< Previous East Midlands Business Link www.eastmidlandsbusinesslink.co.uk FINANCE NEWS ESRC invests £1.6m of £11m fund in Derby study to tackle productivity puzzle A new research project at the University of Derby, designed to contribute towards higher rates of investment and increased productivity growth across the UK, has been granted £1.6 million in funding by the Economic and Social Research Council via UK Research and Innovation’s Strategic Priorities Fund. The study will be led by Professor Marc Cowling, Head of Research and Innovation in the College of Business, Law and Social Sciences at the University of Derby, in collaboration with the University of Leeds, University of Warwick, University of Sussex, University of St Andrews, University of Edinburgh and University of Bath. It is one of only seven to be awarded funding as part of a new £11 million research investment to bring researchers closer to unravelling some of the complex reasons behind the UK’s stagnant productivity. The projects will focus on under-researched topics in relation to improving productivity, including diversity, net zero and the green economy, financial markets, mental health, and wages. UK education sector first as Netherfield-based Findel secures £18m sustainability- linked loan facility Educational resources supplier Findel has secured what is believed to be the UK education supplies sector’s first sustainability-linked loan facility from lender Santander UK. The Netherfield-based company will use the £18m facility to support its medium- term growth plans whilst driving its environmental, social and governance (ESG) commitments. The company’s origins as an educational resources supplier can be traced back to 1817. Today, Findel’s brands and websites offer more than 32,000 products to educators and parents based in the UK and overseas with the business exporting to 130 countries. The company is backed by private equity firm Endless, which supported a management buy-out in April 2021. To qualify as a sustainability-linked loan, Findel has made specific annual commitments regarding improving its carbon footprint and making its products sustainable, or sustainably improved, with a focus on removing single use plastics. Inflationary pressures reach uncharted territory The British Chambers of Commerce’s Quarterly Economic Survey (QES) for Q1 2022 – the independent survey of business sentiment and a leading indicator of UK GDP growth – shows inflationary pressures on firms reaching levels never previously recorded in its 33-year history. The survey of over 5,600 firms also revealed a continuing stagnation in the proportion of firms reporting increased domestic sales and investment, while cashflow weakened slightly in Q1. 42% of respondents overall reported increased domestic sales in Q1, down from 45% in Q4. 18% reported a decrease, up from 16% the previous quarter. 62% of firms expect their prices to rise in the next three months, which is another record high figure for this metric and an increase from 58% in Q4. Only 1% overall expect a decrease in their prices. For production & manufacturing firms, this rises to 75% and stands at 75% for retailers and wholesalers, 70% for construction firms, and 72% for transport and distribution firms. These are also the highest on record. © stock.adobe.com/ ipopba 06-15.qxp_Layout 1 05/04/2022 11:23 Page 5Erewash Borough Council to keep rates reduced for small and medium-sized businesses Erewash Borough Council looks set to keep rates reduced for small and medium-sized businesses in the borough for the upcoming financial year. Council Executive will meet on 6 April when it is recommended that it approves use of the council’s discretionary powers to award Transitional Relief and Small Business Rate Relief to qualifying businesses to reduce their National Non-Domestic Rate liability for the 2022/23 financial year. The two schemes were introduced to protect small and medium-sized businesses from large increases in their National Non-Domestic Rates, which are based on the rateable value of the business premises. The rates are normally reset by the government every five years but this has been delayed until 1 April 2023. The government has therefore asked councils to use their discretionary powers to provide the relief. Councillor Wayne Major, Erewash Borough Council’s Deputy Leader and Lead Member for Resources, says: “We aim to provide continued support to small and medium sized businesses in Erewash. Approving these schemes for another year will provide continued support to local businesses without any direct cost to the council or other local ratepayers.” FINANCE NEWS www.eastmidlandsbusinesslink.co.uk East Midlands Business Link Firms hit by 63% surge in customs duties reveals new report Firms have been hit by a 63% surge in customs duties – a record high of £4.7bn in the year to the end of January, according to a new report. The figures – up from £2.9bn in the previous 12 months – show that the last six months to 28 February 2022 are the six