Potential disappointment for Welsh and Northern Irish businesses

In a Welsh Government response to the UK Autumn Statement, Rebecca Evans MS, Minister for Finance and Local Government, had little time for Hunt’s measures to support regional businesses.

“The announcements today for businesses in Wales are tokenistic and a distraction from the wider and much larger issues the UK Government has presided over,” Evans said in a statement published the same day as the Chancellor’s announcement. “It has failed to provide the conditions for economic growth and has created a poor environment for investment.”

From our survey, 21% of Welsh business leaders told us that improved access to capital and funding would be their most welcomed form of government assistance. Away from the investment hubs of London and the south east, a dearth in business financing support could prove an extraordinary pressure for struggling SMEs in Wales.

For Northern Ireland, there’s an additional pressure in that much of the £75m allocated to Northern Ireland from the Autumn Statement will be used to reduce Stormont’s overspend. This puts a limit on how much can be used to support public services and critical infrastructure that small businesses may rely on for a wider environment of growth and regional optimism.

Business appetite for change in an election year

The muted outlook of business leaders in the devolved regions, versus that of their equivalents in London, could yet cause further grief for a Conservative government in an upcoming election year.

From our survey, a consistent 50% of business respondents in Scotland, Wales and Northern Ireland all told us that the right package of business incentives could influence their voting intentions in the next election.

Above all other potential business incentives, access to capital and funding stood out as the key ask, with 25% of all survey respondents (UK-wide) telling us this is what they needed most, and could have the biggest influence on their vote.

With Jeremy Hunt’s Autumn Statement believed by some to be a starter’s pistol on an imminent election, it’s a crunch time for political leaders on both sides of the aisle to find the right package of head-turning policies to help resolve the business optimism gap that has emerged across the UK.

When tourists pack their suitcases and prepare to jet off on their next getaway, their wishlist will usually be populated by mainstream experiences and spots that are featured in postcards.

From the Tour Eiffel to the Empire State, tourist hotspots dominate Google and social media hashtags. Their emblematic history, their photogenic allure, and their ‘Instagrammability’ give them a magnetic pull that never goes out of fashion.

But a growing number of travellers want to stray from the well-trodden path and seek places that aren’t so picture perfect. The challenge is having to scour the depths of the internet to find these real adventures that aren’t advertised on TripAdvisor.

To cater for this thirst for the unknown, Undiscvered has made it its mission to connect this niche of explorers with the experiences they’re chasing.

Offering the premise of travelling the world like a local, Serena Masand and Anish Kotecha launched Undiscvered after travelling to more than 40 countries. Their travel platform offers a curated menu that immerses users in an authentic cultural experience and promotes conscious tourism.

The challenge to helping others design the perfect vacation? Standing out from the sea of Reels that flood the travel space on social media.

Swimming against the tide

According to survey results, 85% of millennials use someone else’s social posts when planning their vacations. A further 34% book a hostel because they saw it via user generated content (UGC) on social media.

These statistics show that gone are the days of travel agencies. People are flocking to social media feeds to plan out their itineraries and get a taste of what they might be in for when they cross border control.

To inspire someone’s travel plans, the logical solution as a content creator would be to find ways to please the Instagram algorithm. For Undiscverd, it actually makes more sense to turn this convention upside down.

When Masand and Kotecha travel, they’re not carrying around a big DSLR camera or sophisticated vlogging equipment. They strive for content that feels real.

“It’s not so fake, it’s not so filtered, it’s not so perfect – it’s a very imperfect experience, which isn’t very popular on Instagram initially,” confesses Masand. “But as people start to interact with our brand, they start to really like the reality that they see behind places that we go to.”

Masand shares the experience of climbing up into a bat cave and recording everything with a smartphone and “bringing that real feeling through.”

Masand explains that their social media strategy is all about finding the right target audience rather than curating their content to look like the standard picturesque travel vlogs.

“We haven’t got a million, we’ve quite a small 18,000 followers. The content we put out there is appealing only to people that travel consciously, to people that want to go and help the local,” Masand stresses.

“I still have the goal of having as many likes and shares as possible, but at the end of the day, it’s about finding the audience that works for you and what you’re trying to promote.”

