Business Matters – Issue 1


Cushioning the blow?

Will the Winter Economy Plan protect jobs, or is it merely delaying a surge in unemployment?

Brexit in perspective

Do the trade talks matter for investors?

Surviving to thriving

Charting a course to business recovery.

Leaving Time

What does COVID-19 mean for your 2020 exit strategy?

Rethinking retirement

How will the rise in the normal minimum pension age affect your retirement game plan?

Cushioning the blow?

Will the Winter Economy Plan protect jobs, or is it merely delaying a surge in unemployment?

In September, the Treasury scrapped the Autumn Budget in favour of further special measures to deal with COVID-19. But the question on everyone’s lips is: will it work? We investigate.

The closing week of September brought us yet another landmark political speech to digest – this one in the form of Chancellor Rishi Sunak’s Winter Economy Plan, a raft of new measures aims to ward off the threat of mass unemployment after the withdrawal of the furlough scheme.

The Chancellor announced the next stage in the support package to help companies survive the crisis, as the COVID-19 pandemic continues to impact economic output. In doing so, he stressed that: “The primary goal of our economic policy remains unchanged – to support people’s jobs – but the way we achieve that must evolve.”

The announcement comes amid growing pressure to protect jobs. The UK unemployment rate has surged to its highest level in over three years, while redundancies rose to their highest level since 2009, according to the Office for National Statistics (ONS). Despite more people returning to work since the summer, Sunak accepted that measures were needed to help companies cope with the resurgence of the virus.


What are the new measures?

A number of the government’s interventions to support jobs and employment are due to come to a close over the autumn, while other schemes begin to take effect. You can read the announcement in full here, but below is a summary of the key schemes that are due to kick off this winter.

Jobs Support Scheme

The headline scheme for workers is the Jobs Support Scheme, which is essentially a wage subsidy scheme similar to the one that exists in Germany, which will replace the furlough scheme (Coronavirus Job Retention Scheme) that was due to finish in October, but has since been extended to the end of the second lockdown in England. The scheme will pay a portion of worker’s wages, as long as their employer is prepared to offer them at least a third of their typical hours. Larger businesses are also included, provided they can demonstrate their business has been adversely affected by COVID-19.

The scheme requires employees to work a minimum of one third of their normal hours, with the government and the employer each covering one third of the wages for the hours not worked. This equates to at least 77% of the employee’s normal wage, although the government grant will be capped at £697.92 The scheme will run for six months.

Coronavirus Job Retention Scheme management information

Total number of jobs furloughed Total value of claims made
23 April 3.8m £4.5bn
24 May 8.4m £15bn
21 June 9.2m £22.9bn
19 July 9.5m £29.8bn
16 August 9.6m £35.4bn
20 September 1.2m £39.3bn


Jobs Retention Bonus and SEISS

The Jobs Retention Bonus will also be open to companies, even if they haven’t furloughed employees. The government also confirmed that the Self-Employed Income Support Scheme (SEISS) would be extended on the same basis, which will initially be worth 20% of average monthly profits, up to a total of £1,875, from November to the end of January. The second grant will cover a three-month period from the start of February until the end of April – the level of the second grant will be set in due course.

Loan schemes, tax deferral and reduction in VAT

More time has been given for business that have taken advantage of the government’s loan schemes and tax deferral options. The application deadline for all coronavirus loan schemes – including the Future Fund – has been extended to 30 November to ensure that more businesses can benefit.

The government is also extending the temporary reduced rate of VAT (5%) from 12 January to 31 March 2021. This will continue to apply to supplies of food and non-alcoholic drinks from restaurants, pubs, bars, cafés and similar premises, supplies of accommodation and admission to attractions across the UK.

‘Pay as you Grow’

An extension to the repayment period for the “bounce-back” loans from six to ten years was also announced. The ‘Pay as you Grow’ initiative nearly halves average monthly repayments, while allowing businesses “in real trouble” to move to interest-only payments or suspend payments for up to six months, without affecting their credit rating.

Coronavirus Business Interruption Loan Scheme (CBILS)

Last but not least, the government guarantee on loans taken out through the Business Interruption Loan Schemes has been extended for up to ten years, making it easier for lenders to give people more time to repay.

