous 3 months. So whilst there remains significant uncertainty, businesses across our county are feeling modestly more confident about the future. We are also likely to see a further substantial fall in inflation in July as last year’s energy price rises drop out of the data. While inflation remains the top concern for Norfolk firms overall, interest rates have emerged as the second top concern, with 41% citing this as more of a worry than three months ago. Norfolk also remains over-exposed to volatility in sectors experiencing the biggest uncertainty. The tightness of the labour market is most significant in hospitality and tourism, agriculture and health & social care, further fuelling concern about skills, recruitment and talent retention. All of which stymies business growth. Our members and the wider business community in Norfolk will be watching closely for any further indications on the Bank’s plans and hoping this rate rise will have the desired impact on their inflationary pressures.”

• Government must fix people problem to ease inflation and take pressure off interest rate rises

• 79% of businesses surveyed (92% of whom are SMEs) attempting to recruit have faced challenges, with hospitality and construction firms the most likely to report difficulties

• Three in five (60%) businesses attempted to recruit in the quarter 

The latest Quarterly Recruitment Outlook (QRO), a survey of 4,800 UK firms of all sectors and sizes by the British Chambers of Commerce (BCC) reveals there is still no easing in the record high difficulties in finding staff. The second quarter results for 2023 show that the percentage of firms facing recruitment difficulties has fallen just three percentage points from the historical high of 82% in Q4 2022. This has now remained above 75% for the last two years. Attempted recruitment in Q1 was virtually unchanged from the previous quarter, with 60% of those surveyed looking to find staff (59% in Q1 2023). While recruitment difficulties are being experienced across the economy, the construction & engineering, and hospitality sectors were the most likely to report problems with 86% of firms reporting difficulties (up from 81% and 83% respectively in Q1). This is closely followed by manufacturing on 81% (83% Q1) and then professional services on 77% (79% Q1). Of the firms in the construction & engineering sector facing recruitment difficulties, 76% faced difficulties in finding skilled manual/technical workers. However, for hospitality businesses that struggled to recruit, 69% faced difficulties in finding semi/unskilled workers. Investment in training remains stubbornly low with just over a quarter of firms (27%) reporting an increase in their training investment plans over the last three months (the same as Q1), while 14% report a drop (also the same). In terms of cost pressures, the data show that the main factor for increasing prices is now coming from wages rather than utility bills or raw materials. With concern around utility costs dropping, 63% report these as an issue (74% in Q3 2022), the number of firms reporting labour costs as a source of pressure has risen to 68% (67% in Q1) and is now the lead cost pressure.   Although, overall, the percentage of firms expecting their prices to rise fell below 50% for the first time since Q3 in 2021. Responding to the findings, Jack Weaver, Chief Operating Officer at Norfolk Chambers of Commerce said: “The tight labour market continues to push up wage costs, fuelling inflation, and creating huge difficulties for businesses looking to recruit. In Norfolk, our already squeezed businesses also face the issue of a shrinking workforce as the working age population in our county declines in a way not seen in much of the rest of the country. In our focus groups and engagement events with Norfolk businesses, recruitment difficulties are consistently cited by as a major barrier to growth, meaning firms cannot fulfil order books and are turning down new work. Added to this, the national picture shows acute issues in hospitality, construction, health and social care and other sectors heavily reliant on labour from overseas. These are all sectors on which Norfolk’s economy is heavily dependent, so we need to see consistent and pragmatic immigration policy from government and the opposition to give our businesses confidence in the future.

