Research Report. Cumbria Business Survey 2015/16 Final Report. Prepared for: Cumbria Local Enterprise Partnership

Transcription

1 Research Report Cumbria Business Survey 2015/16 Final Report Prepared for: Cumbria Local Enterprise Partnership

2 Cumbria Business Survey 2015/16 Final Report Prepared for: Cumbria Local Enterprise Partnership Prepared by: June Wiseman, Director and Emma Parry, Associate Director, BMG Research Date: August 2016 Produced by BMG Research Bostock Marketing Group Ltd, Project: 9808 Registered in England No Registered office: BMG Research Beech House Greenfield Crescent Edgbaston Birmingham B15 3BE UK Tel: +44 (0) UK VAT Registration No Birmingham Chamber of Commerce Member No. B4626 Market Research Society Company Partner British Quality Foundation Member The provision of Market Research Services in accordance with ISO 20252:2012 The provision of Market Research Services in accordance with ISO 9001:2008 The International Standard for Information Security Management ISO 27001:2013 Investors in People Standard - Certificate No. WMQC 0614 Interviewer Quality Control Scheme (IQCS) Member Company Registered under the Data Protection Act - Registration No. Z The BMG Research logo is a trade mark of Bostock Marketing Group Ltd

3 Table of Contents 1 Executive Summary Background Method Business/organisation profile Impact of 2015 Floods Extent of impact Nature of impact Financial impact Action taken Impact on trading Future concerns Trading and Investment Location of decision-making Markets served Trends Business constraints Short-term outlook Growth Employment growth Turnover growth Drivers of growth Growth indicators Skills Gaps and Shortages Skill gaps Skill shortages Training Provision of training Barriers to training Infrastructure developments in Cumbria Moorside Nuclear Plant development Other infrastructure developments... 10

4 Cumbria Business Survey 2015/16 Final Report 2 Introduction Background Method Impact of 2015 floods Key points Experience of storm and floods Persistency of problems caused by storm and floods Financial implications of storm and floods Financial losses/costs Financial gains Actions taken as a result of the impact of storm and floods Grant applications Sourcing business advice Trading circumstances Current status of business Mitigations Perceptions of longer term impacts of the storm and flooding Views on the importance of a positive PR campaign Concerns in the near future Trading and Investment Key points Location of key decision-making Markets Customer types Customer location Business trends Trends in the last 12 months Anticipated trends in the next 12 months Business constraints Growth Key points Employment growth Turnover growth Drivers of growth

5 Executive Summary 5.5 Growth plans Growth indicators Skills Gaps and Shortages Key points Skill gaps Presence of skill gaps Occupations with skill gaps Skills lacking Skill shortages Training Key points Training Training provision Barriers to the provision of training Focus On Infrastructure Developments in Cumbria Key points Sample profile Moorside Nuclear Plant Impact of the Moorside development on businesses Impact of the Moorside development on local economy Awareness and knowledge of other infrastructure development projects Anticipated impact of infrastructure development projects Business/Organisation Profile Key points Industry Employment profile Number of sites Organisation type Age of business Geographical distribution Appendix: Sector classifications and descriptions Appendix: EA Flood Extent Areas

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7 Executive Summary 1 Executive Summary 1.1 Background Cumbria Local Enterprise Partnership (LEP) is a private/public partnership which provides a strategic lead in activities contributing to the growth and vibrancy of the county s economy. Partners include Cumbria County Council, the District Councils, Cumbria Tourism, Cumbria Chamber of Commerce, Further & Higher Education Providers, the Lake District National Park and private sector businesses. Since the mid-1990s Cumbrian partners have commissioned regular surveys of local businesses on a range of business and employment issues in order to obtain updated information on the local economy. Areas of investigation covered in previous surveys and also included in 2015/16 are: Trading and investment Skills gaps and shortages Innovation and growth Obtaining finance Training provision The 2015/16 Business Survey originally also included questions regarding awareness of, the likely response to and perceived possible impact of prospective infrastructure developments in Cumbria. However, during fieldwork in December 2015, extreme weather conditions resulted in significant flooding in parts of Cumbria and the survey was halted. It was re-launched with a revised questionnaire in March New questions were included that covered the extent and nature of businesses experience of the flooding that resulted from the extreme weather conditions in December 2015 and the questions regarding prospective infrastructure developments, obtaining finance and innovation were removed to accommodate them. The 2015/16 Business Survey was conducted by BMG Research Ltd, which also carried out similar surveys in 1998, 2000, 2002, 2004, 2007, 2009, 2010, 2011 and Method Telephone interviews, with an average interview length of about 25 minutes, were conducted with 2,186 employers in November and December 2015 and March, April and May In November and December 2015, 778 interviews were conducted and this included 96 interviews with businesses that were located in the areas subsequently identified as having been directly affected by flooding. In March, April and May 2016, 1,486 interviews were conducted and this included 78 interviews with businesses that participated in November and December 2015 and were located in the designated flood area. Businesses that were re-interviewed in March, April and May 2016 are only included in the data once i.e. relating to their second interview. Respondents included directors or proprietors or other senior managers with knowledge of the issues investigated. 1

8 Cumbria Business Survey 2015/16 Final Report The 2016 survey included both private and public sector organisations, which reflected the 2013 survey scope. Data reported is related to the establishment at which the respondent was based. In the case of multi-site organisations, this could be a headquarters (provided that the HQ was in Cumbria) or a branch (depending on the outcome of the survey s random sampling processes). A quota sample was designed, based on the local economy s sectors (SIC 2007), its distribution of workplaces of different sizes (in terms of their employment), and Local Authority Districts. The quotas for sector and size were interlocking. Quotas by district were independent of the sector and size quotas. The survey data has been weighted (using information about the local economy from the Office for National Statistics IDBR data) so that the findings are fully representative of Cumbria s employers. 1.3 Business/organisation profile The agriculture, forestry and fishing industry accounts for the largest proportion of businesses and organisations within Cumbria (18%) while slightly fewer (16%) operate within the wholesale and retail sector. The majority of businesses and organisations (83%) employ fewer than 10 staff. This includes 30% of all businesses or organisations that do not have any employees. Just 6% of all businesses and organisations employ 25 or more staff, which increases to 30% of businesses or organisations in the education sector. Just over three-quarters of businesses and organisations (77%) operate from a single site. This increases to 80% of private sector businesses. The majority of businesses and organisations (87%) operate within the private sector. Around one in ten of all businesses or organisations (9%) are a charity/voluntary organisation, whilst 2% are a local government-financed body and 1% a central government-financed body. Seven in ten private sector businesses in Cumbria (70%) have been established for more than ten years. Of these, most have been established for more than twenty years (43% of all private sector businesses). Eight per cent of private sector businesses in Cumbria have been established for less than four years. South Lakeland is home to a quarter of businesses and organisations within Cumbria (26%), with around one in five each based in Allerdale (19%) and Carlisle (19%). One in seven is based in Eden district (14%), while one in eight is in Copeland (12%) and one in ten in Barrow-in-Furness (10%). Two-thirds of businesses are located in a rural area (66%), varying from rural hamlets and sparsely populated areas (around one in five) to a rural town in a more populated area (also around one in five). A third of businesses is located in an urban city and town. 2

9 Executive Summary 1.4 Impact of 2015 Floods Extent of impact Two-thirds of businesses (65%) across the whole of Cumbria suffered a negative impact of the storm and floods that were experienced in December Three in ten (30%) reported restricted access to their business premises, with slightly fewer (27%) reporting a reduction in passing trade and fewer customers. Actual flooding of business premises was less common but still experienced by one in eight businesses across Cumbria (13%) but this increased to two in five (41%) in the EA flood extent areas. Within the EA flood extent areas, more than four-fifths of businesses (86%) experienced a negative impact of some description. The sectors most likely to have been affected included the service industries of accommodation and food; wholesale and retail distribution and, specifically, the visitor economy sectors, which includes accommodation and food services; travel agencies/tour operators and arts, entertainment and recreation businesses (including museums and arts and cultural facilities). A positive effect, such as an increase in new orders and sales, was experienced by one in nine businesses (11%; 12% in the EA flood extent areas) with construction businesses most likely to benefit from this impact (30%) Nature of impact Where businesses reported structural damage to their premises, half (50%) reported the problems as on-going when interviewed between 4 and 6 months after the event. Other issues that were continuing to cause problems or to be unresolved for significant minorities of businesses suffering them, included lost/damaged machinery/equipment (41% reported this as an on-going problem); contaminated land (38%) and a reduction in passing trade/fewer customers (36%). Relatively short-lived problems experienced included staff being unable to go into work (54% reporting this as an issue experienced this for a few days or less); loss of services (58%); flooded premises (48%); restricted access to business premises (42%); flooded land (40%) and late or undelivered supplies (38%) Financial impact Of the 65% of businesses suffering a negative impact of the storms and flooding; three in five (60%) reported a financial loss or additional costs as a result. This equates to around two in five businesses in Cumbria and increases to nearly two in three businesses in the EA flood extent areas. The mean financial loss/cost incurred to date (at the time of the interview) is calculated as 35,759, rising to 84,455 across the EA flood extent areas. Additional costs were expected by around one in four businesses that experienced a negative impact and their projected further costs increase the mean financial loss/cost that is likely to be incurred to 54,608, rising to 99,496 in the EA flood extent areas. 3

10 Cumbria Business Survey 2015/16 Final Report Financial loss due to a reduction in trade was most prevalent, with 74% of those able to provide an estimate attributing their loss to this and the majority of these (42% of all those able to provide an estimate) attributing all their financial losses to a loss of trade. Just over half of those suffering financially from the impact of the storms and flooding (54%) incurred some costs as a result of physical damage with 20% of those reporting some financial loss/cost attributing all their costs to this. Just over a quarter of businesses suffering financially (27%) were able to recover at least some of their costs/losses from insurance or other sources. This rose to nearly half of businesses in the EA flood extent areas (48%). There were also financial gains as a result of increases in orders/sales, with more than half of those reporting some gains (and able to provide an estimate) (55%) reporting gains of up to 5,000. The mean amount was 35,571, rising to 72,090 across production/construction sectors Action taken More than two in five businesses that experienced a problem as a result of the storm and floods (45%) had taken one or more actions as a result. They were most likely to increase promotion/marketing activity (20%) and/or apply for a grant of some sort (15%). Half of those that applied for a grant of some sort (50%; 8% of those that experienced any problems) applied for a business recovery grant from the Cumbria Business Growth Hub/Cumbria Chamber of Commerce. One in eight businesses that experienced a negative impact of the storm and flooding (13%) sought business advice, rising to 23% of those in the EA flood extent areas. This business advice was most likely to have been sought from the Cumbria Business Growth Hub/Cumbria Chamber of Commerce (31%) Impact on trading One in eight businesses (12%) was still trading on a limited basis at the time of interview. This proportion was higher amongst those in the EA flood extent areas (16%) and amongst those whose premises had flooded (25%). The main issues that are affecting businesses abilities to get back to full trading include a downturn in trade/customers; the negative image of Cumbria following the floods and infrastructure issues. Most expect to be fully trading again in the next six months, but one in eight anticipate limited trading for at least a further year and one business expects to close. A third of businesses (36%) were able to avoid a period of limited trading because they were able to take action quickly to protect property and stock, while a fifth of those that remained fully trading (21%) had taken previous preventative/resilience measures. Most businesses that were able to get back to full trading after a period of limited trading were able to do so, they said, because the impact was limited anyway (81%), while around half (51%) took action quickly to protect property/stock and just over a fifth (22%) were helped by the local community. 4

11 Executive Summary Future concerns More than a quarter of all businesses anticipate longer term impacts on the local economy as a result of fewer visitors to the area (28%). This view is held by a higher proportion of businesses than average in the Lake District National Park (38%) and South Lakeland (33%). One in eight businesses (13%) expects that infrastructure repairs will take longer than currently planned or will not be fully completed (the A591 had not re-opened at the time of the survey). Four in five businesses (80%) considers a positive PR and advertising campaign to represent Cumbria favourably as essential/very important going forward and most of the remainder (12% of all) considers it quite important. When asked how concerned they were about the risk of storms and flooding in the future; the level of future insurance premiums; and revisions to insurance policy terms and conditions, views were relatively evenly split between those that were concerned and those that were not. Around one in five were very concerned about each and this rose to one in three in the EA flood extent areas, with similar proportions quite concerned. 1.5 Trading and Investment Location of decision-making The majority of decision-making within Cumbria s businesses is made at the Cumbrian site. This is most likely to be the case with regard to recruitment (92% of all businesses; 65% of multi-site businesses) and least likely to be the case with regard to investment (86%; 41% of multi-site businesses) Markets served Private sector businesses continue to be largely focused on the local market including visitors to Cumbria. There has been little change since Around three-quarters of businesses (73%) sell products or services to domestic/individual customers; around two-fifths (41%) to tourists visiting Cumbria; two-thirds (65%) to private sector businesses; a third to public sector organisations (35%) and one in six (17%) to organisations within the nuclear industry. In terms of geographic markets, there is a trend away from concentration on the local market and a move towards supplying markets further afield. One in three private sector businesses (32%) report all their sales in Cumbria now, compared with nearly half (46%) five years ago. Just over one in five private sector businesses in Cumbria exports (22%); 15% of all reported sales within the EU; 11% outside the EU. On average, 70% of sales, by value, are made within Cumbria. The Cumbria market is particularly important to businesses in Barrow in Furness (80%) and Allerdale (77%) and to construction businesses (83%) and those in the health services sector (89%). 5

12 Cumbria Business Survey 2015/16 Final Report Trends A significant minority of private sector businesses in Cumbria report rising staff costs in the last 12 months (46%). A third report rising energy and raw material prices (35% and 34% respectively). Fewer, however, report increasing output and domestic orders (24% and 22% respectively). As one would expect given the greater prevalence of rising costs compared to rising output and orders, businesses are more likely to have reported lower than higher profit margins in the last 12 months (34%, compared with 17%). There is more likely to have been an increase in investment than a decrease in the last 12 months (20% versus 13%). The propensity to have increased investment is linked to business size; 38% of businesses with 25+ employees; 20% of those with between 1 and 9 employees. A third of Growers (34%) businesses that have reported employment or turnover growth of 5% or more in the last 12 months reported increasing investment in the last year, compared with half that proportion amongst Shrinkers businesses that have reported declining employment or turnover. Businesses are optimistic about the next 12 months, with a third anticipating an increase in domestic orders (36%) and profit margins (33%). However, higher proportions anticipate increasing staff costs (50%); energy prices (39%) and raw material prices (37%) Business constraints When asked to consider whether a range of potential issues were significant barriers to their business performance and efficiency, the economy, regulations, access to or speed of broadband, taxation, VAT and cash flow featured strongly and above local issues such as planning, the transport infrastructure and skills issues. Around a third of private sector businesses cited issues relating to: the local road network and road access, the way the local planning and development control system operates, the availability of people able to do the job, availability of affordable housing in the area and the availability of suitable bus services as significant barriers to performance and efficiency. The issues relating to local infrastructure were more likely to be mentioned as barriers to business performance and efficiency by businesses that have experienced negative impacts from the storm and flooding. Businesses identified as Growers were more likely to feel held back by a lack of availability of people able to do the job. By sector, businesses in the accommodation and food services sector are the most likely to have increased investment, while those in the construction and arts and recreation sectors are most likely to have reduced levels of investment Short-term outlook Looking ahead to the next 12 months, there is considerable optimism, with around a third of private sector businesses anticipating higher levels of domestic orders, profit margins and cash in the business, while a similar proportion, but less positively, expects the prices charged to customers to increase. Fewer businesses (around a quarter) anticipate an increase in investment levels. 6

