Business

Britain’s small business community has reacted with thinly veiled fury to the disclosure that Work and Pensions Secretary Pat McFadden privately told Lord Mandelson that every Labour meeting was consumed by the question of “who can we tax in order to pay benefits to others”, with one CEO declaring the country is “rearranging deckchairs on a very expensive, heavily-taxed ship”.

The message, sent in May 2025 when McFadden was running the Cabinet Office, was among more than 1,000 pages of correspondence released following the Humble Address compelling disclosure of communications with the former US ambassador. In it, the minister bluntly tells Mandelson that his colleagues “are asking the wrong questions”.

A spokesperson for McFadden said the minister had “fully complied with the Humble Address and handed over all messages”, adding that his only contact with Lord Mandelson since the latter left government had been to urge him to “think about the victims in all this and apologise to them”.

For business owners contending with the highest UK tax burden in seven decades, however, the leaked exchange has confirmed a long-held suspicion: that the Treasury sees enterprise as a cash machine rather than an engine of growth.

Paul Denley, chief executive of London-based Oakham Wealth Management, said the comment reflected a default political reflex that was strangling investment.

“Every government inherits problems. The test is whether it reaches for the same tired tools or has the imagination to do something different. Too often, the focus seems to be on redistribution rather than growth, innovation and wealth creation,” he said.

“The concern is that taxation has become the default policy response to almost every challenge. Successful economies do not become more prosperous by continually redistributing a fixed pool of wealth. They grow by encouraging enterprise, investment and productivity.

“At some point, the conversation has to shift from how we divide the pie to how we make it bigger. Otherwise, we risk managing decline rather than creating prosperity. Without a stronger focus on growth, we are simply rearranging deckchairs on a very expensive, heavily-taxed ship.”

His unease is rooted in hard numbers. The Office for Budget Responsibility now puts the tax take at a 70-year high of around 37 per cent of GDP, the steepest level since records began in 1948 – a trajectory that has only sharpened since Rachel Reeves signalled fresh tax rises to plug a £40bn Budget black hole.

Graham Nicoll, chartered financial planner at NCL Wealth Partners, said the McFadden message would resonate with anyone running a small enterprise.

“Pat McFadden’s reported comment reflects a frustration many business owners recognise, the perception that, as the government faces fiscal pressure, businesses, entrepreneurs, investors and higher earners are often seen as the first source of additional tax revenue,” he said.

“The concern is not necessarily about paying tax, but about the cumulative impact of repeated tax increases and policy changes that impact confidence, the attractiveness of investing and growth in the wider economy. Small businesses create jobs, generate tax receipts and drive local economies.

“By exacerbating a system that rewards inactivity and can encourage unemployment, the balance is wrong. The government needs to focus on promoting people to upskill, to aspire to contribute and to get rewarded – and on driving growth rather than stifling it.”

That argument is buttressed by the latest Office for National Statistics figures, which show more than a million 16- to 24-year-olds are not in education, employment or training, with youth unemployment running at 16.2 per cent – the highest rate since 2015.

Tony Redondo, founder of Newquay-based Cosmos Currency Exchange, was unsparing in his assessment of the administration’s record so far.

“This neatly encapsulates the economic illiteracy of this government. They are not in the least concerned with wealth creation,” he said.

“The cost of this myopia is stark: a record number of young people not in work or education, record-high taxation, an economy on its knees, unemployment at 5 per cent and rising, and government borrowing costs that recently reached levels exceeding those that triggered the Liz Truss meltdown of 2022.

“The Tories deserved a good kicking at the last election, but the country does not deserve this shambolic excuse for a government. Two years into Labour’s first term in office in 15 years, they are behaving like a Manchurian candidate, hell-bent on destroying the UK from the inside out.”

Michelle Lawson, director of Fareham-based Lawson Financial, focused on the impact on those who keep the lights on.

“This makes me sick to the core. Millions of people in the UK of all ages get up every day to go to work, and some have multiple jobs to pay the bills,” she said.

“Labour bleat on with their rhetoric on the importance of business but this shows their lack of knowledge and understanding of the basics. In two years they’ve managed to do what no other government has done, become the most unpopular and the most despised, yet the Prime Minister still hasn’t got the memo.

“With all the notes in these papers, there must be plenty to just give him the push he and the Chancellor need. The damage they have done is still repairable but comes with other concerns. Rather than taxing just about every possible morsel, looking at the systemic root cause of these problems and a good financial review of their spending may help. Another fine mess this shambolic lot have put us in.”

Her view chimes with that of the Federation of Small Businesses, which has spent recent months lobbying the Treasury over the threshold freeze that swept 104,000 small firms into the business rates net in April 2026.

Steven Greenall, director of Greenall Estate Planning, offered the bluntest verdict of all: “Labour are doing their utmost to talk themselves out of winning the next election.”