Doing UGC differently and consciously

UGC is a powerful type of organic content that is synonymous with high conversion rates and traffic. Statistics show that 90% of consumers say that authenticity is important when deciding which brands they like and support.

Consumers also find UGC 9.8x more impactful than influencer content when making a purchasing decision. These positive numbers have translated into 86% of companies understanding the importance of UGC and wanting to create it to engage potential customers.

As valuable as UGC is for brands, it’s not necessarily the most sustainable or profitable for whoever or whatever is being featured in the social media travel space.

Creators will come in on ad hoc basis, feature an experience, and never reconnect with the source after that.

Undiscvered, in a bid to establish long-term connections with locals and connect them with conscious tourists, doesn’t think that has to be the method.

“We actually work on longer contracts with brands and the reason why we do that is because we don’t believe in putting out one-off posts or creating one-off content for brands,” she explains. “That way, we actually get to know the brand, build a story for them, and put out content that actually entices an audience rather than it feeling like an ad.”

“We work with these locals to provide them with a platform, but at the end of the day, they also don’t have the resources or the knowledge to put their own content out there,” she expands.

Preserving the magic

Tourism doesn’t have to be an all or nothing. It shouldn’t only mean pushing through the crowds of busy museums or streets, nor struggling to find truly local spots that have been gatekept from tourists, with residents feeling like their territory is being invaded.

After all, it’s a source of revenue for the locals and a way to share cultures. But without respect, the experience can quickly turn sour.

“Their culture is the heart of what they are. You can send any traveller there, and they may or may not travel with respect,” Masand shares. “But if you send travellers there that are conscious about where they’re going but with guides, that makes a difference.”

“Guides need a livelihood, but they also promote this line between mass tourism and conscious travelling,” she adds.

For Masand and Kotecha, conscious tourism is not only about learning about other cultures, but letting it have an impact on their lives.

In terms of the future of travel content creation and tourism, they both think there is a general change towards a more conscious and respectful direction.

“I see at the moment a shift in people engaging with unique cultures, unique destinations and not necessarily just experience, but actually seeing things that they can never see if it wasn’t for social media,” says Masand.

The Chancellor, Jeremy Hunt, has delivered the Autumn Statement and has outlined a package of 110 economic measures to boost economic growth.

Coined as the Autumn Statement of Growth, the Chancellor stressed the “economy has grown but work is not done,” and that the government “backs British business.”

Key measures include an additional £500m for the development of computing power for artificial intelligence, making the full expensing program permanent, and a freeze on the small business multiplier for a further year.

Here’s how startups reacted to the Statement.

AI’s growing coffers

The further £500m in funding for the development of computing power has been welcomed by AI startups.

“It’s excellent to see the Chancellor react to feedback Genie AI and the rest of the startup community have provided when it comes to investment in the AI sector – in particular the need to compete through compute resources,” welcomes Rafie Faruq, cofounder and CEO of Genie AI.

“The question is more whether the amount is enough, and will it be distributed effectively and fairly? Some companies and institutions are building foundational LLM models from scratch, which can take tens of million of pounds to train, whilst others only need fine-tuning resources,” he warns.

Similarly, others are calling for more holistic support for AI startups.

“The announced £500m into supercomputers over the next two years is encouraging, but to really unlock our high-growth potential, we need a longer-term strategy that will ensure our universities, scientists, and startups can continue to innovate and build their IP with a strong ecosystem of support, wherever they are based in the UK,” says Jason Teng, Partner at Potter Clarkson.

Full Expensing is now permanent

After speculation about whether full expensing would be made permanent or not, the Chancellor has confirmed the macroeconomic conditions are appropriate to make the tax break permanent.

Full expensing is a 100% first-year allowance which allows companies to claim a deduction from taxable profits that is equal to 100% of their qualifying expenditure.

Startups are split in their reaction to this measure, with some arguing it simply is not enough to support small businesses.

“The Chancellor’s pledge to make full expensing permanent for businesses is of no benefit at all to pioneering SMEs in the critical R&D phase,” claims Diane Gilpin, founder of Smart Green Shipping. “The only ones that stand to benefit are big business. What we need to focus on is accelerating early-stage innovation.”

Others applaud the move, albeit with some caution.

“There’s enormous demand for lab space and once in situ, companies inevitably need to create the right environment and facilities for research, testing and production,” outlines Stuart Grant, CEO of ARC.

