SJL Insurance CEO Simon Lancaster speaks to LBC News about rising inflation, increasing employment costs and why greater Government support is needed to help UK businesses invest, recruit and grow.
UK businesses are facing another period of uncertainty as rising inflation adds to already significant pressure from employment costs, taxation and weaker consumer spending.
Speaking to LBC News, Simon Lancaster, CEO of SJL Insurance and owner of Worcester City Football Club, said many small and medium-sized businesses are finding it increasingly difficult to hire, invest and grow.
SJL Insurance works with thousands of SMEs, giving Simon a broad view of the pressures facing businesses across different sectors. He highlighted hospitality as an area of particular concern, with some firms struggling not only to grow but simply to survive.
While acknowledging that some economic pressures are outside the Government’s control, Simon believes more can be done to create an environment in which businesses feel confident about the future.
Key Issues Facing UK Businesses
During the interview, Simon discusses:
- Rising inflation – increasing costs for businesses while reducing consumers’ spending power.
- Higher employment costs – including National Insurance and the need for businesses to increase wages as living costs rise.
- Youth employment – with the cost of recruitment making experienced workers more attractive than younger people who need training.
- Business investment – with uncertainty surrounding taxation making companies more reluctant to invest and expand.
- Fewer start-ups – as higher costs and increased employment obligations make starting and growing a business more difficult
For service businesses in particular, employment costs can have an enormous impact. Simon says around 90% of SJL Insurance’s costs relate to employing people, demonstrating why increases in the cost of recruitment and wages can have such a significant effect on growth.
Simon would like to see greater Government support, including reversing the increase in National Insurance, making it more affordable for businesses to employ younger people and providing greater certainty around Capital Gains Tax.
His message is that businesses need more than positive words. They need the confidence and financial headroom to recruit, invest and grow.
Full Interview Transcript
Interviewer: Simon Lancaster is the CEO at SJL Insurance and also owner of Worcester City Football Club. He joins me now. Simon, thanks very much for your time. Just tell us more about the impact that this rising inflation has on business.
Simon: No problem. Thanks for having me on.
We’re an insurance broker and we insure thousands of businesses, primarily small to medium-sized businesses. They’re all struggling, and they’ve been struggling for a long time.
Some of it is outside of the Government’s control, and some of it the Government hasn’t helped with, such as the rises to National Insurance. Businesses are really struggling, and this inflation is just a further challenge for them. They’re all really worried about what the future is going to bring.
In particular, we insure a lot of businesses in hospitality. I know the Government has announced some support for those businesses, but it’s not enough. Lots of them are struggling to grow, struggling to hire and struggling to survive.
I think the Government really needs to step in and do more to help them through this.
Interviewer: And what about workers themselves? Of course, we know that businesses are struggling, but how is that trickling down to employees?
Simon: They’re all struggling with inflation, the cost of living and the price of everything. Of course they’re struggling, which means they’re going out and buying less, but it also means businesses are having to give them pay rises to help them cope.
We’re having to give our staff pay rises and, of course, that’s another strain on the business.
It’s all connected, really. Individuals are struggling and, as a consequence, businesses are struggling too.
Interviewer: And how are you looking to the future as a business owner yourself? We are expecting inflation to rise again in October. Do you feel like this Government can get a grip on what’s happening and help make things easier for business?
Simon: I think they need to do more. They’re making the right noises, but, to be fair, they’ve been making the right noises for two years and haven’t really helped.
Hopefully the new Prime Minister will increase the support that he gives businesses. I understand there is a limit to what the Government can do, but I certainly think he could do more.
I’d like to see the rise in National Insurance reversed. I’d also like to see more help for businesses with the cost of employing young people.
We’ve heard a lot in recent months about the struggle for young people to find work, and a lot of that is because of the cost of employing them. Businesses are turning to older, more experienced people for the same money.
I’d like to see the Government help make it more affordable to employ younger people. That helps them, but it also helps businesses bring young people in at an affordable rate, train them and help them grow.
There’s also been uncertainty around Capital Gains Tax increases. Are they going to increase it? Are they not? That sort of uncertainty makes businesses reluctant to invest and grow.
I think there is a lot the Government can do to reassure businesses that things are going to get better and that we can invest to grow.
Interviewer: And is the current political climate and the economy putting people off starting a business at the moment?
Simon: I would say definitely, yes. We’re seeing fewer start-ups.
Some of that is because of the increase in Capital Gains Tax that I referred to, but there’s also the cost of employing people, which is a business’s main cost.
Around 90% of our costs in insurance, because we’re a service industry, relate to employing people. As those costs spiral, it’s definitely putting people off starting businesses.
It’s not just starting businesses either; it’s also putting people off investing to grow.
We grow through recruiting new people, as do many businesses, and the cost of hiring them is increasing. It’s not just the cost either. Increased legislation around workers’ rights and things like that is making it more difficult, as well as more expensive, to hire people.
That is probably putting businesses off growing as well as setting up, for sure.
Interviewer: Simon, thank you very much for your time. That is Simon Lancaster, CEO at SJL Insurance and also owner of Worcester City Football Club. You are listening to LBC News.