For Sir Keir Starmer’s government, the political risk is that the McFadden message becomes shorthand for a Whitehall mindset that asks reflexively who to tax next rather than how to grow the economy out of trouble. For Britain’s SME owners – the constituency Labour spent two years courting in opposition – the dossier reads less as a leak and more as confirmation.

Read more:
“Rearranging deckchairs on a heavily taxed ship”: business owners round on Labour’s tax-and-spend mindset

Britain’s flagship overhaul of zero-hours contracts could end up doing the very opposite of what ministers intend, the country’s leading HR body has warned, with employers likely to lean more heavily on self-employed contractors and fixed-term arrangements if the new rules prove too unwieldy to administer.

Responding to the Government’s consultation on its zero-hours contract reforms, a central plank of the Employment Rights Bill that recently cleared its final parliamentary hurdle, the Chartered Institute of Personnel and Development (CIPD) cautioned that complex compliance demands could ultimately push more workers into looser, less secure forms of employment.

Ben Willmott, head of public policy at the CIPD, said that while the institute supported the principle of protecting workers from one-sided flexibility, the practical detail of the reforms would make or break their success.

“Well-managed zero-hours contracts provide welcome flexibility for employers and for people who want to work but cannot commit to fixed hours, including students, carers and those managing health conditions,” Willmott said.

He stressed that the reference period used to calculate the guaranteed minimum hours owed to a zero-hours worker would be a critical battleground. “A longer reference period will be easier for employers to manage, but even with this, the new measures are likely to be extremely complex and challenging to comply with, particularly for small firms or those with fluctuations in demand.”

According to the Government’s own factsheet on zero-hours contracts, the reference window is expected to be set at around 12 weeks, although the figure remains subject to consultation. Employer groups have been pressing for a longer horizon to smooth out the seasonal peaks and troughs that characterise sectors such as hospitality, retail and care.

Beyond the question of guaranteed hours, Willmott pointed to a second compliance landmine: the requirement to give workers reasonable advance notice of shifts.

“This is only one headache for employers,” he said. “The challenge of providing reasonable advanced notice of shifts is also likely to prove difficult and require caveats to allow for issues like sickness absence.”

The concern echoes wider business worries that the legislation, while well-intentioned, has been drafted with limited regard for the operational realities of running a small or medium-sized firm — anxieties that have already prompted a third of employers to scale back hiring plans according to fresh CIPD research.

Willmott’s sharpest warning, however, was reserved for the law of unintended consequences. If the final regulations prove unworkable, he argued, employers will simply route around them.

“If the final regulations are too difficult to manage, employers will simply find other ways to achieve workforce flexibility. They are likely to rely more on self-employed contractors and fixed-term contracts, for example, potentially resulting in more rather than less insecure employment.”

That outcome would be particularly damaging for young people, who have historically been one of the biggest beneficiaries of zero-hours arrangements. Such contracts have long allowed students and early-career workers to fit paid work around studies, training or caring duties.

“This would also damage opportunities for young people who particularly benefit from zero-hours contract arrangements because they enable them to balance work while studying,” Willmott added.

The CIPD is among a growing chorus of business voices, covered in detail in Business Matters’ guide to the new Employment Rights Bill, calling on ministers to use the consultation process to soften rough edges rather than rush implementation. With staged commencement now stretching into 2027, Whitehall has time to listen. Whether it does so will determine if the reforms become a landmark for fairer work, or a cautionary tale of policy that achieved precisely the opposite of its aim.

Read more:
Zero-hours contract reforms risk pushing bosses towards more insecure work, warns CIPD

The Federation of Small Businesses says a decade-long freeze on the relief threshold, coupled with backdated changes hitting shared offices, is “directly undermining” the government’s growth agenda.

More than 100,000 small companies have been pulled into the business rates regime for the first time, prompting the country’s largest small business lobby group to demand an urgent rethink from the Treasury.

The Federation of Small Businesses (FSB) has written to Daniel Tomlinson, exchequer secretary to the Treasury, urging ministers to lift the threshold at which premises become liable for the property tax, and to reverse a separate change in methodology that is leaving start-ups and micro-businesses in shared offices nursing unexpected bills running into thousands of pounds.

By piling further costs on the smallest firms, the FSB warned, the existing regime “directly undermines the government’s own growth ambitions”, a pointed reminder that the chancellor’s pro-growth rhetoric is being tested on the high street as much as in the City.

Business rates are levied on most commercial properties in England and are calculated on a building’s rateable value, an estimate of its open-market annual rent set by the Valuation Office Agency (VOA). Single-site small firms pay nothing if their rateable value sits below £15,000, a threshold that has not budged in ten years.

That decade of inertia, combined with the VOA’s latest revaluation cycle, means an estimated 104,000 small business premises were dragged inside the rates regime when the new financial year began in April. Before taking office in 2024, Labour had floated raising the threshold for small business rates relief from £15,000 to £25,000. Two years on, the FSB wants the chancellor to honour the spirit of that pledge.

