Talent shortages in the UK, exacerbated by the Great Resignation, are causing more hiring managers to hire ex-cons to fill hiring slots, according to new research.

In a survey of over 1,000 business owners by facilities management company Sodexo, almost two thirds of UK employers say they will hire ex-offenders in the year ahead.

Sodexo’s results show that 43% of UK businesses are currently struggling to fill in excess of ten vacancies. Worryingly, 16% of hospitality businesses said they were struggling to fill as many as 31-40 positions.

The skills gap seems to be a major driving factor behind the trend. When more reluctant respondents were asked what might bring them round to the idea, 20% replied that the need to fill more technical roles would force them to look at candidates with criminal records.

For more open-minded employers, we explore the reasons for recruiting people with a criminal record, and the support available.

Talent shortages necessitate alternative hiring routes for SMEs

The latest figures from the Office of National Statistics (ONS) demonstrate that there were 142,000 vacancies in hospitality in the three months leading to February 2023. That’s compared to an industry average of 51,000.

In last week’s March budget, chancellor Jeremy Hunt set out a string of incentives designed to improve UK workforce participation, following calls from small business owners for more support to manage labour shortages.

Their demands went largely unanswered, however. Many founders were left disappointed by the lack of funding for contributing factors like the childcare crisis, which will not be fully rolled out until 2025.

Resultantly, senior leaders are exploring alternative avenues to attract, recruit, and retain talent. Particularly as the digital skills gap makes it increasingly hard to hire for specialist tech roles.

Startups recently revealed that Google searches for Skilled Worker visas – the type of visa required for employers to recruit non-UK resident workers for highly-skilled roles – reached a record high in January.

Ex-offenders – a largely untapped labour source – could be the key for organisations. Industry leaders told Sodexo they believe ex-offenders could help to plug employment gaps in specific areas.

For example, food pickers and delivery drivers in farming (62%), and talent shortages in hospitality (57%).

Big name employers hire more prisoners as apprentices

The Sodexo research also found that, when respondents were asked what might encourage them to hire ex-offenders, 22% called for a government initiative which incentivises businesses to do so.

One fifth suggested an initiative giving businesses a target for hiring ex-offenders. The same percentage said a need to fill crucial skills gaps would force them to look at individuals with criminal records.

There has already been some positive movement in terms of policy making. In October 2022, the Ministry of Justice and Department for Education lifted a ban on prisoners undertaking apprenticeships.

Since then major brands such as Greene King, Kier and Timpson have opened their apprenticeship programmes to ex-offenders.

James Tweed, CEO of Cambridge-based Coracle. Coracle is one of the very few companies in the UK authorised by the Ministry of Justice to provide prison inmates with internet-free computers, on which they can complete modules for their apprenticeships.

“Taking on prisoners as apprentices is a golden opportunity to transform lives, help society and increase skills in the workplace,” says Tweed. “This gives them something practical to work towards, which is a huge part of ensuring they can realise better life outcomes.”

Prejudice against ex-offenders heightens hiring woes

While the findings indicate that more HR managers are seeking ways to upskill former convicts, 21% of businesses still said they would exclude ex-offenders from their hiring processes.

This suggests that stigma against people with criminal records is still holding back businesses from employing ex-offenders.

When asked about their greatest concerns, 25% agreed they were worried employees would re-offend. More than one fifth admitted that they wouldn’t trust an ex-con to behave appropriately at work.

Tweed admits there are attitude hurdles to be overcome when taking on apprentices from inside a prison. However, he says it is a practical step towards closing the UK’s skills gap and reducing unemployment.

“Day release prisoners can go to work placements but those inside can also undertake training,” says Tweed. “Having worked in over 50 prisons and met hundreds of prisoners, I think employers might be surprised at just how enthusiastic some prisoners can be when offered the opportunity of a better life.”

Sodexo offers support to help small employers recruit ex-offenders

To help businesses with the employment of ex-offenders, Sodexo has launched Starting Fresh. The programme offers resources for employers seeking to employ people with criminal backgrounds and support them in the workplace.

While not all ex-offenders are prison-leavers, employers are also invited to visit prisons if they are interested in offering opportunities on an individual’s release. Organisations with multiple job opportunities can even run employer days in the prisons.

Commenting on the opportunity to fix hospitality labour shortages, Kate Nicholls OBE, CEO UK Hospitality, said: “Hospitality employers cannot afford to turn their back on any talent pipeline that could provide vital resources.

“The issue is that employers don’t know how to access at scale the volume of recruits – prison leavers and other ex-offenders – potentially available to them. It’s great to see Sodexo launch Starting Fresh which will really help demystify the process.”

Welcome to Startups’ Weekly Round Up, where we bring you the latest headlines affecting UK SMEs.

The highlights this week:

• SMEs react to the Spring Statement
• Packfleet and Legislate announce big wins and collaborations
• Is the tech sector facing a brain drain?
• Job seeker confidence is (surprisingly) high

Some Stats to Start Up your week

• 1 in 6 SMEs in the UK have £1,000 or less saved up to help them stay afloat during a revenue downturn.
• 2022 saw the highest number of businesses incorporated in a year since records began, with April being the most popular time to start a business (79,120).
• 54% of businesses say the cost of energy is the single greatest threat in 2023.
• Last year marked the highest number of strike actions by workers since 1989.

11 Downing Street and the UK economy: what should startups know?

💪 Tough recession but optimistic workers → new research shows job seeker confidence is higher than during the Financial Crash in 2008. Employees and jobseekers remain surprisingly optimistic about their job security and career progression prospects despite an impending recession this year. According to the Jobs Confidence Index (JCI), in Q4 of 2022, the JCI was 19.9, up 58.1 points from Q2 in 2009. Matt Weston, Senior Managing Director UK & Ireland at Robert Half said, “The fact that our data reveals that employees are confident about both their job security and job search and progression prospects suggests that we are going to experience an atypical downturn.”

🧠 Is the tech sector heading for a brain drain? → the technology sector is heading for increased candidate movement. It seems 52% of tech professionals plan to look for a new role in the first half of 2023 and 83% of candidates say they are likely to look for a new role by the end of 2023. Tech companies of all sizes should recognise the demand there is in the sector for flexible working – 55% of tech workers said they would prefer to be fully remote on a permanent basis. Darren Topping, Director of Solutions & Insight at Lorien commented, “Knowing what’s driving these career moves and what candidates want is going to be a key to the strength of an organisation’s tech talent strategy for 2023 and beyond.”

😟 The UK stock market is biting its nails → the UK stock market could see more pressure as traders become increasingly nervous about the health of the financial sector following the rescue of Silicon Valley Bank by HSBC. Investors remain concerned about potential spillovers to other areas of the market and new failures. It remains to be seen how central banks will react to the current confidence crisis in the banking sector and whether their interest rate decisions will lead to a calmer market.

Startups 100 Triumphs

⚖️ Legislate → the Startups 100 2023 alumnus has added $3.6M in funding in a round led by Parkwalk Advisors, participation from Oxford Capital, and several high-profile angel investors. Legislate provides companies with ontologies of legal terms, allowing anyone in the business to semantically search for information across an entire database of contracts. Legislate will use the funds to double down on UK sales and prepare for international expansion in 2023.

📦 Packfleet → Packfleet will provide pollution-free delivery for designer rental platform, HURR. The collaboration aims to tackle the forgotten fashion sustainability issue – delivery. All of the fashion platform’s orders within the M25 will be delivered by Packfleet, with the courier handling thousands of items from fashion brands and stores like Selfridges, Flannels, and John Lewis. Aside from operating a completely electric van fleet, Packfleet is a certified Bcorp and plants a tree with every new delivery via Ecologi. Both businesses in the partnership have had a successful year. Packfleet saw 10x growth last year, whilst HURR saw revenues up 700% in 2022.

Tristan Thomas, CEO and co-founder of Packfleet, said, “It doesn’t make sense to shout about reducing carbon if that doesn’t also apply to the wider supply chain.” Thomas added, “We’re pleased to be working alongside a brand that has a similar mindset when it comes to sustainable and ethical business.”

Spring Statement – What did SMEs think?

After the Chancellor made his Spring Statement last week outlining the budget, SMEs have felt underwhelmed. Some policies have warranted optimism like the announcement of 12 entrepreneurial ‘investment zones’ and the pro-parent childcare support policy. Despite some promise, plenty in the startup sector have responded with reservation.

Emma Jones CBE, Enterprise Nation founder said, “While small firms are busy creating the jobs, the news that returning mothers and returnships for the over 50s may help them fill their vacancies will be welcome – but no amount of tax tinkering can make up for the incremental rise in Corporation Tax that hits well before £250K in profits and effective slash in their incomes especially when energy costs are still so high.”

Alan Thomas, UK CEO at insurance provider Simply Business, echoed a similar wary sentiment. “While important measures have been put in place, such as an increase in the Annual Investment Allowance to £1m and offering great support in terms of childcare provisions, the fear remains that these new measures will only scratch the surface.” Thomas added that whilst the 3-month continuation of the Energy Price Guarantee will be welcome, SMEs will be nervous to know what comes after that.

The majority of Generation Z are choosing to shun traditional 9-5 employment in favour of flexible working hours, new research shows.

