There are signs that the construction industry is slowly recovering

Around 130,000 in construction still on furlough

Peak number was over 700,000 in April

The number of people in construction still furloughed has fallen to less than 150,000, latest figures show.

In the period to 31 October, 130,700 people were still on furlough – down from the 204,400 using the initiative at the end of August.

Figures released by HMRC that in construction the peak of furlough was on 14 April – three weeks after the first lockdown was announced – when 723,600 were using it.

Overall, the number of people furloughed at the end of October was 2.4 million a reduction of 73% from the peak.

Furlough peaked at 8.9 million on 8 May, falling to 5.4 million at the end of July, 3.8 million at 31 August and 2.8 million by the end of September.

The sector with the highest proportion of furloughed staff was the accommodation and food services sector at 27% followed by arts, entertainment and recreation at 24%.

In all, 45% of employers in both the accommodation and food services sector and the arts, entertainment and recreation sector were using the furlough scheme at the end of October.

Lask week chancellor Rishi Sunak confirmed the furlough scheme will be extended by a month to the end of April next year.

Sunak said the government would continue to pay 80% of the wages of furloughed workers until the end of that month.

He also said government would extend its covid-19 business loan schemes until the end of March.

Source: Building

Early Christmas present for struggling businesses as insolvency protection measures extended

Struggling East Midlands businesses are being given an early Christmas present with the news that the Government is offering extra breathing space to deal with the impact of the coronavirus.

A raft of legal changes aimed at protecting businesses from insolvency during Covid-19 were due to expire this month, but these have now been extended to next spring.

The announcement has been welcomed by the Midlands branch of the insolvency trade body R3, as it should provide some flexibility for many struggling firms trying to make the most of an unpredictable pre-Christmas trading period. The organisation sounded a note of caution, however, about how and when the measures would be unwound.

Key updates include the continued suspension of statutory demands and winding up petitions until 31 March. Company AGMs will also be permitted to be held online until 31 March, enabling shareholders to examine company papers and vote on issues remotely.

R3 Midlands Chair Eddie Williams, a partner at Grant Thornton in the region, said: “Local businesses now have an extra three months largely free from the threat of creditor action, which means more time to try and get back on an even keel.

“The big question now for the Government is how to withdraw these support measures in 2021 in a way which doesn’t irreparably damage businesses weathering an unprecedented year of trading difficulties.

“One crucial step would be to ensure that HMRC takes an engaged and supportive approach to its role as a key creditor in most insolvencies. With its new preferential status, HMRC’s support as a creditor will be required to ensure that viable restructuring proposals can be agreed. This could save hundreds of jobs and businesses as our region adjusts to a post-COVID environment next year.

“In the meantime, R3 would urge anyone who is concerned about their company’s financial future to seek advice from a qualified professional as early as possible. Doing so will provide more options and time to make a considered decision about what’s best for their business.”

Source: Business East Midlands Link

Shock and devastation as Rochdale shopping centre closes permanently

Traders at the Wheatsheaf Shopping Centre, Rochdale, Greater Manchester, have been left devastated after the news broke that the centre will not reopen after lockdown.

The struggling centre had already been suffering after losing big brands Argos, New Look and Wilko's, Rymans, Brighthouse and Select in recent years, but the news has come as a shock to small businesses.

MCR Property Group, who manage the centre indicated that the pandemic has been the final nail in the coffin.

They said: "The ongoing coronavirus pandemic has expedited the migration from traditional shopping habits and the impacts on the retail sector have been significant.

"Since re-opening after lockdown in June 2020, footfall has been tracking at an average of 45% down year-on-year and this lockdown will impact these figures further.

"The financial viability of the centre is not sustainable."

Family run business Fizz Bombs have published a heartbreaking video on social media following the announcement.

The business is run by Lauren, Mark, with their four children.

In the video, Mark said: "The last 12 hours have shocked us beyond belief to be honest.

"It's inhumane and it's disgusting.

"There's nothing we can do.

"We will get through this - we are not going anywhere.

"What we've got works and we know it does.

"We have been asked to leave by December 1."

Mark is seen breaking down on the video.

He added: "To have the rug pulled out from under us...

"People are telling us it will be alright makes a difference.

"This year has been a struggle - not just with the business.

"We will get another shop but its going to take time."