13 Executive Summary Of most significance, and underlying the trend towards higher prices, is the fact that at least half of all private sector businesses expect the trend for higher energy and raw material prices to continue, while more than two-fifths anticipate an increase in staff costs; the latter reflecting the proportion that reported increases in staff costs in the last 12 months, suggesting that recent experience is driving future expectations. 1.6 Growth Employment growth Four-fifths of all businesses and organisations (80%) reported no change in the size of their workforce since the same time last year. One in eight (12%) had increased the size of their workforce and a lower proportion (9%) had reduced the number of staff employed. The likelihood of employment growth in excess of 20% was significantly more likely than average in businesses with fewer than 25 employees (13%, compared with an average of 8%). Increases in employment are most likely to have been experienced within manufacturing and education businesses/organisations, while decreases are most likely to have been experienced within wholesale and retail and accommodation and food services. It can be estimated 1 that employers took on around 7,700 new staff in the last 12 months, while shedding around 6,300 jobs. The net increase in employment is estimated at around 1,400 staff. The biggest gains are to be found within the districts of South Lakeland (+850 staff approximately) and Carlisle (+750 staff approximately), within larger businesses and organisations (+1,400 within 100+ employers) and within construction (+600 staff approximately). There have also been significant gains within primary industries and health services. There are significant net losses within the districts of Copeland (-700 staff approximately) and Eden (-170 staff approximately) and within manufacturing (-170 staff approximately) and professional, scientific and technical services (-140 staff approximately) Turnover growth A quarter of private sector businesses that have been trading for at least a year (25%) reported an increase in their turnover in the last year. As in 2013, this is closely matched by the quarter (26%) reporting a decrease. The findings suggest that around 5,000 businesses experienced turnover growth in the last 12 months, while around 5,200 experienced decline. Businesses in South Lakeland are most likely to have benefited from turnover growth rather than shrinkage (around 1,500 compared with around 1,300, respectively). By sector, the largest positive net balances where the number of businesses that have experienced turnover growth exceeds the number that have experienced decline are 1 This data is based on the survey data, grossed up to represent the business population and number of employees within the business population. 7

14 Cumbria Business Survey 2015/16 Final Report apparent within professional, scientific and technical services (+390 approximately), business services (+280) and construction (+230 approximately). Within primary industries there has been significant contraction of turnover, with around 1,700 businesses reporting decline in turnover, compared with just 370 reporting an increase. Businesses without employees are significantly more likely to have seen a decline in their turnover than growth in the last year (around 1,500 compared with around 1,600, respectively) Drivers of growth When asked about the drivers of this growth, they were most likely to stipulate an improvement in demand in their markets (74%), with better work organisation (55%) and stronger marketing (50%) also important factors. Around two-thirds of private sector businesses aim to grow their output, sales turnover or employment in the next two to three years (69%), which is a similar figure to that reported in 2013 (68%). Around a quarter (27%) aims to grow in all of these ways. The factors that businesses expect to drive future growth are very similar to those that have been identified as having driven recent growth, although improving business efficiency/productivity is the most frequently selected (77% of businesses aiming for growth), above that of growth in demand and/or expansion of markets (73%). While, also strongly featured as a driver of future growth is competitive pricing (73%) Growth indicators In terms of growth, three broad groups were identified, based on survey responses. These were: Growers ; businesses and organisations that have increased the number of staff employed by 5% or more or that have increased turnover by 5% or more in the last year: Stable ; businesses and organisations that have the same number of staff and same level of turnover as 12 months ago, or that have seen an increase or decrease that is at less than 5%: Shrinkers ; businesses and organisations that have reduced the number of staff employed by 5% or more or that report a decrease in turnover of 5% or more in the last year but have not also reported a similar size increase in employment or turnover. In addition, a sub-set of Growers, called High growers was identified. These businesses and organisations have increased the number of staff employed or increased their turnover by more than 20% in the last year. Growers account for 34% of all businesses and organisations (27% in 2013) and this group includes 10% of all that are High growers (9% in 2013) Shrinkers account for 22% of all businesses and organisations (19% in 2013). The remaining 43% are classified as Stable (54% in 2013). Young businesses (those established less than 4 years) are more likely than average to be Growers (41%), while three in ten exporters are Growers (30%). Growers are significantly more likely than average to have reported upward trends in most areas of business activity, particularly output, but with the exception of raw materials and energy prices, for which Shrinkers are more likely to have reported an increase. 8

15 Executive Summary 1.7 Skills Gaps and Shortages Skill gaps Fourteen per cent of businesses with employees in Cumbria identify skill gaps in their business or organisation, which is the same proportion as in This proportion increases to 24% of those with 25 or more employees. Employers are most likely to identify skill gaps in skilled trade occupations and low skilled elementary administration and service occupations. The most frequently cited skills lacking within workforces are technical and practical skills and advanced IT or software skills Skill shortages A third of businesses (32%) had tried to recruit staff in the last 12 months and more than half of these (53%; 17% of all businesses) have experienced some difficulties filling job vacancies. Echoing where skill gaps have been reported, hard-to-fill vacancies are most likely to have been reported for skilled trades and elementary administration and service occupations. Businesses within the varied sectors of construction, accommodation and food services and professional, scientific and technical services are more likely than average to report recruitment difficulties. The main causes of hard-to-fill vacancies have been the low number of applicants, particularly of those with the required skills, and including a lack of interest in the jobs advertised and remote locations of workplaces accompanied by poor public transport. 1.8 Training Provision of training Half of businesses and organisations in Cumbria (51%) have arranged or funded any training or development for employees at their site in the last year. Around two-fifths have arranged or funded any off-the-job training (38%) and/or on-the-job training (41%). Business size is the key determinant of training practice with around nine in ten businesses and organisations with 10 or more staff having funded or arranged training in the last year (87%), rising to 95% of those with 100 or more staff. Training is most prevalent within public services, education and health service sectors (94%, 82% and 91% respectively). It is least prevalent within primary industries (34%) and construction (46%). Growers are significantly more likely than average to have arranged or funded training (65%), with Shrinkers significantly less likely to have done so (44%) Barriers to training The most frequently cited barrier to the provision of training amongst those that do not train is a perceived lack of need (14%), while amongst those that train, the main barrier to providing more training is that no more money is available for training (15%). 9

16 Cumbria Business Survey 2015/16 Final Report 1.9 Infrastructure developments in Cumbria Moorside Nuclear Plant development Around one in five businesses (19%) sell or provide services to organisations in the nuclear industry, which suggests that the development at Moorside will have a significant impact on the local economy. The majority of businesses and organisations (82%) were aware of the Moorside Nuclear Plant development prior to taking part in the survey. A quarter of all (24%) consider themselves quite/very knowledgeable about it. Awareness and knowledge of the plans is greatest in the district of Copeland (98% aware; 57% quite/very knowledgeable). One in six businesses and organisations (17%) thought it likely that their business would pursue supply chain opportunities from the Moorside development, increasing to 29% within the district of Copeland. Most businesses and organisations that consider it likely or are undecided with regard to pursuing such supply chain opportunities think some support in doing so would be helpful (89% specify any support). This is most likely to be with regard to information about goods and services required and how to access these opportunities (75%) and support to help build linkages with potential partners and suppliers (71%). In terms of the impact of the Moorside nuclear development on businesses and organisations, the most positive anticipated is the increase in local expenditure resulting from incoming construction workers, while the most negative impact is likely to be from the volume of traffic during construction and this is more pronounced in the district of Copeland. When it comes to the development s impact on the local economy, the views of businesses and organisations are very positive. Very few anticipate a negative impact. Around three-quarters of respondents anticipate positive change to the extent of new job opportunities, the retention of young people locally as a result of these new opportunities and a benefit to the economy as a result of the expenditure of workers and suppliers. In contrast, the most frequently mentioned negative impacts are with regard to potential increases in house prices and the cost of general goods and services locally due to greater demand. Between one in four and one in five anticipate this Other infrastructure developments In terms of other infrastructure developments in Cumbria, 70% of respondents have heard of the Walney Off-shore Wind farm; 49% have heard of the BAe Systems expansion; 33% have heard of the West Cumbria Tidal Lagoon; 28% of the West Cumbria Mining project and 25% of the West Cumbria Water Supply project. Respondents are most knowledgeable about Walney Off-shore Wind farm (14% are quite/very knowledgeable) and the BAe Systems expansion (11%). On the whole, most of those that are aware of these projects have little knowledge of them. More than half of respondents that have heard of any of these infrastructure developments (53%) do not anticipate any impact from them on their business. The 10

17 Executive Summary majority of the remainder (38% of all those aware of any) anticipate a positive impact. This increases to more than half of respondents in Barrow in Furness (53%) and Copeland (51%). 11

18 Cumbria Business Survey 2015/16 Final Report 2 Introduction 2.1 Background Cumbria Local Enterprise Partnership (LEP) is a private/public partnership which provides a strategic lead in activities contributing to the growth and vibrancy of the county s economy. Partners include Cumbria County Council, the District Councils, Cumbria Tourism, Cumbria Chamber of Commerce, Further & Higher Education Providers, the Lake District National Park and private sector businesses. Since the mid-1990s Cumbrian partners have commissioned regular surveys of local businesses on a range of business and employment issues in order to obtain updated information on the local economy. Areas of investigation covered in previous surveys and also included in 2015/16 are: Trading and investment Skills gaps and shortages Innovation and growth Obtaining finance Training provision The 2015/16 Business Survey originally also included questions regarding awareness, the likely response to and perceived possible impact of prospective infrastructure developments in Cumbria. However, during fieldwork in December 2015, extreme weather conditions resulted in significant flooding in parts of Cumbria and the survey was halted. It was re-launched with a revised questionnaire in March New questions were included that covered the extent and nature of businesses experience of the flooding that resulted from the extreme weather conditions in December 2015 and the questions regarding prospective infrastructure developments, obtaining finance and innovation were removed to accommodate them. The 2015/16 Business Survey was conducted by BMG Research Ltd, which also carried out similar surveys in 1998, 2000, 2002, 2004, 2007, 2009, 2010, 2011 and Method Telephone interviews, with an average interview length of about 25 minutes, were conducted with 2,186 employers in November and December 2015 and March, April and May In November and December 2015, 778 interviews were conducted and this included 96 interviews with businesses that were located in the areas subsequently identified as having been directly affected by flooding. In March, April and May 2016, 1,486 interviews were conducted and this included 78 interviews with businesses that participated in November and December 2015 and were located in the designated flood areas. Businesses that were re-interviewed in March, April and May 2016 are only included in the data once i.e. relating to their second interview. Respondents included directors or proprietors or other senior managers with knowledge of the issues investigated. 12

19 Introduction The 2016 survey included both private and public sector organisations which reflected the 2013 survey scope. Data reported is related to the establishment at which the respondent was based. In the case of multi-site organisations, this could be a headquarters (provided that the HQ was in Cumbria) or a branch (depending on the outcome of the survey s random sampling processes). A quota sample was designed based on the local economy s sectors (SIC 2007), its distribution of workplaces of different sizes (in terms of their employment), and Local Authority Districts. The quotas for sector and size were interlocking. Quotas by district were independent of the sector and size quotas. The survey data has been weighted (using information about the local economy from the Office for National Statistics IDBR data) so that the findings are representative of Cumbria s employers. The structure of the unweighted sample achieved by the survey and its weighted profile by sector, size and district are summarised in the following table: Table 2.1: Sample profile Achieved interviews no. Unweighted sample % Weighted no. Weighted/ sample % ABDE: Primary (agriculture, forestry, fishing, mining, quarrying, electricity, water supply) C: Manufacturing F: Construction G: Wholesale and retail H: Transport and storage I: Accommodation and food services J: Information and communication K: Financial and insurance activities L: Real estate activities M: Professional, scientific and technical activities N: Administrative and support service activities O: Public administration and defence P: Education Q: Human health and social work activities R: Arts, entertainment and recreation S: Other services

20 Cumbria Business Survey 2015/16 Final Report Achieved interviews no. Unweighted sample % Weighted no. Weighted/ sample % No employees employees employees employees employees Allerdale Barrow in Furness Carlisle Copeland Eden South Lakeland Total Results from the total sample may be presumed accurate (with a 95% confidence level) within a maximum sample error of +/-2.1%. The margin of error on sub-sets of the total sample is larger, depending on the unweighted number of respondents. Throughout this report, significant differences between sub-samples and significant year-on-year differences are highlighted. However, in terms of comparisons with previous surveys, it should be noted that sample sizes have changed significantly from year to year and that prior to the 2013 survey, the survey included private sector businesses only, rather than both private and public sector businesses and organisations as this year. Furthermore, the questionnaire employed has altered over time and as a result there are limited reliable opportunities for trend analysis. 14

21 Impact of 2015 floods 3 Impact of 2015 floods Chaos in Cumbria: floods turn lives upside down in Lake District (The Guardian 5 th Dec 2015) Communities in Cumbria have unfortunately suffered several incidents of severe flooding in recent years most notably in 2005, 2009 and On Friday 4 th December 2015 weather warnings were issued across the North West as Storm Desmond threatened strong winds and heavy rain. On Friday night heavy rain continued and by Saturday morning there were 23 flood warnings and 21 flood alerts across Cumbria issued by the Environment Agency. Public transport and the road network throughout Cumbria continued to be disrupted throughout Saturday. By Saturday afternoon a major incident was declared and severe flooding had been reported in Cockermouth, Appleby, Keswick, and Kendal as well as outlying areas. In Carlisle, water levels rose to 7.9m in the early hours of Sunday and flood defences were breached. The village of Glenridding after being flooded on Saturday, was flooded twice more as further heavy rain caused the river to burst its banks again. The 2015/16 Business Survey presented an opportunity to ask businesses throughout the county about the nature, scale, duration and cost of the impact 4-6 months after the incident. Interviews were conducted with 1,486 businesses located both inside and outside the Environment Agency flood extent areas. (Please note that the A591 had not re-opened at the time of the interviews). 3.1 Key points Two-thirds of businesses (65%) suffered a negative impact of the storm and floods that were experienced in December Three in ten (30%) reported restricted access to their business premises, with slightly fewer (27%) reporting a reduction in passing trade and fewer customers. Actual flooding of business premises was less common but still experienced by one in eight businesses across Cumbria (13%) but this increased to two in five (41%) in the EA flood extent areas. Within the EA flood extent areas, more than four-fifths of businesses (86%) experienced a negative impact of some description. A positive effect, such as an increase in new orders and sales, was experienced by one in eight businesses (11%; 12% in the EA flood extent areas) with construction businesses most likely to benefit from this impact (30%). Where businesses reported structural damage to their premises, half (50%) reported the problems as on-going when interviewed between 4 and 6 months after the event. Of the 65% of businesses suffering a negative impact of the storms and flooding; three in five (60%) reported a financial loss or additional costs as a result. This equates to around two in five businesses in Cumbria and increases to nearly two in three businesses in the EA flood extent areas. 15