highest months on record for customs duties paid, with £2.6bn paid in that period alone. Over the past five years, the total amount of customs duties paid has averaged just £3.3bn per year. UHY Hacker Young, who compiled the report, says the rise comes as post-Brexit increases in customs duties begin to bite for UK businesses and consumers. Post-Brexit ‘Rule of Origin’ requirements have dragged far more imports into the customs duty net. These rules mean anything sold in the UK by EU businesses must wholly or largely originate in the EU to be exempt from customs duties when it enters the UK. © stock.adobe.com/ Kittiphan © stock.adobe.com/Stephen Davies © stock.adobe.com/ Rawf8 06-15.qxp_Layout 1 05/04/2022 11:23 Page 6Construction gets underway on £15m manufacturing research centre Construction of a 46,728 sq ft research facility for Infinity Park Derby’s (IPD) latest occupier is now underway, which will connect supply chain innovations in carbon zero technologies with UK industry. The progress on the nuclear research centre, led by the Government- backed Nuclear Advanced Manufacturing Research Centre (NAMRC), Derby City Council, the University of Derby, and the site developer IPD LLP, establishes Infinity Park as a centre for innovation, advanced research and development. Located next to Rolls Royce and within 20 minutes’ drive of global manufacturers Toyota, Alstom and JCB, the decision to position the coveted Nuclear AMRC Midlands facility in the area reflects Derby’s unrivalled reputation in manufacturing. The proximity of the Infinity Park facility to a new proposed junction, intended for completion in early 2025 within the South Derby Growth Zone, will also deliver sought after accessibility to major routes like the M1. East Midlands Business Link www.eastmidlandsbusinesslink.co.uk MANUFACTURING NEWS Spring Statement misses significant opportunities says Manufacturing Association Commenting on the Spring Statement, Stephen Phipson, Chief Executive of Make UK, said: “It is right that the Chancellor should prioritise help for the lower paid and those most in need at such a difficult time and business will understand this. “However, Government cannot escape the fact that manufacturers are facing eye watering cost increases that are pushing many towards a tipping point and companies would have been looking for substantial business support measures to help alleviate these. In particular, the lack of action on energy costs for business is especially hard to fathom. “It has been two years to the day since lockdown began and there is very little in today’s statement to support a sector that kept working throughout the pandemic, ensuring that there was food on the shelves, PPE for our NHS and medicines for the people who needed them. The promise of jam tomorrow with consultations through the summer and action in the Autumn will also be of little comfort for many who would have liked to have seen action and support immediately”. Manufacturer launches new recycled material for the automotive market A Nottinghamshire-based manufacturer best known for producing noise, vibration and harshness (NVH) parts and sealing solutions for the automotive industry has launched a new range of recycled materials suitable for use in a variety of sectors. Interflex is using the Ocean brand of materials to manufacture acoustic automotive products designed to reduce noise and vibration in vehicles. Already approved for use at a major original equipment manufacturer, Ocean is lightweight, mouldable and made from a minimum of 75% recycled polyester. It can also be recycled at the end of its life, making it a sustainable solution for NVH issues. Ocean can be used for a variety of vehicle interior and exterior applications from headliners to parcel shelves. Although currently being used in vehicle manufacture, it has potential for use in a range of industries including rail, roadways and construction. 06-15.qxp_Layout 1 05/04/2022 11:23 Page 7Lincolnshire foundry expands with £250,000 funding package Grimsby-based specialist engineering company, Fowler & Holden, is set to expand its manufacturing facilities and invest in new machinery following a £250,000 funding package from HSBC UK. The support from HSBC will allow Fowler & Holden to significantly expand its facilities through the addition of new and repurposed factory space, with the additional space being used to house a new second moulding line and a new plant room – in turn, increasing the privately-owned company’s production capacity by up to 80 per cent and creating up to 14 new jobs. In addition, the funding from HSBC UK will enable investment in new equipment, which includes a sand recycling machine that will allow the business to re-use 95 per cent of the sand from its casting process, substantially reducing wastage. As a result, there will be a reduced need for sand quarrying, and fewer HGVs will be required for transportation, significantly reducing traffic and CO2 emissions in Grimsby town centre. www.eastmidlandsbusinesslink.co.uk