Lifting the bar, the group argues, would predominantly benefit firms outside the capital, where property values keep most premises below the £25,000 mark. “This would take thousands of businesses out of paying the regressive pre-profit tax that we know holds back growth,” the FSB said, “and these are primarily across the north-east, north-west, Yorkshire and south-west, where rateable values, and prosperity levels, are lower.”

The FSB’s letter also flags what it calls an “escalating problem” for firms based in serviced and shared offices, typically start-ups and micro-businesses that have driven much of the post-pandemic recovery in regional cities.

A VOA change to how rateable values are calculated for such buildings, introduced in April and applied retrospectively, has stripped many tenants of the relief they previously claimed. Some are now staring at backdated demands running to several thousand pounds, an issue that has already drawn warnings from operators that the reclassification could put serviced offices at risk across regional markets.

“If this change of methodology from the VOA continues unchecked, the impact would be concentrated overwhelmingly on micro-businesses and SMEs in second cities and regional economies,” the FSB warned, characterising the change as a quirk of how rules are being applied rather than a “deliberate intended policy decision by government ministers”. The group wants officials to revert to the previous methodology.

Calls for wholesale reform of business rates are scarcely new. Pressure has been building from across the economy, most recently from manufacturers, who are bracing for a £1 billion rates bombshell as April’s revaluation feeds through to factory bills, and from hospitality operators who saw Rachel Reeves accused of imposing a “nice pub tax” earlier this year.

The chancellor has committed to permanent reform, but a comprehensive overhaul remains stuck in the long grass. The issue continues to dog ministers, with the King’s Speech in 2026 doing little to allay business concerns that the political will for a meaningful redesign of the tax is still missing.

The FSB’s intervention echoes earlier warnings from the lobby group that the rates system has become an “indefensible” disincentive to invest. For owners of corner shops, salons and small workshops, the maths is simple: a tax levied before a penny of profit has been earned is a tax on ambition.

A Treasury spokesman said the government had “the right economic plan” and pointed to the £4.3 billion set aside to support businesses facing higher rates bills. For the 104,000 firms now opening a brown envelope for the first time, that figure may feel rather more abstract than the bill on the desk.

Read more:
Business rates rethink demanded as 104,000 small firms swept into tax net

For the better part of a century, the fish and chip shop has been the most reliable barometer of British high-street health. When the chippies are thriving, the parade is alive. When they are boarded up, it is rarely a sector-specific problem. Right now, according to one of the trade’s most experienced operators, the chippies are battening down the hatches at precisely the moment Westminster should be helping them grow.

That is the verdict of Danny Hennesy, a three-decade veteran of the trade and owner of Mandens, the UK’s leading broker for buying and selling fish and chip shops. His warning is blunt: ministers are quietly squandering an opportunity to back one of Britain’s most resilient SME sectors at the very moment buyer appetite is at its highest in years.

“There has never been more interest in the sector, but it’s getting harder to run these businesses,” Hennesy told Business Matters.

That interest is visible in the listings. There are currently 338 fish and chip shops on the market across the UK via BusinessesForSale.com, pointing both to a maturing generation of owner-operators preparing to step back and a sizeable cohort of would-be entrepreneurs eyeing the trade as their escape route from corporate life. Whether those deals translate into thriving, reinvested businesses depends almost entirely on the trading conditions the next owners inherit.

The arithmetic of the fish and chip trade has always been unforgiving, but the past 18 months have stretched even the most well-run shops. The industry generates an estimated £1.2 billion a year and serves hundreds of millions of portions annually through a network represented by the National Federation of Fish Friers. Yet operators are being hit from every direction at once.

April’s increase in employer National Insurance Contributions, rising from 13.8 per cent to 15 per cent and biting from a far lower secondary threshold, has hammered margins in a sector where staffing is the second-largest line cost after raw materials. Business Matters has previously reported that employers’ NIC bills have overshot Treasury forecasts by £28 billion, with hospitality among the hardest-hit sectors.

Energy bills remain stubbornly high. And the price of the white fish that defines the menu, cod and haddock, is being pushed up again by tensions in the Middle East. Reuters and others have documented how fishing fleet diesel costs have doubled on some routes, with the conflict feeding directly into the price of a Friday-night supper.

“Fish and chips is one of the most resilient food sectors in the UK,” Hennesy said. “It’s part of our DNA, when times are tough, people still come back to it because it’s familiar, affordable and reliable. But costs are rising from every angle, energy, raw materials, staffing, and global events are now feeding directly into the price of running a shop. That’s stopping owners from investing and growing.”

The behavioural shift Hennesy describes is the issue ministers should care most about. Operators who would normally be refurbishing, taking on second sites or upgrading energy-hungry fryers are instead conserving cash. That caution echoes wider sector data: Business Matters has reported that the hospitality tax raid is now forcing some pubs and restaurants to shut one day a week simply to protect margins.

“We should be seeing growth, instead, people are just trying to hold on,” Hennesy said. “Without support, more shops will close, and that would be a real loss to the high street.”