But, will the new measures work?

The Winter Economy Plan has received a mixed response across the industry, with some praising the government’s continuing efforts to mitigate the impact of COVID-19 on businesses and workers while attempting to bolster the economy, and others claiming it’s not enough to stop an unemployment crisis.

The answer, then, likely falls somewhere in the middle, as Capital Economics suggests:

“The policy measures announced by the Chancellor will go some way to cushioning the blow to the economic recovery from the new restrictions to contain COVID-19 and limiting the long-term hit to unemployment. But these actions won’t eliminate the hit entirely.”

There are a number of allowances and schemes that businesses can take advantage of during this period of uncertainty. If the Winter Economy Plan will affect you or your business and you would like to discuss your options going forward, please contact Wellesley Wealth Advisory today.

Brexit in perspective: Do the trade talks matter for investors?

The ongoing Brexit negotiations are rightly attracting lots of attention, but investors should still put the outcome into perspective – here’s why.

The various twists and turns in the Brexit saga have held the attention of the British public, press and markets for over four years. Last winter, it looked like progress was finally being made – we even lauded the fact that a deal had finally won a vote in the Commons.

Indeed, that period seems like a distant memory now, with lengthy negotiations with the EU leading investors to feel less certain about the UK’s long-term prospects – not to mention the other issues that investors currently have on their plates!

Mid-October saw an escalation in ‘no-deal’ rhetoric, but there should soon be more clarity on what the UK’s trading relationship with the EU will look like. But, while the result is undoubtedly important, its impact on investors in the UK might not be as dramatic as some people think…

The COVID-19 effect

While Brexit has also played a role in holding back the UK stock market, the coronavirus pandemic has overshadowed the talks’ impact, and there are other factors that are currently affecting returns, for example the US Presidential Election is a major source of ups and downs.

Focusing on COVID-19 though, and the context of the pandemic is much more significant for investors than Brexit. Britain’s GDP shrank by 20.4% in April after the first full month of lockdown1, and although recovery is underway, the economy will be battling the effects of the pandemic for some time. Rishi Sunak, the Chancellor, this week argued that controlling national debt and spending is the government’s key task ahead.

The pandemic has already pushed many UK companies into withdrawing dividend payments. Large UK companies have traditionally paid high dividends relative to those in other countries. However, with many firms facing lower earnings this year, lots of them have postponed or reduced these payments, which has been challenging for overall investment returns.

Deal or no deal?

The difference may be actually smaller than it seems! By leaving the EU’s Single Market and Customs Union, the UK has already opted for a Brexit that is at the ‘harder’ end of the spectrum, points out Capital Economics. The firm argues:

“As the differences between a Brexit deal and a no-deal are not as big as they once were, the economic costs of a no-deal have diminished.”

Capital Economics estimates that a ‘cooperative no-deal’ between the UK and the EU would cause the pound to fall, inflation to rise, and for GDP in 2021 to be around 1.0% lower than if there were a deal. It adds that the Withdrawal Agreement has already laid down some terms for the separation, and that progress has been made on financial services equivalence.

The difference would be more striking in the event of an ‘uncooperative’ no-deal, the economists argue: “The bigger risk is that relations between the UK and the EU deteriorate to such an extent that both sides start to unravel the agreements already put in place”.

If the talks do unravel acrimoniously, then there would be a greater hit to GDP, more inflation, and the pound would weaken more, they suggest. Arguably, the EU’s legal challenge to the UK over its Internal Market Bill has made this outcome slightly more likely than it was over the summer.

Looking long-term

In our previous article about the US Election, we stressed the importance of taking a long-term view – even in times of crisis – and the same goes for Brexit. Take a step back and evaluate your investment performance in the context of long-term objectives.

The UK’s longer-term prospects beyond both COVID-19 and Brexit talks will be driven by policy decisions in the coming months, suggests Arnab Das from Invesco, which manages several funds for St. James’s Place:

“Freed from the guard rails of the EU’s regulatory framework in many areas, focus will shift to the Johnson government’s economic, financial, tax and industrial strategies as it returns to the ‘levelling up’ agenda – and above all, whether the UK’s traditional strength as an open, predictable, free-market economy is enhanced or weakened.”

