Retirement on hold for property and real estate bosses

Retirement remains a distant prospect for more than three-quarters of business owners in property and real estate – although the rate at which they are shedding jobs may be stabilising. Meanwhile fewer than a third are operating a company pension scheme and of those, under a quarter are making regular contributions.

Just one percent say they have received cash funding through the Government’s flagship Enterprise Finance Guarantee (EFG), although an increasing number believe the scheme is proof that Whitehall now recognises the crucial role of SMEs in the economy.

These are among the findings of the latest quarterly survey of more than 1,000 business owners carried out by Clifton Asset Management (CAM), which provides specialist financial and strategic advice to SMEs. The latest research marks a year since CAM began tracking attitudes to retirement among the nation’s owner managers. CAM Director Anthony Carty said that 12 months ago, 59 percent of those questioned in the poll said their retirement was further away than it was a year previously. 

“That figure now stands at 79 percent, a substantial increase which reflects the fortunes of the wider economy over the past year as the recession has taken hold,” he said. “In fact, some 41 percent now say they do not currently see any prospect of retirement, a figure which has doubled in the last 12 months. “Property and real estate was the first high-profile casualty of the credit crunch and while we are starting to see signs of returning optimism in the housing market, the situation is still fairly stagnant. The same applies with commercial property, where many projects have ended up being shelved. The property sector has been one of the hardest hit in this recession so it is no surprise that this is reflected in bosses’ attitudes to their retirement.”

Approaching a third of companies in the survey said they had been forced to shed jobs over the past six months, although there are signs that the rate of job cuts may be slowing. Some 13 percent said they had not yet had to lay off staff, but would need to do so in the next six months – the same figure as the previous quarter – and nine percent said they had already shed jobs, and would have to shed even more. Meanwhile more than a fifth said they had now made all the cuts necessary to ensure their business’ survival. 

“These figures give some cause for optimism that the worst may be over but they should be treated with caution,” said Mr Carty. “For example, 80 percent said they had not reduced staff numbers in our last survey and did not anticipate having to do so in future, a figure which fell steeply to 56 percent this time.” Only 30 percent of business owners questioned by Clifton Asset Management said they currently operate a company pension scheme and of those, just 24 percent continue to make regular contributions – down from 33 percent last time.

Meanwhile according to the research, Government attempts to stimulate bank lending to SMEs through the Enterprise Finance Guarantee have failed. Anthony Carty commented: “The fact that 89 percent of business owners say they do not see any benefit in applying for support under this scheme provides damning evidence that they continue to feel abandoned in their hour of need, by both Whitehall and the banks. In fact, a third of our respondents were not aware that this much-heralded scheme even existed. And while four percent say they have made an application under the EFG and are awaiting the result, and a further six percent have made an unsuccessful bid, this leaves a paltry one percent who say they have been able to access the crucial finance they need to help them through the most difficult economic climate for several decades.

“Nevertheless, it is encouraging that a more positive view of Lord Mandelson’s department is emerging, with 35 percent now saying that the introduction of measures such as the Enterprise Finance Guarantee are proof that the Government does at least recognise the importance of owner-managed businesses. When we asked this question a year ago, just four percent felt that Whitehall acknowledged and appreciated their role.” The CAM survey also reveals marked differences in attitudes among business owners in the various regions in England and Wales. Nationally, 43 percent of respondents felt their home region was better placed than the UK as a whole to withstand the recession, with 41 percent more being of the opposing view.
 
In terms of regions
Businesses in London and the South East are the most optimistic, with 61 percent and 56 percent respectively believing their region was better placed than the UK as a whole to withstand the recession.

Businesses in the West Midlands (21 percent) and the North East (25 percent) were the most pessimistic about their prospects.

Compared with the last survey, Wales has seen the biggest increase in optimism, with 29 percent believing their region was better placed than the UK as a whole, up from 20 percent last time. The North West has seen the biggest increase in pessimism about its prospects in the latest survey, with 26 percent believing their region was better placed, a seven percent fall.

 “While this recession has been portrayed in some circles as a `white-collar’ recession, it is interesting that business owners in London and the South East remain the most optimistic about their regions, while those in traditional industrial areas such as the West Midlands and North East are at the opposite end of the scale,” commented Anthony Carty. “One year on from the launch of our survey, it is clear that retirement is becoming ever more elusive for the vast majority of SME owners, and out of the question altogether for a large minority.

“While there may be cause for optimism in terms of the number of employers planning job cuts, there
is a fear that we may have yet to see the full impact of the recession on employment numbers, and certainly the situation in regard to company pension schemes is deeply worrying. Equally, it is totally unacceptable that
so few businesses have received any kind of financial relief via the Enterprise Finance Guarantee, or that so many have no confidence in its ability to deliver.

“We know from our own experience that the accessing the scheme is proving hugely frustrating for many SMEs and that despite the Government’s protestations, the freeze in bank lending to businesses shows no signs of a significant thaw.”