East Midlands Business Link MANUFACTURING NEWS Buyers have keen appetite for food & drink manufacturing The Food & Drink Manufacturing sector has bounced back after a ‘tumultuous’ year, as consumer demand continues to drive growth in alternative markets, according to accountancy and business advisory firm, BDO LLP. The UK market saw a ‘prosperous’ return to form with M&A activity up by 20% in 2021 – only 10% lower than pre-pandemic levels. The BDO Food & Drink Manufacturing Review 2022 has revealed that deals increased in plant-based, free-from, low sugar and alcohol alternative subsectors during the last 12 months. This included the cross-border acquisition of vegan and free-from brand Gosh! by Portugal-based Sonae for £64 million. Roger Buckley, M&A partner at BDO, said: “The rise in M&A activity in 2021 can be attributed to a number of factors, including improving market sentiment, strategic positioning, pent-up demand following an uncertain year, and also rumoured changes to capital gains tax, driving deal completions. “Whilst plant-based, free-from and sustainable food and drink have been upward trending for the past few years, it’s clear that this subsector is now entering a new stage of growth with volumes of M&A transactions rocketing in 2021.” Roger Buckley - picture by Edward Moss Photography © stock.adobe.com/ jeson 06-15.qxp_Layout 1 05/04/2022 11:23 Page 8PROPERTY NEWS Phoenix Brickwork to build state-of- the-art training academy in Derbyshire Brickwork, scaffolding and drywall business, Phoenix Brickwork, has revealed its intention to create a state-of-the-art training academy for apprentices in Derbyshire. Chairman of Phoenix Brickwork, Christian Watson, said the Phoenix Brickwork Training Academy, which is in the early stages of planning and development, will invest in young people who have a passion to work in scaffolding, drylining and bricklaying. He believes the new facility will boost the number of Derbyshire-based teenagers taking up apprenticeships and wanting to launch their careers in the industry. Christian said: “It is my ambition to see more youngsters learn real, practical skills in scaffolding, drylining and bricklaying. Some people find academic study a struggle, but they often thrive when they learn on the job. “Establishing a Phoenix Brickwork Training Academy means we can invest in our industry and provide young people with genuine trade skills, and not just a certificate.” Paragon completes £3.3m finance package with Lodge Park Homes for Wavendon scheme Northampton-based Lodge Park Homes has secured a £3.3 million funding package from Paragon Development Finance to support its new build scheme in Wavendon, Milton Keynes. Laine Rise is a development of 23 new build apartments, including seven affordable units. The apartments have been designed to offer more space than a typical flat, with some units reaching 1,000 square foot, the same size as a typical three-bedroom house. Lodge Park Homes was inspired to build the new apartments after receiving increasing enquiries from Londoners who wanted to leave the city for the countryside in light of the COVID- 19 pandemic. The developers saw the trend continuing so planned for a development that would give city- dwellers the space they needed with great public transport links in a breath-taking location. East Midlands Business Link www.eastmidlandsbusinesslink.co.uk £270,000 project begins to improve traffic flow around retail park in Chesterfield A new £270,000 project to improve traffic flow, road safety and access for cyclists, pedestrians and buses has started at the A619/Park Road junction in Chesterfield. New low-energy, intelligent traffic lights will be installed to automatically monitor and adjust timings to minimise delays at the busy junction which provides access to the popular Ravenside Retail Park. To help encourage cycling and walking, a new Toucan crossing will be installed at the crossing on Park Road, with wider footways to provide space for pedestrians and cyclists. The Toucan crossing will automatically detect cyclists and alert the traffic lights to change to reduce waiting times. As part of the scheme, any local buses running late will be automatically prioritised with a green light to make up lost time, increasing the convenience of travelling by bus. 06-15.qxp_Layout 1 05/04/2022 11:23 Page 9PROPERTY NEWS £2 billion of recent and planned investment in Leicester highlighted in video Major schemes that make up more than £2 billion of private and public sector investment already made, or proposed in Leicester, can be seen in a new video. The video – which uses computer generated images to take the viewer on a fly- through of the city – is being used to promote development opportunities to potential investors. It highlights a wide range of regeneration schemes recently completed in Leicester, as well as some of those proposed or in the planning stage. Ongoing and completed projects referenced include the City Mayor’s Connecting Leicester scheme, which