He adds that in the longer term, he “would expect the UK government to gradually find its way through fits and starts to decent policy choices, unlocking some of that value and restoring a bit of lift to growth.”

Ultimately, investors should remember that the overall risk of Brexit disruption is lower in a diversified portfolio, than if invested in the UK alone. Taking a diversified approach is a brilliant way of sheltering your investments from any market turbulence created by Brexit (or other events) – i.e. by investing in lots of different companies, asset classes and geographical areas. The theory is that, while all your investments may not go up at the same time, they won’t all go down together either.

Fund managers tend to invest across a range of regions, notes Gavin McGhee, a Wealth Management Consultant at St. James’s Place:

“A number of our fund managers say ‘whilst we talk about Brexit in our interviews, when it comes to our investment decisions, when you look around the globe at international businesses, this is a bit of a sideshow’ – it’s something you need to be cognisant of, to be aware of, but it’s not driving decisions.”

Keep calm and carry on

It’s important that we don’t let Brexit take our attention away from our own financial planning needs. As we have shown, when it comes to Brexit and other key political events, it is important to maintain a long-term view, and not putting all of your investment eggs in one basket.

Abiding by these rules does require discipline, though – especially in an increasingly complex investment climate. And that’s where a regular financial review can really come into its own!

As professional financial advisers, it’s our job to recommend a suitable investment portfolio and make sure that you are invested appropriately according to the risks you are happy with. We can help you ensure you have a diversified portfolio, and can give you advice on when is best to ‘sit tight’ through periods of volatility. We will also provide the emotional discipline required to ensure plans are acted upon, by providing guidance, reassurance, support and stability to help you stay on course to reach your financial goals.

If you are concerned about the effect Brexit will have on your investments, or feel it’s time to review your options, please contact Wellesley Wealth Advisory today.

Invesco is a fund manager for St. James’s Place. Where the views and opinions of our fund managers or other third parties have been quoted these are not necessarily held by St. James’s Place Wealth Management.

The value of an investment with St. James’s Place will be directly linked to the performance of the funds selected and the value may fall as well as rise. You may get back less than the amount invested.


1 Office for National Statistics, August 2020

Surviving to thriving:

Charting a course to business recovery

As we start to settle into the ‘new normal’ this autumn, business owners are facing a very different landscape. But as you navigate these uncharted (and rather choppy) waters, it’s more important than ever to be aiming for growth – here’s why.

It’s been a disruptive (to say the least) year for business owners. At the start of the pandemic and the subsequent UK lockdown, entrepreneurs’ thoughts turned solely towards survival – managing cash or liquidity, followed by cutting costs and accessing government support schemes where possible.

Surviving, though, is only part of the challenge. Here’s why now it is time to start looking to the future and planning for growth and recovery.

The ‘new normal’

The COVID-19 crisis has by no means passed, but as well as reacting to the situation as it unfolds and adapting your short-term working practices, it’s important to begin to think seriously about your strategic response going forward.

Business is looking different for everyone at the moment, but there are still opportunities to thrive. Many companies have already changed their business models: restaurants have turned into takeaways and face-to-face meetings have become video conferences.

While there will be a few organisations that will snap back to their old ways of working when this is all over, high-performing businesses will think differently, by using the opportunity to change existing strategies and try out new ideas.

While the prospect of a prolonged recession and possible further lockdowns may be daunting, there are ample opportunities to start bouncing back. Here are three things you can do to navigate this new environment and emerge even stronger:

  1. Embrace new processes

Successful businesses will look for ways to learn and adapt from the experience and will use it as a catalyst for growth. It can be a time of opportunity for businesses that embrace the ‘new normal’ – by re-focussing their energies and resources and setting new priorities.

They won’t just revert to the old ways of working but will look at what they can learn from the changes they made. They will evaluate what worked, what didn’t and most importantly will decide which new practices they keep and could apply more broadly.

In crisis mode people are able to think outside the box to be able to react to the changing situation. Work out where you can apply this new way of thinking elsewhere in the business to drive change and better performance. After all, it’s no coincidence that some of the world’s most dynamic businesses were started during recessions, including Microsoft (1975) and Airbnb (2008).