“Although not relevant to all of our members, for those that it is, it might not materially alter their spending intentions, as scaling science and tech companies already have a clear plan to help them realise their strategy,” he adds.

“It will, though, see a return on that investment happen sooner, which can only be a good thing,”.

Pensions schemes for investment in high-growth companies

The Autumn Statement confirmed the furtherance of the Mansion House Reforms through a £320m pot to unlock investment in the UK’s most promising high-growth companies by pension schemes.

The Mansion House Reforms are expected to provide an extra £1,000 a year for the average earner that starts saving from 18 and unlock economic growth.

“UK pensions are a source of untapped wealth which will both enable more investment into fast-growing tech startups and help the UK cement itself as a global leader in the sector,” welcomes James Clough, CTO and cofounder of Robin AI.

“With increased funding, we would not only see more startups harnessing rapidly evolving technologies but also more skilled individuals being attracted to the UK and world-leading companies staying and listing here,” he adds.

Priya Oberoi, Founding General Partner at Goddess Gaia Ventures also sees the move in a positive light. “Tapping into the latent wealth of UK pensions will unlock greater funding routers for high-growth companies, particularly healthtech startups where the road to commercialisation is long and requires significant patient capital.”

Although the Mansion House Reforms are seen by startups as a way to unlock the investment power of pensions, to others, the Statement was a missed opportunity.

“It’s disappointing that there was no mention of closer ties between innovators and regulators, which would have allowed fintech a seat at the policy table,” laments Babs Ogundeyi, CEO and cofounder of Kuda.

Changes to the R&D tax scheme

The Chancellor announced that loss-making companies that are taxed within the R&D scheme will now have their rates reduced from 25% to 19%. The threshold for additional support for R&D intensive loss-making SMEs will be lowered to 30%, benefiting a further 5,000 SMEs.

The R&D tax relief scheme has also been combined into one, merging the R&D Expenditure Credit and SME schemes.

“The move by the Chancellor to reduce the rate of tax for loss making companies is a significant step in the right direction for the tech startup community,” praises Seb Wallace, Investment Director at Triple Point Ventures.

“By reducing scrutiny and streamlining the process for R&D claims, the government is sending a clear message of support to innovation-driven businesses. This decision fosters an environment where companies can channel more energy and resources into what matters most – groundbreaking research and development,” he continues.

Others similarly applaud the simplification of the R&D tax scheme.

“More funding is pivotal to innovation,” welcomes Clough. “This decision particularly affects AI startups as high computing costs can make research within this sector a very capital-intensive exercise.”

“After last year’s Autumn Statement, we saw confidence amongst UK SMEs drop significantly, with about one-third feeling less confident in their ability to grow,” reminisces Ralph Rogge, cofounder and CEO of Crezco.

“Simplifying R&D tax credits will allow SMEs to invest deeper into technology and innovation, further establishing the UK as a fintech and entrepreneurial powerhouse,” he notes.

For other startups, the measure is still oblivious of early-stage startups and their research and development needs.

“The Chancellor’s raft of announcements today benefit scale-ups and later-stage companies but we are still missing genuine support for early-stage startups,” says Neil Ruth, founder of Well Cell. “Without the right support for homegrown startups, the UK risks losing huge potential from a technical, talent and economic standpoint to more startup-friendly shores abroad right from the earliest days.”

The Public Sector Productivity Programme

The Chancellor also updated the Treasury’s Public Sector Productivity Programme, which has outlined opportunities to cut admin, safely harness AI and deliver early interventions to relieve pressure on public services.

The programme has been welcomed with cautious optimism by small businesses.

“It’s encouraging that this year’s Autumn Statement recognises the critical importance of low productivity levels in the UK’s Public Sector, however, an over-reliance on tech and AI is misguided,” warns Anthony Impey, CEO of Be the Business.

“We must recognise there is no silver bullet for this crisis and expand our focus to include an emphasis on the development of management, leadership, and digital skills which are crucial for the successful implementation of tech in business,” he continues.

What was missing from the Statement?

Amongst all the measures the Chancellor outlined, some startups believe there were crucial points that were missing from the agenda.