Source: InYourArea

Q3 2020 England and Wales insolvency statistics, R3 response

  1. Corporate insolvencies fell to 2,672, down 9% on Q2 2020, and down 39% on Q3 2019.
  2. The fall in corporate insolvencies was driven by a decrease in Creditors’ Voluntary Liquidations, though administrations slightly increased (by 2%) and Company Voluntary Arrangements (CVAs) increased by 34% compared to Q2 2020.
  3. Personal insolvencies decreased to 19,783 in Q3 2020, down 40% on Q2 2020, and down 37% on Q3 2019.
  4. The quarterly decrease in personal insolvencies was mainly driven by a sharp drop in Individual Voluntary Arrangements (IVAs), although a registration issue meant there was an abnormally high number of IVAs recorded in Q2 2020. Debt Relief
  5. Orders fell 7%, while bankruptcies rose by 10% in Q3 compared to Q2.
  6. Eleanor Temple, chair of R3 in Yorkshire and a barrister at Kings Chambers in Leeds, responds to today’s publication of the Q3 2020 corporate and personal insolvency statistics for England and Wales:

Corporate Insolvencies

“The corporate insolvency numbers in Q3 are lower than even the figures seen in Q2, after lockdown came into effect, and are another reminder that – whatever the impact of the pandemic on companies – it is yet to be fully seen in the insolvency statistics.

“The figures demonstrate that the support Government has provided to businesses, from providing a range of emergency loans to suspending winding-up orders and stopping commercial evictions, is helping keep many companies afloat during this period of economic turbulence.

“The third quarter of the financial year has been hard for the UK, its economy and its business community. The ONS found that 18% of UK businesses said they are at moderate to severe risk of insolvency, with 38% – two in five – companies in the hospitality sector saying the same thing. There is clearly trouble on the horizon.

“Five months of economic growth have failed to make up the ground lost by the unprecedented 19.5% economic contraction in April, with GDP remaining 9.2% lower than it was prior to the pandemic. We’ve also seen a number of big brands announce restructurings or enter insolvency processes over the last quarter, as the pandemic affects their customer base and their income.

“Retailers, hospitality, manufacturing and the service sectors have all been hit – and while some of these have shown signs of recovering, others are still not where they were before COVID. With the winter drawing in and a second national lockdown looking increasingly likely, even as some areas are put into local lockdowns, the chances of this recovery continuing are uncertain at best.

“Our members are telling us that they have returned to receiving requests for insolvency and restructuring advice and support, after a flurry of requests for advice about the Government’s support measures at the start of the pandemic.

“Looking ahead, the festive season is often the linchpin of the year for many companies, especially retail and hospitality businesses who build their business models around strong takings as people celebrate Christmas and other holidays. But this year, there is concern this model will not work as it has in the past, especially with limits on social gatherings, and curbs on travel to see family and friends. It remains to be seen how successful the Chancellor’s Winter Economic Plan will be at reducing economic pain – or if it will only delay it.

“Despite the Government’s efforts, there are likely to be a number of directors of businesses who are in a worrying position because of COVID – many of whom would have little cause for concern if the pandemic hadn’t happened, as their businesses would most likely have remained profitable.

“We would urge anyone who is in this position to seek advice from a qualified, reputable source as soon as they see signs their business is starting to struggle. The sooner you seek advice, the more options you have to potentially resolve your situation – and the more time you have to come to a considered decision about your future.

“Many R3 members offer a free consultation to people who are looking for help with their business finances and want to explore their options or understand how they might be able to resolve their situation.”

Personal Insolvencies

“The fall in personal insolvencies over Q3 was driven by a decrease in IVAs and Debt Relief Orders compared to Q2, although bankruptcies increased compared to the previous quarter’s figures. Compared with the same quarter in 2019, all types of personal insolvency procedure saw a steep drop in numbers.

“This shows the Government’s support measures have continued to provide a safety net for many individuals. The furlough scheme has ensured a number of people remained in employment even if they were not working during that time, which has contributed to the reduction in insolvency levels. However, the recent extension of the furlough scheme offers a lower percentage of wages than its first iteration, which, although a lifeline for many, may not be enough for a lot of those affected to pay their bills.

“Despite this, we know people are worried about their future financial health – and that of the economy. Unemployment is at the highest level it’s been for three years – and expected to rise again in the short-term – and we have seen the biggest level of quarterly redundancies on record.

“Although consumer confidence increased quarter on quarter, it’s still much lower than it was this time last year – and before the pandemic. Consumer spending is much lower than at the same time last year, with outstanding credit card balances well below where they were 12 months ago, while mortgage approvals are at their highest level since 2007, following the stamp duty holiday.

“A lot of people in higher-income households have been stockpiling cash, with reduced opportunities to spend on travel or going out, while at the other end of the scale, people in low-income households are in many cases finding it very hard to get by, with reduced incomes leading to negative monthly budgets.

“This slowdown in non-mortgage spending is understandable as many people are just one change in circumstances away from being unable to keep on top of their debts – and it would be fair to say many are aware that the risk of a change in circumstances is increased in the current climate.

“It can’t be said enough – turning to a qualified and professional source of advice if your finances take a turn for the worse is always a good idea. The earlier you seek advice, the more options you have to try and resolve the issues you face.”
This was posted in Bdaily's Members' News section by Melanie Rice.


IAG airline Level Europe files for insolvency

Austrian short-haul budget carrier Level Europe plans to file for insolvency, it said on Thursday, becoming the latest airline casualty of the coronavirus crisis despite the financial might of parent IAG <ICAG.L>.

