< Previous East Midlands Business Link www.eastmidlandsbusinesslink.co.uk END OF YEAR SUCCESS STORIES Highs and lows Surrounded by economic and political uncertainty, rising costs and supply chain struggles, businesses have had to combat a multitude of challenges in 2022. But that doesn’t mean it’s been a year with no positive news for the East Midlands. Business Link highlights some of this year’s major boons set to create a brighter future for the region. 20-23.qxp_Layout 1 30/11/2022 09:43 Page 1www.eastmidlandsbusinesslink.co.uk East Midlands Business Link END OF YEAR SUCCESS STORIES 2022 has been another tough year for East Midlands businesses. Having just got to grips with and readjusted to post- COVID working — still dealing with the ripple effects of the pandemic — further novel complications arose on the global, national, and local stage, from Russia’s invasion of Ukraine to the escalating cost of doing business crisis. The year has seen a rotating cast of prime ministers, multiple Budgets, a recession, skyrocketing costs and spiralling inflation, as well as a continued skills shortage. Meanwhile confidence among East Midlands firms continues to decline as cost pressures, falling customer demand and access to cash take a toll, as highlighted by the East Midlands Chamber’s Q3 Quarterly Economic Survey (QES). Though some firms may have faltered and folded as a result, myriad have risen to the challenge of maintaining resilience in a complex environment. It is not all doom and gloom, especially in the East Midlands, where there has been plenty of good news this year alongside the bad, showcasing a brighter future — from Derbyshire-based property group Clowes Developments’ purchase of Derby County Football Club to Rolls- Royce Submarines opening the doors of its new Nuclear Skills Academy in the region, and, on a grander scale, the proposed devolution deal. The historic, first of a kind county devolution deal signed with the government will give local leaders new powers to improve transport, boost skills training and build more attractive and affordable homes. The deal with Derbyshire and Derby, Nottinghamshire and Nottingham, will see the area appoint a directly elected mayor, responsible for delivering local priorities, backed by a new £38 million per year investment fund, totalling £1.14 billion over 30 years. The deal delivers on a commitment made in the government’s Levelling Up white paper to shift powers and resources away from Whitehall to local communities. In addition to the agreed funding being under local control rather than control from Whitehall, a new Mayoral Combined County Authority will be created, with control over the core © stock.adobe.com/chayantorn 22 Á 20-23.qxp_Layout 1 30/11/2022 09:43 Page 2 East Midlands Business Link www.eastmidlandsbusinesslink.co.uk END OF YEAR SUCCESS STORIES adult education budget, to bolster skills in the region, as well as the ability to increase control over transport infrastructure. The new mayor will also be granted powers to drive regeneration, with compulsory purchase powers and the ability to designate Mayoral development areas and establish Mayoral Development Corporations to promote growth and build new homes. The new East Midlands Combined County Authority will also be granted control of over £16 million of additional funding for the building of new homes on brownfield land. East Midlands Chamber Chief Executive Scott Knowles said: “Our region is home to a wide range of fantastic businesses, from large industrial powerhouses to innovative university spin-outs, and everything in between. What they now need is the political apparatus that removes obstacles to decision-making, enhances our ability to attract investment and ultimately creates a more business- friendly environment. The announcement of a devolution deal for Derbyshire and Nottinghamshire provides a huge opportunity in this respect. It will help these counties to take strides forward in productivity and innovation, enabling firms to drive the economic growth that creates jobs and wealth locally. For too long, our region has lagged behind when it comes to being backed by central government, with our recent analysis in partnership with East Midlands Councils highlighting how the region ranked either bottom or near the bottom for spending on transport, health, education, social protection and economic affairs. It’s reassuring to know many of these themes are covered by the East Midlands MCCA and that businesses will be represented within its governance structure.” A public consultation about devolution for Derby, Derbyshire, Nottingham and Nottinghamshire has now begun, taking place until Monday 9 January 2023. 