71% of 16-25 year olds said they are planning to, or already do, work as a freelancer, in a survey conducted by Fiverr, with 36% stating that their ultimate career goal is to be their own boss.

Out of 2,000 Gen Z respondents from the UK, 35% said that they believed that freelancing will increase their income. 67% also said that they considered freelancing a successful and fulfilling career.

More people switching from employee to self-employed provides a decent stimulus for the economy. But with workforce participation in the UK already much-diminished, the trend could spell danger for employers already struggling to hire for full-time roles.

We explore the research further to ask what other work preferences Gen Z are searching for, and how employers can attract new talent by meeting their demands halfway.

Gen Z is re-writing the office rulebook

We’ve written previously about the generational divide between older office workers, and the emerging Gen Z.

As the first group to enter the workforce post-pandemic, this age bracket seems to display a more relaxed attitude when it comes to office dress code. They also have higher expectations on salary progression.

Now, it seems Gen Z are also bringing a ‘be your own boss’ approach to the workplace, with the majority seeking to eventually become a sole trader or else take on a more ad-hoc freelancer working style.

Recent ONS figures show that self-employed workers are much more likely to work from home as a way to choose their own working schedule. They can also avoid spending more money on things like commuting and office lunches.

Younger generations want hybrid, not remote, work

In 2021, many business leaders expressed concerns that the office might become a ghost town as a result of remote working during the pandemic.

However, according to Fiverr’s research this is not the case. Only 24% of 16-25 year olds identified a remote work policy as a factor when choosing a job.

Instead, 44% say they want flexible working hours, indicating that the next generation of workers still recognise the benefits of an office environment.

Physical interaction at work is especially advantageous for young people. Conversing with older colleagues is an effective method for knowledge-sharing – crucial for an individual’s learning and development. It can also build meaningful relationships across the company.

Indeed, after flexible working, the other top priorities for Gen Z employees are a positive and friendly work culture (35%), and the ability to build skills (34%).

This feedback is backed up by a recent report that shows Gen Z are leading the charge back to in-person working. 54% say they want to work four or five days a week in the office, as a way to still socialise without spending money during the cost of living crisis.

Why is it important to attract and retain Gen Z employees?

Hiring freelancers is a good short-term solution to the talent shortage. But they typically only work for shorter stretches of time, leading to high staff turnover that can also scupper company culture.

Instead, companies should embrace the shift towards more flexible operations. Employers can meet the new demands of younger staff members by adopting a hybrid work policy.

Doing so will enable hiring managers to build a more attractive benefits package and work environment for full-time Gen Z workers.

For SMEs, bringing younger talent onboard will be key to combating the current hiring crisis. They are considered the newbies today, but in just two years time, Zoomers will constitute 27% of the workforce.

Here are three other big benefits to hiring Generation Z workers:

• They’ll help bridge the skills gap. Gen Z will be the UK’s most qualified generation. 80% have higher education qualifications, compared to 15% of Boomers. This will no doubt prove key to plugging the skills gap in years to come.
• They’re attuned to new ways of working. Coming of working age post-COVID means Gen Z are well up-to-speed with hybrid working, with 75% saying they prefer it to full-time office working patterns.
• They are digital natives. This age group has grown up with the internet in all its glory. As global connectivity soars, Gen Z employees can help firms keep up with technological advances.

Business names are important. Bad ones can kill a company before it’s even got off the ground, by making it impossible to define who your brand is, and how you stick out from the competition.

Like expectant parents, most entrepreneurs will already have a name picked out for their bundle of joy. But companies need to be careful not to fall in love with a title that might give off the wrong first impression to customers or investors.

More than just a wacky, memorable moniker, a business name needs to be an accurate reflection of how your firm is meeting consumer needs, today and in future. Because of this, savvy founders typically go with a catchy handle that fits with the current zeitgeist.

So, how are the leading new organisations of 2023 choosing to style themselves?

We’ve come up with a list of five winning formulas based on the fashionable business owners behind this year’s top 100 startups. Put down that Business Baby Name book, and let’s get started!

1. Make a long story short

Marie Kondo fans, relax – minimalism is still in. Large corporations like Apple and McDonalds have already made the shift towards simplified logos, colour palettes, and font styles.

Names, it seems, are no different. Single names are in vogue: 72% of all the companies that featured in this year’s Startups 100 Index had a one name title.

Today’s digital world has consumers easily distracted by hundreds of companies yelling over each other. Shortened names ensure you’ll be remembered in a soup of information.

One-word descriptions can also make a complex topic easy to grasp. Particular praise must go to the healthcare specialists in the Startups 100 that used portmanteaus (two words squashed into one) to explain a sophisticated business model, like PocDoc and CoolMed.

2. Add an ‘.ai’ at the end

Artificial Intelligence (AI) has very quickly turned from an underrated Steven Spielberg film, into reality. All the popular kids are doing it, with Bing building ChatGPT into its search function, and Google catching up with its own system, Bard.

Companies utilising this technology are ahead of the curve and they rightfully want to shout about it. Among the many companies in our Startups 100 list adding ‘.ai’ to the end of their titles were Jiva.ai, Gigged.ai, and PolyAI.

The lesson here is to make your USP as clear as possible within your title. Knowing that you have a sought-after technology like AI will bring the dual benefits of building investor and customer confidence.

3. Lose your ‘e’s

Whatever you call it – SMS language, textspeak, textism, or textese – texting is now one of the most popular forms of communication between humans.

Many of our top companies chose to appeal to their growing online customer base by creatively misspelling their names through vowel deletion (fun fact; this is also delightfully referred to as ‘disemvoweling’).

Tech brands seem to favour this spelling error. UniTaskr, Worldr, and Ambl have all dropped the ‘e’ to show that they are doing something different and innovative in the online world.

4. Say goodbye to capitalisation

There is a real case for going lower case in 2023. for peat’s sake!, bide planet, and onHand are three examples of startups that have let their hair down to embrace a more informal organisational culture post-pandemic.

Just like adopting a more relaxed office dress code, avoiding capital letters will ensure your brand gives off an approachable vibe to more easily connect with audiences. This is particularly effective in the era of social media, where punctuation and grammar has all but gone out the window.

This allergy to corporate custom is not just evidenced in startups. Other famous names that have recently banned the block capital in their logos include Adidas, Amazon, and eBay.

5. or CAPITALISE EVERYTHING

Plenty of firms on our list are shouting for customers’ attention by branding their business in upper case to assert a strong presence in the market this year.

Examples include AUDIOMOB, SURREAL, and LOANHOOD, all of which need to stand out in the busy sectors of advertising, F&B, and retail.

Impressing your customers from the get-go with loud and proud branding can also help a brand like SURREAL, which offers high-protein, plant-based cereal, to feel more premium.

Examples include the famous luxury brand Dior, which announced that it was changing its brand name to an uppercase version, DIOR in late 2018.

You’ve chosen a business name – what next?

So you’ve decided on a clever and catchy business name. Next, it’s important to jump on registering a business name as soon as possible. Also known as incorporation, this is necessary to protect your name being snaffled by a potential rival.

There are benefits to doing so, such as paying less tax. You’ll also secure a name for your firm, which makes things easier if you want to apply for a trademark further down the line.

For more help on getting started, check out the below guides:

• Registering for VAT as a sole trader
• Writing a business plan
• Getting set up in a specific industry

Employee theft has increased by 19% in just one year, as the rising cost of living triggers a wave of workplace crime.

Freedom of information data obtained by Zurich, an insurance provider, has revealed that almost 6,000 workers were caught stealing from their employer in 2022, up from 5,000 the year before. This amounts to nearly 500 incidents every month.

While most employers might not lose any sleep over petty pilfering of office supplies, Zurich reports it has also seen an increase in the number of data thefts and embezzlement of company funds. According to Zurich, firms affected by commercial crime face average losses of £140,000. 

Zurich has released a region-by-region breakdown of the areas seeing the highest rise in employee theft. 

The results show that employees in the North and Midlands are most likely to steal from their employer due to the cost of living crisis, as evidence of disappointing progress so far on the government’s Levelling Up pledge. 

Cost of living crisis widens regional inequalities in the UK

Last year, research from the Centre for Progressive Policy predicted that the economic inequalities between the north and south of England would widen as a result of the cost of living crisis. 

It found that, of the 31 areas across the country most vulnerable to soaring fuel, food and energy prices, 61% are in the north and another 25% are in the Midlands.

Zurich’s data supports this theory. The results are based on information from 43 police forces across England and Wales.

While London’s Metropolitan Police saw the highest number of employee thefts in 2022 with 874 incidents (the City of London saw the fewest, at 18), the biggest increase in thefts occurred in Lincolnshire, up from 40 to 71 incidents – a rise of 44%. 

Of the top five areas with the biggest increase in employee theft (excluding London), none are located in the south of England. 

This suggests the cost of living crisis is having a greater impact on worker financial wellbeing in the North and Midlands; putting more pressure on the government to achieve its Levelling Up pledge of improving the economic performance of these regions by 2030.

Top five areas (outside London) with the biggest increase in employee theft:

By population size, the highest rate of employee theft was recorded in Northamptonshire, with 43 incidents per 100,000 people.