The loss would not just be sentimental. Fish and chip shops are anchor tenants in thousands of secondary parades that no national chain will ever colonise. When a chippie shuts, the footfall it generates for the newsagent two doors down goes with it, a dynamic that helps explain why high street closures are projected to accelerate sharply as the business-rates relief regime tightens.

For all the pressure, the underlying economics remain attractive, which is precisely why buyer demand has not collapsed. Well-run shops can deliver margins of around 28 per cent. Many turn over £8,000 to £10,000 a week. Top-performing sites push past £15,000, and a handful of marquee chippies clear more than £1 million a year.

Andrew Markou, chief executive and co-founder of BusinessesForSale.com, says that profile is exactly what is keeping mid-career career-changers in the market.

“In uncertain times, people look for businesses that offer stability and steady demand, and fish and chip shops are a classic example,” he said. “The demand is there. The question is whether the wider environment allows the sector to grow, or simply forces it to stand still.”

Hennesy’s frustration is not that the sector lacks resilience. It is that resilience is being mistaken for a reason to do nothing. He wants ministers to recognise that targeted relief, on energy, on the NIC threshold for hospitality SMEs, on business rates for independents, would unlock investment that is currently being deferred.

“This industry has survived everything, recessions, rising costs, changing habits. It will survive this too,” he said. “But with the right backing, it could do far more than just survive, it could lead growth in the fast food sector.”

For now, the chippies remain open, the queues remain steady and the national dish remains, as it always has, a low-cost ritual that outlasts almost everything thrown at it. The question for the Treasury is whether it is content to let one of Britain’s most reliable SME success stories merely endure — or whether, with a few well-aimed measures, it is willing to let it grow.

Read more:
In cod we trust: industry urges ministers to back Britain’s chippies before the high street loses its national dish

In Can We Be Rich Again? the former chancellor delivers a refreshingly self-aware diagnosis of what has gone wrong with the British economy, and a costed prescription that SMEs, in particular, ought to read with interest.

He could so easily have phoned it in. A bulky political memoir, a couple of nicely judged knives slipped between the shoulder blades of former Cabinet colleagues, an amusing yarn or two from Davos and the IMF spring meetings, and a discreet bit of humble-bragging about steadying the ship after the Truss-Kwarteng mini-Budget. Sir Jeremy Hunt, now liberated from the red box and with rather more time on his hands, could have produced precisely the sort of worthy but unreadable volume that gathers dust on the shelves of every Westminster bookshop.

To his very considerable credit, he has not. In Can We Be Rich Again?, the former chancellor has instead set himself the rather harder task of working out, with disarming honesty about his own role in the muddle, what has gone so badly wrong with the British economy, and how it might still be put right.

A question that should not feel provocative

That the title itself reads as slightly cheeky is, in truth, a damning indictment of where we have arrived. Rich? In an economy where output per person has barely shifted since the eve of the pandemic, the Office for Budget Responsibility’s March 2026 outlook puts real GDP per head growth at an average of just 1.1 per cent a year between now and 2030, against the 2 per cent enjoyed before the financial crisis, the average voter has long since lowered the bar to “not visibly poorer than last year.”

Sir Jeremy will have none of it. “We still have a lot going for us,” he writes, with the breezy confidence of a man who has just remembered he is no longer responsible. Britain, he reminds the reader, retains the integrity of its institutions, robust property rights and a serious legal system. It is the most open of the major economies and houses the third-largest technology ecosystem on the planet, behind only the United States and China. Harness those advantages, he argues, and the British economy can grow again. The diagnosis chimes neatly with the IMF’s own 2026 Article IV concluding statement, which praised the broad direction of the government’s investment-and-reform agenda while warning that “credibility will ultimately hinge on sustained implementation.”

The eight-point plan, costed

What lifts the book above the standard centrist-Tory lament is that Sir Jeremy has done his homework. Each of his prescriptions is tested against an estimated effect on GDP, lending the manifesto a refreshing absence of magical thinking.

The two opening shots are familiar enough: bring taxes down, and adopt a new fiscal rule that compels debt to grow more slowly than output. Then come the supply-side reforms, eight of them, that form the spine of the book. Fix a welfare system that has parked too many working-age adults on long-term sickness benefit. Relax planning rules so that Britain can build something, anything, again. Drive public-sector productivity higher. Hand local mayors the powers and budgets to rebuild their regions. Embrace artificial intelligence rather than regulating it into irrelevance. Restart oil and gas production in the North Sea. Repair an education system that has spent decades failing the 50 per cent of school-leavers who do not go to university. And, perhaps closest to the heart of this magazine’s readership, properly encourage entrepreneurship.

Put the whole package to work, Sir Jeremy reckons, and Britain could add three percentage points a year to its growth rate, a compounded gain of around 20 per cent over a decade. That is not loose change. It is the difference between managed decline and a recognisably advanced economy. For founders and owner-managers, it is the difference between scaling and surviving, a tension Business Matters has chronicled at length in its coverage of SME expansion plans.