22 Cumbria Business Survey 2015/16 Final Report The mean financial loss/cost incurred to date (at the time of the interview) was 35,759, rising to 84,455 across the EA flood extent areas. Additional costs were expected by around one in four businesses that experienced a negative impact and their projected further costs increases the mean financial loss/cost that is likely to be incurred to 54,608, rising to 99,496 in the EA flood extent areas. Financial loss due to a reduction in trade was most prevalent, with 74% of those able to provide an estimate attributing their loss to this. Just over half of those suffering financially from the impact of the storms and flooding (54%) incurred some costs as a result of physical damage. Just over a quarter of businesses suffering financially (27%) were able to recover at least some of their costs/losses from insurance or other sources, rising to nearly half of businesses in the EA flood extent areas (48%). There were financial gains as a result of increases in orders/sales, with more than half of those reporting some gains (and able to provide an estimate) (55%) reporting gains of up to 5,000. The mean amount was 35,571. More than two in five businesses that experienced a problem as a result of the storm and floods (45%) had taken one or more actions as a result. They were most likely to increase promotion/marketing activity (20%) and/or apply for a grant (15%). One in eight businesses that experienced a negative impact of the storm and flooding (13%) sought business advice, rising to 23% of those in the EA flood extent areas. One in eight businesses (12%) continued to be trading on a limited basis at the time of interview. This proportion was higher amongst those in the EA flood extent areas (16%) and amongst those whose premises had flooded (25%). Most expected to be fully trading again in the next six months, but one in eight anticipated limited trading for at least a further year and one business expected to close. A third of affected businesses (36%) were able to avoid a period of limited trading because they were able to take action quickly to protect property and stock, while a fifth of those that remained fully trading (21%) had taken previous preventative/resilience measures. Most businesses that were able to get back to full trading after a period of limited trading were able to do so, they said, because the impact was limited anyway (81%), while around half (51%) took action quickly to protect property/stock and just over a fifth (22%) were helped by the local community. More than a quarter of all businesses anticipate longer term impacts on the local economy as a result of fewer visitors to the area (28%). Four in five businesses (80%) considers a positive PR and advertising campaign to represent Cumbria favourably going forward as essential/very important and most of the remainder (12% of all) considers it quite important. Around one in five were very concerned about the risk of storms and flooding in the future; the level of future insurance premiums; and revisions to insurance policy terms and conditions, and this rose to one in three in the EA flood extent areas. 16

23 Impact of 2015 floods 3.2 Experience of storm and floods Overall, two-thirds (65%) of all respondents reported that the storm and floods had a negative effect on their business in one or more ways, the most common being restricted access to business premises (30%), reduction in passing trade (27%) and land being flooded (25%). One in five respondents reported that staff had been unable to get to work; supplies were not delivered or were late (21% for each) and bookings or orders were cancelled or unfulfilled (20%). Figure 3.1: Impact of storm and floods (all respondents) Unweighted sample base = 1486 Restricted access to business premises Reduction in passing trade/fewer customers Land flooded 25% 27% 30% Staff unable to come to work Supplies not delivered/late Bookings/event cancelled Orders cancelled/unfulfilled 21% 21% 21% 20% Loss of services* Business premises flooded Land contaminated Increase in new orders/sales Business premises suffered structural damage Stock lost Machinery/equipment lost/damaged 15% 13% 12% 11% 11% 10% 9% Something else 5% * Services include: water, gas, electricity, telecommunications 17

24 Cumbria Business Survey 2015/16 Final Report The likelihood of suffering any negative impact as a result of the floods was significantly higher within the service industries of accommodation and food services (86%) and wholesale and retail distribution (77%), and particularly among those working in the visitor economy 2 (84%). In contrast, one in ten (11%) reported an upturn in new orders and/or sales as a result of the storm and floods with construction businesses significantly more likely than average to report this (30%). This proportion was also significantly higher within the business service sector (18%). Considering only those respondents from businesses in the EA flood extent areas (18% of the total sample), 86% of businesses reported that the storm and floods had a negative effect on their business in one or more ways, the most common being restricted access to business premises, flooded land, and a reduction in passing trade/fewer customers. In line with the wider sample, one in ten (12%) of those in an EA flood extent area reported an upturn in new orders and/or sales as a result of the storm and floods. 2 Visitor economy includes accommodation and food services; travel agents/tour operators/arts, entertainment and recreation 18

25 Impact of 2015 floods Figure 3.1: Impact of storm and floods (respondents in the EA flood extent areas) Unweighted sample base = 311 Restricted access to business premises Land flooded (including agricultural; yard; car parks; gardens; other outdoor space) Reduction in passing trade/fewer customers coming to premises Business premises were flooded Loss of water/gas/electricity/telecommunications Staff unable to come into work Orders cancelled or unable to be fulfilled Bookings/event cancelled Stock lost (including livestock, raw materials, goods for sale) Machinery/equipment lost/damaged Land contaminated (debris etc) Supplies not delivered/late delivery of supplies 49% 43% 41% 40% 37% 35% 35% 31% 31% 30% 29% 58% Business premises suffered structural damage 19% An increase in or new orders/sales Something else 12% 11% * Services include: water, gas, electricity, telecommunications 3.3 Persistency of problems caused by storm and floods Where respondents reported that their business had experienced issues as a result of the floods they were asked how long the problem(s) persisted. The most persistent problems were those related to structural damage of the business premises and loss/damage to machinery/equipment; problems which were less prevalent than many others. However, problems to do with contaminated land and, of more concern due to the extent to which it has been experienced, a reduction in customers, also persisted for a significant minority of businesses, being still on-going at the time of the survey, some four to six months after the storm. Other issues that were more persistent included loss of stock and cancellation of orders and bookings, the latter two clearly also directly related to loss of trade. 19

26 Cumbria Business Survey 2015/16 Final Report Figure 2.3: How long problems persisted (all experiencing each problem) Unweighted sample bases in parentheses A few days or less A week to two weeks Most/all of December Dec 15 to Jan 16 Dec 15 to Feb 16 Ongoing Business premises suffered structural damage (161) 13% 16% 5% 10% 6% 50% Machinery/equipment lost/damaged (165) 11% 17% 12% 10% 9% 41% Land contaminated (167) 19% 20% 14% 3% 6% 38% Reduction in passing trade/fewer customers (546) 14% 14% 12% 13% 11% 36% Stock lost (163) 25% 19% 12% 9% 4% 28% Orders cancelled/unfulfilled (351) 17% 22% 18% 13% 6% 23% Bookings/event cancelled (390) 16% 22% 18% 9% 11% 22% Restricted access to business premises (502) 42% 20% 9% 7% 4% 17% Business premises flooded (216) 48% 19% 6% 7% 4% 17% Land flooded (327) 40% 19% 11% 7% 8% 14% Supplies not delivered/late (400) 38% 34% 8% 9% 4% 7% Loss of services* (266) 58% 19% 7% 4% 5% 6% Staff unable to come to work (450) 54% 29% 7% 3% 3% 4% Something else (95) 2% 8% 5% 13% 10% 61% * Services include: water, gas, electricity, telecommunications 3.4 Financial implications of storm and floods Financial losses/costs Of the 65% of respondents who reported that their business has suffered as a result of the floods, three in five (60%) said that they have incurred a financial loss, or additional costs (whether or not these were covered by insurance), which equates to two in five of all respondents. This increased to nearly three-quarters (72%) of those in the EA flood extent areas who reported that their business has suffered and to more than three-quarters (78%) of those working in the visitor economy. The figure below highlights the fact that in just over half of instances (52%) the total financial loss/cost has been, so far, up to 5,000. However, one in nine (11%) reported losses/additional costs to date of 50,000 or more. 20

27 Impact of 2015 floods Overall, the mean loss/cost incurred at the time of interview was 36,759 and this varied widely between those in the EA flood extent areas, where the mean loss/cost was 84,455, and those outside the EA flood extent areas, where the mean loss/cost was 18,165. Figure 3.3: Financial losses/costs incurred as a result of the floods (where incurred financial loss/costs valid responses only) Unweighted sample base: 603 Under 1,000 13% Between 1,000 and 3,000 24% Between 3,000 and 5,000 15% Between 5,000 and 10,000 Between 10,000 and 25,000 Between 25,000 and 50,000 12% 11% 14% Between 50,000 and 100,000 Between 100,000 and 250,000 4% 5% Between 250,000 and 500,000 Between 500,000 and 1 million More than 1 million 1% 1% 1% Of the 65% of respondents who reported that their business had suffered as a result of the floods, a quarter (25%) expected to incur further financial losses/costs as a result of the floods (or 16% of all respondents), and this rose to a third (34%) of those in the EA flood extent areas who had suffered (or 30% of all respondents in the EA flood extent areas). Where additional costs were expected, one in ten (11%) were unsure how much these were likely to be. Around one in three (29%) expected the total amount incurred to be less than 5,000, and one in six (18%) expected the total amount to be over 50,000. Overall, the mean total amount they expected to incur was 54,608, increasing to 99,496 in the EA flood extent areas, but still 33,104 among those outside the EA flood extent areas. When asked to estimate what proportion of the financial costs incurred by their business could be attributed to physical damage and what proportion to loss of trade, it is clear that a significant proportion of those whose businesses had incurred losses/costs as a result of the storm and floods attributed this entirely to loss of trade. More than two in five of those able to provide an estimate (42%) said that 100% of 21

28 Cumbria Business Survey 2015/16 Final Report their losses were due to loss of trade, and around three-quarters (74%) attributed at least some of their losses to this. In contrast, just over half (54%) of those whose businesses had incurred losses/costs attributed this to physical damage to at least some extent and one in five (20%) said that physical damage accounted for 100% of their losses/costs. Figure 3.4: Proportion of financial losses/costs incurred accounted for by physical damage/loss of trade (where experiencing financial losses/costs valid responses only) Unweighted sample bases in parentheses Physical damage (583) Loss of trade (561) 0% 26% 46% 1% to 19% 5% 8% 20% to 39% 40% to 59% 6% 7% 8% 8% 60% to 79% 5% 8% 80% to 99% 6% 7% 100% 20% 42% Where respondents reported incurring a financial cost as a result of the floods, a quarter (27%) said they were able to recover at least some of this from insurance or other sources, and this figure rose to close to half (48%) of those in the EA flood extent areas. The likelihood of being able to recover at least some of the costs increased with business size, from 20% of those with no employees, 27% of those with 1 to 9 employees, 33% of those with 10 to 24 employees, to 40% of those with 25 or more staff Financial gains Among the 11% of respondents who reported that their business had experienced increased or new orders/sales as a result of the floods and were able to provide an estimate, over half (55%) reported gains of up to 5,000, while one in twenty (6%) reported gains of over 50,

29 Impact of 2015 floods The mean gain reported was 35,571, but this differed significantly by SIC, with respondents in the production/construction industries reporting mean gains of 72,090 (mainly in manufacturing) and those in services 10,266. Figure 3.5: Financial gains as a result of the floods (where experienced increased or new orders/sales as a result of the floods valid responses only) Unweighted sample base: 128 Under 1,000 18% Between 1,000 and 3,000 24% Between 3,000 and 5,000 Between 5,000 and 10,000 12% 12% Between 10,000 and 25,000 18% Between 25,000 and 50,000 9% Between 50,000 and 100,000 Between 100,000 and 250,000 Between 250,000 and 500,000 More than 1 million 2% 2% 1% 1% 3.5 Actions taken as a result of the impact of storm and floods Overall, 45% of respondents who had experienced a problem as a result of the storm and floods said that they had taken one or more of a number of actions as a result of their impact. This proportion varied significantly between those in the EA flood extent areas (62%) and those in the non-ea flood extent areas (40%). The most common action amongst those in the EA flood extent areas was to increase promotion/marketing activity (20%), followed by applying for a grant of some sort (15%). Within the EA flood extent areas, applying for a grant was the most common action (30%), while increasing promotion/marketing activity was the most common action within the non-ea flood extent areas (19%). Also relatively significantly reported actions included reducing staff working hours at the site (13%); seeking business advice (13%) and implementing new flood defence/resilience measures to buildings or land (13%). 23

30 Cumbria Business Survey 2015/16 Final Report Figure 3.6: Actions taken as a result of the impact of storm and floods, by whether within or outside the EA flood extent areas (all experiencing any problem) Unweighted sample bases in parentheses EA flood extent area (278) Non-EA flood extent area (752) Applied for a grant of some sort Increased promotion/marketing activity Implemented new flood defence/resilience measures Sought business advice Obtained business rate relief Reduced staff working hours Applied for business rate revaluation Moved to alternative premises 4% 3% 2% 10% 10% 10% 11% 12% 26% 19% 25% 23% 20% 19% 16% 30% Grant applications Among the 15% who had applied for a grant of some sort (which comprises approximately equal numbers of respondents in the EA flood extent areas and those outside of it), half (50%) said they had applied for a business recovery grant from the Cumbria Business Growth Hub/Cumbria Chamber of Commerce (equating to 7% of all those who had been affected by the floods), although this figure rose to 73% of those in the EA flood extent areas (equating to 22% of those affected by the floods in the EA flood extent areas). Nearly half (47%; 7% of all businesses affected) obtained business rate relief; increasing to 61% (19% of all) in the EA flood extent areas. Of those who had applied for a grant of some sort, a quarter (26%) said they had applied for the 5,000 flood resilience grant (equating to 4% of all those affected by the floods), rising to four in ten (39%) of those in the EA flood extent areas (equating to 11% of those affected by the floods in the EA flood extent areas). This pattern was reversed in relation to the Farming Fund, where overall a quarter of all those who had applied for a grant (39%, equating to 6% of all those affected) had applied for such assistance, driven in large part by those that applied for a grant of some sort in the non-ea flood extent areas (57%, compared with 19% of those in the EA flood extent areas). One in five of those who had applied for a grant of some sort had done so from another source (20%, equating to 3% of all those affected). 24

31 Impact of 2015 floods Sourcing business advice Overall one in eight (13%) of those who had experienced a problem as a result of the storm and floods sought business advice, and this varied significantly between those in the EA flood extent areas and those outside (23% and 10% respectively). Within this group the most common source of business advice was Cumbria Growth Hub/Cumbria Chamber of Commerce, used by 31% of all those seeking such advice. There was little difference in the sources used by those in the EA flood extent areas and those outside, with the exception that the former were more likely to seek advice from Cumbria Growth Hub/Cumbria Chamber of Commerce (48%, compared with 19%). Figure 3.7: Source of business advice (all who sought business advice) Unweighted sample base: 147 Cumbria Growth Hub/Cumbria Chamber of Commerce Bank/accountant/solicitor 20% 31% National Farmers' Union 16% Other businesses Local district council Insurance company Cumbria County Council Marketing companies/cosultants Trade group/association Internally/via Head Office Cumbria Community Foundation Federation of Small Business Local builders Cumbria Tourism Other DK/prefer not to say 9% 8% 7% 5% 4% 4% 3% 3% 2% 2% 1% 8% 4% 25

32 Cumbria Business Survey 2015/16 Final Report 3.6 Trading circumstances Current status of business The majority of respondents in all affected businesses reported that they were currently fully trading (87%), although this was somewhat lower among those in the EA flood extent areas (82%, compared with 89% of those outside of the EA flood extent areas), with a higher proportion reporting limited trading (16% cf. 11%). Very few respondents reported that they had ceased trading temporarily (4 respondents in total). A quarter of businesses whose premises flooded (25%) reported only limited trading at the time of the survey. Figure 3.8: Current state of business, by whether within or outside the EA flood extent areas (all experiencing any problem) Unweighted sample bases in parentheses EA flood extent area (278) Non-EA flood extent area (752) Fully trading (business as usual) 82% 89% Limited trading 11% 16% Ceased trading temporarily 2% <0.5% In cases where trading remained limited at the time of the survey, there was wide variation in terms of when respondents expected their business to be fully running again: while one in six (18%) expected this to be the case within the next month, one in eight (13%) expected it to take over a year and a similar proportion (13%) expected it to take between 6 months and a year. One business (in health services) expected to close. 26

