Hertfordshire Growth Hub has reported a slight downturn in the number of enquiries over the last two weeks, but enquiry levels remain 160% higher than in the period immediately prior to lockdown. The number of enquiries relating to Government’s Bounce Back Loan scheme is low which suggests, as reported by some districts, that there is less appetite for loan-based interventions.

341 firms have now responded to the Growth Hub’s COVID-19 business impact survey. There has been a slight decrease in the number of businesses reported to be in crisis (previously 67%, now 59%); 39% of respondents are in survival. Excluding micro businesses (under 10 employees), there is a slightly more negative picture, with 56% in crisis compared to 52% the previous week, and 41% in survival compared to 47% the previous week. The majority of respondents are micro businesses and the top two responding sectors are ‘wholesale and retail trade’ and ‘other service activities’.

Furlough funding and small business rates relief pay-outs are now feeding through to businesses but there is continued frustration from those that cannot access support due to not meeting the selection criteria. There is evidence of some businesses successfully appealing cash grant decisions.

Businesses are continuing to call for flexibility around the furlough scheme to enable them to take on small contracts or start some form of trading when the time comes, without incurring full staff costs.

The Department for International Trade is looking at key tradeable sectors post-lockdown. The initial focus appears to be agriculture and technology.

Districts are reporting that businesses are concerned about reopening with social distancing measures in place, as they are unlikely to do enough business to recuperate costs. There are also concerns about the cost and supply shortage of PPE for employees. With most businesses in town centres being service and hospitality-based and therefore among the last to open, there are concerns from other businesses that there will be insufficient incentive for people to visit town centres.

The results of the latest British Chambers of Commerce business impact tracker shows an increase in the number of export documents being processed, with several exporters saying goods are reaching their European destinations faster than usual due to reduced road traffic.

Wenta saw demand for online services grow by 200% in Hertfordshire at the point of lockdown, with a subsequent reduction in demand since grants were made available and paid. One-to-one support has risen by 224% for one hour plus sessions.

New Government funding announcements

Top up to local business grant funds scheme: a discretionary fund of up to £617m has been set up to accommodate certain small businesses previously outside the scope of the business grant funds scheme. This is an additional 5% uplift to the £12.33bn funding previously announced for the Small Business Grants Fund and the Retail, Hospitality and Leisure Grants Fund. This additional fund is aimed at small businesses with ongoing fixed property-related costs. 

£6.1m funding boost to help high streets and town centres: Business Improvement Districts across England will share £6.1m of funding to spend on projects that will help their local economies through the uncertainty of the COVID-19 pandemic

Coronavirus Bounce Back Loan scheme: SMEs can borrow between £2,000 and £50,000. Government guarantees 100% of the loan and there are no fees or interest to pay for the first 12 months. Loan terms will be up to 6 years, with no repayments due during the first 12 months. The scheme will be delivered through a network of accredited lenders. You cannot apply if you are already claiming under the Coronavirus Business Interruption Loan Scheme.

Hertfordshire LEP COVID-19 Business Support Package

The LEP has launched a £3.28m package of measures to help mitigate the impact of COVID-19, including: 

Crowdfund Hertfordshire: Small Business Innovation Fund: this will support small and micro businesses within the tourism, leisure, hospitality, retail, arts and cultural sectors. Hertfordshire LEP has set aside £200k to support the scheme, which will be administered by Visit Herts and offer grant funding up to a maximum of £5,000 on a £1 for £1 match basis.

Hertfordshire Business Expansion Grant Scheme: open to all SMEs (subject to eligibility for receipt of ERDF funds). Grants for capital expenditure will range from £10k - £100k and will require a minimum £1 for £1 match and the creation of at least one new job. Hertfordshire Growth Hub will manage enquiries and make referrals to the LEP and its programme partner Finance South East for grant consideration.

Volunteer Business Support Scheme: this Hertfordshire Growth Hub branded service will be established and managed by the University of Hertfordshire and will provide additional peer-to-peer advice and support to those businesses adversely affected by COVID-19. Up to 50 volunteers would each offer their expertise to up to four businesses, providing support to around 200 businesses in total over a six month period. Express your interest in becoming a volunteer.