“The PSTN switch-off is the biggest shake-up of the telecoms sector in a long time, it will help the UK to maintain its position as the ‘third-largest tech country in the world’. That’s why it’s incredibly worrying that the Government has not set out more measures to ensure a smooth transition,” worries Simon Hochhauser, CEO of PiPcall.

“Lots of businesses are still yet to realise how the switch will impact them; with many using legacy technology like fixed-line office phones, they could be left without sufficient communication if they aren’t careful. Organisations should not wait for the Government to implement measures, they must upgrade their technology now,” he recommends.

How are startups looking at the year ahead

As Parliament debates the measures outlined by the Chancellor over the next three days, startups are looking ahead with some cautious optimism.

Although some policies are warmly welcomed by startups, there are about how the additional pots of funding will trickle down and impact small businesses.

“The Autumn Statement provides top down guidance, however much government investment is lost through operational and allocative inefficiencies,” warns Faruq. “UK business investment has been 9.5% of nominal GDP over the past 10 years, compared to 11.2% on average between France, Germany and the US, indicating a need to double down on business and, by extension, startups.”

“Generally speaking, these are good measures,” he says. “The R&D Scheme has long been bureaucratic and cumbersome for little marginal benefit. There’s more the government could do, such as simplifying the tier 2 visa scheme to hire skilled workers, and simplify the Innovate UK grant scheme, in particular the application and ongoing management of grant programmes.”

As the UK gears up for next year’s general election, exclusive Startups data showcases that businesses have a strong interest in government assistance, particularly in access to capital and funding.

In fact, regulations that favour small businesses will carry political weight – of the small businesses we surveyed, 54% said their vote would be affected by the business incentives they receive.

As the year continues and the effects of the policies of the Autumn Statement take effect, small businesses will continue to request measures that will foster stability and growth following a tumultuous economic year.

The Chancellor is set to deliver the Autumn Statement to Parliament on 22 November, where he will outline the government’s latest tax and spending decisions informed by predictions by the Office of Budget Responsibility.

The announcement could have important implications for startups and small businesses across the country, as it’s expected that business taxes will not be reduced from the 25% rate established in April.

It also is expected the Chancellor will address extra relief for businesses working in the artificial intelligence space, after leading technology firms wrote a letter encouraging the government to support investment in digitalisation.

The letter recommends support of 140% on the first £50,000 of expenditure on productivity enhancing digital services.

The Chancellor will need to weigh out a number of policies based on their financial weight, including the full expense capital allowance regime that is already in place, as well as tax incentives for R&D.

From 1 April 2023 until 31 March 2026, companies subject to UK corporation tax will receive a 100% first year tax deduction for expenditures they incur on qualifying plant or machinery – known as full expensing.

The Chancellor has hinted already that tax cuts are virtually impossible and that ‘frankly very difficult decisions’ had to be made for the Autumn Statement.

This is worrying for startups, who already have been dealing with a complicated macroeconomic and regulatory climate.

According to figures from the Confederation of British Industry, private sector activity continued to fall in the three months leading up to October, with downturns across the services, distribution, and manufacturing sectors.

“More funding is pivotal to innovation”

Startups are a paramount ingredient of the business landscape as SMEs comprise 99.2% of the business population in the country. Having faced difficult economic conditions over the past years, they want measures in the Autumn Statement that will safeguard economic growth and innovation.

“More funding is pivotal to innovation,” stresses Dr James Clough, CTO and cofounder of Robin AI, an AI-powered contract software company.

“For the Autumn Statement, this means boosting R&D tax credits for deeptech and AI companies and incentivising pension funds to invest in venture capital.”

“There were cuts to R&D tax credits in the Spring Statement, much to the dismay of many startups, as this scheme was beneficial to both early stage companies and those that are looking to scale,” outlines Dr Clough.

This is particularly crucial for AI companies, which have risen to the tech foreground as the UK embarks on a mission to become a regulatory figurehead following the AI Safety Summit.

“Even if the Autumn Statement only introduces one of these measures, the UK could better capitalise on its potential to become a science and technology superpower and a global leader in AI. UK pensions are a source of untapped wealth, and using this capital for investment could fund AI companies,” Dr Clough continues..

Tax cuts at the top of the wishlist

According to research conducted by iwoca, one of Europe’s largest SME lenders, tax cuts are the most sought after policy among small businesses ahead of the Autumn Statement – 46% of SMEs want this.