The small airline, previously known as ANISEC, began operating in 2018. It has six Airbus short-haul jets and is part of IAG-owned Vueling Group.

British Airways owner IAG also operates a long-haul airline called Level, which is separate from Level Europe, an IAG spokeswoman said.

Level Europe blamed the COVID-19 pandemic for its move to cease trading, joining a growing list of airline failures after planes across the world were grounded for months during coronavirus lockdowns.

Anglo-Spanish group IAG, which also owns Iberia and Aer Lingus, said in April that it had 10 billion euros (£9 billion) of liquidity, but Chief Executive Willie Walsh has said it is burning through cash as the crisis continues and has warned that British Airways is "fighting for survival".

British Airways has said it needs to axe 12,000 jobs.

While IAG's airlines have used furlough schemes and accessed government-backed loans, they are not in line for government bailouts like European rivals such as Air France-KLM and Lufthansa.

An administrator will be appointed once insolvency proceedings have been filed, Level Europe said in its statement.

Source: Yahoo Finance

30 signs you are financially comfortable

A new study commissioned by Skipton Building Society (SBS) has revealed 30 signs of being financially comfortable, including having savings and being able to go on a last minute holiday without feeling guilty.

The study, which polled 2000 adults, reveals signs of financial comfort include both material factors, such as having disposable income, as well as abstract factors, such as having others consider you wise and a good source of financial advice.

Kris Brewster, the head of products for SBS, said “it is more about making sensible decisions when it comes to spending and saving”, rather than “having a lot” financially.

Worryingly, less than half of those polled said that they were in a good place financially, and of that minority, 56% were over 55. One in four said that they do not know what the future holds for them financially.

Despite these bleak findings, one in seven of those polled said that they believed that they were sensible with money. The average respondent had approximately £228 a month of disposable income. According to the study, however, that is not enough to put you in the category of financial comfort. Instead, the research suggests that disposable income of over £500 a month is needed.

The following are the 30 signs factors which identify the financially comfortable:

  • Having savings
  • Not being in debt
  • Not having to count down the days until payday
  • Not regularly using savings to get through the month
  • Having paid off your mortgage
  • Having a "rainy day" fund
  • Being able to buy what you like without having to worry
  • Being able to afford emergency house maintenance
  • Having more than £500 disposable income a month
  • Being able to afford occasional treats for yourself
  • Budgeting effectively
  • Having a good credit score
  • Being able to eat out in restaurants without it being for a special occasion
  • Making sensible spending choices
  • Being able to go on more than one holiday a year
  • Being confident about the future
  • Being able to go on a last minute holiday without feeling guilty
  • Having the ability to make wise decisions about money and spending
  • Owning more than one property
  • Being able to make financial decisions without seeking advice
  • Not arguing over money with friends and family
  • Not having to check the price of clothes when shopping
  • Having multiple investments
  • Having good knowledge about financial services on the market
  • Not gambling or relying on a successful bet for income
  • Being generous when it comes to lending money to loved ones and donating to charity
  • Paying for others’ meals when out rather than splitting the bill
  • Being well-read when it comes to money management
  • Buying from the leading clothing and food brands
  • Having others approach you for advice about finances as they see you as a source of good advice

While some of the factors - such as having savings or a good credit score - may be unsurprising indicators of being financially comfortable, it is perhaps also unsurprising that so few young people identify as financially comfortable when factors include owning multiple properties or having various investments. For young people, in particular, these are rare luxuries.

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Is Personal Debt getting in the way of your life goals?

Whether it is the application for a mortgage, a new car, the cost of further studies or a business start-up, personal debt can severely impact on your goals and prospects as lenders measure up your application. Strategic financial advice when weighing your lending options against your wider commitments can help you reach your long-term aims faster.

Economic Impact

The impact of personal debt on the economy is manifold, but shapes the terms of your loan and wider economic prognoses of the lenders.

With household debt to GDP anticipated to reach 88.50 % by the end of the third quarter (Trading Economics), additional financial stresses for the winter season may negatively impact the turnover of businesses in the fourth quarter.

While government research notes that ‘growth in total debt is still low compared with pre-recession rates’ (Research Briefing, 2018), nonetheless, debt remains at a high level against historic trends. Highlighting a rise of 8.6% of unsecured debt, consumers require a clear perspective of their liabilities and interest rates, in step with their household income.

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Cost of over-indebtedness

The Money Advice Service (MAS) estimates that 8.3 million people in the UK are over-indebted and that 22% of UK adults have less than £100 in savings, making them highly vulnerable to a financial shock such as job loss or large unexpected bills. The National Audit Office (NAO) also reported that:

  • £18 billion estimated minimum value of personal debt is owed to government, utility companies, landlords and housing associations; and,
  • Approximately 5,000 consumer credit lenders are regulated by the Financial Conduct Authority.

Personal debt can hinder your aspirations for individual, and business ventures, and may even restrict your choice of career. Find out what we can do to put you back on track.

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