Quibbles, mostly minor

It is not difficult to pick at the detail. AI may, in time, prove less revolutionary than its loudest evangelists promise, although the early productivity numbers, Business Matters recently reported research suggesting SMEs deploying AI can unlock productivity gains of between 27 and 133 per cent, argue otherwise. Politicians have been promising to fix vocational training for the best part of a century, generally without troubling the outcomes.

More seriously, Sir Jeremy remains, in temperament, a pragmatic centrist. He instinctively underplays the ferocity of the resistance any reforming chancellor will encounter from what Liz Truss memorably christened “the anti-growth coalition”, that diffuse weave of judges, quangos, NGOs and Whitehall lifers known to its critics as “the Blob”. After five years of a Labour administration that has fed and watered that ecosystem with some enthusiasm, it will be denser, better funded and considerably more confident than it was when he occupied 11 Downing Street.

The book Hunt wishes he had been handed

These, though, are quibbles. Sir Jeremy is unlikely to return to office, and the book never pretends to be a Treasury-ready blueprint. Its real virtue is in marshalling, in one place and with proper analytical rigour, every credible lever available to revive British growth, and in making the unfashionable case that none of this is especially difficult. Read in the context of the optimism filtering back through Britain’s small business community, the message lands harder still: the country wants to grow; it just needs a government that lets it.

By the close of this decade, he warns, Britain will look less like an advanced economy than a developing one. The flipside, he points out with a wry smile audible in the prose, is that emerging economies have spent decades demonstrating that catch-up growth is largely a matter of copying what works elsewhere. “My analysis shows that delivering it may not be easy, but it is not impossible either,” he writes. “All the solutions have been tried in other countries with similar democratic constraints to ourselves.”

The most uncomfortable passage in the book is also the most revealing. “If that’s the answer, why on earth didn’t you do it when you had the chance?” Sir Jeremy asks himself, with the directness of a man who knows the question is coming. “The truth is that no one starting a job can ever know all the answers. In some ways, I wish I had been given this book on the day I became chancellor.”

Whoever inherits the Treasury in 2028 or 2029, and the polling suggests it will not be a Conservative, would do well to take him at his word. Can We Be Rich Again? is, despite itself, the most useful piece of economic writing produced by a former British chancellor in a generation. It deserves to be read, argued with, and, on most counts, acted upon.

Can We Be Rich Again? by Sir Jeremy Hunt is published by Swift at £25.

Read more:
Jeremy Hunt may have just written the growth manual Britain has been waiting for

Nearly one in five young Britons could be out of work within little more than a year, as higher payroll taxes, a sharply rising minimum wage and the relentless march of artificial intelligence combine to shut school and university leavers out of the jobs market.

In a sobering update to its quarterly economic outlook, the British Chambers of Commerce (BCC), one of the country’s most influential business lobby groups, forecasts that the unemployment rate among 16 to 24-year-olds will climb to 17.8 per cent in 2027, up from an already uncomfortable 16.9 per cent this year. The deterioration would push youth joblessness to its highest level in well over a decade and lend fresh weight to warnings of a “lost generation” of workers.

The BCC singled out the rapid take-up of AI tools by employers, typically to handle the kind of routine, entry-level tasks that have traditionally given young people a foot on the ladder, as a leading culprit. A separate Business Matters investigation has shown how the big four accountancy firms are already slashing graduate hiring as AI replaces entry-level roles, a pattern now spreading rapidly across financial services, legal, marketing and back-office functions.

Government policy is doing little to soften the blow. The BCC believes ministers’ decisions to lift employer national insurance contributions and push through one of the largest minimum wage increases on record have made younger, less experienced staff disproportionately expensive to hire, a point business owners and payroll specialists have made repeatedly since the Treasury signalled the increased cost burden facing employers.

The findings reinforce a warning issued last week by Alan Milburn, the former Labour cabinet minister, who told ministers that without urgent intervention as many as 1.25 million young people could be classed as not in employment, education or training (NEET) by the early 2030s. Business Matters has previously reported that the NEET cohort is already nudging one million, with Office for National Statistics figures showing the share of economically inactive young people at its highest level since records began in 1992.

David Bharier, deputy director of economics and insights at the BCC, said the picture pointed to a structural, not merely cyclical, problem. “The UK is not in recession, but the economy remains trapped in a cycle where each recovery is interrupted before gaining traction, and firms go back on the defensive,” he said. “With youth unemployment approaching 18 per cent by mid-2027, the UK risks weakening the skills pipeline it needs for the next economy.”

Overall joblessness is forecast to reach 5.5 per cent next year, up from the current 5 per cent. Gross domestic product, the BCC said, will grow by just 0.9 per cent this year, 1 per cent in 2027 and 1.3 per cent in 2028, with the services sector, which now accounts for around 80 per cent of national output, doing most of the heavy lifting.

