The cost of doing business: supporting you
2024 was a year divided with London leading the way in the first half with 161,000 new business incorporations, the highest across all regions. However, towards the later part of the year business confidence fell, as changes in government meant businesses paused awaiting policy changes to be announced in the Autumn Budget with the new government citing a £20 billion deficit in public finances.
At the centre of the government's announcement shortly after the Autumn Budget was the Employment Rights Bill dedicated to improving workers' rights, tackling poor working conditions, and supporting economic growth through the Make Work Pay policy.
The proposed reforms compounded by demands for an increase in employers’ national insurance contributions “can have a real impact, certainly in the short term. It is possible we’ll see businesses pause or reduce hiring or commit to lower wage increases in the next few months as they wait to see what happens to the economy. However, if the growth effects of public spending materialise, you can expect some of the initial caution to be reversed.
Similarly, with inflation down to normal levels, there’s a likelihood of interest rate cuts from the Bank of England over the next few months. If and when these happen, they will ease business costs and help to stimulate confidence." — Professor Ashwin Kumar, from his blog titled Assessing the Economy.
Commercial Property
Savills predicts increased stability in the UK commercial property market for 2025, following a 20% increase in investment volumes in 2024. They anticipate further cuts to interest rates by the Bank of England, which will reduce borrowing costs and boost investor confidence.
To reform business rates the government is taking steps to permanently reduce business rates for retail, hospitality, and leisure properties (RHL) starting in 2026 by imposing a higher tax rate for larger businesses. Until then, the existing 75% RHL discount will end on March 31 and will be replaced by a new 40% relief starting in April for the 2025/26 fiscal year, capped at £110,000 per business while transitioning to the new system. Additionally, the Budget announcement included a freeze on the small business multiplier, along with Small Business Rates Relief, which will protect over a million properties from inflationary increases.
Starting from 2 December last year, the government introduced the High Street Rental Auctions (HRSA) a new legislation that gives local authorities additional powers, that aim to bring life back into our high streets by preventing landlords from leaving commercial properties empty for more than 365 days within a two-year period. Under this legislation, local authorities will have the power to auction leases, aligning with the Council’s High Street Strategy to build a fairer, greener, and better local economy.
To help businesses keep up with all the changes, the Property Advice Service offers regular masterclasses delivered by industry experts on all things commercial property related. It also offers SMEs which need urgent one-to-one support with an array of commercial property-related issues access to an expert commercial property advisor. To access this support please complete the Newham-specific registration form.
If you feel you don’t need a fixed commercial property for your business, you could think about hiring flexible office space for use only when you need it. Please visit our page on affordable workspace.
Running your commercial fleet efficiently or even better change to low-emission transport
Running a commercial fleet is a major cost for many businesses, as this affects every part of the supply chain and in most instances now suppliers are passing on these costs.
See below how petrol and diesel prices have fluctuated year on year:
The RAC has created the Ultimate Guide to saving on fuel. Apart from the way you drive the vehicle itself, there are other ways of saving costs such as better route planning using available apps or mapping systems.
Join the Zero Emissions Network
The Zero Emissions Network (ZEN) is an award-winning initiative that supports businesses and residents in Newham to save money, reduce emissions, and improve local air quality. It offers free advice and services to switch to a range of low-emission transport options. ZEN has delivered 1000 emission-reducing initiatives to its members including electricians, florists, and hairdressers to name a few. By joining ZEN you can benefit from bespoke advice, free trials, cash-saving services, networking opportunities, loyalty discounts, and grants to join the Zero Emissions Network click here.
Lowering your cost of recruitment
Recruitment is not cheap, as there are many factors to consider such as the costs of which job websites to use and weighing up all the costs associated with hiring a new member of staff. We recommend in these very difficult times, where every penny counts, to use the Council's recruitment service Our Newham Work.
We encourage businesses to support their employees by signing up for the London Living Wage. We understand that some SMEs may feel the financial strain more than others, especially with the increases in employer National Insurance contributions to come into effect by April. We encourage those looking to uphold our Building a Fairer Newham plan to consider the long-term benefits including reduced absenteeism, lower staff turnover, and improved employee well-being both at work and in their personal lives. Ultimately, helping you to improve productivity and efficiency within your business.
In July 2022 the Royal Docks launched their action plan to become a living wage place by 2025. Anchor organisations like the University of East London, Tate & Lyle Sugars, London City Airport and London ExCeL are already accredited with the Living Wage Foundation and are actively championing the Royal Docks’ plan to increase uptake by 50% across all industries, enabling a pay rise for more than 3,000 workers. View our guide to Becoming a London Living Wage Employer.
Furthermore, If you’re a business looking to improve your employment processes, our colleagues at the Employment Rights Hub at Our Newham are here to help! They offer guidance and signposting to ensure you are compliant when it comes to employment law practices.
Deep dive
Owing to the continued cost pressures, it is recommended businesses take the time to unpick what’s going on in their business so that they can make the necessary hard decisions.
First thing first: monitor your profit margins as this will help you to optimise the most lucrative areas of your business.
To do this, look at your gross profit margins. This will help you to review your pricing structure, item by item. Then compare that with your competitors and benchmark your prices accordingly.