This follows stagnant SME growth over the past year, with just 34% of small businesses reporting growth and 28% shrinkage. SMEs have blamed rising business costs for falling revenue, after a year of struggling with high inflation.

Importantly, SMEs believe the government hasn’t done enough to help them weather the storm. Of those surveyed, 42% said government support in the last year has been insufficient for their business.

“The message from SMEs to the Chancellor is clear – cut tax and protect us against potential spikes in energy costs to help us trade through this uncertain economic environment,” points out Christoph Rieche, iwoca CEO.

Besides targeted tax cuts, 32% of small businesses want to see an extension of the small business rate relief scheme and 22% want to obtain support with training costs for staff.

Regulation only where needed

For startups, the Autumn Statement will not just be about economics, but signalling that appropriate regulations to bolster innovation are in the pipeline

“First and foremost, we need politicians and government to understand and define the “problem” before trying to jump to conclusions, solutions and regulations,” emphasises Rafie Faruq, CEO and cofounder of Genie AI, an artificial intelligence legal assistant.

“What exactly are we trying to regulate? AI? But AI is just code and mathematics, so are we regulating coding and mathematics?” he questions.

What Faruq suggests is an economically forward-thinking AI regulatory scheme where freedom of business operations is respected without the limitations of regulations and taxes. He applauds investment through programs like InnovateUK.

Upskilling will be key

Startups also point out the importance of implementing incentives to improve the workforce’s training and education in emerging technologies.

“Investment in education also remains a key issue,” notes Faruq. “It’s important that large companies like Meta and Google don’t just buy up all the academic talent, and that universities can compete in academic research with the big players by having access to large-scale computer power.”

Preparing for the next financial year

Although the annual inflation rate decreased to 5.6% in October, the lowest since January this year, the macroeconomic outlook is predicted to continue to be challenging into 2024.

The upcoming general election is similarly set to cause some disruption, as politics takes the centre stage on the agenda.

As the government financial plans are confirmed next week in the Autumn Statement, small businesses will continue to demand more initiatives that foster innovation and investment.

Following last week’s news that global shared office provider WeWork has filed for bankruptcy in the US, coworking analysts have been pitching their thoughts on what caused the startup’s property empire to topple.

Many point to the company’s financial woes. Also cited, the loss of founder and ex-CEO Adam Neumann, who left the company in disgrace in 2019. Both arguments trace back to an underlying theme in modern workplaces: the backlash against toxic office culture.

WeWork’s early beginnings may have been defined by a meteoric rise in memberships and valuation. But after leaders faced allegations of a poisonous work environment, the startup has never recovered from the losses it incurred as a result of the reputational damage.

We explore how WeWork’s founding company values, established in 2010, have set it up for a crash thirteen years later.

Startup culture

Heralded as ‘the future of work’ when it first entered the scene back in 2010, WeWork was part of a cohort of tech and media startups that claimed to revolutionise modern work environments.

In practice, this meant a lot of gimmicky office interiors. Where Buzzfeed had its office puppies, and Google had its slides, WeWork doled out free beer and ping-pong tables in an attempt to bring home comforts into an office setting. 

Moving away from rigid processes and a defined management pecking order, WeWork also popularised the open plan office which it said created the ideal atmosphere for innovation, and accelerated growth.

With these benefits, the founders argued, they were selling more than just an office. They wanted to build a global community of workers who were empowered to ‘Do what you love’.

This narrative got WeWork off the ground. It expanded to almost every major global city, growing at a pace that wowed investors and ultimately led to a $47 billion valuation over the summer of 2019. In August, everything was lined up for the company to go public. 

Toxic leadership

Around this time, however, came the fallout. Pushback against WeWork’s organisational culture began when the darker side effects of its anti-corporate principles were revealed.

WeCrashed, a tell-all documentary that tracked the WeWork saga from disruption to debt, uncovered a toxic leadership style from CEO Adam Neumann which led his former personal assistant, Megan Mallow to require therapy.

An annual ‘WeLive’ event, held each year to encourage teams to engage with the company vision, was also found to culminate in an alcohol-fuelled party which had led to allegations of sexual assault.

One employee, Ruby Anaya, who began working at WeWork in 2014, sued the company after allegedly being groped at two such company-wide events where attendance was mandatory and alcohol was readily available.