Watford Chamber of Conscience, a group set up by the Watford and West Hertfordshire Chamber of Commerce, is coordinating donations from Watford businesses to support NHS staff and the community.

• Watford Football Club (pictured) has offered its stadium as a sanctuary for hospital staff, with executive boxes transformed into bedrooms using beds supplied by The Grove Hotel, as well as counselling rooms, a training centre, a call centre, meeting rooms, and feeding and relaxation areas.
• Watford bakery Wenzel's (pictured) is delivering food to Watford General Hospital every morning, and has donated over 10,000 doughnuts so far.
• The group is working with charities Home Start and Small Acts of Kindness (pictured) to deliver meals to the elderly and to isolated families.
• Other business donations include hundreds of iPhones to help patients to keep in touch with their families, as well as video units, coffee machines, food and drink, PPE, and toiletries.
• Dozens of other businesses are involved in the group, including Costco, Warner Bros. Studios Leavesden, Tesco, Cisco and Rosalyn Graham.

Staff from the Design & Technology department at Queens' School in Bushey are producing scrubs (pictured) and face shields for frontline workers. Having received requests for nearly 700 face shields so far, Watford firm Stylo Graphics is helping the school by taking on larger orders to help keep up with demand.

A law clinic run by the University of Hertfordshire (Hatfield), in partnership with housing solicitors from Just for Kids Law and Shelter, is providing free legal advice to renters struggling with rent and fear of eviction during lockdown, and those who are confused about their rights.

Cocktail and cordial maker Icely Done (Hoddesdon) has adapted its drinks kitchen to formulate medical grade hand sanitiser gel for the NHS, key workers, and local businesses. The company has already had 100,000 litres worth of orders.

Brookmans Park Golf Club (Hatfield) is providing a shopping service for those who are unable to get to the shops for essential food and supplies. Goods can be ordered online or by phone for collection or delivery.

Staff at Hightown Housing Association (Hemel Hempstead) have donated essential personal care and beauty items to the charity DENS for distribution to vulnerable people in Dacorum.

PCW Solutions (Watford) is providing NHS staff with free remote IT support during the COVID-19 lockdown to help them keep in touch with their families while having to work long hours away from home.

JPA Furniture Ltd (St Albans) is providing logistical support, manpower and storage facilities to help the NHS move vital medical equipment between hospitals. It has also helped transform a tired and worn space in Lister Hospital, Stevenage, into a much needed relaxation area for doctors and nurses, with the help of donations from a range of businesses enlisted via the Hertfordshire Chamber of Commerce, including ATG Spectrum (Letchworth) and Garrards of Stevenage.

Bondholders of debt secured against shopping centres owned by Intu Properties, including Intu Watford (pictured), are drawing up plans that could lead to them taking control of the company’s retail assets. Intu announced on 1 May that it had secured waivers for some breaches of certain bank covenants that may occur before June, giving it more time to further negotiate with lenders. The company has already warned of breaches after retail tenants only paid around a third of rent owed in March for the second quarter, due to COVID-19.

Hotel Chocolat (Royston) has secured a £35m revolving credit facility with Lloyds Bank, which will enable the company to move forward with long term growth opportunities. The finance will replace a £10m overdraft, and is comprised of £25m expiring in December 2021 provided under the terms of Government’s Coronavirus Large Business Interruption Loan Scheme, and the remainder provided on commercial terms expiring at the end of December 2020.

Tesco (Welwyn Garden City) has nearly doubled its capacity for delivery and click and collect over the past six weeks to 1.2m slots per week, with the aim of offering 1.5m slots in the near future. The company was close to completing the construction of its first robot-driven distribution hub before lockdown, which is set to be finished once construction is allowed to restart to help fulfil online orders more quickly.

JD Wetherspoon (Watford) has raised over £140m in a share placing. Plans to open new pubs have been put on hold until its 2022 financial year, after which the company will aim to open five venues per year.

Infrastructure technology services provider CAE Technology Services has purchased a 30,000 sq. ft. head office in Hemel Hempstead to house its central business functions, warehousing, configuration and service desk. The business is currently based in Watford in premises spanning 18,000 sq. ft., with the move expected to take place by the third quarter of 2021.