Inflation, meanwhile, is being given an unwelcome boost by surging global energy prices linked to the war in the Middle East. The BCC now sees the consumer prices index peaking at 3.8 per cent by the end of 2026, well above its previous forecast of 2.7 per cent, before easing back to 2.3 per cent next year and returning to the Bank of England’s 2 per cent target in 2028. The latest ONS data put inflation at 2.8 per cent in April, down from 3.3 per cent in March.

Faced with that mix of weak growth, rising joblessness and stubborn price pressures, the BCC expects the Bank’s Monetary Policy Committee to hold the base rate at 3.75 per cent for the remainder of the year, with its next decision due on 18 June. At its April meeting the Bank said it “stands ready to act” if inflation proves sticky, but officials are clearly mindful of the damage a further squeeze would do to a fragile labour market.

“Much hinges on the course of the Middle East conflict,” Bharier said. “Inflation is likely to edge towards 4 per cent this year, but the Bank of England faces a different scenario compared with the 2022 crisis. Weaker growth, rising unemployment and already restrictive monetary policy mean the Bank could seek to manage this without raising the interest rate and risking further damage.”

For SMEs, long the proving ground for first jobs, apprenticeships and on-the-job training, the cocktail of higher employment costs, geopolitical uncertainty and falling investment is becoming hard to swallow. The BCC expects business investment to fall by 2.2 per cent this year and a further 0.1 per cent in 2027 before recovering by 2.3 per cent in 2028. Without a meaningful shift in policy, the danger is that today’s hiring freeze becomes tomorrow’s lost decade for Britain’s young workers.

Read more:
BCC warns nearly one in five young Britons could be out of work by 2027 as AI and tax rises bite

Britain’s letter writers, and the small businesses that still depend on the post for invoices, contracts and statutory notices, are paying the price for another year of underperformance at Royal Mail.

Just 75.7% of first-class mail was delivered on time in the 12 months to the end of March, the postal operator confirmed on Friday, a country mile from its 93% regulatory target and the first full-year snapshot of life under Czech billionaire Daniel Kretinsky’s EP Group, which completed its £3.6bn takeover last spring.

Performance has actually slipped since the company’s final year on the London Stock Exchange, when 76.9% of first-class and 92.2% of second-class letters arrived on time. The new figures show only 90.2% of second-class post landed within three working days, against a target of 98.5%.

The communications regulator described itself as “very concerned” by the figures. Business Matters understands Ofcom is preparing to open a formal investigation into Royal Mail’s performance as soon as next week – a move that would almost certainly lead to a further multi-million-pound fine on top of the £21m penalty imposed last October, the third-largest in the watchdog’s history.

It is six years since Royal Mail last hit its second-class target and a decade since it cleared the bar on first-class. The slump that began during the pandemic has stubbornly refused to reverse.

Chief operating officer Jamie Stephenson struck a contrite tone, insisting the business is on course to meet new, softer targets of 90% for first-class and 95% for second-class by this time next year.

“We’re putting significant investment into improving reliability and reaching these new delivery targets, but delivering lasting change across a network of this scale takes time,” he said.

The company is ploughing £500m into its five-year improvement plan, which includes offering part-time posties longer hours and scrapping second-class Saturday deliveries – a structural overhaul agreed with Ofcom and rolled out from April.

For Britain’s 5.5 million small businesses, however, the patience required is wearing thin. SMEs remain disproportionately reliant on physical mail for cheques, payment reminders, HMRC correspondence and signed agreements. Slow post means delayed cash flow, missed deadlines and, in the worst cases, penalties from regulators whose own letters arrive late.

Tom MacInnes, policy director at Citizens Advice, was withering in his assessment. Poor performance at Royal Mail, he said, was “business as usual”.

“What’s worse, Royal Mail claims people will have to wait another year until it can meet its new, lower delivery targets,” he added.

In February, postal workers told the BBC that letters had been sitting undelivered in depots for weeks because staff had been instructed to prioritise parcels, which carry fatter margins. Mr Kretinsky was hauled before MPs on the Business and Trade Committee in March, where he said he was “deeply sorry for any letter that arrives late” but flatly denied that parcels were being put ahead of letters. As the House of Commons Library has documented, letter volumes have collapsed from 20 billion items in 2004-05 to around 6.6 billion last year, putting the universal service economics under unprecedented strain.

Ofcom has already eased Royal Mail’s regulatory burden. Since April, the operator has been measured against the lower targets of 90% next-day delivery for first-class and 95% three-day delivery for second-class. The regulator argued the previous benchmarks were “more stretching” than in comparable European countries and would “carry higher costs which would need to be recovered through higher prices” – an unwelcome trade-off for any SME owner who has watched a first-class stamp climb to £1.70.

Whether £500m and a slacker rulebook can finally turn around an institution that has failed its own customers for the best part of a decade is the question now landing on Mr Kretinsky’s desk. On the evidence of Friday’s numbers, the answer is not yet in the post.

Read more:
Royal Mail misses first-class delivery target again as Ofcom prepares fresh probe under Kretinsky ownership

The Lalvani family is on the brink of cashing in more than half a century of patient brand-building, with US private equity giant Bain Capital understood to be days away from sealing a near-£1 billion swoop on Vitabiotics, the UK’s largest multivitamin maker.