2022 also saw a significant boost to the East Midlands’ drive to attract inward investment and address regional disparities when it was chosen to host the UK Atomic Energy Authority (UKAEA)’s pioneering prototype fusion power station, in West Burton, Nottinghamshire. The focus of local stakeholders on low- carbon energy generation as a route to tackle climate and energy crises, and create vital high-paid, high-skilled jobs across the Midlands, helped present the West Burton site as an ideal choice. West Burton was the site of coal and gas power generation for decades, thus becoming a symbol of the pathway from fossil fuels to fusion power. It was one of 15 sites which entered bids in early 2021 to host the Spherical Tokamak for Energy Production (STEP) project, and chosen from an eventual shortlist of five after more than a year of detailed technical and socio-economic assessment. Part of the UKAEA’s selection process was to assess which site combined the ability to 20-23.qxp_Layout 1 30/11/2022 09:43 Page 3www.eastmidlandsbusinesslink.co.uk East Midlands Business Link END OF YEAR SUCCESS STORIES © stock.adobe.com/Leonid Andronov support the project’s delivery, with the potential for major socio-economic benefits. It is expected that local firms, clusters and R&D hubs will develop and benefit from an influx of activity, as they support the construction and operation of the site and welcome some of the world’s leading fusion experts and companies. The STEP project aims to build on the UK’s status as a world-leader in fusion technology by creating a prototype plant, capable of net power output to the grid, by 2040. If successful, it could pave the way to commercial fusion plants producing safe, sustainable, low carbon energy for generations to come. Moreover, a plethora of promising and exciting Levelling Up bids were submitted this year, town deal funding was confirmed, and major redevelopment projects continued to progress, advancing the status of the region. Some of Nottingham’s biggest businesses and organisations got behind Nottingham City Council’s funding bid for £20m from the government’s Levelling Up Fund to help bring the transformation vision of Broad Marsh to life after its many stumbling blocks. The bid would prepare the centrepiece of the vision, the Frame of the derelict shopping centre, to be retained and reimagined into a space to bring people together in the city for play, performance and food, providing the necessary catalyst and confidence for private sector partners to invest. This would unlock other key elements of the vision including the creation of 6,000 jobs, 750 homes and over 400,000 sq ft of commercial and business space, a ‘Green Heart’ providing a wildlife rich green space in the city centre, the rejuvenation of Nottingham’s cave network, and a potential cultural anchor tenant. The 20-acre Broad Marsh site is one of the most significant city centre development sites in the UK, with neighbouring streets and buildings already undergoing a transformation. Further on in the process of regeneration, Derby’s £200m Becketwell scheme has advanced at pace in 2022. The region’s property continues to be attractive to investors, with direct investment into real estate assets in the Midlands running well-ahead of the 10- year average for deal value, according to a new study. The findings, from property services firm JLL, report that the total amount of capital invested in the East Midlands was up 13 per cent to £1.1bn over the first nine months of 2022. Concurrently industrial properties remain in high demand, with the region holding excellent transport links, and attracting companies to establish hubs, while developers look to construct new schemes. Having to consistently adapt to myriad challenges, the East Midlands’ businesses have proven their resilience in historically difficult trading conditions, and will need to continue to do so as we enter what is looking like it will be a testing 2023. 20-23.qxp_Layout 1 30/11/2022 09:43 Page 4 East Midlands Business Link www.eastmidlandsbusinesslink.co.uk TAX Autumn Statement changes to R&D tax reliefs - how do they affect SMEs and large companies? Luke Prout, corporate tax partner at Streets Chartered Accountants, offers a summary of the changes to Research and Development Tax Credits in the Autumn Statement. T he Autumn Statement included a number of changes to Research and Development Tax Credits, and in particular a significant scaling down for Small and Medium Sized Enterprises (SMEs) of the generous reliefs available for undertaking qualifying Research and Development (R&D). Whilst R&D by larger companies has been significantly enhanced by the tax credits, the scheme’s application by SMEs has deemed to be less than effective or satisfactory, with in many cases it being misused, even abused, by those it seeks to support. As a result the Chancellor has reduced the level of relief available to SMEs for undertaking R&D. The scaling down of the reliefs was perhaps to be expected based