33 Impact of 2015 floods Figure 3.9: How long anticipated before business fully running (all with limited trading) Unweighted sample base: 148 Within next month 18% Within next 2 to 3 months 37% Within next 4 to 6 months 10% Within 6 to 12 months 13% Longer than a year 13% Expect to close 1% Don't know 9% The main reasons cited for not yet being back to full trading were the downturn in trade/customers still being affected, the negative image of Cumbria as a result of the floods and issues with infrastructure (road, rail etc.). Figure 3.10: What has prevented business getting back to full trading (all with limited trading) Unweighted sample base: 148 Downturn in trade/customers still affected 77% Negative image of Cumbria following the floods Infrastructure issues 54% 61% Buliding/repair work still going on Property/furnishings/stock still drying out Problems with funding repairs Red tape/bureaucracy delaying necessary work Problem finding trades people for building work/repair Suppliers still affected Delays to or disputed insurance claims 36% 30% 30% 25% 23% 20% 19% 27

34 Cumbria Business Survey 2015/16 Final Report Among respondents from businesses affected by the storms and flooding who were fully trading at the time of survey (87% of all surveyed), two in five (40%) reported that they had experienced a period of limited trading at some point following the storm and flooding. So overall a third of all businesses (31%), whether in the EA flood extent areas or outside, reported some limits to their business trading as a result of the storm and flooding Mitigations Where respondents had been able to avoid a period of limited trading they were asked whether the ability to take action quickly to protect their property/stock or previous preventative/resilience measures which reduced the impact this time were reasons why their business had been able to trade as usual. A third (36%) said that taking action quickly and a fifth (21%) that previous preventative measures had been reasons why their trading had been unaffected. Respondents within primary industries were significantly more likely than average to cite taking quick action (58%) while also slightly more likely to have taken previous preventative/resilience measures (30%). Those in the EA flood extent areas were more likely to cite taking previous preventative/resilience measures than those in the non-ea flood extent areas (35%, compared with 19%). Respondents that had indicated that their business had seen limited trading for a period as a result of the storm and floods (22%) were asked which of a number of factors helped them to get back to full trading. For most (81%) the impact was limited anyway and half (51%) reported that they were able to act quickly to protect property/stock. One in five (22%) mentioned help from the local community, while fewer (18%) considered that previous preventative/resilience measures reduced the impact. 28

35 Impact of 2015 floods Figure 3.11: Factors that helped businesses get back to full trading (where experienced limited trading for a period) Unweighted sample base: 369 Impact was limited anyway 81% Able to take action quickly to protect property/stock 51% Local community helped Previous preventative/resilience measures reduced the impact Insurance company helped Landlord support Support agencies/council helped Something else 22% 18% 14% 13% 9% 11% Nothing 3% 3.7 Perceptions of longer term impacts of the storm and flooding The most likely longer term impact of the storm and flooding is considered to be fewer visitors to the area (28%). This view is particularly common within the Lake District National Park (38%) and South Lakeland (33%). This leads into the second most commonly held view that the storm and flooding is going to result in fewer customers for Cumbrian businesses (18%). One in eight respondents expect that infrastructure repairs will take longer than currently planned and/or will not be fully completed (13%). 29

36 Cumbria Business Survey 2015/16 Final Report Figure 3.12: Views on longer term impacts of the storm and flooding (all respondents) Unweighted sample base: 1486 (mentions 3% or over) Fewer visitors to the area 28% Fewer customers for Cumbrian businesses 18% Infrastructure repairs will take longer than currently planned/will not be fully completed 13% More investment in infrastructure Less investment in business sites in Cumbria Businesses will move out of Cumbria Cost of dealing with flooding will reduce spending elsewhere in the County Increase in insurance premiums/difficulty in getting insurance cover Limited accessibility to the area/infrastructure (travel issues) Fewer businesses moving into Cumbria Greater levels of engagement with business support agencies and councils Businesses will close/cease trading Reduced property values/it will be difficult to sell properties Greater levels of collaboration between businesses Concentration of vacant properties (creating no go/blight areas) Fewer people moving into the area for work Younger people more likely to move out of the area Fear of flooding again General financial impact/loss of revenue 7% 6% 6% 6% 6% 6% 5% 4% 4% 4% 3% 3% 3% 3% 3% 3% Other 14% Nothing 11% 30

37 3.8 Views on the importance of a positive PR campaign Impact of 2015 floods Respondents reactions to the observation that media reports regarding the damage done to the area by the storm and flooding may have presented the public with a negative picture of Cumbria as a place to visit were gauged. They were asked how important they considered the launch of a positive PR and advertising campaign to counter negative PR and help businesses that rely on or benefit at all from tourism. There was almost universal support for this, with over nine in ten (92%) regarding it as important, including 80% who viewed it as essential/very important and this varied little by geography, sector and business size, although businesses in the accommodation and food services sector and the visitor economy sub-sector are particularly likely to consider this activity essential/very important (90% and 89% respectively). Figure 3.13: Views on importance of positive PR and advertising campaign (all respondents) Unweighted sample base: 1486 Essential/very important 80% Quite important 12% Not very important 3% Not at all important 3% Unsure 1% 3.9 Concerns in the near future All respondents were asked how concerned they were about a number of issues occurring in the near future. The results were fairly consistent across all three possible risks the risk of storms and flooding, the level of future insurance premiums and revisions to insurance policy terms and conditions with views relatively evenly split between those were more concerned and those who were less concerned. Respondents are most likely to be concerned about the risks of further storms and flooding (52% concerned; including 24% very concerned) and least likely to be concerned about revisions to terms and conditions of insurance policies (45%; 20% very concerned). 31

38 Cumbria Business Survey 2015/16 Final Report Figure 3.14: Extent to which businesses are concerned about specified eventualities (all respondents) Unweighted sample base: 1486 Not at all concerned Not very concerned Quite concerned Very concerned Risk of storms and flooding 25% 22% 29% 24% The level of future insurance premiums 27% 22% 28% 20% The revisions of any terms and conditions of insurance policies, including the level of excess payable 30% 22% 25% 20% As one might expect businesses within the EA flood extent areas are more likely to be concerned about each of the possibilities than those outside. Around three-quarters of businesses in the EA flood extent areas are concerned about the risk of storms and flooding in the future, compared with just under half of those located outside of these areas (73%, compared with 48%). They are less likely to be concerned about the level of future insurance premiums but still significantly more likely than businesses based outside the flood extent area to be (68%, compared with 44%). Similarly, two-thirds of businesses in the EA flood extent areas are concerned about revisions to insurance policy terms and conditions in the future, compared with far fewer businesses outside of the flood areas (66%, compared with 40%). Figure 3.15: Extent to which businesses are concerned about specified eventualities (respondents in the EA flood extent areas) Unweighted sample base: 311 Not at all concerned Not very concerned Quite concerned Very concerned Risk of storms and flooding 14% 13% 34% 39% The level of future insurance premiums 14% 16% 33% 35% The revisions of any terms and conditions of insurance policies, including the level of excess payable 18% 15% 31% 34% 32

39 Trading and Investment 4 Trading and Investment 4.1 Key points The majority of decision-making within Cumbria s businesses is made at the Cumbrian site. This is most likely to be the case with regard to recruitment (92% of all businesses; 65% of multi-site businesses) and least likely to be the case with regard to investment (86%; 41% of multi-site businesses). Private sector businesses continue to be largely focused on the local market including visitors to Cumbria. There has been little change in this since Around threequarters of businesses (73%) sell products or services to domestic/individual customers; around two-fifths (41%) to tourists visiting Cumbria; two-thirds (65%) to private sector businesses; a third to public sector organisations (35%) and one in six (17%) to organisations within the nuclear industry. In terms of geographic markets, there is a trend away from concentration on the local market and a move towards supplying markets further afield. One in three private sector businesses (32%) report all their sales in Cumbria now, compared with nearly half (46%) five years ago. On average, 70% of sales, by value, are made within Cumbria. Just over one in five private sector businesses in Cumbria exports (22%); 15% of all businesses reported sales within the EU; 11% outside the EU. Almost half of private sector businesses in Cumbria report rising staff costs in the last 12 months (46%). A third report rising energy and raw material prices (35% and 34% respectively). Fewer, however, report increasing output and domestic orders (24% and 22% respectively). As one would expect given the greater prevalence of rising costs compared to rising output and orders, businesses are more likely to have reported lower than higher profit margins in the last 12 months (34%, compared with 17%). There is more likely to have been an increase in investment than a decrease in the last 12 months (20% versus 13%). Businesses are optimistic about the next 12 months; with a third anticipating an increase in domestic orders (36%) and profit margins (33%). However, higher proportions anticipate increasing staff costs (50%); energy prices (39%) and raw material prices (37%). In terms of significant barriers to business performance and efficiency, the economy, regulations, access to or speed of broadband, taxation, VAT and cash flow featured strongly and above local issues such as planning, the transport infrastructure and skills issues. Around a third of private sector businesses cited issues relating to the local road network and road access, the way the local planning and development control system operates, the availability of people able to do the job, availability of affordable housing in the area and the availability of suitable bus services as significant barriers to performance and efficiency. 33

40 Cumbria Business Survey 2015/16 Final Report The issues relating to local infrastructure were more likely to be mentioned as barriers to business performance and efficiency by businesses that have experienced negative impacts from the storm and flooding. Businesses identified as Growers were more likely to feel held back by a lack of availability of people able to do the job. 4.2 Location of key decision-making Respondents in businesses and organisations with more than one site were asked where key decisions affecting the business are made. Amongst these multi-site businesses and organisations, recruitment decisions are most likely to be made at their site (65%), rather than at another site further afield. They are least likely to make investment decisions (41%) or decisions about business or organisation strategy (44%) at their site. Around two-fifths of multi-site businesses and organisations report investment and strategy decisions being made outside of Cumbria and elsewhere in the UK (39% and 40% respectively). These findings echo those of Figure 4.1: Location of key decision-making (all multi-site businesses) Unweighted sample base = 611 * denotes less than 0.5% At this site Elsewhere in the UK Elsewhere in Cumbria Elsewhere in the rest of the world Recruitment 65% 15% 16% *% Training 59% 13% 25% *% Purchasing 53% 14% 31% 1% Marketing 45% 15% 37% 1% Business or organisation strategy 44% 16% 37% 3% Investment 41% 16% 38% 1% When these figures are recalculated across the whole sample that is, including single site businesses or organisations in which decisions are necessarily in Cumbria, there is a high level of autonomy within Cumbria, with the vast majority of businesses and organisations making decisions in key areas at that site. Decisions on recruitment and training are particularly likely to be made locally (see next figure). 34

41 Trading and Investment Figure 4.2: Location of key decision-making (all respondents) Unweighted sample base = 2,186 * denotes less than 0.5% At this site Elsewhere in the UK Elsewhere in Cumbria Elsewhere in the rest of the world Recruitment 92% 3% 4% *% Training 91% 3% 6% *% Purchasing 89% 3% 7% *% Business or organisation strategy 87% 4% 8% 1% Marketing 87% 3% 8% *% Investment 86% 4% 9% *% 4.3 Markets Customer types When asked about the type of customers to whom they sell or provide services, threequarters of private sector businesses indicated that their business sells or provides services to domestic/individual customers (73%), with over two in five of all private sector businesses (41%) selling or providing services to tourists visiting Cumbria, an uplift since 2013 (36%). There has been a slight increase in the proportion of private sector organisations selling or providing services to organisations in the nuclear industry (from 14% to 17%), while the proportion selling or providing services to public sector organisations has remained at a similar level to 2013 (35% this year, compares with 34% in 2013). Two-thirds (65%) reported selling or providing services to other private sector businesses, in line with In terms of their most important customers, domestic/individual customers remain the most important customer group (in terms of sales value) for around half of private sector businesses (46%), in line with 2013 (47%). The proportion remains significantly higher in Barrow-in-Furness (70%) than elsewhere and also remains higher than average in a number of sectors, including other services (87%) and health services (79%). 35

42 Unweighted sample bases Cumbria Business Survey 2015/16 Final Report One in three businesses (33%) cited other private sector businesses as their main customer group, similar to 2013 (35%). This increases to 42% of businesses in Carlisle. Tourists visiting Cumbria have grown in importance since 2013, with one in eight private sector businesses now citing them as their main customer group (12%), compared with one in twenty in 2013 (7%). There has been an increase in the extent to which businesses in the accommodation and food services sector rely on this customer group (from 42% in 2013 to 53% this year). Markets served and the extent to which they are considered businesses main markets are summarised in the table below. Table 4.3: Types of customer that businesses sell or provide services to (all private sector businesses); percentages Figures in bold are significantly greater than the previous year or against the average for this year minus the sub group tested * denotes less than 0.5% sample base ~caution: low Domestic/ individual consumers Tourists visiting Cumbria Public sector organisations Organisations in the nuclear industry Other private sector businesses Any Main Any Main Any Main Any Main Any Main 2015 All 1, All 1, All Local authority district Allerdale Barrow-in-Furness Carlisle * Copeland Eden * South Lakeland * Number of employees at that site 0 employees employees employees employees Industry sector Primary Manufacturing Construction Wholesale and retail *

43 Unweighted sample bases Trading and Investment Domestic/ individual consumers Tourists visiting Cumbria Public sector organisations Organisations in the nuclear industry Other private sector businesses Any Main Any Main Any Main Any Main Any Main Accommodation and food services Transport and communication Financial intermediation~ Business services Professional, scientific and technical services Education~ Health services Arts and recreation~ Other services Younger businesses, established in the last 4 years, are more likely to serve domestic/individual customers and tourists visiting Cumbria than those established for 5 or more years (91% serve domestic/individual customers cf. 71% of older businesses; 68% serve tourists cf. 38%) Customer location Private sector businesses were asked to estimate the proportion of their sales made within specified geographical areas. The trend would appear to be towards less reliance on the Cumbria market and an expansion in the geographical areas served. One in three private sector businesses (32%) report that all their sales are made in Cumbria compared with 39% in 2013, 46% in 2011 and 53% in 2010, while, for the first time since 2010, a higher proportion estimate that more than half but, crucially, less than all sales are within Cumbria; 39% this year, compared with 24% in 2010, 30% in 2011 and 32% in 2013). Overall, just over two-thirds of private sector businesses estimate that more than half their sales are made in Cumbria (69%); with 59% of all estimating that more than three-quarters of their sales in the county. A year on year comparison, highlights a decline in dependence on the sales within Cumbria; the proportion that estimated more than half their sales were in Cumbria was slightly higher in 2013 (71%) and significantly higher in 2011 (76%) and 2010 (77%). Over half (52%) reported some sales outside of Cumbria but still within the North West region, a significant uplift on the 43% who did so in 2013, and a slightly lower proportion report sales outside the North West region but within the UK (43%), again an increase on the 39% who did so in 2013, continuing the upward trend since 2011 in both instances. 37