City sources suggest a deal valuing the family-owned group at around £900 million could be announced as early as this week, capping an auction that began in early 2025 and has run hot and cold for more than a year. Talks remain “delicately placed”, insiders cautioned, and there is still a risk the transaction slips or unravels at the eleventh hour.

For Tej Lalvani, the former Dragons’ Den panellist who has run the company since 2015, the deal would mark a remarkable chapter in a story that began on the warehouse floor. Fresh out of university three decades ago, Lalvani drove a forklift at the family business before working his way up through operations to the corner office, succeeding his father, Kartar, who founded the firm in 1971.

A British supplements powerhouse

Vitabiotics is the rare British consumer-health champion that has built genuine high-street recognition. Its stable of brands, Wellman, Wellwoman, Perfectil, Pregnacare and Menopace among them, sit on pharmacy shelves in more than 100 countries, while its celebrity ambassador roster reads like a Strictly after-party guest list: former host Tess Daly, supermodel David Gandy and broadcaster Davina McCall have all fronted campaigns.

Under Tej Lalvani’s leadership, the group’s annual global sales are said to have almost doubled from £101 million to £195.6 million, although the exact figures are hard to verify. Vitabiotics Group Holdings, the parent entity, sits within a complex ownership structure ultimately registered in the British Virgin Islands, an arrangement that allows the company to keep the finer points of its financial performance under wraps. The Lalvani family is ranked 255th on The Sunday Times’ Rich List, with an estimated fortune of £525 million.

A controversial buyer

If completed, the sale would represent another statement deal in UK consumer health for Boston-headquartered Bain Capital, which has been ploughing capital into the nutrition and wellness space, including its 2023 acquisition of US sports nutrition group 1440 Foods and a stake in India’s Emcure Pharmaceuticals.

It would also reopen a familiar debate. Bain is no stranger to controversy in the British market: in 2021, its £530 million swoop on the mutual insurer LV was famously rejected by members in a vote that ricocheted through Westminster and the City. The firm has spent the years since rebuilding its reputation among UK boards and policymakers, and a Vitabiotics deal would underscore how appetite for British family-owned consumer brands has rebounded, a theme Business Matters has tracked across the sector, including Danone’s recent €1 billion swoop on Huel.

The sale process has been overseen by boutique investment bank Houlihan Lokey. After fielding interest from several of the world’s largest buyout houses, the shortlist was whittled down to Bain and Blackstone earlier this year, before Vitabiotics entered exclusive talks with Bain last month. EQT and TPG, two of the other early suitors, dropped away as the price tag firmed up at close to £1 billion.

That valuation puts the business at roughly 4.5 times its claimed sales, a punchy multiple that reflects both the defensive cash flows associated with supplements and the broader resurgence in UK private equity dealmaking, where buyout houses are paying up for resilient consumer brands amid choppier macro conditions.

The Vitabiotics sale would also be a useful barometer of where deep-pocketed sponsors see growth in the post-pandemic wellness boom, with consumers continuing to spend on preventive health products even as broader discretionary categories soften.

What it means for Lalvani

For Tej Lalvani himself, the sale would mark the end of an era. He joined Dragons’ Den in 2017 and stayed on the BBC show for four series, backing companies that ranged from herbal tea brands and protein shake bottles to knitting accessories. Like many Dragons’ Den investors before him, he leveraged the platform to raise his profile as much as to build a portfolio, though his day job at Vitabiotics has always overshadowed his television deals.

What he chooses to do with a windfall of this scale will be watched closely. With Bain expected to retain the operational team, Lalvani is likely to remain involved in some capacity, at least through a transition period. According to reports in the Financial Times, the deal would rank among the largest sponsor-led acquisitions of a UK family-owned consumer business this year.

Bain Capital declined to comment. Vitabiotics had been approached for comment.

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Dragons’ Den’s Tej Lalvani lines up £900m sale of Vitabiotics to Bain Capital

Nvidia has fired its loudest shot yet at the personal computing market, unveiling a new superchip that chief executive Jensen Huang says will turn the humble Windows PC into a “teammate” capable of running personal artificial intelligence agents.

Speaking on Monday at a keynote ahead of the Computex technology show in Taipei, Mr Huang likened the moment to the arrival of the smartphone. “This reinvention of the computer is as big of a deal as the reinvention of the phone into what we now know as the smartphone,” he told delegates as he lifted the lid on the RTX Spark.

The chip, which Nvidia describes as a “superchip for the era of personal AI agents”, will sit at the heart of a new generation of Windows machines from Asus, Dell, HP, Lenovo, Microsoft Surface and MSI when they reach shelves this autumn. Acer and Gigabyte are expected to follow with their own models shortly afterwards. According to Nvidia’s own briefing notes, Spark pairs a Blackwell GPU with an Arm CPU and up to 128GB of unified memory, delivering roughly one petaflop of AI performance on the desk.

