One in ten UK business opts for remortgage instead of layoffs

LONDON | The cost of too many layoffs made during a steep crisis could leave a wide range of businesses unable to board the pick up economic train. So either it is optimism in the medium term or an honest belief in the coalition government’s mantra ‘we are all in this‘, but research from insurance firm More Than revealed Wednesday how small business owners are going to extraordinary lengths to protect their workforces during these tough economic times. One in ten have actually re-mortgaged their own homes to free up money to pay wages and retain staff, rather than make redundancies.

“It would seem Britain has a new crop of ‘heroes on the high streets, and trading estates and retail parks too for that matter,” More Than said.

Desperate to keep their businesses going, company owners are taking huge hits for employees, and mostly straight to their own wallets. A further 35pc admit to having taken significant pay cuts since 2007 to avoid firing workers. And these are not short-term measures: of those who have reduced their earnings to avoid making redundancies, 60pc responded it is something that has lasted for more than a year and nearly one in five or 17pc say it may go on indefinitely.

Of those business proprietors that have reduced their own wages, 70pc have cut them by as much as a half, while one in 20 admit they are not looking after number as they’ve scrapped their salaries completely.

Commenting on the results, More Than managing director Janet Connor remarked that although

“trading environment for small businesses remains tough, they might be able to look forward to the summer with greater optimism.”

The More Than report showed that sacrifices don’t stop there. As well as doing away with marketing and advertising budgets (21pc), a 12pc are re-locating to smaller premises while 7pc say they are off-loading stock and inventory at greatly reduced prices, too.

Across the country, the issue of holding onto staff when times are tight is most prevalent in the West Midlands (41pc), an area that has been identified as the worst place for small business trading in the UK at present. The same proportion of business owners in the West Midlands said the trading environment wasn’t good even though it is higher than anywhere else in the country, and 43pc described new business leads as a dried up opportunity. A 28pc admits to having seriously considered relocating to draw in more new business leads. In the West Midlands, the figure rises to 30pc.

While the research will make for glum reading for those that run small and medium sized enterprises, there could be a light at the end of tunnel. Figures from the latest edition of the Business Inflation Guide pointed out that for the second consecutive quarter key costs for small businesses have risen only very marginally: a 0.31pc increase in costs for the fourth quarter of 2011 follows a similarly low increase of 0.05 per cent in the third quarter.

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