Whilst the sector continues to make a slow and steady recovery, there has been a slight rise in businesses making a loss. Up 6% from September 2023, 20% of businesses are now reporting losses, whereas 40% of businesses are making a small or good profit – this is down 5% from September last year.
The trend towards increasing prices continued to slow with only 39% of businesses doing so over the previous three months – this is down from 55% in September 2023. A further 64% of businesses will raise their prices over the next three months.
Reliance on external support remains high but is stable, with over half of businesses (58%, up marginally from 56%) partially or completely reliant on Government support. High energy costs also continue to affect the sector, with two thirds of the industry paying for more energy than they were six months ago. When the Energy Bill Discount Scheme ends on 1st April, half of the businesses (49%) will see their costs increase by a further 20%, and two thirds of the sector will see these costs rise by up to 40%.
Business debt levels remain high with debt reported as a problem for over half (56%) of sector businesses, similar to the levels we saw in July 2023. For one third of businesses, (32%), levels of debt have increased over the last six months. In addition, 45% of businesses with debt estimate that it will take between 2 and 5 years to clear.
Rising costs are also having an effect on staffing and recruitment intentions, with the workforce remaining the same over the last three months for nearly two thirds (63%) of the sector. Recruitment intentions, however, have taken a dip with only 17% (down from 27%) of businesses likely to take on new staff. Fewer than 9% of businesses are now open to taking on new apprentices over the next three months, which adds further concern regarding the increase of 21.2% to the National Living Wage (NLW) for 16–17-year-olds and apprentices from April 2024.
Caroline Larissey, NHBF Chief Executive, says:
“The sector recovery is slow, but of most concern is the dip in businesses intending to take on staff and apprentices, as we rely on a pipeline of young talent entering our sector. Ahead of the Spring Budget on 6 March, we are calling on the government for further targeted sector support in the form of VAT reform (either reducing the rate, raising the threshold or tiered rates) and further support to employers through apprenticeship incentives.
With this support, we are positive that our sector will continue to demonstrate resilience and the ability to weather the storm.”
