The Shorthand – small tech, big investments

The Shorthand
The week's small business news in under 5 minutes
24 June 2022
4 minute read

Welcome to this week's edition of The Shorthand, your weekly digest of the top news stories that affect small businesses in the UK! Here, we break down the stories you may have missed during the week, detailing what they’re all about and, more importantly, why you should care.

And all that in under 5 minutes.

Go on, put the kettle on and we’ll have you caught up with the most pressing business news stories of the week by the time you’ve finished a cup of tea.

1. UK small tech enjoys record investment

What’s happening here?

According to research from the state-owned British Business Bank (BBB), venture capital investment in the UK's small business sector hit a record £7.6 billion in the first three months of 2022 to March.

The impressive first quarter follows a record 2021, in which the sector attracted £18.1 billion in investments. This represented an 88 per cent increase of investment compared to 2020 and was 121 per cent higher than pre-pandemic levels.

Investment in UK small tech

Why should you care?

Whilst small businesses are currently facing many challenges, this research suggests the UK remains a strong market for finding investment for your business and continues to be the largest VC market in Europe.

In particular, software companies, artificial intelligence, big data and the fintech sector saw billions invested in Q1.

Paul Scully, the small business minister, commented:

Equity investment is at the highest levels on record. We’re continuing to do everything we can to back UK businesses, including through Help to Grow, increasing the Employment Allowance and slashing fuel duty.

Despite the record breaking figures, there are words of caution.

The continued economic uncertainty, including high inflation, disrupted supply chains and war in Europe make it a difficult landscape for small businesses. Indeed we have already seen investors downgrade their valuations in tech stocks in recent months, whether that impacts the volume of deals is still to be seen however it is unlikely these high levels of investment will continue unabated.

2. Are we on track for more strikes?

What’s happening here?

Unless you are completely off the grid, chances are you have been impacted in some way by the UKs biggest rail strike in 30 years. And according to analysis from the FT, this is unlikely to represent the end of the line for strike action in the UK this summer.

The action, centered largely on disagreements between unions and employers about job cuts, conditions, pay and pensions is expected to continue into the weekend if an agreement cannot be reached.

Even if an agreement is reached in this dispute, the indication is there is likely to be more industrial action and strikes on the horizon across other sectors and industries, as soaring costs continue to bite workers and employers.

Why should you care?

Economists say the direct impact of strike action on the economy will be limited, however there are many side effects of industrial action that could impact small businesses.

Whilst many are sympathetic to strike action, there have been numerous accounts of how industrial action has impacted businesses, from cancelled bookings to postponed shows and for those unable to work from home many have seen a knock on effect on their ability to attend work.

With both employers and workers facing soaring costs, strikes could become more frequent in the public and private sectors.

Neil Carberry, chief executive of the Recruitment & Employment Confederation commented:

In any unionised workplace there is going to be a higher risk of a dispute in the next year or two than there has been for a couple of decades.

Small businesses are likely to be dealing with the impact of industrial action, either directly within their workforce or the knock on effects, whilst also facing more pay disputes as inflation and the cost of living continues to rise.

3. Increases proposed for workplace pensions

What’s happening here?

This year marks 10 years since automatic enrolment in workplace pensions was introduced.

The scheme sees workers automatically enrolled into a pension based on certain criteria such as age and minimum earnings, with employers paying at least 3% of the employee’s ‘qualifying earnings’ into the pension scheme.

Widely regarded as a success, in the last decade the initiative has seen 10 million more people enrolled into workplace pension schemes according to a report by the ABI.

Auto enrolment pension scheme

Why should you care?

Under the Pensions Act 2008, every employer in the UK must automatically enroll employees who are over the age of 22 and earn at least £10,000 a year into a workplace pension scheme and pay into it.

Despite the positive uptake in the scheme, the ABI warns that more may be needed to ensure employees are able to save enough for retirement. Amongst their recommendations are a necessity to increase the minimum contribution from 8% to 12% over the next 10 years, with the new minimum contribution split evenly between employers and employees.

Hannah Gurga, Director General at the ABI said:

Automatic enrolment has transformed workplace pension savings in this country. But the challenge remains to ensure people are saving enough for their retirement

While these proposals need to be legislated for, and aren’t expected to come into force until 2025 at the earliest, the indication is employees and employers alike will need to set more aside for a happy retirement.

For more information on the topic, you can read our analysis of the types of pension schemes in the UK.

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This content has been created for general information purposes and should not be taken as formal advice. Read our full disclaimer.

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