44 Cumbria Business Survey 2015/16 Final Report Only a minority of respondents report sales outside the UK and the proportion has remained stable: 15% reported sales outside the UK within the EU (compared with 14% in 2013) and 11% outside the EU (compared with 13% in 2013). Only 4% of respondents reported having no sales within Cumbria and this proportion has also remained stable; being similar to the 2013 figure. The next figure shows the proportion of respondents sales made within Cumbria by district and sector. Figure 4.4: Proportion of sales estimated to be within Cumbria by district and sector (private sector businesses) Percentages. Unweighted sample bases in parentheses 0% 1-10% 11-25% 26-50% 51-99% 100% All businesses (1742) 4% 9% 4% 9% 37% 32% Allerdale (352) 5% 6% 1% 7% 32% 43% Barrow in Furness (104) 1% 2% 5% 6% 41% 38% Carlisle (335) 3% 10% 4% 12% 43% 25% Copeland (149) 1% 7% 7% 8% 30% 42% Eden (257) 5% 13% 3% 12% 36% 28% South Lakeland (545) 6% 10% 7% 9% 39% 26% Primary (exc. Manuf and Construct) (168) 6% 8% 5% 10% 24% 41% Manufacturing (134) 6% 17% 6% 8% 35% 22% Construction (131) 1% 2% 7% 41% 47% Wholesale and Retail distribution (438) 1% 6% 3% 10% 45% 29% Accommodation and Food (293) 4% 19% 8% 13% 24% 28% Transport and Communications (105) 8% 10% 6% 10% 49% 16% Financial intermediation (20) 5% 5% 6% 66% 18% Business services (102) 6% 3% 4% 10% 33% 43% Prof. Scientific, Tech. services (160) 5% 13% 4% 8% 52% 15% Education (31) 9% 18% 7% 3% 19% 35% Health services (65) 9% 37% 52% Arts, Recreation (43) 7% 4% 7% 37% 33% Other services (52) 2% 9% 40% 43% 38

45 Trading and Investment The average proportion of sales made within geographic locations both in Cumbria and beyond was calculated by using the mid-point of the different band options. This calculation provides a broad indication of where there is greater reliance on local markets and where there is more of a focus further afield. The share of sales across the geographic markets for different districts and sectors is summarised in the chart that follows. The local market continues to be of prime importance to Cumbria businesses: Figure 4.5: Estimated mean share of sales (percentages) within various geographic markets, by district and sector (private sector businesses where provided an estimate) percentages Unweighted sample bases vary but do not exceed those in parentheses * denotes less than 0.5% Within Cumbria Outside the North West but still in the UK Outside of the EU Within the North West region Outside the UK but within the EU All private sector businesses (1742) Allerdale (352) Barrow in Furness (104) Carlisle (335) Copeland (149) Eden (257) South Lakeland (545) Primary (exc. Manuf and Construct) (168) * Manufacturing (134) Construction (131) ** Wholesale and Retail distribution (438) Accommodation and Food (293) Transport and Communications (105) Financial intermediation (20) * * Business services (102) Prof. Scientific, Tech. services (160) Education (31) Health services (65) * Arts, Recreation (43) Other services (52) * 1 39

46 Cumbria Business Survey 2015/16 Final Report 4.4 Business trends Trends in the last 12 months Respondents in private sector businesses were asked about trends in their businesses in the last 12 months with regard to orders, employment, output, prices, profit margins, and cash flow. (It is important to take into account that the survey was taking place in the aftermath of the 2015 floods which will have influenced results for some respondents and also that the 12 month period includes two Easter periods which may have particularly influenced responses from businesses in the tourism sector.) Observed trends are summarised in the figure which follows: Figure 4.6: Business trends in the last 12 months (all private sector respondents providing a valid response) Maximum unweighted sample bases = 1742 Staff costs; maximum unweighted sample base = 1395 Higher Same Lower Staff costs 46% 44% 5% Energy prices 35% 40% 15% Raw material prices 34% 34% 11% Output 24% 51% 15% Domestic orders 22% 52% 16% Prices charged to customers 22% 59% 16% Investment 20% 46% 13% Profit margins 17% 43% 34% Cash in the business 15% 50% 25% Significant proportions of respondents report rising staff 3 (46%), energy (35%) and raw material (34%) costs, while around a quarter - considerably fewer - report increased output (24%), prices (22%) and domestic orders (22%) and fewer still report increasing investment (20%). As in 2013, higher proportions of respondents report a decline than an increase in profit margins (34% and 17% respectively) and cash in the business (15% and 25% respectively). The question regarding export trends was only applicable to around quarter of all private sector businesses (22%), as not all businesses export. Of these, just 7% 3 Staff costs: This was only asked of businesses with employees. 40

47 Trading and Investment report a recent upward trend in export orders, with a similar proportion (8%) reporting a downward trend. When we examine trends in key areas since 2009 (where we have comparable data) we can see that there has been decline in the extent to which employers report increases in most areas in the last 12 months except for staff costs where a higher proportion of employers this year report an increase, and with regard to cash in the business, where there has been no change since Figure 4.7: Businesses reporting higher trends in the last 12 months (all private sector respondents providing a valid response) 50% 45% 40% 35% 30% 25% 20% 15% 10% Staff costs Output Domestic orders Prices charged to customers Profit margins Cash in the business 5% 0% When examining data over time with regard to downward trends i.e. lower levels of staff costs, output, orders, prices, profit margins and cash flow, there has been little change since The greatest movement has been in terms of prices charged to customers, where a higher proportion of businesses report lower levels than in

48 Cumbria Business Survey 2015/16 Final Report Figure 4.8: Businesses reporting lower trends in the last 12 months (all private sector respondents providing a valid response) Maximum unweighted sample bases = % 45% 40% 35% 30% 25% 20% 15% Staff costs Output Domestic orders Prices charged to customers Profit margins Cash in the business 10% 5% 0% The following table sets out business trends data across the districts, industry sectors, area types and different sizes of business in more detail: 42

49 Lower Higher Unweighted sample bases: where have employees Lower Higher Lower Higher Lower Higher Lower Higher Lower Higher Lower Higher Lower Higher Unweighted sample bases Trading and Investment Table 4.9: Business trends in the last 12 months (all private sector businesses); percentages Figures in bold are significantly greater than average minus the sub group tested less than 0.5% ~caution: low sample base *denotes Domestic orders Output Prices charged Profit margins Cash flow Energy prices Raw material prices Staff costs Total 2015 Total 2013 Total , , n/a 77 n/a Total 2010 Total 2009 District 1, n/a , Allerdale Barrow- in- Furness Carlisle Copeland Eden South Lakeland Location type Urban Rural

50 Lower Higher Unweighted sample bases: where have employees Lower Higher Lower Higher Lower Higher Lower Higher Lower Higher Lower Higher Lower Higher Unweighted sample bases Cumbria Business Survey 2015/16 Final Report Domestic orders Output Prices charged Profit margins Cash flow Energy prices Raw material prices Staff costs Industry sector Primary Manufacturing Construction Wholesale and retail Accommodation and food services Transport and communication Financial intermediation Business services Professional, scientific and technical services Education Health services Arts and recreation Other services

51 Lower Higher Unweighted sample bases: where have employees Lower Higher Lower Higher Lower Higher Lower Higher Lower Higher Lower Higher Lower Higher Unweighted sample bases Trading and Investment Domestic orders Output Prices charged Profit margins Cash flow Energy prices Raw material prices Staff costs Business size No employees Any employees 1-9 employees employees employees 100+ employee , , Investment trends were covered for the first time in 2013 and, as there are only two years to compare and it is an intentional activity that points directly to growth, we are examining trends in investment independently of other activities. As in 2013, a higher proportion of private sector businesses have increased investment levels in the last 12 months than reduced them (20%, compared with 13%). The extent to which businesses have increased investment in the last 12 months varies little by geography, although businesses in the designated flood area are significantly more likely than those outside of it to report higher levels of investment in the last year (26% cf. 19%). This may have been driven by activities undertaken to recover from flood damage. Similarly to 2013, the propensity to have increased levels of investment during this period increases with business size from 18% of those with fewer than 10 employees to 45% of those with 100+ employees. Growers, a group consisting of businesses that have reported employment or turnover growth at 5% or more in the last 12 months, are significantly more likely than average to report increasing investment in the last 12 months (34%; 37% of High Growers ). Furthermore, younger businesses; those established for less than 4 years, are more likely to report increased levels of investment over the last year than more established businesses (32%, compared with 19%). 45

52 Cumbria Business Survey 2015/16 Final Report Figure 4.10: Investment trends in the last 12 months, by district, business size, age and growth (all private sector respondents) Unweighted sample bases in parentheses Higher Lower All private sector businesses (1742) Allerdale (352) Barrow in Furness (104) Carlisle (335) Copeland (149) Eden (257) South Lakeland (545) No employees (347) 1-9 employees (960) employees (284) employees (130) 100+ employees (21) Young (<4 yrs) (183) Established (5+ yrs) (1559) Growers (508) Stable (839) 13% 18% 6% 15% 13% 15% 10% 14% 14% 13% 8% 9% 14% 3% 10% 20% 20% 21% 20% 21% 22% 20% 16% 20% 28% 36% 45% 32% 19% 34% 15% Shrinkers (391) 32% 17% A review of reported investment activity by industry sector highlights a greater than average propensity to have invested at higher levels within manufacturing (33%) and the accommodation and food services sector (29%) and greater than average propensity to have invested at lower levels within primary industries (26%) and the arts and recreation sector (25%). Within LEP priority sectors, there has been a significantly higher propensity to increase investment within specialist manufacturing (35%) and the visitor economy (27%). 46

53 Trading and Investment Figure 4.11: Investment trends in the last 12 months, by industry sector, including priority and underpinning sectors 4 (all private sector respondents) Unweighted sample bases in parentheses Higher Lower Primary industries (168) 26% 17% Manufacturing (134) 12% 33% Construction (131) Wholesale & Retail (438) Accommodation and food services (293) Transport and communications (105) Financial intermediation. (20) Business services (102) Professional, science and technical services (160) 9% 9% 13% 17% 4% 5% 9% 14% 23% 29% 18% 32% 22% 18% Education (31) 9% 6% Health services (65) 4% 10% Arts and recreation (43) 25% 25% Other services (52) 3% 19% Specialist Manufacturing (98) Food and Drink (24) Visitor economy (343) Construction (131) Digital Media and Creative (77) Logistics and transport services (62) Business services (156) Food and drink (24) 10% 10% 15% 9% 18% 14% 3% 10% 35% 38% 27% 14% 15% 20% 23% 38% 4 See appendix for more information 47

54 Cumbria Business Survey 2015/16 Final Report Anticipated trends in the next 12 months Respondents representing private sector businesses were then asked about their expectations for the next 12 months. There is considerable optimism with around a third of respondents anticipating higher levels of domestic orders (34%) and profit margins (34%) in the next 12 months. Slightly fewer (29%) expect cash in the business to increase. In the cases of both profit margins and cash in the business, respondents are more optimistic than one might expect given that only around one in six or seven reported increases in profit margins and cash in the business in the last 12 months. Three in ten (30%) expects prices charged to customers to increase, which is lower than the figure reported in 2013 (35%). The proportion anticipating an increase in investment levels is similar to that reported in 2013 (25%, compared with 26%). The proportion of businesses anticipating increases in energy and raw material prices in the next 12 months is similar to those reporting increases in the last 12 months (energy prices, 39%; raw material prices, 37%). Half of businesses with employees (50%) anticipate an increase in staff costs. This is a higher proportion than in 2013 (43%). Figure 4.12: Expected business trends in the next 12 months (all private sector respondents) Unweighted sample base = 1742 Staff costs; unweighted sample base = 1395 Higher Same Lower Staff costs 50% 42% 3% Energy prices 39% 40% 10% Raw material prices 37% 35% 7% Domestic orders 36% 42% 6% Profit margins 33% 43% 19% Prices charged to customers 30% 56% 7% Cash in the business 29% 47% 14% Investment 25% 46% 11% The following tables set out anticipated business trends across the districts, industry sectors, area types and different sizes of business, in more detail. 48

55 Lower Higher Unweighted sample bases: where have employees Lower Higher Lower Higher Lower Higher Lower Higher Lower Higher Lower Higher Lower Higher Unweighted sample bases Lower Higher Unweighted sample bases: where have employees Lower Higher Lower Higher Lower Higher Lower Higher Lower Higher Lower Higher Lower Higher Unweighted sample bases Trading and Investment Table 4.13: Expected business trends in the next 12 months (all private sector respondents) percentages Figures in bold are significantly greater than against the previous year or against the average this year minus the sub group tested *denotes less than 0.5% ~caution: low sample base Domestic orders Investment Prices charged Profit margins Cash flow Energy prices Raw material prices Staff costs Total 2015 Total , , Total n/a 74 n/a Total 2010 Total , n/a n/a 1, District Allerdale Barrow- in- Furness Carlisle Copeland Eden South Lakeland Location type Urban Rural 1, Domestic orders Investment Prices charged Profit margins Cash flow Energy prices Raw material prices Staff costs Industry sector Primary Manufacturing Construction Wholesale and retail

56 Lower Higher Unweighted sample bases: where have employees Lower Higher Lower Higher Lower Higher Lower Higher Lower Higher Lower Higher Lower Higher Unweighted sample bases Lower Higher Unweighted sample bases: where have employees Lower Higher Lower Higher Lower Higher Lower Higher Lower Higher Lower Higher Lower Higher Unweighted sample bases Cumbria Business Survey 2015/16 Final Report Domestic orders Investment Prices charged Profit margins Cash flow Energy prices Raw material prices Staff costs Accommodation and food services Transport and communication Financial intermediation Business services Professional, scientific and technical services Education Health services Arts and recreation Other services Domestic orders Investment Prices charged Profit margins Cash flow Energy prices Raw material prices Staff costs Business size No employees Any employees 1-9 employees employees employees 100+ employee Businesses in the sectors of wholesale and retail and manufacturing are most likely to anticipate increases in orders and investment but also in staff costs, while businesses in accommodation and food services are also more likely than average to anticipate an increase in investment and staff costs, but not in orders. Businesses in 50

57 Trading and Investment accommodation and food services and manufacturing are also more likely than average to anticipate an increase in prices charged. Businesses based in rural areas are more likely than those in urban areas to anticipate downward trends in investment and cash in the business, but also more likely to expect the cost of energy and raw materials to fall, which is a positive outlook for these businesses compared with Urban-based businesses are more optimistic in respect of orders and cash flow than those in rural areas. They are, however, also more likely to expect an increase in staff costs. Given the extent to which businesses anticipate an increase in staff costs in the next 12 months, it is not surprising that businesses with employees are more likely than average to expect a downturn in cash in the business. The level of optimism increases with the size of the businesses but so too do expectations of increasing costs. 4.5 Business constraints Respondents were asked to consider a list of potential barriers to their business performance and efficiency and to indicate which are significant for them. The range of aspects that were presented to respondents encompassed both those relating to the local area and infrastructure and wider ranging aspects of operating in the UK, including national economic conditions, regulations and financial burdens such as taxation and business rates. This year the list was split into the differing subject areas of housing, planning and premises; transport issues; skills and training and general issues. By asking respondents to consider each set of aspects in turn, respondents were able to give more careful and equal consideration to each. 51