Commenting on the Electronic Trade Documents Act receiving Royal Assent, BCC Head of Trade Policy William Bain said:  “Campaigners have worked for years to have the Electronic Trade Documents Act passed, and its introduction in mid-September will a mark transformational change in digitalising international trade.  “The BCC will work with our colleagues in the International Chambers of Commerce, and with Chambers and businesses across the UK to ensure the full benefits of digitalisation are felt in increased global trade.  “This new era begins in the UK, but it can also act as a beacon, leading towards further digitalisation of trade across the world. We also urge governments to accelerate their work to digitalise border processes. “In our new Trade Manifesto, we called on Government to work with business to ensure 60% of the UK’s exports are carried out digitally by the end of the decade.” About The Act The Electronic Trade Documents Act gives legal status to electronic Bills of Exchange and Bills of Lading and other commercial documents. The new legislation will come into effect in mid-September this year providing opportunities to digitalise international trade documents and reap efficiency benefits. It also covers trade documents such as promissory notes, warehouse receipts, marine insurance policies, and cargo insurance certificates. 

Responding to the launch of a UK Government consultation on negotiations for an upgraded trade agreement with Turkey, BCC Head of Trade Policy William Bain said: “It is good news to see this statement of intent to deepen UK trading terms with Turkey. It is our 18^th largest bilateral trading partner worth £23.5bn in total trade in 2022. “Currently, three quarters of UK exports to Turkey are in goods, so a key aim of these negotiations must be to keep that secure while expanding scope for services exports. “An upgraded free trade agreement must focus on being match-fit for the 21^st Century. This means negotiating new arrangements on services, business and labour mobility, green trade and digital trade. All areas we flagged in our new Trade Manifesto. “Only 6% of UK VAT registered exporters trade goods and services with customers in Turkey – a refreshed agreement needs to work in practice to raise that share.” The UK’s current trade agreement with Turkey was a roll-over deal reached a few days after the Trade and Co-operation Agreement (TCA) between the UK and the EU was made in late December 2020. Turkey has a partial customs union and regulatory relationship with the EU which forms the background to what can be negotiated with the UK. Mr Bain said: “Issues around rules of origin are being consistently raised by UK companies trading in the European neighbourhood. The BCC would like the UK to join the Pan-Euro Mediterranean (PEM) Convention which would offer greater flexibility for traders seeking to sell manufactured goods in the EU, Turkey, and the rest of the European neighbourhood within the Convention. “There will also be an overlap therefore between trade issues we would want to agree bilaterally with Turkey, and the wider review of the operation of the TCA in 2025/6. “As these negotiations look to get underway later this year, securing a future looking, upgraded set of trading terms with Turkey is a key part of achieving closer economic relations for UK businesses across the European neighbourhood in the coming years.” The existing UK-Turkey continuity trade agreement can be found here: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/963851/CS_Turkey_1.2021_UK_Turkey_Free_Trade_Agreement.pdf

We hear a lot from our SME businesses that accessing government funding support and the wider routes to finance can be tricky. If that sounds like you, then UK Parliament’s Treasury Select Committee want to hear from you! Have your voice heard and submit evidence to the Treasury Committee. The Committee will examine the accessibility of finance and lending to SMEs, by considering the key challenges SMEs face when seeking finance, the regulation of SME lending and the role Government can play in enhancing lending to SMEs. Submit your answers here  

After securing the works contract last year, Vattenfall has made the decision to stop work on Norfolk Boreas Offshore Wind Farm. The project has come to a halt due to rising costs caused by inflation, rendering the offshore wind farm project financially unviable, with two other sites: Vanguard East and Vanguard West also being reviewed. Vattenfall is one of Europe’s largest producers and retailers of electricity and heat, operating 10 wind farms across the UK. Vattenfall planned to construct the Norfolk Boreas Offshore Wind Zone off the coast of Norfolk, providing power to more than 4 million homes in the UK. Jack Weaver, Chief Operating Officer at the Norfolk Chambers, said: “Like all businesses operating in Norfolk, Vattenfall are being squeezed by multiple macro-economic pressures. Stubbornly high inflation, rising interest rates, a very tight labour market and an increasingly uncertain policy environment are undeniable, but this decision will not have been taken likely. Nevertheless, it is unfortunate to see such a significant expansion of our offshore renewables offer hitting pause. This decision will not impact on the positive relationship Norfolk Chambers has with Vattenfall, and we will continue to engage positively with them to ensure Norfolk businesses still benefit from the win-win scenario of investment in the drive to Net Zero.”