on the projection that without reform the cost of providing the relief could double to almost £9bn by 2027 and that such a financial commitment could perhaps not be supported or justified at a time when the Chancellor is seeking to address a £55bn black hole. It is also the case that earlier this year, Prime Minister Rishi Sunak promised reforms when he was Chancellor, saying that in spite of spending “huge and rapidly growing sums” on the scheme it was not doing enough to boost growth. In part this may have a large impact for smaller businesses, to allow them to receive cash funding for undertaking R&D. In contrast the separate R&D tax relief scheme for large companies was actually enhanced in the Autumn statement to provide larger companies increased benefits. Perhaps this is the starting point for the two schemes to eventually be merged into a combined singular scheme, which means we probably have not seen the end of these changes and there may well be amendments in next year’s Budget and/or Autumn statement. Summary of changes SME Scheme From April 2023, businesses classed as an SME will no longer receive an uplift of 130% for every £1 spent, instead this will reduce to 86% and for loss making companies that can sell (surrender) their losses to HMRC, the repayable credit will be reduced from 14.5% to 10%. However, bear in mind, that the Corporation tax rate from April 2023 changes from 19% to 25%, so it would be expected that the repayable tax credit would be reduced based on previous changes in the rate of Corporation tax (albeit it has never been consistent). For profit making SMEs this is a reduction of 11% and for loss making SMEs this is a reduction of around 15%. Large Scheme This is aimed at large companies, groups and certain SMEs that receive grants or are subcontracted to carry out R&D. The calculation is slightly different, and in general, there is a 4-5% increase in the benefit for large companies, and one would expect this to be increased further next year to eventually align the two schemes. What should businesses be considering now? If you are an SME facing a reduction in the level of R&D tax relief you will be able to receive post 6th April you may want to consider making a claim before March 31st 2023. If you are classed as a large company and undertaking qualifying R&D you may want to defer submitting a claim until the start of the new financial year in April 2023 so ensuring you optimize the value of the relief received. If you want advice and guidance about either your eligibility for making a claim and/or assistance in preparing and submitting a claim, we strongly advise you to contact a tax specialist who is experienced in R&D reliefs such as a corporate tax partner at a firm like Streets Chartered Accountants. 24-25.qxp_Layout 1 30/11/2022 09:44 Page 1www.eastmidlandsbusinesslink.co.uk East Midlands Business Link TAX 24-25.qxp_Layout 1 30/11/2022 09:44 Page 2 East Midlands Business Link www.eastmidlandsbusinesslink.co.uk HEALTH AND SAFETY Health and safety in the workplace wasn’t so common a factor during the pandemic, but now that we’re back in offices and on sites, old habits are slipping into place. D uring 2020 and 2021, the office environment became a barren landscape of a handful of workers, socially distanced and wearing masks. This meant that the number of workplace accidents plummeted during this time, as most UK workers were either working remotely or placed on furlough. 2022 saw a huge push from the government and private industry to return to widespread office working. From this, somewhat expectedly, there has been an increase in workplace illness and injury. Statistics suggest that sadly, the time away from the office was not utilised to revise health and safety standards, as the most dangerous jobs pre-pandemic remain so. With the Health and Safety Authority having just released its 2022 report, it’s time to see how a return to normality has impacted the workforce. The Labour Force Survey determined that 565,000 working people have sustained an injury whilst at work and a total of 61, 713 employee injuries have been reported to RIDDOR (Reporting of Injuries, Diseases and Dangerous Occurrences Regulations). These numbers seem enormous, but they do only account for roughly 2% of the working population (around 27.9 million people). Whilst this may not be enough for widespread concern, there are certain sectors which are disproportionately affected by Old 28 Á 26-29.qxp_Layout 1 30/11/2022 09:46 Page 1www.eastmidlandsbusinesslink.co.uk East Midlands Business Link HEALTH AND SAFETY 26-29.qxp_Layout 1 30/11/2022 09:46 Page 2 East Midlands Business Link www.eastmidlandsbusinesslink.co.uk HEALTH AND SAFETY workplace injuries. Just 38 work-related fatalities occurred in 2021, with manual labour being the biggest culprit. This is the lowest number in more than 