has seen the transformation of the city centre thanks to improved connectivity and high-quality public realm improvements. The regeneration of Leicester Waterside including the development of two new hotels, high- spec offices, the restoration of Grand Central Station and a new public square – carried out by Charles Street Buildings in partnership with the city council – is also shown Growth prompts six-figure investment at conference centre The Derby Conference Centre has made a six- figure investment in its facilities as business continues to boom post-pandemic. The centre saw a 108% increase in business in the first quarter of the year after restrictions lifted. This has allowed it to invest £120,000 in the building to support meetings, conferences, and events in the coming year. The Derby Conference Centre, which is a Grade II listed building, houses an array of conference rooms and meeting rooms, as well as 50 en-suite hotel bedrooms and self-catering accommodation at its India House Hotel. The refurbishment of all meeting rooms, conference rooms and bedrooms are planned to be complete by the summer. The renovation includes a significant upgrade to the meeting room technology, with new high spec projectors, screens, speakers, and video conferencing equipment. Alongside this, new coffee machines and a vending machine have been installed so that guests are able to enjoy a selection of hot drinks and snacks in the newly redecorated meeting rooms. Rutland County Council refuses rabbit farm planning application Rutland County Council has refused a planning application for a temporary workers’ dwelling and separate agricultural building on land near Hambleton, submitted by T&S Rabbits. The design for the proposed agricultural building was deemed by Planning Officers to be inconsistent with existing buildings or landscape features in the local area and would appear particularly prominent – causing significant harm to what is a sensitive and largely undeveloped landscape. Without the agricultural building there would be no way of operating a commercial enterprise at the site and therefore no need for a workers’ dwelling, as was also proposed. The Council says proposals for this development were also directly at odds with current local planning policy relating to the Rutland Water Area (Policy CS24). This states that any new development which is near to Rutland Water but falls outside of five clearly defined ‘Recreational Areas’ must be small-scale development for recreation, sport and tourism facilities. Such development would also have to be considered critical for nature conservation, fishing or the essential operation of existing facilities. www.eastmidlandsbusinesslink.co.uk East Midlands Business Link 06-15.qxp_Layout 1 05/04/2022 11:23 Page 10 East Midlands Business Link www.eastmidlandsbusinesslink.co.uk COMMERCIAL PROPERTY I t all began in June 2019 when the UK Government became the first of the major economies to legislate for Net Zero carbon emissions, with the goal to bring the country’s net carbon emissions to zero by 2050. Where the commercial property sector comes into this is that building stock accounts for 31% of the country’s carbon emissions. Obviously, a conflict of interest was to be found, and many have claimed that commercial property is where the war on carbon will be won or lost. The short of it, in as blunt a term we can manage, is that commercial property will be required – by law – to reach an EPC standard of B by the year 2030, at an investment cost of which a white paper in December of 2020 estimated would reach £5 billion. Failure to reach these targets will result in fines, making the matter of Net Zero a mandatory investment for any commercial property owner, whether they use it themselves or rent it out to another business or businesses. This may be more easily attainable for newer builds – these tend to have higher energy efficiency, and may need less work, but older buildings are likely to require not insignificant investment to bring them up to a B rating. In fact, the Government believes that 10% of non-domestic buildings in the UK have an EPC rating of below E, and these might require significant, even extensive, changes to the architecture of the buildings to bring the rating higher. Many commercial property owners and landlords have been slow to act on the Net Zero pledge but may now be sitting on a ticking time bomb. Though the legislation was implemented pre-COVID, the pandemic itself may have proved too much a distraction, but now with only eight years to go (or less as you’ll read later), commercial property at below a B rating may become increasingly more difficult to sell, or even drop in value. Beyond having to improve the EPC rating of buildings, from April 2025 (a mere three years away) all non-domestic rented buildings must have a valid EPC, meaning that many landlords and businesses must have up-to-date EPC tests carried out, especially if their previous ones had expired. The Government’s implementation