To top it all off, Neumann was accused of misleading investors regarding WeWork’s valuation. In one month, the company cut its valuation down to $10 billion and delayed its initial public offering (IPO) indefinitely.

David Soffer, founder and editor in Chief of TechRound commented: “At its peak, WeWork epitomised the ‘work hard, play hard’ ethos, but its so-called frat-boy culture blurred the lines a little too much. 

“This approach to office life, while initially appearing to foster better relationships, ultimately contributed to a lack of professionalism.”

Cultural change

WeWork’s leaders weren’t completely naive to the impact that this toxic workplace culture was having on the firm’s reputation. Neumann was asked to leave the company in 2019, after shares plummeted following the failed IPO. 

Following his departure, WeWork could potentially have recovered from the above PR crises. But then came the COVID-19 pandemic, triggering an abrupt transition to remote work and rendering many of WeWork’s perks obsolete.

With the majority of office-based firms shifting to an hybrid or remote working model, many UK employees have drastically altered how they view modern office space in 2023.

Rowdy office features, like WeWork’s bars, have since fallen by the wayside as workers increasingly prioritise productive environments that allow them to collaborate with team members they might usually chat to over Zoom.

Related to this came a rejection of the so-called “hustle culture” that defined 2010s office working. An epidemic of staff burnout in UK workplaces came to light, as employees pressed pause during COVID and reconsidered their personal and professional goals.

As a result, the past two years have seen a wave of anti-work trends like ‘quiet quitting’ and ‘career cushioning’, as workers put greater emphasis on keeping work and home lives separate.

Re-embracing red tape

WeWork’s troubled teenage years signal the end of an era. The short-lived office customs of frat-boy camaraderie and blurred boundaries have given way to a renewed emphasis on culture that supports employee mental health and wellbeing.

“A lesson to be learned from WeWork is the importance of investing in robust HR structures,” says Soffer. “Employee satisfaction goes beyond office perks like ping pong and free coffee. It’s about genuine care for employees’ wellbeing, offering benefits that support life outside work.”

It’s time for entrepreneurs to grow up. This year, coworking spaces have sought to establish themselves as providers of productive work spaces, not just a quirky, fun sofa area. 

Many have introduced ‘dull’ human resource (HR) policies, such as sober work events, in recognition of their importance for crafting inclusive, professional work environments. Even WeWork has taken steps to ‘normalise’ its business offering. In 2020, it ended its free beer policy as part of a string of new membership house rules.

The move has done little to alleviate members’ concerns, however. Between Q1 and Q2 2023, the firm reported a global drop in physical memberships of around 29,000.

The new operators changing how We Work

Alexandra Livesey is CEO of Clockwise, a flexible workspace business based in Europe and the UK. Livesey says that WeWork’s demise is not evidence for the death of in-person office work. 

Instead, he argues, it signals the need for fresh operators like Clockwise, who can embrace modern workplace culture.

“People are at the centre of our business and wellbeing is at the centre of our brand,” says Livesey. “We couldn’t, in good conscience, talk about wellbeing for members if we’re not extending the same to colleagues.”

Livesey tells Startups that all Clockwise colleagues have access to “wellness support, professional therapy and education”. The firm’s people team also carries out a quarterly colleague survey to help understand their thoughts and feelings of working at the company.

“We are a values-led business,” adds Livesey. “Our purpose is to create personal, purposeful and productive work environments and experiences that enable individuals, companies and communities to flourish.”

For businesses that might be still clinging to outdated cultural practices, WeWork’s is a cautionary tale that underscores the importance of adapting to the ever-changing demands of today’s workforce.

WeWork has since moved to reassure its UK members that their agreements will not be impacted after it filed for Chapter 11 last week. Yet even if the company can recover financially, its legacy as a toxic employer will be a much bigger hurdle to overcome.

Ahead of next week’s Autumn Statement, the government has unveiled its new ‘Back to Work’ Plan’. The package of employment focused support is aimed at helping small businesses address the number of workers currently on long-term sick leave.

This year has seen consistent records set for the numbers of employees out of work due to ill health. In July, official figures showed that 2.5m people were not currently working following a spike in stress-related burnout, exacerbating worker shortages for employers.