The Centre for Cities cost of living tracker put Northampton inflation at 0.3% higher than the national average of 10.1% in January 2023. According to the tracker, workers in the region have £128 less each month, on average, compared to the same period in 2022.

How small businesses can stop employees from stealing – without raising wages

Rose Sutton, senior Speciality Lines claims expert at Zurich, says employee theft can be devastating for companies. “It can result in reduced profits, lower staff morale and in extreme cases, even bankruptcy. Consumers also lose out through higher prices.”

To help employers defend their cash flow from commercial crime, Zurich has come up with eight strategies for owners to protect their business from employee theft:

• Carry out employee background checks
• Ensure you have robust approval and verification processes for payments
• Document all transactions using purchase order, invoices and receipts
• Put in place a random audit schedule and use different internal auditors
• Ensure employees feel valued
• Introduce confidential whistleblowing channels
• Give employees flexibility to avoid theft of time
• Invest in strong cyber controls and security awareness

As Zurich’s top tips highlight, keeping staff satisfied is crucial to ensure that employees do not feel they have to resort to such drastic measures as theft.

It is easy to dismiss employee theft as an isolated incident. But it can actually be a symptom of a poor organisational culture that has left employees feeling disgruntled and even wronged by their employer.

Since last year, record-high inflation has seen real wages plummet – directing more workers to look to their employers for financial support. Startups’ research recently revealed it is cheaper to commute into the office than to work from home due to hiked living costs.

However, at a time when businesses are also struggling to cope with hiked energy bills, raising wages isn’t always an option.

Helpfully, we’ve come up with a list of over 50 benefits and perks that can take the place of a pay rise to provide tangible support for your team members.

Introducing small measures, such as a paid lunch or subsidised travel, can have a big impact by promoting a positive office culture where staff feel understood and valued during the difficult months ahead.

Today’s budget announcement by chancellor Jeremy Hunt has drawn mixed reactions from among the UK’s startup and small business community.

Some policies have received a welcome reception, including the announcement of 12 entrepreneurial ‘investment zones’; the extension of emergency support for high energy bills; the ‘full expensing’ announcement, and a pro-parent childcare support policy that initially, at least, sounded like a godsend for parents and their employers.

However, plenty in the startup sector have responded with reservation to the list of policies, wary of the tangible impact they’ll actually be able to make among a small business community reeling from recent crises. We’ve gathered some initial responses to the Spring Budget 2023, below.

More on this:

• “We’re a long way from Startup Britain” – Spring Budget Review
• What small businesses wanted to see from the Spring Budget

Childcare support feels like a political mirage, not an immediate lifeline

You can picture the delight of many a parent upon learning they’d suddenly be eligible for up to 30 hours of free childcare support per week for toddlers under three. The policy is clearly intended to help the (overwhelmingly female) parents who’ve had to make the tough decision not to return to work, due to some of the highest childcare costs in the world.

For a parent of a toddler under three, living in London – and yes, I’m one such parent – the support could put £10k per year back in pocket. Cue jumping for joy on Tuesday night when the announcement was previewed.

For employers, too, this would be a windfall. Not only do they keep or gain a skilled workforce having to otherwise make a lifechanging call, but those staff get a far larger effective ‘pay rise’, courtesy of the government subsidy, than most employers would be able to offer them.

And then, the reality of the plan hit on Wednesday at around 1.30pm. Jeremy Hunt announced that the proposed support wouldn’t roll out in its entirety until deep into 2025. Two year olds, for example, won’t be eligible for the 30 hours of free care until 2025, beginning with 15 free hours from April 2024 (anyone want to guess when my own little bundle turns three?).

There’s no one who’d realistically believe the Tories will be in power to see this all through. The promised support for parents is less of a ready-to-go gift, and more of a political mirage, blurring on the distant horizon. It’ll be a neat little point of campaigning come election time – “remember what we promised for parents?” – and then, a cynical trap for a future Labour government to navigate. Either Labour fails to find the money, and the remaining Tory MPs get to call out a failure to support parents; or, Labour sees through on the commitments and whoever’s left on the Tory benches claims credit for the idea.

Meanwhile, small businesses desperate to attract and keep talent will see no material difference for a year, and parents of young children will continue to deal with eye-watering childcare fees throughout the next 12 months of the cost of living crisis.

Slim pickings for small business

Today’s Budget was touted as one for growth but there’s not much small businesses will have taken from it.

While small firms are busy creating the jobs, the news that returning mothers and returnships for the over 50s may help them fill their vacancies will be welcome – but no amount of tax tinkering can make up for the incremental rise in Corporation Tax that hits well before £250K in profits and effective slash in their incomes especially when energy costs are still so high.

What we would have liked to see were measures on how small businesses can be supported to boost digital adoption, how Brexit freedoms could be used to help them sell their wares to the world, and to secure contracts with government.

The announcement did confirm a long-coming change in the landscape of business support with local economic decisions moving from Local Enterprise Partnerships to local councils. This spells significant change and it’s not clear how local councils will handle this.

A budget of promise for tomorrow, not today

This was largely a Budget of promise for tomorrow, not today. There were some welcome announcements, such as investing £2.5bn into quantum over the next decade which will deliver rewards in decades to come. And, it was good to see the importance of R&D in promoting innovation recognised. Ultimately, though, for the UK’s fast-growth tech sector to thrive, the burning issue remains later stage funding.

Announcements around the defined contribution pension funds and making the London Stock Exchange (LSE) and AIM a better place to list have been deferred to the Autumn Statement.

Today, the Nasdaq remains the leading market in terms of liquidity and trading for technology companies so there is considerable ground to be made up to shore up the scaleup ecosystem in the UK.

If we compare the UK’s investment to the German government’s ‘Zukunftsfonds’, which is mobilising tens of billions of Euros in equity funding for technologies of the future, the optics do not look good. The focus on the UK’s vibrant ecosystem is still not sufficient to create a pipeline of tech companies suitable for public markets.

The funding gap between early and late-stage businesses is simply too large

It’s somewhat a relief that there haven’t been any big surprises in this Budget. After a tumultuous few months, it’s great to see the government beginning to build back the confidence of early-stage businesses and prove that growth is a priority in our ambition to become a tech and science superpower.

This starts with R&D – the funding gap between early and late-stage businesses is simply too large. So while there was something of a U-turn on the R&D tax credit scheme cuts – which has been in place for over a decade – it feels like an act of appeasement and compromise rather than progress. This will have a significant impact on early-stage tech businesses and Britain’s research capabilities, especially those that cannot devote 40% of their total expenditure to R&D investment.

Active investment into unlisted equities through pensions also needs to be promoted, so we can match the might of other European hubs that are using pensions to their advantage. This has once again been kicked down the road and we look forward to the potential introduction in the autumn of investment in high growth firms from defined contribution pension funds, as the proposed changes have the potential to unlock billions in investment capital.

While there is the welcome recognition of innovation and talent beyond London with the introduction of 12 new investment zones, this same promise of investment into broad areas needs to be applied to tech businesses who cannot devote so much of their budget to R&D.

We proved over the weekend that we can respond quickly to a crisis by supporting the startups impacted by the fall of SVB. Let’s keep that momentum.

Only a very small portion of UK businesses will be eligible

The government clearly recognises that its decision to cut tax relief for all SMEs in November undermines its ambition to make Britain the next Silicon Valley. In particular, the government’s new funding for R&D-intensive businesses will allow the UK’s most innovative companies to do what they do best. The structure the Chancellor ran through sounds sensible and clear, with 40 per cent of spend being a straightforward figure and goal for others to work towards.

However, it is a lot more targeted and therefore not as accessible. Forty per cent of spend on R&D is very high, so only a very small portion of UK businesses will be eligible. The government estimates about 11,000 businesses could benefit, which is about 14% of current claimants. All other small businesses that don’t meet the threshold will still see a cliff edge in funding, which will most certainly have an impact on the UK’s innovation as a result.

Furthermore, while its definition of “research-intensive SMEs” is clear, we don’t know which companies and what activity will be eligible. It would be great to see green innovation incorporated into this. It was a little disappointing not to hear more mention of funding relating to R&D in environmental technologies, which the UK could be a world leader at. To drive forward the sustainable transition, specific tax incentives must be considered around green R&D. If they can include that in definitions, it could provide a boost both to our innovation and net-zero objectives.

This could particularly harm young companies

While it’s great to see the government has decided to largely reverse its decision to cut R&D tax credits scheme for high tech companies, those measures should stretch to companies at all stages and sectors of tech. The cut to R&D credits still remains for those companies that can’t afford to allocate 40% of their research and development investment.

This will particularly harm young companies, which is concerning because these are the businesses most likely to create the growth we need from early-stage to scaleups. Therefore, it is vital to keep the policies and picture consistent across these companies, to avoid funding gaps and to encourage scaleups to remain in the UK.

Strange absences

It was strange that an extension of the EIS and VCT schemes was not mentioned. There is a lot of work to be done to keep the UK globally competitive, and current Government policy has not yet met with very positive rhetoric.

These are critical schemes for UK startups, and it is odd that the extension, which has no new fiscal impact, has not been swiftly implemented. It is one of the few areas, post-Brexit, where the Government truly enjoys new powers.