Wholesaler Lamex Food Group (Broxbourne) has acquired German frozen fruit and vegetable specialist Horns, to form a new business known as Lamex Horns. The acquisition will enable Lamex to further expand into the German food processing market, supplying frozen produce from its own network of certified suppliers including Alterra in Greece and Mondi Lamex in Serbia – both companies in which Lamex has significant investments.

Housebuilder Countryside has been appointed by Homes England to build the 22 hectare Spencer’s Park Phase 2 scheme in Hemel Hempstead, where 100% of the 600 planned homes will be constructed using modern methods of construction. Construction is set to begin in 2022 with completion anticipated in 2028.

Röchling Insoll (Hitchin), which specialises in micro-machining plastics, has seen a significant increase in demand for thermoplastic seals and fittings to support medical device projects and customers trying to develop a vaccine to combat Coronavirus. The company’s products are used in all types of fluid and gas supply systems in the healthcare sector.

Escape room company Know Escape, which has a branch in Bishop’s Stortford, has diversified and avoided staff redundancies with the launch four new virtual escape rooms to keep customers entertained during lockdown. The virtual game allows eight households to play together from anywhere in the world and connect with a live games master. Demand has been high with each new launch selling out quickly.

SASA School of Performing Arts (St Albans) has adapted to lockdown by holding online performing arts classes. A new service providing companies with virtual ‘business dance energiser’ classes to keep employees active has proved popular, attracting customers from the US.

Classobtain Holdings Ltd (St Albans), the holding company for equipment rental hire companies Superloo Ltd, John Anderson Hire Ltd, and Smallford Supplies Ltd, has gone into administration, putting up to 40 jobs at risk.

Care company Care By Us (Bishop’s Stortford) reports that it received only 300 masks from Government via the NHS supply chain and has spent over £120,000 of its own money to purchase PPE at ‘grossly inflated prices’ over the internet.

Portable toilet hire specialist John Anderson Hire (St Albans) has called in administrators. The business generated a record turnover of about £2.5m in 2019, albeit with losses, and has been impacted by the mass cancellation of events due to COVID-19. Nine of the company’s 25 staff have been retained to support the insolvency process.

Nationally, a significant number of small businesses have applied for Government's new Bounce Back Loan scheme. The scheme was launched at 8.30am on 4 May and received 79,500 applications by the afternoon, exceeding the 52,807 applications for the existing Coronavirus Business Interruption Loan Scheme, which started on 23 March.

France, Germany, and Spain are now officially in economic recession. The wider Eurozone economy also experienced its first full quarter of recession, after contracting by 3.8% in the three months from January to March.

Bank of England data confirms typical household behaviour during a crisis – to cut consumption, pay off debt and save money. Households paid back £2.4bn of credit card debt in February, suggesting a huge fall in consumption that almost certainly augurs a recession. There was £5.4bn less lending to households in March compared to February, with only a week of full lockdown.

Aviation and aerospace manufacturing: nationally, airlines have been amongst the first to announce major redundancies, followed by aerospace manufacturers. In the past week, British Airways has announced 12,000 redundancies, Ryanair 3,000, and Virgin Atlantic 3,000. Boeing has announced 10,000 job cuts, whilst Rolls Royce has announced 8,000.

Retail: almost two-fifths of Britain’s retailers have closed for business completely as a result of a collapse in consumer spending unmatched since the financial crisis in late 2008 (CBI survey). UK retailers are increasingly falling between the cracks of various government support schemes, with large companies facing stringent credit rating criteria and banks still reluctant to lend to smaller ones. Major retailers no longer have investment grade credit ratings – a requirement to access the Coronavirus Corporate Credit Facility, and banks have been limiting their exposure to loans to the retail industry. John Lewis predicts a worst case sales decline of around 35% in 2020. Online sales have not offset sales lost through shop closures.

Manufacturing: the UK’s manufacturing Purchasing Managers' Index (PMI)reading came in at 32.6 in April, slightly worse than the flash reading of 32.9. That is confirmed as a record low. The Confederation of British Industry’s latest members survey (Feb-April) of 330 manufacturing firms indicated that business sentiment had plunged in the three months to April by -87%, with export sentiment dropping by -84%. Four-fifths of firms have experienced negative impact on their domestic output, and three-quarters reported a negative impact on international output.