The additional support comes alongside tougher sanctions for people who don’t look for work, including those who are currently claiming Universal Credit.

In a press release, Chancellor of the Exchequer, Jeremy Hunt, said: “We must address the rise in people who aren’t looking for work – especially because we know so many of them want to and with almost a million vacancies in the jobs market the opportunities are there.”

Fit notes to be made fit for purpose

Amidst soaring levels of inactivity among working-age people, the Back to Work scheme has been billed as a way to help people “stay healthy, get off benefits and move into work”.

Targeting a joined-up approach to employment support, the package promises £2.5 billion of investment over the next five years to help those with mental health conditions stay in or find work.

It relies on increasing the number of people who can access frontline public health services like NHS Talking Therapies, a treatment for conditions such as depression and anxiety. The government says it will help an additional 384,000 people access the course by 2028.

Under the new plans, ministers will also trial unspecified reforms to the fit note process. Fit notes are medical certificates which workers must show to their employer if they are unable to work. 

The government says it will “make it easier and quicker for people to get specialised work and health support, with improved triaging and signposting.”

Last year, changes to the legislation enabled nurses, occupational therapists, pharmacists, and physiotherapists to legally certify fit notes. At the time, the government said it would evaluate the impact of the changes at the end of 2023.

No funding announced for NHS yet

Combined, the government says the measures will serve to funnel over half a million people back into the UK workforce over the next five years. However, the scheme does not address one of the key underlying causes of the labour shortage: the NHS.

Stretched care services, exacerbated by worker strikes over the past year, have led to increasingly long wait lists at hospital and GP services. This has resulted in many employees on long-term sick leave unable to access care. 

Last month, the now ex-health secretary, Steve Barclay, pushed for the NHS to receive £1bn in additional funding in the Autumn Statement to cover the costs of strikes and allow it to provide critical services including for mental health.

Responding to the announcement, shadow work and pensions secretary Liz Kendall said: “This poor excuse of a proposal does nothing to fundamentally change the state of our health service or our Jobcentres after a decade of failure from the Tories.”

Incentives balanced out by penalties

Alongside further support measures for employers, the government has also announced tougher penalties for those who claim Universal Credit, but are still unemployed after six months.

As part of an expanded Restart scheme, this group will be given coaching, CV and interview skills, and training to help improve their chances of finding work. The scheme will be extended for two years until June 2026.

Universal Credit claimants who are still unemployed after the 12-month Restart programme will be given access to a work coach, who will find what the government describes as “mandatory work placements” for the claimant.

If a claimant refuses to accept the potential placement, their Universal Credit claim will be closed. This will also end their access to additional benefits such as free prescriptions and legal aid.

What does Back to Work mean for presenteeism?

Taking the stick approach to get more people back to work, many of whom will have physical or mental conditions, will raise red flags for some business owners. 

While the government announcement does specify that only those who are able to work will have their Universal Credit removed, there is a risk that the new scheme could encourage presenteeism in the workplace.

Presenteeism is where staff turn up at their desks while feeling ill or burnt out. And, under UK employment law, those with long-term sickness count as having a disability in law, which means they may also have legal protections against dismissal.

This could end up doing more damage, with workers neglecting to take necessary sick leave and contributing to a growing engagement crisis in UK workplaces. 

In October, Gympass’ second annual State of Work-Life Wellness Report found that 67% of UK employees report that their productivity is lower when they feel lonely, and less connected with their workplace.

As a response, many SMEs have taken to introducing their own employee support measures, as well as benefits and perks, to alleviate the impact on the workforce and reduce turnover rate.

The government has announced a £200m digital skills training package to help people across the UK launch careers in high priority sectors.

As the UK commits to have a net zero economy by 2050 and plans to become a global leader in AI, the digital, green energy, and construction industries will be the primary beneficiaries of the scheme.

Investment will be targeted at specific skills for each region, driven by businesses in their local improvement plans. The training package will be rolled out through universities and government schemes.

Some key jobs will be in environmental consultancy and electric vehicle manufacturing. This was outlined in the recent King’s Speech and the government’s priorities to bolster innovation and Research & Development (R&D).

The scheme will also fund higher technical qualifications (HTQs), which are designed in close collaboration with employers so they can equip students with the skills they need to go onto further study or straight into a job.