Looking forward, I’d encourage the government to maintain close oversight of the FCA, in its efforts to continue to support the startup ecosystem. The FCA recently introduced unwieldy and complex regulations affecting startups disproportionately – such as the Consumer Duty and new restrictions on the financial promotion of alternative investments.

The impact will only be felt by larger businesses

The new policy announced by the Chancellor around ‘full capital expensing’ will go some way to reducing concerns over the increases to corporation tax, but its impact will only be felt by larger businesses.

It will not bring any further relief to small businesses, who already received such relief from the previously announced Annual Investment Allowance.

The investment zones announcement is long overdue

The announcement of 12 entrepreneurial investment zones within the budget is long overdue in not only promoting innovation at a local level, but in ensuring that the specific sectoral strengths of different parts of the UK contribute to the overall economy.

Whilst I welcome the links with the higher education sector, it is also critically important that the investment zones also maximise the opportunities for those high growth firms that are scaling up locally, and have the greatest potential for creating jobs and prosperity

But the 12 new investment zones don’t stretch the length of the land

The creation of 12 new investment zones is a great step towards achieving a ‘founder first’ mentality – specifically, moving beyond a narrow focus on the ‘Golden Triangle’ of London, Oxford, and Cambridge that has for so long been at the forefront of investment, especially in science and deeptech.

But it’s very concerning to see that the south coast has been left out. The South East, South West, and particularly Southampton, for example, is a leading source of innovation alongside the ‘Golden Triangle’, so this oversight is personally disappointing, yet unsurprising, to see.

This is an example of where relatively deprived areas like Southampton lose-out because of its geographic location. Southampton has two things that The Government should be looking for – world-class science and tech innovation coupled with social and economic challenges much like many other cities

The value of R&D cannot be overstated

We’re delighted to see the government act in response to the many science and innovation-based companies that rely on the existence of the R&D tax credits scheme.

It will help companies operating across deep tech and life sciences, to continue to attract and retain world leading talent and have the materials to develop the fundamentally important technologies required to make the UK a leader in the fields of science and innovation.

We want to continue to attract global companies to the UK to work side-by-side with the fast-growth ventures born here and the nascent businesses being spun out of our excellent academic institutions. It is that richness of companies, clustering together, that will deliver a model community capable of competing internationally.

Following a week in which the chancellor also acted swiftly to support venture capital-backed start-ups affected by the collapse of Silicon Valley Bank, we can see this as well as the quantum computing strategy and AI Sandbox commitments as hugely positive moves in the right direction for our sector.

Nobody wants to live in a country where the government in power cheers the forecast that we’re not entering a technical recession. But that’s where we are.

To be fair, compared to the previous Government’s “disastrous” mini-Budget, startups will be encouraged by Jeremy Hunt’s Spring Budget. As is always the case, business owners of different sizes will be impacted differently, with this Government retaining its focus on high-tech, research-intensive startups and scaleups.

Just consider R&D tax credits. As previously announced, R&D Tax Credits are being scaled back significantly, causing much consternation in Britain’s tech community. The Treasury has offered something, but only for R&D intensive firms who spend over 40% on R&D.

Full expensing remains the best idea in politics you’ve never heard of

With better than expected predicted future tax returns, the Chancellor had cash to play with. The big announcement was full expensing.

It’s an idea that’s been pushed by economists across the political spectrum for years – everyone from Obama’s adviser Jason Furman, to Dan Neidle (more famous for recently bringing down Nadhim Zahawi over his tax affairs), to Sam Bowman (who back in 2017 described it as “the best idea in politics you’ve never heard of”), to our 2018 report with the All-Party Parliamentary Group for Entrepreneurship.

In essence, this will let businesses deduct the cost of most investments from their Corporation Tax bills straight away. Again, this won’t help every business, even though it’s something we back.

“12 potential Canary Wharfs”

The Chancellor wants to get cracking on building 12 potential Canary Wharfs across the UK, with the promise of tax breaks and subsidies. But the critical ingredient to make this a success will be bold planning policy – building quickly at density. In 1990, the regeneration kicked off with a 244m Canary Wharf skyscraper at One Canada Square – then Britain’s tallest building for two decades.

This is the sort of ambition we need to see if this policy is going to be a success.

Female founders will be encouraged by further support for childcare, but the scale of the problem will likely require further reforms if costs are going to be reduced. While slightly loosening ratios and the wraparound pathfinder scheme to support the expansion of school-based childcare provision either side of the school day may make a difference, the 30 hours a week of free childcare is unlikely to bring down costs without finding a way to increase supply.

No mention for micro businesses and startups

We’re a long way from Startup Britain – the Cameron-era campaign to help inspire and support new businesses in the UK. In the Budget documents, micro businesses don’t get a mention, nor do startups (apart from in relation to grants for new childminders), and small businesses get short shrift.

One minor exception is the promise to “collaborate with businesses and representative bodies to undertake a systematic review of tax guidance and forms for small business over the next 24 months to make it easier for small businesses to interact with the tax system as they set up and grow.” I’m not holding my breath for this – not least, because it shouldn’t take two years to fix.

Beyond business – but currently impacting business owners – Martin Lewis, ‘the peoples’ Prime Minister’, is “very pleased’ his campaign for energy bill support didn’t fall on deaf ears.

While it’s unlikely to unravel along the lines of Kwasi Kwarteng’s Budget, as experts have time to pour over the Budget documents there will no doubt be plenty missed in the necessary hot takes. And even if it does stand up to scrutiny, when it comes to the looming election, the Government will be judged on more than one Budget. Nevertheless, compared to last time round, I think business owners across the political spectrum can all agree that it could be worse.

Following a dramatic 48 hours, HSBC has struck a last-minute deal with the Bank of England (BoE) to purchase the collapsed Silicon Valley Bank UK for a nominal price of £1.

Its intervention prevents the bank being placed into insolvency, and will save thousands of UK tech startups from potentially fatal losses.

Silicon Valley Bank UK (SVBUK) had been on the edge of catastrophe following the sudden collapse of its US parent company on Friday, but the government wasted little time in responding.

In an extraordinary series of events over the weekend, the UK government stepped in ahead of the opening of Monday morning’s markets to meet with potential bidders to take over the collapsed lender.

We explain what happened, what the response has been, and what the potential impact could be for the UK’s startups scene.

SVBUK purchased by HSBC

Silicon Valley Bank (SVB) was the sixteenth largest bank in the US. Last Friday, it failed after a run on the bank saw clients speeding to withdraw their cash due to concerns over its poor balance sheets.

Working as part of an extraordinary rescue mission, the UK government raced to hold numerous emergency meetings to minimise disruption to tech firms, whose cash flows had been left hanging in the balance.

In the early hours of this morning, the BoE announced that HSBC had emerged as the triumphant white knight in what was apparently a competitive bidding process.

Chief executive Noel Quinn confirmed that HSBC has purchased SVBUK for a nominal price of £1. The takeover will override the BoE’s earlier decision to place SVBUK into insolvency.

As a result of the transaction, all depositors’ money with SVBUK is now safe and fully accessible. Customers should not notice any changes.

Chancellor Jeremy Hunt wrote on Twitter at 7am: “I said yesterday that we would look after our tech sector, and we have worked urgently to deliver that promise.”

This morning, the Government and the Bank of England facilitated a private sale of Silicon Valley Bank UK to HSBC

Deposits will be protected, with no taxpayer support

I said yesterday that we would look after our tech sector, and we have worked urgently to deliver that promise

— Jeremy Hunt (@Jeremy_Hunt) March 13, 2023

In a statement released on Monday, the BoE said the action had been taken “to stabilise SVB UK, ensuring the continuity of banking services, minimising disruption to the UK technology sector and supporting confidence in the financial system”.

SVBUK government intervention

It’s been a heck of a weekend for the chancellor, who may have been hoping for a quiet couple of days ahead of the spring budget announcement. On Saturday morning, Hunt reacted to a letter sent to the government by 250 UK tech CEOs, who had been left in the dark about what SVBUK’s collapse would mean for their businesses.

Hunt moved quickly to reassure the estimated 3,5000 SBUK customers that the government would act urgently to provide a cash lifeline to all tech startups affected by the bank’s collapse.

Overnight meetings were held between Hunt, prime minister Rishi Sunak, and BoE governor Andrew Bailey to find a solution to the chaos.

It is understood that ministers from the government’s newly-formed innovation department, DSIT had also been speaking to sector leaders and startup representatives to decide on a rescue approach.

On Sunday, it became clear that the government wanted to avoid the bank being placed into insolvency by selling it to a UK rival. Various parties were apparently interested, but HSBC was announced as the successful buyer this morning.

At 8am, George Freeman MP, Minister for Science, Research, Technology & Innovation at DSIT, posted his thanks to all those who had been involved in the talks, declaring simply: “we’ve delivered.”

After a busy weekend Government & the Bank of England facilitated a private sale of Silicon Valley Bank UK to HSBC:

🔹deposits will be protected, with no taxpayer support.@Jeremy_Hunt + @RishiSunak pledged HMG would act to stop a UK S+T sector crisis.