Reacting to the latest GDP data from the ONS, Alex Veitch, Director of Policy at the BCC, said: “Today’s data show that while consumer price and core inflation remain stubbornly high, businesses’ input prices have fallen. “While firms’ costs are now much higher than a year ago, the fall in the input rate will give some hope that consumer price inflation will soon start to ease. However, the drivers of price rises have shifted with labour costs now the most significant factor. This may slow down the rate of CPI decline – due to the high number of job vacancies. “Our latest Quarterly Economic Survey in July, of 5,000 businesses, showed that fewer firms are now expecting their prices to rise, and while inflation remains the top concern, the numbers worried have been falling since the end of 2022. “The drivers of inflation are diverse with most (68%) now citing labour costs as a key pressure, 63% citing utilities, and 45% citing raw materials. Labour costs may remain an issue for business for some time; although the figure has been steadily falling, there are still around 1 million job vacancies in the UK. “However, for manufacturers, 75% cited raw materials as the main cost pressure, and hospitality firms were far more likely than all other sectors to cite utility costs as a worry. “But overall, our data show there has been optimism building in the business community that future prices rises might not be inevitable. Today’s ONS findings will be an important factor for the Bank of England to consider going forward.” The full ONS data can be found here for CPI and here for PPI.

The British Chambers of Commerce oversees a dynamic Network of 53 accredited UK Chambers with affiliates in over 75 international markets committed to creating a platform for businesses to shape the economy for the better. We firmly believe that international trade can make every company a better one. With more than 160 years of experience in the world of trade we know that once you open the door to overseas exports, then the possibilities for expansion are endless. That’s why we want to build a business community in the United Kingdom where more than half of firms export. Our Chamber Network already does that, and we want to help thousands more do it too. In 2022, there was a continued expansion in UK services exports across the world – cementing our place as the globe’s second largest exporter of services. That needs to grow further. Now we need our goods exports to experience greater growth in the coming years. View the Trade Manifesto 2023 below!

On 3^rd July, Evander Norwich welcomed the Norfolk Chambers to their office for another in our series of Focus Groups. Joined once again by James Ingham and Jonny Spinks from our sponsor UPP, the group was chaired by Chambers Board Member Carole Burman (MAD-HR) who led the group through a variety of topics. Impacts of ageing infrastructure and next-level connectivity Once again, the topic of connectivity in a largely rural county elicited a wide range of opinions – while some present have great connections, others are more isolated and cannot rely on a stable connection which can have potentially embarrassing results while talking via video call. Even those with access to a full-fibre connection cannot always get a good phone signal, meaning that going on the road either when meetings potential clients or at trade shows has its risks, including losing sales.  It was suggested that, just as Royal Mail has an obligation to deliver to all UK addresses, perhaps there should be an obligation to provide a fast internet connection as well, meaning physical location has less bearing on where business can and cannot be done. What is most challenging at the moment? With the current economic climate providing a number of challenges, the biggest was considered to be a combination of government policy and a rise in interest rates. Changes in how businesses can spend their money affect how they can run, and with uncertainty comes the additional challenge of not being able to plan effectively. There was a consensus that it currently takes a lot more work to remain at the same level than it has done in the past. Cost of living crisis and its effects Although primarily a business-focused discussion, it is impossible not to see how further challenges in peoples personal lives can affect their business decisions. The cost of living crisis has meant people have cut back, while the feeling within the group was that they should now be focusing more than ever on promoting their businesses. If you would like to join us at one of our Focus Engagement Groups you are more than welcome to do so. They are free to attend and take place around the county. The next Focus Group will be taking place at Downham Market on Friday 14^th July – book your place here. Our Focus Groups are kindly sponsored by Upp