58 Cumbria Business Survey 2015/16 Final Report Figure 4.14: Perceived significant barriers to business performance and efficiency prompted, multiple response (all private sector respondents) Unweighted sample base = 1,742 The way the local planning and development control system operates Availability of affordable housing in the local area 31% 35% Availability of suitable alternative business premises 20% Not having suitable business premises at the moment Availability of executive housing 13% 12% Network and access relating to roads 38% Availability of suitable bus services Availability of parking for customers, staff or deliveries Availability of suitable air linkages to Cumbria 25% 30% 28% Network and access relating to rail 18% Availability of people able to do the job 38% Availability of suitable training 22% The economy 62% Regulations Access to or speed of broadband Taxation, VAT, PAYE, National Insurance Cashflow 52% 48% 46% 43% Business rates Pension reforms which require all employers to make workplace pension arrangements for their staff Future increases in the minimum wage 28% 34% 33% Other 11% None of these 7% When we compare those barriers that were included in previous surveys, there is an increase in all local aspects since 2013, which may reflect the heightened focus that these aspects were allowed when respondents were asked this question this year. 52

59 Trading and Investment Conversely, and also perhaps reflecting the heightened focus on local aspects, several general issues have declined as barriers this year compared with last. There has, however, been a significant increase in the extent to which access to or speed of broadband has been cited as a barrier (from 39% in 2013 to 48% this year). Table 4.15: Perceived significant barriers to businesses performance and efficiency locally prompted, multiple response (all private sector respondents); percentages Total 2015/6 Total 2013 Total 2011 Total 2010~ Total 2009~ The local road network and road access The way the local planning and development control system operates The availability of suitable bus services The availability of parking for customers, staff or deliveries The availability of suitable air linkages to Cumbria The availability of suitable training The availability of suitable alternative business premises The rail network and rail access The availability of executive housing The economy Regulations Access to or speed of broadband Taxation, VAT, PAYE, National Insurance Cashflow Business rates Unweighted Bases 1,742 1, ,731 2,020 Another likely reason for the increase in the propensity to cite local factors, particularly those relating to transport and sites, as barriers to businesses performance and efficiency is the impact that the flooding experienced in December 2015 has had on these issues. Businesses that suffered flooding to their premises are more likely than those that have not to cite issues relating to road infrastructure and premises as constraints to their performance and efficiency, but also more likely to cite general issues as barriers. This is also true of businesses suffering other negative impacts from the flooding. It is likely to reflect the extent to which the crisis has placed them in a more vulnerable position all round. n/a 53

60 No impact No negative impact Any negative impact Not flooded Premises flooded Cumbria Business Survey 2015/16 Final Report Table 4.16: Perceived significant barriers to business performance and efficiency, by experience of flooding (all private sector respondents); percentages Figures in bold are significantly greater than average minus the sub group tested Total The way the local planning and development control system operates Availability of affordable housing in the local area Availability of suitable alternative business premises Not having suitable business premises at the moment Availability of executive housing Network and access relating to roads Availability of suitable bus services Availability of parking for customers, staff or deliveries Availability of suitable air linkages to Cumbria Network and access relating to rail Availability of people able to do the job Availability of suitable training The economy Regulations Access to or speed of broadband Taxation, VAT, PAYE, National Insurance Cash flow Business rates Pension reforms which require all employers to make workplace pension arrangements for their staff Future increases in the minimum wage Other None of these Unweighted bases Most aspects are more likely to be perceived as barriers by businesses with employees than by those without employees. As one would expect, this is particularly the case with regard to issues relating to finding people able to do the job, pension reforms and the possibility of future increases in the minimum wage. However, businesses with employees are also particularly likely to cite business rates and regulations. 54

61 Shrinkers Stable Growers Any employees No employees Trading and Investment When we examine the barriers specified by businesses that have identified themselves as Growers 5, compared with those that self-categorise as Shrinkers 6, it highlights the extent to which Growers may be hindered by the lack of availability of people able to do the job (44%, compared with 34% of those that report minimal if any change), but the proportion of Shrinkers citing this as a barrier is similar (42%), which suggests that this issue may also be hindering growth. Those reporting a decline in employment and/or turnover i.e. Shrinkers, are significantly more likely than average to report barriers relating to the economy, regulations, taxation and cashflow. Both Growers and Shrinkers are more likely than average to identify barriers than businesses that report no change in employment or turnover. Barriers are more apparent when businesses are looking to expand and more likely to be identified by businesses that are contracting. Table 4.17: Perceived significant barriers to business performance and efficiency, by whether have employees and trends in growth (all private sector respondents); percentages Figures in bold are significantly greater than average minus the sub group tested Total The way the local planning and development control system operates Availability of affordable housing in the local area Availability of suitable alternative business premises Not having suitable business premises at the moment Availability of executive housing Network and access relating to roads Availability of suitable bus services Availability of parking for customers, staff or deliveries Availability of suitable air linkages to Cumbria Network and access relating to rail Availability of people able to do the job Availability of suitable training The economy Defined as having grown turnover and/or employment by 5% or more in the last 12 months 6 Defined as having reduced turnover and/or employment by 5% or more in the last 12 months 55

62 Shrinkers Stable Growers Any employees No employees Cumbria Business Survey 2015/16 Final Report Total Regulations Access to or speed of broadband Taxation, VAT, PAYE, National Insurance Cashflow Business rates Pension reforms which require all employers to make workplace pension arrangements for their staff Future increases in the minimum wage Other None of these Unweighted bases Taking each barrier individually, the characteristics of businesses that are most likely to cite them as such are highlighted in the table that follows: Table 4.18: Perceived significant barriers to business performance and efficiency, highlighting significant differences by geographic, business size and sector variables (all private sector respondents) Total Most frequent mentions The way the local planning and development control system operates Availability of affordable housing in the local area Availability of suitable alternative business premises Not having suitable business premises at the moment 35% 31% 20% 13% Allerdale (40%) In LDNP (46%) Construction (46%) Visitor economy (42%) South Lakeland (38%) In LDNP (43%) Wholesale and retail (38%) Accommodation and food services (38%) EA flood extent (30%) Manufacturing (34%); specialist manufacturing (37%) Wholesale and retail (31%) Arts and recreation (29%) Manufacturing (20%); specialist manufacturing (21%) Availability of executive housing 12% Wholesale and retail (17%) Accommodation and food services (16%) 56

63 Trading and Investment Total Network and access relating to roads 38% Availability of suitable bus services 30% Most frequent mentions Copeland (61%) Allerdale (47%) employees (44%) employees (46%) Wholesale and retail (46%) Accommodation and food services (48%) Visitor economy (46%) Copeland (40%) Eden (36%) In LDNP (36%) employees (41%) Accommodation and food services (56%) Arts and recreation (49%) Health services (42%) Visitor economy (53%) Availability of parking for customers, staff or deliveries 28% South Lakeland (39%) Urban areas (40%) EA flood extent (39%) Wholesale and retail (55%) Accommodation and food services (45%) Visitor economy (43%) Availability of suitable air linkages to Cumbria 25% Network and access relating to rail 18% Availability of people able to do the job 38% Availability of suitable training 22% The economy 62% Copeland (39%) Accommodation and food services (42%) Visitor economy (37%) Copeland (34%) employees (28%) Wholesale and retail (22%) Accommodation and food services (32%) Professional, scientific, technical services (26%) Visitor economy (30%) employees (49%) 25+ employees (62%) Manufacturing (51%); specialist manufacturing (58%) Businesses with skill gaps (65%) 25+ employees (29%) Manufacturing (29%) Professional, scientific, technical services (34%) Businesses with skill gaps (43%) EA flood extent (68%) 25+ employees (70%) Specialist manufacturing (72%) Businesses with skill gaps (78%) 57

64 Cumbria Business Survey 2015/16 Final Report Total Regulations 52% Access to or speed of broadband 48% Taxation, VAT, PAYE, National Insurance 46% Cashflow 43% Business rates 34% Most frequent mentions Allerdale (61%) In LDNP (61%) Primary (71%) Logistics and transport services (65%) In LDNP (59%) Rural areas (54%) EA flood extent (51%) Accommodation and food services (62%) Visitor economy (58%) Primary (54%) Young businesses (<4 years) (52%) South Lakeland (39%) EA flood extent (44%) 25+ employees (44%) Manufacturing (45%); specialist manufacturing (47%) Wholesale and retail (47%) Accommodation and food services (59%) Visitor economy (58%) Pension reforms which require all employers to make workplace pension arrangements for their staff 33% employees (48%) Accommodation and food services (44%) Visitor economy (42%) Logistics and transport services (48%) Businesses with skill gaps (54%) Future increases in the minimum wage 28% Copeland (36%) employees (43%) 25+ employees (47%) Wholesale and retail (39%) Accommodation and food services (45%) Visitor economy (42%) Logistics and transport services (41%) 58

65 Growth 5 Growth 5.1 Key points Four-fifths of all businesses and organisations (80%) reported no change in the size of their workforce since the same time last year. One in eight (12%) had increased the size of their workforce and a lower proportion (9%) had reduced the number of staff employed. It can be estimated 7 that employers took on around 7,700 new staff in the last 12 months, while shedding around 6,300 jobs. The net increase in employment is estimated at around 1,400 staff. A quarter of private sector businesses that have been trading for at least a year (25%) reported an increase in their turnover in the last year. This is closely matched by the quarter (26%) reporting a decrease. The findings suggest that around 5,000 businesses experienced turnover growth in the last 12 months, while around 5,200 experienced decline. Key drivers of growth were considered to be an improvement in demand in their markets and better work organisation (74%), better work organisation (55%) and stronger marketing (50%). Around two-thirds of private sector businesses aim to grow their output, sales turnover and employment in the next two to three years (69%), which is a similar figure to that reported in 2013 (68%). Around a quarter (27%) aim to grow in all of these ways. The factors that businesses expect to drive future growth are very similar to those that have been identified as having driven recent growth, although improving business efficiency/productivity is the most frequently selected (77% of businesses aiming for growth), above that of growth in demand and/or expansion of markets (73%). While, also strongly featured as a driver of future growth is competitive pricing (73%). Growers (businesses and organisations that have increased the number of staff employed or turnover by 5% or more in the last year), account for 34% of all businesses and organisations (27% in 2013). This group includes 10% of all that are High growers (businesses and organisations have increased the number of staff employed or increased their turnover by more than 20% in the last year) (9% in 2013) Shrinkers (businesses and organisations that have reduced the number of staff employed or reported a decrease in turnover by 5% or more and have not also reported a similar size increase in employment or turnover) account for 22% of all businesses and organisations (19% in 2013). The remaining 43% are classified as Stable (54% in 2013). Young businesses (those established less than 4 years) are more likely than average to be Growers (41%), while three in ten exporters are Growers (30%). 7 This data is based on the survey data, grossed up to represent the business population and number of employees within the business population. 59

66 Cumbria Business Survey 2015/16 Final Report Growers are significantly more likely than average to have reported upward trends in most areas of business activity, particularly output, but with the exception of raw materials and energy prices, for which Shrinkers are more likely to have reported an increase. 5.2 Employment growth Respondents were asked if their total employment at that site had changed in the last year. Four-fifths (80%) reported having the same size workforce this year as last (79% in 2013). One in eight businesses and organisations (12%) had increased the size of their workforce in the last year, with a lower proportion employing fewer staff this year than last (8%). This compares with 10% and 9% in 2013 respectively. The likelihood of experiencing employment growth increases with business size and businesses and organisations with between 1 and 24 employees were significantly more likely than average to report employment growth in excess of 20% of the workforce (12% of 1-9 employers; 13% of employees, compared with an average overall of 8%). By sector, manufacturing businesses and education organisations are most likely to have reported an increase in employment (17% and 16% respectively), while one in eight businesses in business services (12%) and health services (12%) report an increase of 20% or more). Decreases in employment are most likely to have been experienced within wholesale and retail (13%) and accommodation and food services (14%) As in 2013, positive net balances i.e. the proportion that report a decrease in employment subtracted from the proportion that report an increase in employment, are apparent across the board, increasing to +21% in the largest businesses (those with 100+ employees) and particularly within education (+9%) and business services (+8%). There are also positive net balances in all districts except Allerdale. The highest positive net balance by district is within Carlisle (+6%). It should be noted that these figures do not give an indication of the number of jobs involved either way. 60

67 Growth Figure 5.1: Change in employment at establishment in the last year (all respondents) Unweighted sample bases in parentheses *caution: low sample bases Fewer All businesses (2186) Allerdale (428) Barrow-in-Furness (165) Carlisle (416) Copeland (227) Eden (309) South Lakeland (641) No employees (396) 1 to 9 employees (1127) 10 to 24 employees (394) 25 to 99 employees (229) 100+ employees (35) Primary (172) Manufacturing (137) Construction (135) Wholesale and retail (466) Accommodation and food services (308) Transport and communication Financial intermediation~ (23) Business services (128) Professional, scientific and technical services Public services~ (24) Education (154) Health services (163) Arts and recreation (89) Other services (106) More 9% 12% 10% 9% 10% 14% 8% 14% 8% 10% 10% 11% 8% 12% 5% 0% 9% 14% 14% 25% 13% 24% 8% 29% 5% 8% 15% 17% 6% 8% 13% 13% 14% 14% 9% 12% 0% 2% 2% 7% 15% 5% 9% 4% 4% 7% 16% 11% 18% 13% 13% 9% 8% +3% -1% +4% +6% +2% +1% +4% -5% +5% +11% +11% +21% +3% +2% +2% +3% +2% +8% +4% ±0% +9% +7% -1% If survey findings are grossed up to Cumbria s business population as a whole, it is estimated that just under 2,800 businesses and organisations report growth in employment at their establishment, whilst around 1,900 report a contraction. Responses given, in terms of absolute numbers of staff by which the workforce has increased or decreased provides an estimate of the net growth or loss in employment overall. The following table estimates overall employment growth or contraction in Cumbria, by district, size and sector: 61

68 100+ employees employees employees 1-9 employees Any employees No employees South Lakeland Eden Copeland Carlisle Barrow-in-Furness Allerdale All businesses Other services Arts & recreation Health services Education Public services Professional, scientific &technical services Business services Financial intermediation Transport and communication Accommodation & food services Wholesale and retail Construction Manufacturing Primary Cumbria Business Survey 2015/16 Final Report Table 5.2: Change in employment at establishment in the last year; number of businesses/staff (all respondents) Have experienced growth Number of new staff Have experienced contraction 2, , , , , , Number of staff lost 6, , Net increase/ decrease +1, , Have experienced growth Number of new staff Have experienced contraction Number of staff lost Net increase/ decrease The data suggests that Copeland and Eden both suffered net losses while other districts experienced net increases in employment. Within Allerdale, this is despite the fact that the number of businesses reporting workforce reduction exceeds the number reporting workforce growth, which highlights the extent to which analysis by business unit can be misleading. The largest net gains are to be found in the districts of South Lakeland and Carlisle and within the production and construction sectors; namely construction and primary industries, while within services, the health services sector shows the greatest net gains in employment. 62