30 years, since the Health and Safety Authority (HSA) was established. This has been correlated with the increased furlough rates amongst manual and construction workers. However, this figure rose to 123 this year. This increase is to be expected given the widespread return to work and is on par with pre-pandemic levels. Workplace fatalities (and general injuries) have been on a downward trajectory since 2017. Whilst this is not an alarming increase, it demonstrates that there is scope for improving the safety of manual workers. The most common cause of fatalities has remained the same, with the top three causes being falling from height, being struck by a moving vehicle, and being struck by a moving object respectively. The risk of exposure to these is inherent in construction work. Construction sites (depending on their scale) are somewhat notorious for a lackadaisical attitude towards health and safety. In fact, a construction worker was recently killed in Lincolnshire due to a lack of on-site safety training. This once again demonstrates a need for more stringent safety measures across the industry. In fact, this is showcased in the figures for non-fatal injuries. Alongside fatal injuries, the number has increased from 2020 to 2021. A total of 8,279 non-fatal injuries occurred at work last year, which is actually a 12% decrease from 2019. The HSA found that the imposed business closures and changes in working practices due to the Covid-19 pandemic may have fundamentally changed the way some carry out operations. For example, health and safety guidelines had to be updated to include workplace sanitisation and social distancing, some of which is still being enforced. This could mean that workers are more cautious about what they are doing, and how they are doing it. The biggest increase in injuries last year was in the manufacturing sector, with 1,632 occurrences, compared to 1,346 in 2020. Within this, manual handling and falls were the most common cause of injury. This tracks with pre-pandemic statistics, as these have been the most common of injuries since 2017. Back problems caused by lifting or moving heavy objects account for 21% of all injuries sustained at work. This compares to it being the cause of only 5% across injuries not sustained at work. Manual labour is the most common cause of long-term injuries too. There are 477,000 workers currently suffering from a work related musculoskeletal disorder, according to the HSA. Whilst the human cost is the most obvious, time off due to workplace illness or injury also naturally incurs a business cost. From 2019 – 2022, 36.8 million working days have been lost across the UK due to work-related illness or injury. The total estimated cost of this is £18.8 billion. These figures are staggering and highlight the importance of robust health and safety procedures from a business continuity perspective. It could also wreak havoc on reputation. Customers care about employee treatment and prefer to hire companies with a reputation for fairness. Furthermore, workplace injury (especially in construction) often stems 26-29.qxp_Layout 1 30/11/2022 09:46 Page 3www.eastmidlandsbusinesslink.co.uk East Midlands Business Link from cutting corners. Customers want value for money, so will put their faith in businesses with a reputation for doing things the right way, even if it takes longer or is more costly. So how can companies create a robust health and safety policy? Firstly, surveys will need to be done on common hazards found in their workplace, and any common injuries being sustained. Next, those most at risk need to be identified. For example, office workers are more likely to be at risk of musculoskeletal damage due to poor posture and desk setup, whereas warehouse workers may also be at risk, but due to poor lifting practices. The next and most important step is to develop a detailed training plan. The Health and Safety at Work Act 1974 requires businesses to provide adequate employee training. However, whilst everyone must undergo training, the best training is tailored towards that person’s specific job role. Certain training will be required for everyone, but if you know that certain jobs expose employees to specific risks, teach them how to avoid and mitigate those risks. Whilst construction and manual handling is the main culprit for workplace injury, everyone is prone to stress. Nearly two fifths of UK businesses have seen an increase in work related stress since 2019, and companies are required to protect the mental health of employees. Look after staff by encouraging regular breaks and taking their full allocated lunch break. You could appoint a Mental Health First Aider as someone to speak to, who can guide those in need towards useful mental health services. © stock.adobe.com/Getty Gallery 26-29.qxp_Layout 1 30/11/2022 09:46 Page 4Next >