Banking & finance: the pandemic has put banks under pressure to lend more while simultaneously facing mounting defaults from hard-pressed customers whose revenues have fallen precipitously because of the lockdown. The Royal Bank of Scotland suffered a near -50% drop in first quarter profits after putting aside £802m to help cover a potential surge in bad debts due to the COVID-19 outbreak, making it the latest UK bank to reveal the mounting cost of the pandemic.

Barclays Bank’s first-quarter credit impairment charges surged almost fivefold to £2.1bn from £448m in the same period last year. The stress was particularly acute at Barclaycard, the credit card business that operates in the UK, US, and Germany, which accounted for £885m of the virus-related loan-loss reserves. The banking sector continues to face bad loans and credit, balance sheet pressures, a freeze on new mortgage lending, and short-term cost increases.

Hospitality, tourism and events: 92% of people that travel to the UK come for a period of less than two weeks. If 14-day isolation is enforced this would seriously impact the inbound tourism industry and the sector is suggesting that testing regimes are enforced before people depart their source country.  The Institute of Chartered Accountants England and Wales has modelled the impact of social distancing on businesses in the hospitality sector. Assuming capacities of venues at 25% due to social distancing, it estimates significant impacts on profitability of between 10-20% for corporate chains.

Visit Herts reports that businesses are calling for a continuation of financial support, particularly given seasonality and the fact that many businesses rely on their summer earnings to get through the winter. Businesses are also concerned about social distancing capping revenue and therefore the ability to sustain current staffing levels. Many depend on additional spend to break even and hotels also mention it is a difficult decision for them to “start trading again as anything lower than 70% occupancy means operating at a loss”.

Universities: as part of a package announced by ministers on 4 May to shore up the sector’s short-term cash flow, universities have agreed not to engage in predatory student admissions practices in return for an advance of tuition fees worth up to £2.6bn. However, the sector failed to secure Government backing for its demand for a £2bn research funding bailout to protect universities most exposed to a predicted sharp fall in international students this autumn. Instead they were offered an advance of £100m in research funding pending the outcome of a ministerial task force review that will consider further support for the sector.

There were 1.8m new registrations for Universal Credit between 16 March and 21 April. If all registrations became claimants – this would represent a 243% increase in claimant unemployment. The February 2020 claimant rate in Hertfordshire was 1.9% compared to UK rate of 3%. An increase in claimants by 243% between February and April, would see unemployment claimants rise from 14,300 (1.9%) to 34,400 (4.6%).

A local law firm has reported concerns that many, mainly small, businesses are leaving themselves open to legal challenges from employees by furloughing staff without written agreements. Hertfordshire Citizen’s Advice Bureaus have received around 900 calls for advice, with an increasing number of cases relating to unfair dismissal.

EMSI data shows that there was a 10% reduction in the number of Hertfordshire job postings in April compared to the same period last year. The cancellation of events such as festivals is having a market impact on recruitment intentions. Job postings are down by 7,000 in the last week, which represents a 26% reduction compared to the same period in 2019.

Working from home

ONS data on the ability and incidence of home working by occupational category suggests that a higher share of residents in Hertfordshire are capable of working from home (29.1%) compared to the UK average (26.6%). However, more than 70% are not capable. Within the LEP area, ability to work from home is highest in Three Rivers (32.3%) and lowest in Stevenage (25.2%).

The impact of shutdown

Compared to the Great Britain average (16.9%), Hertfordshire has a lower share of employees working in shutdown sectors (14.2%). Local authority areas with the highest shares of employees working in shutdown sectors are Hertsmere (18.5%) and Welwyn Hatfield (16.1%). Shutdown sectors in Hertfordshire with the largest numbers of employees are bars and restaurants (30,800); other (non-food) retail (28,700); and arts, entertainment and recreation (13,000).

Compared to the Great Britain average (30.6%), Hertfordshire has a lower share of employees working in high-risk key worker sectors (22.4%). Within the LEP area, Stevenage (38.1%), Broxbourne (28.1%) and Welwyn Hatfield (24.3%) have the highest shares of employees working in high-risk key worker sectors. Sectors in Hertfordshire with the largest numbers of key workers are health and social care (55,800); education (39,400); and food wholesale and retail (29,700).