Memorandum from Rugby Borough Council
(WM 18)
To help with the formulation of this response
discussions have taken place with the Chamber of Commerce, the
FSB and JCP.
1. EFFECTS ON
BUSINESS
1.1 The impact of the present economic situation
has seen a wide selection of differing experiences.
1.2.1 JSA claimants in the Borough are higher
than they have been for some long time. However, there have been
only two closure announcements made by companies in the Borough,
requiring the issue of HR1 forms.
1.2.2 Indeed an increasing number of highly
paid individuals has been noticed, mainly leaving London based
employment. These now account for some 20% of those registered
as unemployed in the Borough.
1.2.3 However, vacancies registered at JCP
have been fairly steady and something like 25% of these vacancies
are for middle to senior staff positions.
1.3 Areas of employment such as retail,
leisure and the logistics sector that feeds them have seen shrinkage,
together with the motor industry supply chain who are hit by declining
sales and extended payment terms. Although other manufacturing
is holding up.
1.4 There is also evidence of projects being
put on hold or cancelled as businesses are unsure about their
own and their specific market sector
1.5 One of the biggest areas of concern
expressed by the businesses consulted is the extension of payment
terms by their customers, which seriously effects cash flow and
has lead to business closure.
2. EFFECTS OF
AMW/BUSINESS LINK
2.1 Advantage West Midlands have been proactive
in looking for ways to help the present crisis and indeed have
come in for some positive comments from the businesses that have
been in contact with. However their focus does seem to have been
on the major conurbations and their Regeneration Zones.
2.2 Business Link on the other hand have
come in for some criticism. It is possible that this reflects
their position pre the crisis and as such businesses have not
had the confidence to contact them. Where contact has been made
through the Credit Crunch Hotline, experience is mixed, with some
businesses being positive about the help and others less so. None
commented that there had been any help in accessing financial
help.
3. BANKING RESPONSE
3.1 The banks have come in for more or less
universal criticism. No help with increased short term overdraft
facilities, short term notice of reduced overdraft facilities
together with the removal of facilities, pressure applied to pay
off loans early and the cancellation of credit cards are all sited
as recent experiences. Together with increased over draft interest
rate, despite the reductions in base rate. In fact no evidence
that Government intervention had any effect.
3.2 There is an instance locally where a
successful local company has been turned down an overdraft because
they are in the automotive industry despite the fact that they
were seeking to diversify.
3.3 Factoring, which has been a major source
of finance seems to have hardened with movements in rates, putting
even more pressure on cashflows.
4. OTHER AGENCIES
4.1 The creation of the Coventry and Warwickshire
Economic Recovery Partnership has seen the development of a local
help network. The partnership includes the Chamber of Commerce
and the FSB, which have been helpful in getting the messages out
to businesses.
4.2 An established local financial instrument
is the Coventry and Warwickshire Reinvestment Trust, which has
seen a huge increase in the number of enquiries for its services.
As a lender of last resort the number of businesses seeking their
help, having been turned down by the banks has led to the Trust
having to take on extra staff.
4.3 One area that has been positive to the
plight of business is the Inland Revenue who have been understanding
about spreading payments for businesses in difficulty.
4.4 Likewise the LSC and JCP have been proactive
about redundancy help and training opportunities.
4.5 An area of concern is the time taken
for the NHS and Primary Care Trusts who do seem to have a reputation
for taking up to 90 days to settle invoices.
| 
