Overview of 2011

13th December 2011

2011 has been a year of major turmoil, both nationally and internationally. In the UK, we have seen rioting in several cities and the first mass strike in over 30 years. Across the globe, the Arab Spring, the uprising in Libya and the threat of collapse of the Eurozone have dominated the headlines. There is so much going on at the moment and it’s important to stop and consider the impact that the current events will have on your business.

The UK has seen its economy grow at a much slower rate than hoped, with record unemployment rates. The increase in VAT and fuel costs has caused financial pain across the board and ensured that inflation has remained stubbornly high, leading to a decline in consumer spending power. To make matters worse, the massive changes to the public sector, particularly the decline of the regional development agencies, have dramatically reduced the amount of funding available to technology businesses.

In terms of recruitment, the new Agency Worker Directive has been an unwelcome change for many businesses. The additional costs and red tape necessary to ensure compliance are seen as an extra burden to already stretched companies. Though the scientific sector has been shielded from the full effects (due to the equality of pay usually offered between highly-skilled permanent and temporary staff), this piece of new legislation has caused significant concern.

But are things as bad as they might initially appear? There have been a number of very positive events that have taken place in 2011, which provide a more hopeful outlook for 2012.

The launch of the Regional Growth Fund, now totalling £2.4 billion, has provided investment for a number of major projects across the UK. This fund is already helping organisations to develop new infrastructure and other projects, in order to create new jobs. In several cases, these projects have allowed scientific companies to invest in new state of the art equipment necessary to develop their businesses.

The new Life Sciences Strategy, launched recently, is a £180 million catalyst fund designed ‘to help the next generation of brilliant British medical breakthroughs become the next generation of great British companies.’ It is aimed specifically to solve the funding problems facing the community of smaller R&D intensive companies to allow them to bring innovative products to market.

The government has also announced a new £125 million initiative to improve the global competitiveness of the UK and its Advanced Manufacturing Supply Chains. It aims to help existing UK supply chains grow and achieve world class standards, while encouraging new suppliers to manufacture here. The funding will cover a combination of capital equipment, associated R&D and improved support for training and up-skilling for employees.

Combined with the new £180 million programme to recruit 50,000 apprentices, the recent changes to the Employment Regulations to allow businesses more flexibility (valued at £350 million) and the rate increase for the R&D Tax Credit system to 225% (from April 2012), these measures do offer a lifeline to struggling businesses and give a more hopeful outlook for the sector in 2012.