of Net Zero will also not be a sudden or faraway concept. It is set to be introduced in stages, with “compliance windows” set along the way. For instance, while a non-domestic building will require an EPC rating of B by 2030, it must be able to present an EPC report of C by April 1st, 2025 – and if they cannot do so, they will have until April 2027 to fix the issue and present an updated EPC. What’s more, while fines will not come into place until 2030 for buildings that do not have a rating of B or higher, the Government will request a new EPC with a minimum Net Zero and your property It can be hard with everything going on in the business world today to fully appreciate the challenges inherent in a piece of legislation three years old, but which will be making huge demands of commercial property owners and landlords in just three more. 16-19.qxp_Layout 1 05/04/2022 11:25 Page 1www.eastmidlandsbusinesslink.co.uk East Midlands Business Link COMMERCIAL PROPERTY Achieving Net Zero by Doug Hough Starting your journey to Net Zero can been daunting. However, with the right support and expert advice, it is a journey we must all take together. No matter the size or sector of your business, we can help. In the current climate, with rising energy bills, the right solutions should also improve your energy efficiency. Lower energy consumption leads to lower costs and a better bottom line for your business. That’s why you should look for experienced specialist advisors like those at East Midlands Energy Efficiency who can provide support tailored to your business. The construction and operation of buildings contributes a significant portion of the UK’s total carbon emissions. As such, it is a very good place to start. Your current position can be easily benchmarked at low cost using both Energy Performance Certificates (EPCs) and Display Energy Certificates (DECs). Your progress can be measured and your property assets protected as the Minimum Energy Efficiency Standards (MEES) increase and become harder to achieve. At East Midlands Energy Efficiency, we provide independent advice to guide you towards making effective improvements to achieve the outcomes you need. While many larger businesses are about to navigate another round of the Energy Savings Opportunities Scheme (ESOS), savings for smaller businesses often have the biggest impact. Do you use modern LED lighting? Just one of the quick wins available but it must be suitable! Saving carbon, saving energy, saving you money – Contact us today and start your journey. rating of B on April 1st, 2028. Any landlord or business whose building is not EPC B or higher would than have until April 1st, 2030, to submit an updated EPC where it meets said criteria. This means there can be no suggestion that the Government will simply “not notice” a lower EPC, or that many will slip under the radar. The offenders will already be known by 2028, and fines could well be pre-penned and set to be sent on their way by 2030. Of course there are exemptions for extreme cases, but what those are or may be are best discussed by legal professionals with expertise in the law. The Government is considering options wherein tenants can share a part of the legal responsibility wherein the tenant’s business or fit-out causes the EPC rating of the building to drop. This will obviously come into effect where the building had, prior to occupation, been rated at EPC B or higher, but where the specific business energy demands of the tenant have compromised that. There are other exemptions, but the onus to prove said exemptions will be on the landlord, and the building shall be considered applicable for the requirements until proven otherwise. When it comes to improving the energy efficiency of 18 Á © stock.adobe.com/ZETHA_WORK 16-19.qxp_Layout 1 05/04/2022 11:25 Page 2 East Midlands Business Link www.eastmidlandsbusinesslink.co.uk COMMERCIAL PROPERTY commercial property it can be difficult to know where to begin – an updated EPC report is an obvious first step, and will be necessary before 2025 anyway, so businesses might as well get started. EPC inspectors can and should be able to offer advice or highlight areas of significant concern, which should be the first areas to be addressed as they can often have the greatest improvement, saving costs elsewhere. Heat loss from walls and roofs is a common problem for many older buildings. Research has found that 66% of an office’s heat is lost through the walls and ceiling, compared to just 8% through doors and windows. Improvement in a building’s insulation can drastically reduce this, improving the buildings efficiency and even cutting heating cost in the long run. Draught prevention, double-glazed windows and updating boilers or air conditioning systems will also be on the cards, but more expensive measures such as installing heat source pumps or solar arrays should hopefully not be necessary. That said, focus should first be on identifying the costs through an EPC and then fixing them, as while overhauling