“Digital skills are essential in the modern workplace as organisations take control of fast-moving technologies such as AI, so it is great to see the government’s investment in this area,” says Margo Waldorf, Founder at Change Award.

The urgency of upskilling

The government’s commitment to digital upskilling follows a widening digital skills gap in the workforce.

According to a survey by IONOS in collaboration with YouGov, 29% of small businesses said the ongoing shortage of skilled workers poses a high or very high risk for their business.

Similarly, a Salesforce survey found that only one in ten global workers have key AI skills and that 14% of respondents have roles that rarely involve digital expertise like encryption, cybersecurity or artificial intelligence.

This gap is not only wide, but costly – the digital skills gap is costing the UK economy an annual £12.8bn.

“Businesses are crying out for more people with technical skills to fill the great jobs we have today and new ones in the developing green economy,” emphasises Jane Gratton, Deputy Director of Public Policy at the British Chambers of Commerce.

“It’s vital that everyone can access the training they need locally to grasp these opportunities,” she adds.

Research by Deloitte and Digital Poverty Alliance found that there are 13-19 million people in the UK who are digitally excluded, which deprives them of the devices, skills, and connectivity needed to advance their professional career.

Although this policy is welcomed by some experts, others have approached it with more scepticism.

“While it is great to see the government taking action with this skill package, more must still be done to ensure everybody in the country has access to basic digital skills and technology,” warns Elizabeth Anderson, CEO of the Digital Poverty Alliance.

As the Autumn Statement approaches, industry experts suggest a more holistic approach should be taken by the government, particularly around R&D and innovation.

Westminster and Camden rank as the best unitary districts in the UK for startups, based on a study conducted by a merger and acquisitions advisor.

Webacquisition.com conducted a study comparing unitary districts based on the number of new enterprise births, percentage of Year-on-Year business counts growth, business survival rates, average Gross Domestic Household Income (GDHI) per hour worked, and other key indicators.

Based on these indicators, Camden and Barnet were awarded a credit score of 80 and 70.5 out of 100 respectively.

On the opposite end of the spectrum, Merthyr Tydfil in Wales and Inverclyde in Scotland ranked the lowest, with a 40 and 40.11 credit score respectively.

In the study, out of the 20 best unitary districts to fund a business, 10 were based in London. This speaks to the enduring funding gap between the North and the South, despite government efforts to narrow it.

Levelling up or down?

The top unitary district to fund a startup, London’s Westminster, had the highest number of new enterprises in 2022 with 7,145. It also boasts an impressive business survival rate of 46.3%, making it a premier region for business and affluence.

Ranking fourth, Birmingham in the West Midlands is the first non-London district to rank in the top 20. It has a 26.32% business survival rate and has a 70.32 credit score.

On the other side of the coin, Merthyr Tydfil in Wales has a negative YoY growth of -0.49% and scores a low 40 credit score.

These figures paint a picture of the slow yield of the Levelling Up initiative, set forth by the government in 2019 as part of an eight year project to bridge regional economic disparities.

The Levelling Up fund was awarded to over 100 projects this year across England, Wales and Scotland.

Despite the well-intentioned ethos of the policy, a recent investigation by The Guardian found that 95% of local authorities that received funding in the past year were unable to spend all of their share.

This was due to the funds being handed over too late due to bureaucratic hurdles and a hollowing-out of council expertise.

Startups 100 Index exclusive data corroborates this pessimism – London startups receive an average of £15m in early-stage investment, eight times more than the average for companies across the UK.

This disparity is affecting the scalability and sustainability of startups. According to a report by Nucleus, some 55% of SMEs believe regional inequalities are affecting their ability to hire highly skilled workers. Meanwhile, 47% said regional funding gaps are impacting the business financial health.

As inflation is set to stubbornly persist at 6.7% until September 2024 according to Office for National Statistics (ONS) figures, it’s more crucial than ever for small businesses in poorer areas to access funding.

Staying afloat

The Chancellor is set to deliver the Autumn Statement on 22 November. It’s expected he’ll outline the government’s macroeconomic policies for the next coming months, which could significantly shape the economic environment SMEs have to navigate as they struggle to stay afloat.

As corporate tax is expected to stay at 25% and banks scale back funding support for SMEs, small businesses will need to find agile ways of cutting costs and engaging in creative methods of raising money.