We’ve delivered. https://t.co/HueZZ5IK5n

— George Freeman MP (@GeorgeFreemanMP) March 13, 2023

Cashflow liquidity to maintain staff payments

Following the news of its parent company’s collapse, the BoE announced its intention to put the UK arm, SVBUK, into insolvency as soon as Sunday evening.

Under the UK’s deposit protection scheme, customers of an insolvent bank are eligible for up to £85,000 of compensation for cash (£170,000 for joint accounts). Startups using SVBUK would not have been able to recover more than these amounts – which are small compared to the deposits that some had with the bank.

However, the most imminent threat to owners was not just losing their deposits, but accessing them.

Had SVBUK been made insolvent, its customers would have been left unable to move money in and out of their accounts for 30 days. Being blocked from making staff and supplier payments could have signalled a potential extinction event for thousands of firms.

Chancellor Jeremy Hunt acknowledged there was “a serious risk” that SVBUK customers, who he described as “some of our most promising and exciting businesses”, would not be able to settle payroll and bills this week.

In a statement published online, the Treasury said “given the importance of Silicon Valley Bank to its customers, its failure could have a significant impact on the liquidity of the tech ecosystem.

“The government recognises that tech sector companies are often not cash flow positive as they grow, and that they rely on cash on deposits to cover their day to day costs.”

Spring budget incoming

The government’s quick response to the crisis indicates it was aware of the devastating consequences that the bank’s collapse could have had on UK startups.

Even with Wednesday’s Spring Statement just days away, HM Treasury reacted swiftly to begin meeting with potential buyers and organise a takeover almost overnight.

Startup owners should feel reassured that the chancellor’s March Budget will likely contain further details on how HSBC’s takeover will work, and any further support that may be made available.

What could be the potential impact on UK startups?

SVB’s collapse is the biggest bank failure since the 2008 financial crisis. But while SMEs could rest assured that the SVB emergency would not blight the UK’s financial system this time round, tech startups were rightfully worried about ripple effects in the sector.

Bank of England reads the room wrong

Criticisms were levelled at the Bank of England’s statement on Friday evening, which declared that “SVBUK has a limited presence in the UK and no critical functions supporting the financial system.”

That the government’s first move was to reassure the banking sector, rather than the organisations affected by the disaster, showed a severe lapse in judgement. Entrepreneurs were equally unimpressed.

In a letter sent to the chancellor on Saturday morning, 250 tech startup CEOs said: “Most businesses are operating on very fine margins in the current economy and the contagion from the initial insolvencies will be vast and impact the economy far beyond the tech sector.”

Ripple effect potential for startup sector

While SVBUK had an estimated 3,500 customers, data from the Office of National Statistics (ONS) shows that its primary client base of professional, scientific, and technical businesses is the largest industry group of all businesses in the UK. These firms make up 15.6% of all registered businesses.

Consequently, sources reported by the BBC have estimated that between 30% and 40% of UK startups could have been affected by the collapse – including up to 50,000 employees.

Based on the name, some might mistake Silicon Valley UK for a far-removed lender that served more as a branding tool for clients. But the bank was a rare backer of many successful, high-growth startups like Wise – themselves a key driver for economic growth.

Shadow chancellor Rachel Reeves, posted on Twitter at 7:45am this morning to recognise the importance of the deal, stating that “tech and life sciences are vital to getting our economy growing again.”

That SVB has a buyer will be a relief to the entrepreneurs and the thousands of people working in the tech and start-up sectors, who woke up facing huge uncertainty this morning.

Tech and life sciences are vital to getting our economy growing again.https://t.co/zvDrIodv3U

— Rachel Reeves (@RachelReevesMP) March 13, 2023

Caution should be exercised alongside any celebrations, however. While the takeover is welcome news for existing customers, SVBUK’s downfall will do little to curb investor anxieties.

Funding in the tech sector has already slowed in recent months, leading to mass layoffs. A considerable number of venture capitalists also banked with SVBUK. Should they choose to discontinue their working relationship with HSBC, future fast-growing businesses will struggle to keep the momentum going.

One hope is that the crisis makes central banks less willing to raise interest rates higher, which should calm market nerves and help to prevent a repeat disaster like SBVUK. The BoE has repeatedly raised the rate to try and combat inflation. Currently, it is set at 4%.

Timeline of the SVBUK collapse and response

SVB is the most high-profile company to fall victim to a wider trend of lost investor appetites. High interest rates in both the US and the UK have been deterring backers from making ‘riskier’ investments.

This drastically curbed the amount of early-stage funding being given to SVB’s primary customer base, setting SVBUK up for a crushing fall at the end of last week. Here’s a day-by-day breakdown of what unfolded:

Wednesday 08 March

Short on capital, and with private fundraising becoming unaffordable, SVB’s customers begin withdrawing large amounts of money from the bank at the beginning of the week.

To fund the redemptions, SVB sells a $21bn bond portfolio. However, hiked interest rates over the last year have pushed up the yield on bonds, which lowers their price. The bank sells at a $1.8bn loss.

Thursday 09 March

SVB announces it will sell $2.25bn in common equity and preferred convertible stock to cover the loss. This spooks investors and causes the bank’s shares to plummet by 60%.

At the same time, SVBUK continues to insist that everything is fine. Erin Platts, CEO and Head of EMEA, issues a press release on Thursday morning in an attempt to reassure investors of its strong financial position “as a standalone independent banking institution.”

Friday 10 March

SVB scrambles to find alternative funding, including searching for a buyer. It’s too late. US regulators announce they are shutting down the bank and placing it under its receivership.

Later on Friday, the BoE publishes a statement that it is seeking a court order to wind up Silicon Valley Bank UK Limited and place it into an insolvency procedure.

Saturday 11 March

Reuters reports that 250 UK tech firm executives have signed a letter addressed to Hunt calling for government intervention and warning of an “existential threat” to the UK tech sector.

The chancellor responds by organising an emergency meeting with the BoE, tech firms, and the prime minister. He promises to secure an emergency support package for startups in the tech and life sciences sectors, to protect from major losses and potential failures.

Sunday 12 March

In a statement on Sunday morning, Hunt says that the government will “bring forward plans to ensure the short-term operational and cash flow needs of Silicon Valley Bank UK customers are able to be met.”

That evening, various potential buyers begin throwing their hat into the ring to rescue SVBUK including HSBC and Lloyds.

The Evening Standard speculates that Barclays – the bank that was previously awarded Tech Nation’s funding last September – is a frontrunner. Meanwhile, Bank of London announces it has submitted a formal offer to the SVBUK board.

Monday 13 March

Tech startups awake to find that HSBC has swooped in at the last minute as part of an extraordinary rescue deal facilitated by the government. It purchases the bank for £1.

HSBC’s Noel Quinn says: “This acquisition makes excellent strategic sense for our business in the UK. It strengthens our commercial banking franchise and enhances our ability to serve innovative and fast-growing firms, including in the technology and life-science sectors, in the UK and internationally.”

Were you affected by the SVBUK collapse? Email us at hello@startups.co.uk or contact us on our social media pages to add your voice to the conversation.

Welcome to Startups’ Weekly Round Up, where we bring you the latest headlines affecting UK SMEs.

HSBC rescue salvages Silicon Valley Bank UK collapse

After a frantic weekend of activity following the dramatic collapse of Silicon Valley Bank on Friday, HSBC has stepped forward to rescue SVB’s UK arm, Silicon Valley Bank UK (SVBUK).

Amid the the biggest global bank failure since the financial crisis of 2008, an estimated 3,500 tech startups who banked with SVB’s UK arm had been in limbo over whether they will be able to pay their employees and suppliers when the markets open today. Over the weekend, UK chancellor Jeremy Hunt pledged to prepare a cash lifeline for all the businesses affected, but the HSBC purchase (at a nominal value of £1) means that deposits will remain protected and the tremors for the UK startup sector may just be minimised.

The UK government had also contacted numerous UK banks and potential bidders to find an emergency buyer, before the HSBC deal was agreed. Late on Sunday evening, Bank of London confirmed it had submitted a formal takeover offer. Barclays, which was awarded Tech Nation’s funding in January, was apparently also in the running.

We’ll be bringing you more information on this developing new story as it appears. Keep an eye on the Startups website for updates.

Some stats to start up your week

• Women across the UK are able to save 34.5% less than their male counterparts, when considering both ISA value and pension savings
• 95% of SMEs are overlooking obvious cost savings, with the most neglected being water bills
• 60% of customers prefer to use WhatsApp for support but only 31% of customer service operatives currently use it
• Only 26% of the technology workforce are women and only 3% of CTOs or technical director roles are filled by women

11 Downing Street and the UK economy: what should startups know?

🌱 What do businesses want from the Budget? → 25% of UK businesses say they’re unable to obtain necessary goods needed to operate, and 23% of all adults are financially vulnerable. Businesses tell Startups they want essential support from the government in the lead up to chancellor Jeremy Hunt’s Spring Statement on March 15.

The chancellor is not expected to announce tax cuts, despite pressure from Tory MPs and the International Monetary Fund predicting poor economic performance for the UK in 2023 due to fiscal and monetary tightening. SMEs will therefore be looking for measures to reinvigorate the economy.