the interior of a building, changing lighting to LED and other matters may be cheaper, it might ultimately prove fruitless if too much heat is being lost due to poor insulation. It is far cheaper to get an updated EPC and identify the problems then to try and solve them blindly. There are many ways, not all expensive, to improve the EPC rating of a commercial property, but it may also be impossible – or inhibitively expensive – and seeking an exemption may be the only recourse. Knowing that in advance is half the battle, but with a rating of C or better expected to be handed in by April 2025, there isn’t time to wait. Landlords and building owners may well be sitting on ticking time bombs, and the clock is ticking. © stock.adobe.com/Andrey Popov Understanding fines! Lest the severity of the legislation not be fully understood, we have compiled some of the punitive measures that are in place to ensure compliance. * Renting out a property in breach of EPC requirements for under three months – 10% of the rateable value of the property (Min: £5,000 – Max: £50,000) * Renting out a property in breach of EPC requirements for over three months – 20% of the rateable value of the property (Min: £10,000 – Max: £150,000) * Proving misleading or false exemption information – Max: £5,000 * Failure to comply with a compliance notice – Max: £5,000 16-19.qxp_Layout 1 05/04/2022 11:25 Page 3www.eastmidlandsbusinesslink.co.uk East Midlands Business Link COMMERCIAL PROPERTY I f you are a landlord of a commercial property, you may be familiar with the importance of Energy Performance Certificates (EPC) since their introduction in 2008. An EPC rates how energy efficient your building is, providing a rating from A to G, with the most efficient achieving an ‘A’ rating. Under current rules introduced in 2018 in the ‘Minimum Energy Efficiency Standards’ (MEES) regulations, a commercial building must have an EPC rating of at least ‘E’ before a new lease or a renewal lease can be granted. A new deadline of 1 April 2023 is fast approaching, following a government consultation in 2019. The government proposes to introduce changes to MEES which will affect the Non-domestic Private Rented sector and will extend the rules surrounding EPC rating to include existing leases on commercial property. As a commercial property landlord, this may affect your ability to let or continue to let your property if it does not meet the new rules. It may also affect rent reviews and the valuation of your property. Another important consideration is the impact on your ability to obtain a mortgage or refinance your property. We are starting to see a trend in Lenders reviewing a property’s EPC rating as part of their initial assessment of new applications. In addition, the 2020 Energy white paper indicated that all commercial properties (without an exemption) would be required to achieve an EPC rating of ‘B’ by 2030. The government has proposed to phase in the requirement for an EPC rating of ‘B’ minimum standard by setting an interim milestone in 2027 for a minimum standard of ‘C’. Whilst no immediate action is required, 2023 is fast approaching and owners of commercial property should begin the following: * Carry out an audit of the current EPC ratings of all properties and their dates of expiry. * Clarify if your commercial properties are affected. There are a few exemptions, notably, leases shorter than 6 months and longer than 99 years. * If you have established that your building/s need to increase the EPC rating before the proposed deadline, you will need to plan to make the necessary improvements in good time and take professional advice. * Speak with your commercial finance broker to review your existing finance arrangements and future property purchases. It may be possible to cover the cost of any improvements with a loan secured against the property. If you continue to let a property without meeting the required EPC rating and do not hold a valid exemption certificate, you will run the risk of enforcement action, which could include a fine of up to £150,000. These changes inevitably raise the question of who will cover the increased compliance costs for landlords. Landlords might argue that tenants will benefit from lower energy bills brought about by the improvements, whilst tenants might claim landlords will ultimately benefit from increased capital value and their continued ability to let the property. For more information on how the changes might affect you, contact Sterling Commercial Finance on 0115 9849800 or email property@sterlingcommercialfinance.co.uk You can read more on the proposed implementation of the changes here: www.gov.uk/government/consultations/non- domestic-private-rented-sector-minimum- energy-efficiency-standards-epc-b- implementation Commercial property landlords - are you ready for EPC changes? Nic Rotton, commercial mortgage consultant at Sterling Commercial Finance, prepares you for the upcoming changes surrounding EPCs. 16-19.qxp_Layout 1 05/04/2022 11:25 Page 4Next >