  1. Invest in growth

The COVID-19 crisis will impact your strategy and the way your brand is perceived for the foreseeable future. You might need to change your approach, or you may not have the funds for investment that you thought you would, or you could have had to completely pivot your business to survive.

Take the time to review your strategy, identify whether it is still fit for purpose. If it is not, work with your people to set a new path. When you have defined your strategy, review your learning and development strategy to ensure that it will build the skills you need to make you future fit.

A crisis is an opportunity to see the true DNA of your business. Make sure they are the same characteristics that will enable your growth and prosperity and invest in making sure your culture is evident at every stage of your employee journey. The right culture will drive customer loyalty and growth, so take this moment of reflection to think about your culture. Does it need to be redefined to enable you to achieve your goals?

  1. Put the ‘human’ back into business

When your strategy and vision is defined, your people are clear on their role in helping you succeed, and your culture is hard-wired into every step of your employee journey, it will be easier to find opportunities for continuous improvement.

Navigating a business through such difficult times is not something most leaders will have experienced. This is new territory. Looking for the opportunities to reinforce who you are and what you stand for will be critical. The challenge is not to be underestimated especially when many businesses will also need to rebuild trust and re-engage people who they have furloughed during this period.

Listen to your employees and partners to find out what is getting in their way and create the forum and mechanism for them to solve these issues. Enable them to collaborate, connect and contribute so that you can leverage your entire talent pool.

Unleashing, empowering and inspiring your talent though this experience will be key.  This is not something we can cost-cut our way out of.

Steering towards success

To conclude then, leading your business through a recession is challenging, but when you come out the other side you should be more resilient, more agile and better able to meet the challenges of the years ahead. Full steam ahead!

For tailored advice on business resilience planning, contact Wellesley Wealth Advisory today.

Leaving time –

What does COVID-19 mean for your 2020 exit strategy?

Exiting a business can be a challenging experience at the best of times, and for those wishing to sell in 2020, the coronavirus pandemic may feel like an additional hurdle. But an exit this year could still be possible – here’s how you can do so.

Many business owners will have had their exit plans thrown into disarray by COVID-19 – and none more so than those intending to sell this year. You may feel like you’re left facing a period of uncertainty when you should be reaping the rewards of years of hard work – but it isn’t all bad news!

While the pandemic has led to a pause in acquisitions, the wheels of business are beginning to turn, and private equity houses are once again open for business. Enquiries around new purchases are also beginning to rise, and buyers are ready to complete purchases that have been put on hold.

So, if you’re still hoping to sell up in 2020, there are some steps you can take to improve your chances.


Learning from 2008

Potential sellers are arguably in a better position than they were during the 2008 crash, with the government shielding businesses from the worst economic impacts of lockdown, offering loans, business rate support grants, furloughing and other schemes.

That said, there are still lessons to be learned from 2008 if you’re considering exiting your business in the current climate. First and foremost, it’s vital that you plan your exit process as soon as possible. That may seem obvious, but surprisingly a huge percentage of business owners looking to sell don’t have an exit strategy in place. In 2018, a Q1 Investor Watch Report found that 48% of business owners didn’t have a formal exit strategy.1

The importance of leadership

Times like these are a chance for your leadership qualities to shine – and being forward-thinking is a key strength of a good leader. Although it’s arguably hard to prepare for something as unprecedented as the pandemic, it goes without saying that the earlier you plan, the greater your resilience and flexibility to act when circumstances change.

There’s therefore no time like the present for you, as a business owner, to get your head down and use the time effectively to start working towards that exit, or by refreshing or refining your business’ strategy.

Showing your resilience

Remember that everyone is in the same boat, and it’s how you react to COVID-19 and the resulting upheaval that’s important to buyers. By surviving the pandemic, it shows a lot about resilience and the nature of your business. Plus, the companies that are successfully starting to rebuild their value to pre-crisis level are the ones that have shown the ability to innovate and adapt quickly.

Furthermore, owners who have had to take advantage of government loans or furlough employees and are worried about how this may come across, needn’t be – but make sure you have a clear narrative about how you expect to recover and move away from those initiatives.