🛍️ Short-lived business stories → 6,928 businesses were launched and dissolved in 2022, according to research conducted by Real Business Rescue. On average, dissolved companies operated for just 164 days and 22% of these businesses were London-based. The hardest-hit sector were online retail stores, followed by buying and holding property, and hairdressing and other beauty treatments. Birmingham was the second worst-hit area for new businesses, followed by Cardiff and Manchester.

🤖 Preparing for the future with AI → London leads the way as the world’s most AI-driven city, having 2,645 AI events on offer. London, Manchester, and Jakarta are the forefront of AI education with up to 29 AI-specific university courses to choose from. These insights were the result of Business Name Generator research which looked at 50 cities leading the way for AI development and implementation. Metrics included AI venture capital investment, events, career opportunities, salaries, and education options.

Donelan and data protection

The Data Protection and Digital Information Bill was introduced by Technology Secretary Michelle Donelan last week in a bid to simplify the existing GDPR law that governs data protection. The government claimesit will save the UK economy more than £4 billion over the next 10 years and ensure that privacy and data protection are securely protected.

Data-driven trade generated 85% of the UK’s total service exports and contributed an estimated £259 billion for the economy in 2021. The bill seeks to reduce the amount of paperwork organisations need to complete to demonstrate further compliance and provide organisations with greater confidence that they can process personal data without consent.

Importantly, the Bill also seeks to increase business confidence in AI technologies by clarifying the circumstances when robust safeguards apply to automated decision making.

Donelan said: “Co-designed with business from the start, this new Bill ensures that a vitally important data protection regime is tailored to the UK’s own needs and our customs.Our system will be easier to understand, easier to comply with, and take advantage of the many opportunities of post-Brexit Britain.”

Graduate salary expectations rising faster than SMEs can afford

Graduate workers expect to earn over £5,000 more than the average starting salary, according to research by Startups. Gen Z wage expectations are rapidly outpacing the market average, as the rising cost of living makes starting salaries untenable for graduate workers. The average wage for a full-time worker who graduated in 2019-20 is £25,000 against the average graduate expected salary of £30,244.

This follows an increase in the number of young people choosing to attend university. As salary expectations fail to be met, university leavers are increasingly questioning whether a degree is worth the investment. Instead, alternative career paths like apprenticeships are becoming more enticing to younger people who are looking to launch their career.

This Wednesday, as the UK teeters on the precipice of a recession, the new chancellor Jeremy Hunt will offer up his first Spring Statement. Depending on the contents, it will be ‘make or break’ for many SMEs.

Likely, the budget will focus on flattening the inflation rate, which is currently hovering around a record 9% mark. But Hunt is only expected to offer minimal support for smaller organisations due to the poor state of the public purse.

Help is urgently needed. Recent Companies House analysis from NerdWallet has shown that 534,777 closed in 2022, the second highest number of business closures in a decade.

We asked five small business owners and experts to tell us what’s at the top of their budget wishlist. Below, we’ll explore what policies they’d like to see and how likely they are to be introduced.

1. Reverse the corporation tax increase

Last September, the UK government announced that corporation tax will increase from 19% to 25% on April 1. This is expected to net £18bn a year for the Treasury.

The legislation will affect any business with annual profits of £250,000 or more. Small companies with profits up to £50,000 will still pay corporation tax of 19% (profits between these two figures will be subject to a tapered rate).

At the same time, the Super Deduction Tax, which allows businesses to cut their tax bill by 25p for every £1 that they spend on plant and machinery assets, is scheduled to end on March 31.

Mike Randall is CEO of Simply Asset Finance, a small business lender. In light of these two planned policies, Randall argues any budget changes should give SMEs more confidence to make strategic growth investments.

“The introduction of the Super Deduction Tax in 2021 demonstrated an intent from the government to incentivise UK business investment. Its limited impact so far demonstrates that there’s still much more to be done to support UK business productivity,” adds Randall.

How likely is it to happen?

Many small business experts have called for the corporation tax rise to be scrapped. Telecoms giant BT has said it will take the UK in a “drastically anti-investment direction”.

However, both the prime minister and chancellor have publicly ruled out cancelling the increase. One U-turn on the issue has already occurred under Liz Truss’ tenure. Two would be pushing it.

Instead, analysts are predicting that the Super Deduction Tax will be extended or revamped in some form to mitigate against the negative impact of the corporation tax rise.

2. Raise the threshold on business rates to counteract rising energy bills

Small business rates, a charge by local authorities to finance public services, are set to increase on 1 April 2023. Any climbs will be capped at 5% for small companies, but the change will still be an unwelcome tariff for small business bookkeeping.

Currently, English firms can get the Small Business Rate Relief (SBRR), a national discount scheme administered by local councils, if their property’s rateable value is lower than £15,000.

The Federation of Small Businesses (FSB) is calling for this to be raised to £25,000 to ensure more organisations can qualify for financial assistance.

Elizabeth Jones is the owner of Natural for Baby, a Balham-based children’s clothing and gift shop. Jones says companies like hers need more help with business rates to combat the financial difficulties being caused by hiked energy bills.

“The business rates are discounted a bit at present,” she accepts, “but when so few people have money to spend, reducing the rates more will mean that the savings can balance out the bigger electric bills.”

How likely is it to happen?

Hunt will almost certainly press ahead with the rise in small business valuation rates. He has already extended and increased business rates relief, from 50% to 75% up to £110,000 per business.

However, we may yet see some further support measures introduced to help with energy bills.

Revisions to the new Energy Bill Discount Scheme, set to begin on April 1, could see more generous discounts allocated to firms. Funding to improve energy efficiency for businesses is another option being suggested by industry experts.

3. Lower the age limit for workplace pensions

As employees across the country have been hit by shrunken real wages, there have been calls for the Spring Statement to provide more support for savings and retirement by addressing pension tax reform.

Chieu Cao is founder of Mintago, a financial wellbeing and pension management app. Cao says he wants the March budget to focus on two aspects.

Firstly, for the qualifying age for auto-enrolment pension obligation to be lowered from 22 to 18. Secondly, for Hunt to remove the qualified earnings limit, which currently only permits earnings over £10,000 to be eligible for auto-enrolment.

“By at least increasing the amount that is being contributed through auto enrolment, we would be one step closer to helping people have enough at retirement”, insists Cao.

How likely is it to happen?

Almost certain. The government has already backed legislation to give ministers the powers to lower the pension obligation age. As for removing the qualified earnings limit, Cao is hopeful.

“We do think this will be introduced,” he affirms. “Especially given what we have seen in terms of inflation. Without any action taken, millions of individuals will end up in retirement poverty.”

4. Broaden employment support

UK labour market participation fell dramatically in the pandemic, with lots of people choosing to give up work or move industries as a result of the ‘Great Resignation’. Resultantly, staff vacancies have soared upwards, leaving SMEs with hiring gaps and skills shortages.

Ahead of the Spring Statement, two small business owners told Startups that the lack of available skilled labour is the biggest issue they’d like to see addressed by Hunt.

The childcare crisis is one culprit. Last week, a report by the charity, Coram, found that the average annual cost of a full-time nursery place for a child under two is now £14,836. Such figures effectively lock out low-income parents from the workforce.

Brett Wigdortz is founder of childminder agency Tiney.co. One of his ‘perfect world’ suggestions is the government to offer subsidised early years care from birth to school.

“Parents could go back to work, and their children would have better education for their future careers,” he argues.

Another contributor to low workforce participation is poor health. Government data shows that half a million people are currently out of work due to long-term illness.

Molly Johnson-Jones is the cofounder of Flexa, an accreditation service for flexible working. She says she wants to see Hunt commit to improving support for workers with additional health needs. “As someone who has lived with a chronic health condition since the age of 18, I know how difficult it can be to find employers who accommodate health needs.”

Johnson-Jones suggests business grants could be given to help make workplaces more accessible. Training courses could also help managers to support workers with health conditions or help with inclusion policies like neuroinclusion.

“Given the government’s current focus on fixing labour shortages, I don’t see why the chancellor wouldn’t consider measures such as these,” she states.

How likely is it to happen?

Hard to say. Childcare support for benefit claimants is expected to be introduced in the budget, but the government has so far kept mum on the idea of broader support to help businesses attract and retain talent.

Still, it is likely that some training and employment policies will be introduced to reckon with the labour shortages. In his Autumn Statement in November 2022, Hunt announced that the Work and Pensions Secretary would review workforce participation in time for the March budget.

5. Work directly with more small businesses

Reactionary financial aid packages have been a safety device for many SMEs through the turmoil of the previous three years. But a long-term support solution could be more government contracts for small businesses

Recently, Enterprise Nation’s Access All Areas report found that, despite Whitehall’s ambition to spend 25% of its procurement budget directly with small firms, it has so far only managed 10%.

Emma Jones, founder and CEO of Enterprise Nation, says, “Entrepreneurs want to see the government championing their work [and] recognising the great value they add to the economy, making sure they have access to the support and funding they need to grow.”

Jones suggests leveraging technology. Connecting government’s tier one suppliers to suitable digital sub-contractors would help. Taking steps to ensure SME invoices are settled on time would be similarly valuable.