For Britain’s small and medium-sized businesses, the implications are significant. On-device AI promises to run drafting, scheduling, customer-service triage and basic analytics without sending sensitive data into the cloud, a development that chimes with the productivity story Business Matters has been tracking in our recent coverage of small businesses embracing AI for quick productivity wins. It also raises the bar for the next hardware refresh, with finance directors now needing to weigh AI-capable specifications alongside the usual considerations of price and support.

The move puts Nvidia squarely in the path of Apple and Intel in a consumer PC market that has been searching for a story to tell since the post-pandemic slump. With an estimated stock-market value north of $5 trillion (£3.7 trillion), a milestone first reported in detail by CNN Business, Nvidia has both the firepower and the brand recognition to disrupt the established order on the high street as well as in the data centre.

The announcement was not without geopolitical noise. On Sunday, the US Department of Commerce moved to close a loophole that had allowed the most advanced Nvidia hardware, including its Blackwell processors, to reach subsidiaries of Chinese firms operating outside the mainland. Washington’s broader campaign to keep cutting-edge silicon out of Chinese hands has been a recurring drag on Nvidia’s growth narrative, even as demand elsewhere remains ferocious.

For UK owner-managers, the strategic question is no longer whether AI belongs in the workplace, but where it should live. As we noted in our analysis of why AI and green tech are vital to SME growth, the businesses that move first on practical, on-the-ground deployment tend to widen the gap on those that wait. That trend is already showing up in the lending figures, with our recent report on UK SME lending climbing to £17.5bn on the back of AI-led growth suggesting balance sheets are being shaped around the technology, not the other way round. Spark, if it delivers on Mr Huang’s billing, may finally make the case for putting that intelligence on the desk rather than in the cloud.

Whether it really represents a “smartphone moment” will depend less on the silicon and more on the software that ships with it. But after a decade in which the PC has felt increasingly like a commodity, Nvidia has at least given the industry something fresh to argue about.

Read more:
Nvidia takes the AI war to the desktop with RTX Spark superchip

Whitehall has turned to one of the City’s most seasoned retail chiefs in an attempt to head off what ministers are now privately describing as the most acute youth unemployment crisis in more than a decade.

Marc Bolland, the former chief executive of Marks & Spencer, has been drafted in by the government to corral Britain’s biggest employers behind a renewed push to get young people into work, following an excoriating review by the former Labour cabinet minister Alan Milburn that warned the country risked sacrificing a generation to worklessness.

Milburn’s interim report, published this week, found that one in six 16- to 24-year-olds will be out of work, education or training within five years unless ministers act decisively. The figure currently stands at one in eight. Official data has already pushed the cohort of so-called NEETs above the one-million mark, the highest level in more than 12 years, and Milburn warned of a “generational fault line” opening up beneath the labour market.

“The problem is that for too many young people, opportunities are not growing, they’re shrinking,” Milburn wrote. His review found that six in ten NEETs have never held a job, yet 84 per cent of those surveyed said they wanted to work or train, a finding that has galvanised support inside Number 11 for a more interventionist approach.

Bolland, who also ran Morrisons and served as chief operating officer at Heineken, will report to Work and Pensions Secretary Pat McFadden and take up the role of Lead Non-Executive Director at the Department for Work and Pensions. His brief, confirmed by the government, is to convene chief executives across sectors and to advise ministers on how to respond to Milburn’s findings.

It is familiar territory. In 2012, in the wake of the previous summer’s riots, Bolland founded Movement to Work, the employer-led charity that has since helped more than 200,000 disadvantaged young people into employment. That track record, built on persuading rival boardrooms to pool resources rather than wait for state schemes, is precisely what ministers hope he can replicate at scale.

“I believe the government is serious about tackling this generational crisis of youth unemployment,” Bolland said on his appointment, “and I know that working hand-in-hand with business to support young people gives them the best possible chance of success.”

Alongside Bolland’s appointment, the government has secured commitments from some of the UK’s largest employers to back 300,000 work experience and training placements over the next three years. McDonald’s was first off the blocks earlier this year with 2,500 paid work experience placements, and Whitehall is now banking on a long tail of mid-market and SME employers following suit.

The push dovetails with the Treasury’s £725m package of apprenticeship reforms, which is expected to create 50,000 new roles and introduce shorter, more flexible training routes from April. Together, the measures represent the most concerted attempt to rebuild the rungs of the working ladder since the Coalition’s apprenticeship drive of the early 2010s.

Whether it works will depend in no small part on whether Bolland can persuade boardrooms that the cost of a placement now is cheaper than the cost of a hollowed-out talent pipeline later. As Milburn put it in his own assessment of the review’s findings, for every £1 the state spent on employment support for young people in 2024/25, roughly £25 went on benefits. That, more than any speech from the Despatch Box, is the number business will be asked to help shift.

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Bolland called in as Milburn review warns of a “lost generation” of British youth