69 Growth Businesses that are classified as Growers indicated by having increased the size of their workforce or increased their turnover in the last 12 months (or both) by at least 5% estimate a net increase of 6,786 staff in the last 12 months. This contrasts to a net loss of 3,888 staff amongst Shrinkers businesses that have indicated decline in either their turnover or the size of their workforce by at least 5% in the last 12 months. 5.3 Turnover growth Respondents within businesses mainly seeking to make a profit that have been established at least a year were asked if their turnover had changed in the last year compared with the previous year. Nearly (47%) reported no change in their level of turnover; while a quarter each reported an increase (25%) or a decrease (26%) in turnover. These figures are similar to those reported in 2013 (44%; 28% and 25% respectively). The likelihood of experiencing turnover growth increases with business size, with 37% of businesses with 25+ employees reporting an increase, compared with 24% of businesses with up to 9 employees. By sector, manufacturing businesses (33%) are significantly more likely to report an increase in turnover in the last year; while the proportion is also relatively high amongst businesses in professional, scientific and technical services (31%) and arts and recreation (31%) and other services (32%). Three-fifths of businesses in financial intermediation (61%) report an increase in turnover in the last year, but this is not statistically significantly higher than average because of the small sample size. Primary businesses are least likely to report an increase in turnover (8%) and significantly more likely than average to report a decrease (40%). Agriculture is highlighted as a sector that is most likely to report a downturn. 63

70 Cumbria Business Survey 2015/16 Final Report Figure 5.3: Change in turnover at establishment in the last year (private sector businesses established for at least a year) Unweighted sample bases in parentheses *caution: low sample bases Increased Decreased Total (1712) Allerdale (345) Barrow in Furness (104) Carlisle (332) Copeland (149) Eden (251) South Lakeland (531) No employees (339) 1-9 employees (941) employees (282) employees (129) 100+ employees (21) Primary industries (168) Manufacturing (134) Construction (129) Wholesale & Retail (430) Accommodation and food services (281) Transport and communications (104) 26% 31% 22% 27% 26% 24% 23% 26% 28% 22% 18% 13% 40% 25% 16% 29% 29% 26% 25% 20% 28% 23% 23% 27% 28% 24% 24% 29% 36% 40% 8% 33% 27% 28% 29% 23% Financial intermediation. (20) 6% 61% Business services (99) Professional, science and technical services Education (31) Health services (31) Arts and recreation (65) 12% 17% 19% 19% 27% 31% 31% 27% 25% 31% If survey findings are grossed up to Cumbria s business population as a whole, it is estimated that just under 5,000 businesses report an increase in turnover, whilst just over 5,000 report a contraction. At this aggregate level, the largest negative imbalance between the number of businesses experiencing lower levels of turnover versus those seeing an increase is 64

71 100+ employees employees employees 1-9 employees Any employees No employees South Lakeland Eden Copeland Carlisle Barrow-in-Furness Allerdale Total Other services Arts & recreation Health services Education Professional, scientific & technical services Business services Financial intermediation Transport and communication Accommodation & food services Wholesale and retail Construction Manufacturing Primary Growth estimated for primary industries with 367 businesses estimated to have experienced turnover growth, and 1,748 businesses reporting a reduction in turnover while within professional, scientific and technical services there is a significant positive imbalance, with 883 businesses reporting turnover growth and 496 reporting a decrease. The net balance in terms of the estimated number of businesses in Cumbria having experienced turnover growth rather than a reduction is summarised in the table that follows. Table 5.4: Change in turnover in the last year; number of businesses (private sector businesses established for at least a year) Have experienced growth 4, ,488 3,458 2, Have experienced contraction 5,190 1, , ,620 3,570 2, Net increase/decrease Have experienced growth Have experienced contraction Net increase/decrease , , Drivers of growth Private sector businesses, established for at least a year, that reported an increase in turnover in the last year (25% of all private sector businesses; 21% of all businesses and organisations in Cumbria), were asked to specify what they thought had driven their recent turnover growth. 65

72 Cumbria Business Survey 2015/16 Final Report They were prompted with a list of possible factors and were able to select as many as applied. Responses are summarised in the figure below. These businesses were most likely to specify an improvement in demand in their markets (74%) and better work organisation (55%). Around half (50%) specified stronger marketing as a factor that has driven recent growth. Figure 5.5: Drivers of recent turnover growth prompted, multiple response (Private sector respondents, established at least a year that report turnover growth in the last 12 months) Unweighted sample base = 470 An improvement in demand in your markets 74% Better work organisation Stronger marketing Increasing the productivity of staff Having a formal plan or strategy for growth Have introduced new products or services Bringing new skills into the business Staff or management training and development Have reduced or held down prices charged Investment in new technology or premises Expanding into new markets 55% 50% 48% 46% 42% 40% 39% 37% 34% 33% One or more competitors has gone out of business 18% Head Office has driven growth at this branch Have bought out or merged with another business Other 5% 8% 7% Amongst businesses with employees, increasing staff productivity is a significant driver of turnover growth (52%) and that is also true of staff or management training and development (45%). Focusing on non-staff related drivers, compared with businesses without employees, businesses with employees are significantly more likely to cite having a formal plan or strategy for growth (52%, compared with 30%) and investment in new technology or premises (41%, compared with 18%) as drivers of turnover growth. They are also 66

73 Growth significantly more likely to cite a reduction or holding down of prices as a driver (43%, compared with 21% of businesses without employees). By sector, wholesale and retail businesses are significantly more likely than average to cite a range of drivers, including increasing staff productivity (57%); better work organisation (69%); stronger marketing (60%); having a formal plan or strategy for growth (59%) and introducing new products and services (64%) as drivers of recent growth. Businesses in the accommodation and food services sector are significantly more likely to cite stronger marketing (61%); staff or management training and development (50%) and investment in new technology or premises (44%). Those in professional, scientific and technical services are more likely than average to cite an improvement in demand in their markets as a driver of growth (89%). Businesses that export are significantly more likely than those that do not to cite having a formal plan or strategy for growth (65% cf. 41%); better work organisation (63% cf. 53%); stronger marketing (63% cf. 49%), bringing new skills into the business (50% cf. 38%) and expanding into new markets (45% cf. 30%) as drivers of growth. 5.5 Growth plans Respondents representing businesses mainly seeking to make a profit (private sector) were asked whether their businesses aim to grow with regard to output, sales turnover and employment in the next two to three years. Just over two-thirds (69%) said that their business aims to grow in any of these ways (68% in 2013), the most likely being through increasing sales turnover (66%, as in 2013). Just over a quarter (27%) reported that their business aims to grow in all of these ways (29% in 2013), while 29% aims to increase the number of people employed at the site which suggests that employment growth is planned to accompany an increase in output and sales turnover. Plans for growth (in any of the ways outlined) are significantly more likely than average amongst businesses based in urban (76%) rather than rural (65%) areas and within multi-site businesses (85%) rather than those operating from a single site (65%). These characteristics are reflected in the higher than average proportion of businesses within wholesale and retail and accommodation and food services that aim to grow their businesses in any of these ways in the next two to three years (87% and 83% respectively). The propensity to plan growth in the next two to three years increases with business size, from 57% of those without employees to 69% of those with between 1 and 9 employees, to 94% of those with 25+ employees. These findings are summarised in the tables that follow: 67

74 South Lakeland Eden Copeland Carlisle Barrow-in- Furness Allerdale Other services Arts and recreation Health services Education Professional, science and technical services Business services Financial intermediation Transport and communications Accommodation and food services Wholesale & Retail Construction Manufacturing Primary industries Cumbria Business Survey 2015/16 Final Report Table 5.7: Ways in which businesses aim to grow in the next two to three years (all private sector respondents); percentages Figures in bold are significantly greater than average minus the sub group tested Total Output total volume of goods or service supplied Sales turnover Number of people employed at the site All of these Any of these None of these Don t know Unweighted Bases 1, Output total volume of goods or service supplied Sales turnover Number of people employed at the site All of these Any of these None of these Don t know Unweighted Bases

75 Growth Output total volume of goods or service supplied 1-9 employees employees employees 100+ employees No employees Any employees Sales turnover Number of people employed at the site All of these Any of these None of these Don t know Unweighted Bases Businesses aiming for growth were asked to think about factors that they expect to drive that growth. They were prompted with a list of possible factors which was similar to that used to ask respondents about drivers of recent turnover growth and were able to select as many as applied. Responses are summarised in the following figure. As might be expected, factors that are expected to drive growth are similar to those that have already driven growth, with the majority of those aiming for growth highlighting an improvement in demand in their markets as a driver (73%) and competitive pricing, which is likely to result in increased demand, is considered on a par in this respect (also 73%). The most frequently cited driver of future growth, however, is considered to be improving business efficiency and productivity (77%). Stronger marketing is cited as a driver by more than two-thirds of business that are aiming for growth (69%), while just under two-thirds cited improving workforce skills through recruitment or training (63%). 69

76 Cumbria Business Survey 2015/16 Final Report Figure 5.9: Expected drivers and single main driver of future growth prompted, multiple response/single response (Private sector respondents aiming for growth) Unweighted sample base = 1328 Improving business efficiency/productivity Growth in demand and/or expansion of markets Competitive pricing Stronger marketing Improving workforce skills through recruitment or training 77% 73% 73% 69% 63% Investment in new technology or premises 53% Increasing market share through a reduction in competition or merger with competitors 28% Head Office has driven growth at this branch 11% Other 5% By sector, businesses in manufacturing are particularly likely to expect growth in demand and/or expansion of markets to drive future growth (82%), while those in health services are significantly more likely than average to cite improving workforce skills through recruitment or training as a driver (85%). Construction businesses are most likely to cite competitive pricing as a driver (88%), while this proportion is also higher within wholesale and retail (83%) and accommodation and food services (82%). 5.6 Growth indicators The survey sample has been segmented into three broad groups, based on employment or turnover growth. These are defined as follows: Growers : Businesses or organisations that have increased the number of staff employed by 5% or more in the last year or that have increased turnover by 5% or more in the last year. Stable : Businesses or organisations that have had the same number of staff or who employed less than 5% more or fewer employees than 12 months ago and whose turnover has remained the same or increased or decreased by less than 5%. Shrinkers : Businesses or organisations that have reduced the number of staff employed by 5% or more in the last year or that report a reduction in turnover of 5% or more compared with 12 months ago. In addition, this group has not grown employment or turnover by 5% or more. 70

77 Shrinkers Stable Growers High* growers Unweighted Bases Growth In addition, there is a sub-set of Growers that are High growers. These are businesses or organisations that have increased the number of staff employed by more than 20% in the last year or those that have increased their turnover by more than 20% in the last year. A further group of incompletes are not discussed. This group includes respondents that were unable or unwilling to provide the information that was required to place them in one of the three groups. They account for just 2 cases. The table below summarises the main characteristics of each of the four groups, including the small sub-set of High growers. Table 5.10: Growth segmentation (all respondents); percentages Figures in bold are significantly greater than average minus the sub group tested *high growers are also included in the growers segment All businesses/organisations , All businesses/organisations , Local Authority District Allerdale Barrow-in-Furness Carlisle Copeland Eden South Lakeland Employment size No employees Any employees 1, employees 1, employees employees employees Organisation type Private sector 1, Public sector Charity/voluntary Single site 1, Multi-site Age of business 71

78 Shrinkers Stable Growers High* growers Unweighted Bases Cumbria Business Survey 2015/16 Final Report Young (less than 4 years) Established (4+ years) 1, Whether exports Exporter Non-exporter 1, Industry sector Primary industries Manufacturing Construction Wholesale and retail Accommodation and food services Transport and communication Financial intermediation Business services Professional, scientific and technical services Public services Education Health services Arts and recreation Other services Overall, 34% of all businesses and organisations were classified as Growers, which includes 10% that are classified as High growers. Shrinkers account for 22% of all businesses and organisations, with the remaining 43% classified as Stable. Compared with 2013 there are more businesses and organisations identified as Growers but also more as Shrinkers. Around two-fifths of private sector businesses that have been established less than 4 years are Growers (41%; including 22% that are High growers ). Public sector and charity/voluntary organisations are significantly more likely than private sector businesses to be identified as Growers (87% and 88% respectively). This results in private sector businesses being less likely than average to be Growers (26%), although the proportion that are High growers is similar to the average (11%). By sector, businesses and organisations in service sectors are more likely to be identified as Growers than those in production and construction sectors, with the proportion that are Growers particularly high in public sector dominated industries, 72

79 Growth such as education and health services, as well as public services. Businesses in financial intermediation, arts and recreation and other services sectors are also more likely than average to be Growers, with those in other services also significantly more likely to be High growers (18%). High growers are also more prevalent within business services (17%) and professional, scientific and technical (16%) sectors, while although no more likely than average to be Growers, businesses in the construction sector are more likely than average to be High growers. Growers are, naturally, significantly more likely than average to report upward trends in most areas of business activity, particularly output but with the exception of raw materials and energy prices (which Shrinkers are more likely to identify as having gone up) and they are also significantly more likely than average to have similarly positive outlooks going forward. This is summarised in the following table. 73

80 Shrinkers Stable Growers High* growers Cumbria Business Survey 2015/16 Final Report Table 5.11: Trends in business performance: Last 12 months/next 12 months (all private sector respondents); percentages Figures in bold are significantly greater than average minus the sub group tested *high growers are also included in the growers segment Higher in the last 12 months Domestic orders Output Prices charged to customers Profit margins Cash in the business Investment Raw material prices Energy prices Unweighted Bases (private sector only) Export orders Unweighted Bases (exporters only) Staff costs Unweighted Bases (organisations mainly seeking to make a profit with employees) Higher in the next 12 months Domestic orders Prices charged to customers Profit margins Cash in the business Investment Raw material prices Energy prices Unweighted Bases (private sector only) Export orders Unweighted Bases (exporters only) Staff costs Unweighted Bases (private sector businesses with employees only) Aims to grow output in the next 2-3 years Aims to grow sales turnover in the next 2-3 years Aims to grow workforce in the next 2-3 years Unweighted Bases (private sector only)

81 Skills Gaps and Shortages 6 Skills Gaps and Shortages 6.1 Key points Fourteen per cent of businesses with employees in Cumbria identify skill gaps in their business or organisation, which is the same proportion as in Employers are most likely to identify skill gaps in skilled trade occupations and low skilled elementary administration and service occupations. The most frequently cited skills lacking within workforces are technical and practical skills and advanced IT or software skills. A third of businesses (32%) had tried to recruit staff in the last 12 months and more than half of these (53%; 17% of all businesses) had experienced some difficulties filling job vacancies. Echoing where skill gaps have been reported, hard-to-fill vacancies are most likely to have been reported for skilled trades and elementary administration and service occupations. The main causes of hard-to-fill vacancies have been the low number of applicants, particularly of those with the required skills, and including a lack of interest in the jobs advertised and remote locations of workplaces accompanied by poor public transport. 6.2 Skill gaps Presence of skill gaps Respondents working within businesses with employees were asked about skill gaps within their business or organisation. For the purposes of obtaining an accurate response, skill gaps were defined for respondents as existing where there are people working in the business/organisation at any level who are not as wholly skilled or competent as you would like. Based on this definition, 14% of employers identified skill gaps in their business/organisation. This is the same proportion as in 2013 and so remains slightly higher than five years ago (12% in 2011). As in previous years, the propensity to report skill gaps increases with business size to 24% of employers with 25 or more employees and 42% of those with 100 or more employees. The proportion identifying skill gaps is significantly higher than average within manufacturing (24%) and the accommodation and food services sector (21%). Growers are more likely than average to identify skill gaps within their workforce (19%, increasing to 24% of High growers ). 75