So, a win-win situation for everyone. The government would get access to better-value contracts, while supporting an essential part of the economy. Smaller businesses, meanwhile, would be awarded a bankable avenue for ongoing work.

How likely is it to happen?

The government’s overreliance on expensive, third-party consultancies is already much discussed. Consultants have successfully tendered for more than £700m of work from the UK government since 2020.

Reform has so far been slow. Back in 2010, David Cameron promised to “drive down the use of contract staff”. Come this January, the in-house consultancy arm that his government pedalled as a solution was scrapped.

Movement towards prioritising small business tenders for public-sector contracts is likely to be introduced as a series of long-term objectives, rather than a quick-fix bill introduced in the upcoming budget.

We’ll be publishing a reaction piece on the day of the Spring Statement to see how well the government’s actions measure up against small business owner expectations. Email us at hello@startups.co.uk on the day or visit our social media pages to add your voice to the conversation.

Remember when modern slang used to mean words like ‘newbie’, ‘peeps’, ‘sweet’? Well, move over millennials. Generation Z, the group born post-1996, is introducing a whole new lexicon to today’s workspaces.

According to new research from the careers website, Reed.co.uk, ‘goals’ or ‘work goals’ will be the most popular phrases used in workplace chat this year. 19% of workers surveyed said they were already using the term ‘goals’ in meetings and catch-ups.

Rather than objectives or KPIs, the expression instead refers to work aspirations, as the so-called ‘Great Resignation’ sees many people upping and leaving for a career change. As evidence, Reed found there has been a 22% increase year-on-year in job applications.

Also making their way into corporate dictionaries this year are the phrases ‘feeling it’, ‘vibe’ and ‘its giving’.

Feel old yet? Here’s a rundown of the latest lingo that staff members will be using in 2023 – including definitions:

Younger workers are breaking the rules of ‘business speak’

Based on Reed’s survey, almost a third of company employees in the UK say they are increasingly finding themselves using slang words and phrases within the workplace.

Age differences are a clear influencer when it comes to company slang use. We’ve written previously on how Gen Z and younger staff members are changing the way that staff members express themselves in the workplace.

They’re already ushering in a new, informal dress code. Now, it seems there’s a whole new language for managers to translate, as 19% of 18-34 year olds say they use colloquial terms from social media to feel more like themselves when at work.

Reed uncovered that our work colleagues are the most influential when it comes to picking up new words or phrases, with 34% of people saying their coworkers have the biggest impact on their language choices.

Lifting the language barrier

While they might seem like harmless fun, there is a danger that social media jargon could make it tricky for workers from different generations to collaborate with, and understand, each other.

Nurturing an organisational culture where all staff members feel comfortable can be a tricky task for businesses working to such a sizable generational gap. 26% of workers aged 35–44-years old admit to using modern slang to fit in with their colleagues.

Complex acronyms and other forms of business speak can be equally confusing for people who aren’t ‘clued-in’ to terms that might seem obvious to those in the know.

Slang should be tolerated for informal office scenarios. However, being clear and effective in formal communication, such as meetings or presentations, will keep staff on the same page.

This is a surefire way to nurture an engaged workforce where everyone is aiming for the same, shared ‘work goals’.

Managing Director at Reed, Simon Wingate, says: “When people use shared language at work it’s about making them feel closer to their colleagues. We know that people love their job when their colleagues are more like friends.”

Against a backdrop of the recruitment crisis and record-high inflation, Startups has found that, on average, today’s employers are offering just over £5,000 less than what graduates expect from a base salary.

Our analysis is based on the latest graduate outcome figures from the Higher Education Statistic Agency (HESA). They show that the average wage for a full-time worker who graduated in 2019-20 is £25,000. 

This is markedly lower than the expected starting salary stated by undergraduate students of £30,244, as found by Bright Network.

The £5,000 disparity is no doubt a response to record-high inflation figures, which have made everyday living costs like rent and commuting more expensive for the average employee.

Below, we’ve broken down the HESA statistics to find what’s causing the gap in pay predictions between employee and employer. Plus, we explore how SMEs can attract and train new talent without exhausting overstretched budgets.

Have UK universities oversold the value of a degree?

The number of young people choosing to attend university has rapidly increased in recent years. In 2022, a record quota of 18-year-olds had a place at their first choice of university confirmed — a 20% increase on 2019, when exams were last sat.

Simultaneously, the cost of university has also shot upwards. As with sales of any product or service, the boost in demand has led to surge pricing.

Until 1998, full-time students in England could attend university completely free of charge. Two and a half decades later, most institutions today charge £9,250 per year of study, amounting to an average debt toll of just under £28,000 upon graduation.

The current interest rate on student loan repayments of 6.3%. That means a full-time worker earning the average graduate pay package of £25,000 will take 29 years to repay 83% of their loan. Only then will it be written off.

It’s not surprising that many higher education graduates are questioning the return on their substantial investment.

What are the highest paid degrees in the UK?

How much a graduate earns in their first year of working depends on multiple factors. These include location, employer, degree type, and industry competitiveness.

In terms of degree type, specialist courses tend to be highly-skilled and return a higher average wage.

For example, a mathematical science degree covers both everything from applied mechanics to accounting. That is why graduate salaries for this qualification range from £19,500 to £28,000.

Below, we’ve listed the UK degrees in order from highest to lowest starting salary, on average:

George has a high-skilled masters degree in chemistry from Newcastle University. Having graduated in 2022, he has since found a full-time job as a Junior Chemist.

In terms of salary, George says he is definitely disappointed. The HESA data shows he is being paid a below-average salary for a physical science degree in the UK.

“The suggested wages for graduates on my course was £27,000”, he reports. “I only started on £21,000 and am now on £23,500 after six months.”

Are apprenticeships the new way forward?

With more uni leavers questioning the validity of their degree certificates, alternative career routes are being positioned as a way to avoid large student debt. One of the most popular is apprenticeship schemes.

Sophie Ruddock is Chief Operating Officer at Multiverse, an apprenticeship training programme which won the Startups 100 Index in 2021.

Ruddock says that young people are defaulting to university due to incorrect assumptions that it guarantees a high quality, well-paid job at the end. She argues this is actually what an apprenticeship promises.

“You still get the world-class learning and the qualification, but instead of the debt you get a salary, and learn some of the most in demand skills that businesses need today,” she posits.

Far from being low-skilled, those who complete a degree apprenticeships (which take three to six years to complete, depending on the course level) receive a qualification equivalent to a full undergraduate or master’s degree.

Ruddock says that more should be done to persuade young people of the benefits of apprenticeships. “The very best jobs of the future, things like software engineering and data analytics, don’t need a degree – you can start learning and earning straight from school.”

What does an apprenticeship offer businesses?

For the business case, apprenticeships are not just cheap labour. They are a strategic hiring decision that scales the workforce at a comfortable, steady rate.

An apprentice can have their learning tailored to plug relevant skills and knowledge gaps within your business. Such bespoke training also makes future talent-based decisions, like succession planning, easier.

Additionally, apprentices offer a practical learning experience for fellow staff members, as a route to develop their coaching and mentoring skills. Younger workers might also bring fresh energy, ideas, and perspective to workforces.

There are also cost savings. SMEs should take advantage of the government’s Apprenticeship Levy scheme to employ apprentice workers.

Companies earning over £3m in revenue each year pay 0.5% of their overall pay bill into a ‘digital fund’. A 10% government contribution is then added to each monthly payment, which the employer can use to cover any apprenticeship training expenses.

How can small businesses attract graduate talent without raising wages?

The majority of small companies will not be able to match the escalating pay expectations of graduate workers. Based on a recent report by the business spending tracker Pleo, 95% of UK SMEs report being impacted by the cost of living crisis.

The crisis has already necessitated cuts to employee remunerations and benefits packages. Three in five have stopped or reduced staff promotions, while 61% have curtailed staff bonuses.

In this climate, SMEs might feel frustrated by the demands that entry-level workers are placing on balance books. But there are still small measures that can be taken to make the pay process fairer for Generation Z. And they don’t have to compromise bottom lines.

Jack Parsons is founder and CEO of The Youth Group, a job support service that has helped millions of young people to gain the work experience needed to launch and grow their careers.

“Graduates may have unrealistic salary expectations, especially if they are not aware of industry averages,” acknowledges Jack Parsons. “At the same time, recruiters and hiring managers have a responsibility to provide fair and transparent salary information.”

If you’re a business owner, Parsons recommends including a clear salary range or figure within the job advert, so that companies can attract candidates who are genuinely qualified for the role and its compensation. Ditto for experience levels, which often don’t align with the ‘entry-level’ description being advertised.

“This can help to streamline the hiring process and save time and resources for both the company and young people,” adds Parson.

Naturally, this should extend into transparent communication on pay scales and the potential earnings or promotions a worker could have in years to come, to counteract any disappointment felt by the initial pay offer.

Another option is to invest in learning and development opportunities as a way to demonstrate the CV-building courses and qualifications that your company can offer in the long-term. It is also effective for reducing staff turnover.

Charlotte acknowledges the useful ‘foot-in-the-door’ benefits for further career development that entry-level positions produce. “Progression is probably more accessible and the opportunities come more frequently,” she says.