A return to growth

There’s been a slow return to activity, but an acquisition will still take time. While not as jumpy as in 2008, buyers, banks and other funders are still nervous about how much financial risk they’re prepared to take and will want to carry out very strict due diligence. Make sure you identify – and remove/mitigate – any potential problems for buyers or funders, as even a smaller issue could destroy confidence in the deal in the current climate.

A buyer will want to see evidence of a stable and sustainable level of profitability and growth for a period of at least three months coming out of lockdown. For example, if it took until September 2020 for the business to be back up and running at full pace, then by early December the acquirers will have three months’ active information. Ensure you’ve got a sound business plan, financial projections, cash and balance sheets and profit and loss records in place.

For more information

To conclude, then, by demonstrating strong leadership through the pandemic and achieving three months of stable, sustainable growth, you can put yourself in a strong position for an upcoming sale.

Our best advice for those about to exit is not to panic and understand the situation your business is in. As always, an experienced financial adviser will be able to advise and guide you, and make sure your exit strategy is moving in the right direction.




Rethinking retirement

How will the rise in the normal minimum pension age affect your retirement game plan?

With the government confirming that the minimum age for drawing a personal pension in the UK is set to rise to 57 in 2028, we look at what the latest change means for savers.

2014 seems like a lifetime ago, so you would be forgiven for forgetting the detail of George Osborne’s pensions flexibility Budget, announced in March that year.

In the first consultation paper on those reforms, we saw the following statement:

“The government…proposes to increase the age at which an individual can take their private pension savings at the same rate as the increase in the State Pension age. It is important people have the opportunity to plan properly for this change and so the government proposes to wait until 2028 (when the State Pension age will rise to 67) to fully implement this change.”

However, this proposed two-year jump in the normal minimum pension age (NMPA) has been in ‘no man’s land’ ever since, with no official legislation. This has led many savers and industry experts to question whether the change would actually go ahead.

The silence was broken on 3rd September, when John Glen, the Economic Secretary to the Treasury, confirmed in a written parliamentary answer that the NMPA will rise to 57 from 2028, with the changes to be legislated for ‘in due course’.


What will the change mean?

The change will have significant implications for pension freedoms, which were introduced by the government in 2015 – they currently allow savers aged 55 and over who pay into a personal pension, either directly or one arranged through their workplace, to access their personal pension pots however they like. These rules around flexible withdrawals will stay the same – but the age at which people can access their pots is changing.

Although no specific date has emerged, it appears likely that the change will take effect from 6th April 2028, catching anyone born after 5th April 1973. The people most affected by the change will therefore be workers who will turn 55 after the cut-off date in 2028 (those currently aged 47 and under).

Information is key

There have been mixed reactions across the industry – with some experts saying that it’s a ‘kick in the teeth’ to workers on top of the COVID-19 crisis, while others have commented that the extra years will give people time to put more into their pension pots – and is therefore a positive.

One thing everyone agrees on, however, is that the government needs to provide full details of how this change will work. Experts have quoted the state pension age blunder for women born in the 1950s (where many discovered too late that their state pension age was increasing from 60 to 65 – an issue that is still going through the Court of Appeal) as an example of a government communication failure.

Although Glen has said that the initial 2014 announcement has enabled those affected by the rise in NMPA to make financial plans ‘well in advance’, it is clear that more information is needed to help savers look ahead.

Refining your retirement strategy

Although Glen’s announcement may come at a difficult time, it is arguably long overdue – and since many of us are already reassessing our future plans due to COVID-19, it gives us chance to take this change in NMPA into account. While we need more details from the government, savers in the affected age group still have a chance to think about their options going forward.

Those who had planned to access their pension(s) at 55 but can’t do for a further two-year period should now look at other options. There plenty of possibilities for creating a retirement income strategy that works for you – and, arguably, your pension shouldn’t be your first port-of-call as it is Inheritance-Tax-friendly.

Saving enough for a comfortable retirement has undoubtedly become more of a challenge – however, with careful pensions planning, you can get firmly on track to reach these goals, while being flexible if your situation changes or unexpected events occur. An experienced financial adviser can help you create and maintain the right pension strategy, while offering the providing guidance, support and stability required to help you stay on course.

If you have a question about planning for retirement or would like more information about our services, please contact Wellesley Wealth Advisory today.