Why businesses should care about graduate salary expectations

The £5,000 difference between their salary expectations and the real average wage might make today’s group of graduates seem out of touch.

But as our analysis shows, there is cause for young people’s concerns. This is a generation that has emerged from a pandemic into an economic crisis, saddled by growing student debt, and with no end in sight to their inflated living costs.

Understanding these worries is crucial for SMEs. The ongoing talent shortage means firms need to appeal to Gen Z talent. They might be considered the newbies today, but in just two years time, these so-called ‘Zoomers’ will constitute 27% of the workforce.

Small steps bring big positives. Any recognition you can give to the difficult economic conditions that graduates have emerged into will demonstrate that you are at least listening to their concerns — a simple, but powerful way to bring young workers onboard.

Ever since Spain officially legalised menstrual leave last month, questions about how UK workplaces should accommodate for periods have come to the fore. Should a similar policy be imported into the UK? What measures should be crafted to help cramp-ridden women feel more comfortable during working hours?

According to YouGov data, Brits are narrowly in favour of offering menstrual leave in the UK, with 45% supporting the policy. Furthermore, attitudes towards menstrual leave are more supportive among younger workers, than among those in their 50s and 60s.

However, nurturing workplaces that are genuinely period positive takes much more than just policies. Menstrual leave alone – or something that looks like it – will not address the structural issues that continue to stigmatise periods.

The silent pain of periods in the workplace

Many women who face highly debilitating periods stop short of telling their bosses, because of the taboo attached to openly discussing menstruation.

According to a YouGov poll, some 59% of women who have called into work with cramps say they have not been truthful about the reasons for needing a sick day. Regardless of whether they take days off or not, according to the same poll, 24% of women say they get period pains that affect their ability to work.

Women also experience shame and silence when discussing periods in the workplace. According to data collected by the Bloody Good Employers programme launched in 2021, 89% of women had experienced some form of stress in the workplace because of their period, and 25% believed that taking time off work for menstrual health issues had negatively affected their career progression.

Importantly, when asked what employers could do to help, 63% said normalising the conversation around periods in the workplace would be a key starting point.

Destigmatising ‘that time of the month’

Whether it’s using sugar-sprinkled vocabulary that subtly alludes to menstruation, or simply avoiding the topic altogether, discussing periods continues to be heavily stigmatised in the workplace.

Period stigma in the workplace looks like having to sneakily shove a tampon or a pad up a sleeve, or jokes bouncing around about how women are poignantly emotional during their ‘time of the month’.

Company-specific policies or even wider law changes around menstrual leave could be a step in the right direction. But, these won’t be enough to tackle the deeply rooted institutional menstrual shame, a concept first developed by Chella Quint, author of Be Period Positive and Own Your Period, and founder of the Period Positive movement. This institutional ‘sickness’ corrodes the working world due to a lack of proper education and awareness.

“I think as soon as you start looking at who are the decision makers, and you start adding or subtracting the amount of menstrual education they’ve had, you kind of get the answer,” says Quint.

The lack of awareness that dominates industries that are male-dominated then reinforces institutional silence when it comes to understanding and discussing how menstruation affects workers’ effectiveness and comfort in the office.

“I think there’s something incredibly powerful about coming into a new workplace environment and seeing that they talk about menstruation in some way,” says Quint. “I actually do see changes in workplaces when they start talking about menstruation at all. I see a lot of employees and employers start communicating about broader issues about menstrual health, and also broader issues around menstrual shame.”

Fostering these conversations that break the taboo that envelops periods is therefore a foundational ingredient needed to create workplaces that are period positive at their core.

The sales pitch for period positivity

Providing period products in office bathrooms and debating whether menstrual leave is the right step for your company is just the tip of the iceberg.

“Policies are great, however, if there isn’t a culture that supports the policy, then not many people are going to benefit,” says Elysha Paige,Manager of the Bloody Good Employers Programme of the Bloody Good Period social enterprise.

“There is a business case for doing this work. We know that people who are happier at work are less likely to burnout and more likely to be productive over a long period of time,” says Paige, “The more flexibility that people have, the more empowered they are to do good work when they feel like they can.”

Female entrepreneurs also agree that flexibility and other holistic approaches to period positivity are smart for business.

Leila Martyn, Founder of MyOva, agrees that menstrual leave alone is not enough. “Employers could also provide education on menstrual health and wellbeing as part of women’s health initiatives on managing menstrual pain and other common gynaecological conditions,” says Martyn.

“However, we need to be careful not to further stigmatise women by offering menstrual leave and ensuring it is treated just like any other form of sick leave, so women are not penalised for taking it,” warns Martyn.

Positive steps forward

Workplaces play a key part in deconstructing stigmas that surround periods. But, they’re just one part of a larger societal issue. Stigmas around periods heavily stem from gaps in educational systems.

This is gradually changing. “We are improving menstruation education – it’s been added to the national curriculum for sex education,” points out Quint. “What we want to do now is just remind employers that their up-and-coming employees know a lot more about periods than the current staff do.”

“Employers would benefit from keeping up with the current and future level of knowledge that people now have about periods by educating themselves.”

While the road to period positivity still looks winding, with plenty of obstacles on the way, mentalities are gradually changing. Businesses should face the fact that uncomfortable conversations and holistic period positive approaches are a winning recipe to happier employees and better workplaces.

Welcome to Startups’ Weekly Round Up, where we bring you the latest headlines to keep you in the loop with everything that’s affecting smes in the UK.

The highlights this week:

• Business leaders react to the Windsor Framework
• Government announces the launch of the Centre for Finance, Innovation and Technology
• Why talking money is key to advancing female representation in entrepreneurship
• Cybersecurity talks in Parliament

Some Stats to Start Up your week

• 75% of employees who receive recognition are satisfied in their role and employee appreciation leads to a 31% increase in productivity
• 72% of women want to own their own business, according to a survey of 9,000 women in 15 countries
• Customer acquisition can cost five times more than customer retention, whilst increasing customer retention 5% can increase profits from 25-95%
• Only 33% of workers felt engaged in 2022 because of employee experience

11 Downing Street and the UK economy – What should startups know?

🖥️ Banking on British fintech → the launch of a national hub for FinTech, known as the Centre for Finance, Innovation and Technology (CFIT) has been announced by the government. Its aims are to drive growth of the sector on a global scale. The CFIT is supported by £5.5 million of Treasury and City of London Corporation funding and supports around 2,500 organisations in the UK.

Charlotte Crosswell OBE, Chair of CFIT, said, “This organisation will enable us to come together as a sector to start breaking down barriers that the FinTech sector is facing while creating a clear path for our homegrown FinTech companies to achieve global scale, impact and success.”

♀️ Is the gender gap in business narrowing? → new research shows the proportion of British microbusinesses owned by women has surged during the cost of living crisis and since the start of the pandemic. The gender split of British microbusiness founders in the last 12 months is 46% female against 53% male. This is down from the general microbusiness gender split of 38% female and 60% male.

However, challenges remain. 82% of female business owners say they are responsible for most domestic household duties and 44% say the costs and expectations associated with childcare are a barrier to female entrepreneurship.

🤖 Cybersecurity Talk → business leaders in the cybersecurity sector will get together on March 13 to discuss the UK’s readiness to defend itself against growing threats posed by ransomware in parliament. Key topics will also touch on the UK’s chronic cyber skills shortage and the threat it poses to national security.

Nick Van Someren, CTO of Absolute Software, explained, “The rise of remote and hybrid working has also given hackers new routes to enter companies undetected. Tackling these threats requires collaboration between the cyber industry, the government and businesses to ensure the highest standards are in place.”

Money Talks – Why women need to talk more about investment

70% of women don’t talk about investment, and instead are more likely to be asked about their weight or marriage status. This could be holding women back from investing as 60% of women say they lack confidence in talking about investing, compared to 40% of men.

This is set against a gender investment gap of almost £600bn between men and women in the UK. However, statistics show that women are more likely than men to start investing after talking to someone about it, illustrating a disproportionate benefit to conversations about investing between women.

Reframing Brexit – The Windsor Framework

Last week, the government announced changes to Northern Ireland’s Protocol that will change the nation’s place within the EU’s single market. It eradicated some EU-imposed checks that had to be carried out on goods heading west over the Irish sea. This continues to reify Northern Ireland’s unique position as having privileged access to the single market, compared to Scotland, Wales, and England.

Businesses have reacted with optimism. Khalid Talukder, co-founder of London fintech firm DKK Partners, said,“This new approach unlocks international trade and avoids a hard border which would have had catastrophic consequences for the Good Friday Agreement.”

James Bentley, Director of Financial Markets Online, was also positive. “With one of the most toxic – yet least understood – legacies of Brexit apparently put to bed, the Pound has leapt into relief territory,” he said, continuing, “As Westminster and Northern Irish politicians pore over the fine print of the Windsor Framework to work out who will be the winners and losers, the currency markets have already made their snap judgement; UK trade will be a winner.”

Funding Opportunities

Global climate tech accelerator Subak is offering £130k grant funding to 14 not-for-profit climate startups across the UK, Europe, and Asia Pacific. Subak has already funded and scaled 15 startups who have raised £13M in follow-on funding and achieved significant consumer and policy impact. You can apply here. Applications close on 17 March.