82 Cumbria Business Survey 2015/16 Final Report Figure 6.1: Proportion of employers that report skill gaps (All respondents with employees) Unweighted sample bases in parentheses Total (2186) Allerdale (428) Barrow in Furness (165) Carlisle (416) Copeland (227) Eden (309) South Lakeland (641) 1-9 employees (1132) employees (394) employees (229) 100+ employees (35) Primary industries (172) Manufacturing (137) Construction (135) Wholesale & Retail (466) Accommodation and food services (308) Transport and communications (116) Financial intermediation (23) Business services (128) Professional, science and technical services (165) Public services (24) Education (154) Health services (163) Arts and recreation (89) Other services (106) High growers (223) Growers (879) Shrinkers (436) 4% 14% 11% 13% 14% 13% 15% 18% 15% 25% 20% 13% 24% 14% 16% 21% 10% 10% 9% 16% 14% 11% 12% 13% 24% 19% 16% 42% Occupations with skill gaps Skill gaps are most likely to be experienced within skilled trades occupations (cited by 24% of employers with skill gaps), elementary administration and service occupations (20%) and amongst administrative and secretarial occupations (15%). Compared with three years ago, fewer businesses have skill gaps within management occupations and there is an increasing need for skills in skilled trades occupations. 76

83 Skills Gaps and Shortages High growers are significantly more likely than average to identify skill gaps amongst skilled trades occupations (36%). Figure 6.2: Occupations in which there are skill gaps (where skill gaps reported) Unweighted sample bases in parentheses Managers, Directors and Senior Officials 9% 17% Professional Occupations Associate Professional and Technical Occupations 5% 7% 9% 10% 2016 (320) 2013 (250) Administrative and Secretarial Occupations 15% 15% Skilled Trades Occupations 18% 24% Caring, Leisure and Other Service Occupations Sales and Customer Service Occupations Process, Plant and Machine Operatives 5% 8% 9% 10% 12% 7% Elementary Administration and Service Occupations 15% 20% Skills lacking Respondents identifying skill gaps within the workforce were asked about the sort of skills which their workforce lacks. The most frequently cited skills lacking amongst businesses with employees with skill gaps are technical and practical/specialist to the sector skills (58%; 44% in 2013). Advanced IT or software skills are next most frequently cited (45%; 31% in 2013), while management skills are mentioned by around two in five, (40%; 39% in 2013). Around a third of those with skills gaps cite the need for customer handling, problem solving, written communication, office/administration and basic computer literacy/using IT skills within their workforce (see figure overleaf). 77

84 Cumbria Business Survey 2015/16 Final Report Figure 6.3: Skills lacking or that are needed to improve prompted, multiple response (where have skills gaps within the workforce/by sole trader) Unweighted sample bases in parentheses 2016 (352) 2013 (256) Technical and practical skills/skills that are specialist to sector Advanced IT or software skills Management skills Problem solving skills Customer handling skills Written communication skills Office/admin. skills Basic computer literacy/using IT Oral communication skills Team working skills Numeracy skills Literacy skills Foreign language skills Other skills lacking 6% 44% 45% 31% 40% 39% 36% 33% 33% 33% 32% 24% 32% 23% 30% 27% 27% 29% 26% 23% 21% 15% 20% 14% 17% 12% 20% 58% Around one in twelve of all respondents (8%) cited the need to improve their own technical and practical skills (10% in 2013). They were asked to specify the technical or practical skills they feel are lacking. As in 2013, they were most likely to cite the need for IT skills that are specific to their sector (22%), whilst a range of other skills were cited by just one or two respondents. These other skills mainly included: Technical knowledge; new technology and general experience; Electrical/electronic skills; machining; Product knowledge; Accountancy skills; New technology; 78

85 Skills Gaps and Shortages Engineering skills; Cooking/catering skills; Machining. 6.3 Skill shortages Skill shortages are generally defined as a lack of relevant, suitably skilled people in the labour market relative to the jobs that are available. Having a job vacancy that is proving difficult to fill because of a lack of relevantly skilled and experienced applicants would qualify as evidence of a skill shortage. A third of respondents (32%) reported that their business or organisation has recruited staff in the last 12 months or were trying to recruit at the time of the survey. This is a similar proportion to that reported in 2013 (31%). This proportion increases with the size of the workforce, from 33% of those with 1 to 9 employees to 90% of 100+ employers. Workforce size is the key determinant of recruitment activity and sector variations tend to reflect the extent to which sectors are populated by micro, small, medium and large employers, as well as the extent to which single and multi-site organisations are represented. Another factor is the level of staff turnover and this is higher in some sectors; mainly those where there is a prevalence of lower skilled jobs and where part time and casual employment is more widespread than average. There were also higher than average levels of recruitment within wholesale and retail (45%) and accommodation and food services (49%) businesses as a consequence of the use of lower skilled and casual, part time employment in these sectors. As would be expected, the propensity to have recruited any staff in the last 12 months or recruiting currently is significantly higher amongst Growers (52%) and still higher amongst High growers (64%). This is summarised in the figure that follows. 79

86 Cumbria Business Survey 2015/16 Final Report Figure 6.4: Proportion of employers that have recruited in the last 12 months or are recruiting currently (All respondents) Unweighted sample bases in parentheses All businesses (2186) 0 employees (396) 1 to 9 employees (1132) 10 to 24 employees (394) 25 to 99 employees (229) 100+ employees~ (35) Primary (172) Manufacturing (137) Construction (135) Wholesale and retail (466) Accommodation and food services (308) Transport and communication (116) Financial intermediation~ (23) Business services Professional, scientific and technical services (165) Public services~ (24) Education (154) Health services (163) Arts and recreation (89) Other services (106) High growers (223) Growers (879) Stable (860) Shrinkers (436) 4% 32% 33% 15% 36% 23% 43% 48% 32% 28% 32% 21% 31% 59% 55% 37% 32% 57% 48% 23% 23% 72% 84% 90% Just over half of all those who have recruited in the last 12 reported having some vacancies that have been hard-to-fill; 53% or 17% of all respondents. Businesses or organisations which have experienced hard-to-fill vacancies are most likely to have done so with regard to elementary administration and service occupations (26%) and skilled trade occupations (24%). The occupations in which respondents reported recruitment difficulties are summarised in the figure below. 80

87 Skills Gaps and Shortages Figure 6.5: Occupations of hard-to-fill vacancies (where have experienced difficulties in recruiting staff) Unweighted sample base = 503 Managers, Directors and Senior Officials 6% Professional Occupations 13% Associate Professional and Technical Occupations Administrative and Secretarial Occupations 9% 10% Skilled Trades Occupations 24% Caring, Leisure and Other Service Occupations Sales and Customer Service Occupations Process, Plant and Machine Operatives 10% 12% 14% Elementary Administration and Service Occupations 26% Can't code 3% The incidence of hard-to-fill vacancies rose to nearly two-thirds (64%) in South Lakeland. Businesses within the varied sectors of construction (68%), accommodation and food services (67%) and professional, scientific and technical services (67%) were more likely than average to report recruitment difficulties. While base sizes for many individual sectors are low, the table below summarises the roles that businesses have found difficulties in recruiting. This highlights that those in manufacturing and construction found the recruitment of skilled trades particularly difficult, while this proportion is also relatively high within accommodation and food services. Those in accommodation and food services were also more likely than average to mention difficulties in recruiting elementary administration and service roles. Wholesale and retail businesses were particularly likely to have experienced recruitment difficulties with regard to sales and customer service occupations. Professional roles were most often experienced by businesses in the professional, science and technical services sector. 81

88 Other services Arts and recreation Health services Education Public services Professional, science and technical services Business services Financial intermediation Transport and communications Accommodation and food services Wholesale & Retail Construction Manufacturing Primary industries Cumbria Business Survey 2015/16 Final Report Figure 6.6: Occupations/job titles where there have been difficulties in recruiting (Where have had difficulties in recruiting in the last 12 months or currently), percentages Unweighted sample bases in parentheses; Figures in bold are significantly greater and those in italics significantly lower than average minus the sub group tested ~ denotes low sample bases Managers, Directors and Senior Officials Professional Occupations Associate Professional and Technical Occupations Administrative and Secretarial Occupations Skilled Trades Occupations Caring, Leisure and Other Service Occupations Sales and Customer Service Occupations Process, Plant and Machine Operatives Elementary Administration and Service Occupations Unweighted sample bases ~ 33 25~ ~ 3~ 21~ 39 4~ ~ 13~ Where difficulties had been encountered, respondents were asked what they thought were the main causes of that difficulty in recruiting. Three in ten (29%) of respondents mentioned the issue of low numbers of applicants with the required skills, while around one in six mentioned the low number of applicants generally (17%); not enough people interested in doing the job (16%) and/or the remote location/poor public transport (17%). Issues to do with the job s terms and conditions and other logistics in working for the business are less frequently mentioned. 82

89 Skills Gaps and Shortages Figure 6.7: Main causes of difficulties in recruiting (Where have had difficulties in recruiting) Unweighted sample base: 503 Responses cited by 2% or more shown Low number of applicants with the required skills 29% Remote location/poor public transport 17% Low number of applicants generally Not enough people interested in doing this type of job 17% 16% Low number of applicants with the required attitude, motivation or personality Poor terms and conditions (eg. pay) offered for post 11% 10% Lack of work experience the company demands 7% Job entails shift work/unsociable hours 7% Lack of qualifications the company demands 6% Too much competition from other employers 5% High cost of living/lack of affordable housing 4% Lack of training available 2% 83

90 Cumbria Business Survey 2015/16 Final Report 7 Training 7.1 Key points Half of businesses and organisations in Cumbria (51%) have arranged or funded training or development for employees at their site in the last year. Around two-fifths have arranged or funded off-the-job training (38%) and/or on-the-job training (41%). The most frequently cited barrier to the provision of training amongst those that do not train is a perceived lack of need (14%), while amongst those that train, the main barrier to providing more training is that no more money is available for training (15%). 7.2 Training Training provision Around half the respondents (51%) reported that their business or organisation had arranged or funded staff training or development either on- or off-the-job for employees at their site. This compares with a slightly higher proportion in 2013 (53%). This increases to 61% of businesses or organisations with any employees (62% in 2013). The propensity to have arranged or funded training rises sharply with the size of the workforce. Amongst businesses or organisations with 10 or more staff around nine in ten (87%) offer training, with nearly all those with 100 or more staff (95%) doing so. The figure that follows summarises these findings and highlights the extent to which the incidence of both on- and off-the-job training increases in larger businesses or organisations. 84

91 Training Figure 7.1: Training arranged and funded in the last 12 months, by business size (all respondents) Unweighted sample bases in parentheses Any off-the-job training Any on-the-job training Any training Total (2186) 38% 41% 51% No employees (396) 20% 16% 26% 1-9 employees (1132) 38% 43% 53% employees (394) employees (229) 67% 75% 71% 84% 86% 92% 100+ employees (35) 84% 93% 95% Businesses or organisations based in Barrow-in-Furness are significantly more likely than average to have arranged or funded any training (60%), while those in South Lakeland are less likely than those in other districts to do so (48%). Those based in urban locations are more likely than those in rural areas to have arranged or funded any training (59%, compared with 47%). The propensity to have arranged or funded training is highest in public services, education, and health services sectors (94%, 82% and 91% respectively), while also significantly higher than average in the arts and recreation sector (79%) and within wholesale and retail (58%), although the latter involves mainly on-the-job training. There are lower than average levels of training within primary industries (34%) and construction (46%). 85

92 South Lakeland Eden Copeland Carlisle Barrow-in- Furness Allerdale Other services Arts and recreation Health services Education Public services Professional, science and technical services Business services Financial intermediation Transport and communications Accommodation and food services Wholesale & Retail Construction Manufacturing Primary industries Cumbria Business Survey 2015/16 Final Report Table 7.2: Training arranged and funded in the last 12 months (all respondents); percentages Figures in bold are significantly greater than average minus the sub group tested Total Off-the-job training only On-the-job training only Both on and off the job training Any off-the-job training Any on-the-job training Any training No training Unweighted Bases Off-the-job training only On-the-job training only Both on and off the job training Any off-the-job training Any on-the-job training Any training No training Unweighted Bases Training staff is more likely within multi-site businesses and organisations (75%, compared with 44% of single site enterprises), which is linked to business size. The majority of public sector and charity/voluntary organisations have arranged or funded training in the last year (82% and 72% respectively), compared with just under half of businesses in the private sector (47%). Growers are significantly more likely than average to have arranged or funded training (65%) and this proportion compares with just 44% of Shrinkers. 86

93 Training Barriers to the provision of training All respondents were asked about the barriers preventing their business or organisation providing training or providing more training in the last 12 months. The figure below summarises the barriers identified by those that provided any training in the last 12 months and those that did not. Figure 7.3: Barriers to the provision of training in the last 12 months, by whether arranged/funded training unprompted, multiple response (all respondents) Unweighted sample bases in parentheses * denotes less than 0.5% Any training (1316) No training (870) No money available for training Lack of time generally External courses are too expensive The courses interested in are not available locally All our staff are fully proficient/no need for training No training available in relevant subject area Employees are too busy to undertake training and development Location difficulties/travel issues Managers have lacked the time to organise training Employees are too busy to give training Small business (one man band) The quality of the courses or providers locally is not satisfactory Difficult to get information about the courses available locally Training is not considered to be a priority for the establishment Don't have enough staff cover Other 4% 2% 2% 3% 3% 1% 2% *% 2% *% 1% 1% 1% *% 1% 1% *% 1% *% 1% 2% 1% *% 3% 3% 6% 6% 7% 9% 10% 14% 15% The main barrier or reason for not providing any training is that staff are perceived as being already fully proficient and not in need of training (14% of those that have not provided training in the last 12 months). 87

94 Cumbria Business Survey 2015/16 Final Report More than half of both those that have provided training cite no barriers or particular reason for not training or not providing more training (56%) and the proportion is even higher amongst those that have not provided any training in the last 12 months (64%). This reflects the fact that those who do not provide much if any training are less likely to go through the process of identifying obstacles to doing so. Some will not even have considered the idea. 88

95 Focus On Infrastructure Developments in Cumbria 8 Focus On Infrastructure Developments in Cumbria Prior to the December 2015 flooding in the area, the Cumbria Business Survey had already been in progress and 774 interviews had already been undertaken with businesses across all size bands, sectors and districts. The questionnaire used in this first phase of the survey included a number of questions that covered levels of awareness and the perceived impact of prospective infrastructure developments in the area amongst businesses. The projects discussed included: The new nuclear generating plant at Moorside A proposal to build three AP1000 nuclear plants near Sellafield in Cumbria. The plan by NuGeneration, which is the British subsidiary of Toshiba-owned Westinghouse Electric Company, has the station coming online from 2024 with 3.4GW of new nuclear capacity. The West Cumbria Water Supply project A plan to link West Cumbria to the rest of our regional water network via a major new pipeline from Thirlmere to West Cumbria, a new water treatment works, pumping stations and underground service reservoirs. The Walney Off-shore Wind farm Walney Offshore Wind Farm, located 15km west of Barrow-in-Furness in Cumbria, UK, began generating power from its first turbine in January The turbine is connected to the national grid through an offshore transformer at Heysham. The wind farm consists of 102 turbines which were installed in two phases, Walney I and Walney II. Built at a cost of 1bn ($1.58bn), the project delivers 367.2MW of combined energy sufficient to power more than 320,000 households in the UK. The West Cumbria Tidal Lagoon With one of the UK s highest tidal ranges the West Cumbrian Coast holds significant potential for energy generation and plans for a full-scale tidal lagoon on the coast north of Workington are being considered. The West Cumbria Mining project The coalfield is m deep offshore under the sea. The mine is expected be a drift mine, with an access point south of Whitehaven, where the mine offices will also be built. The exact location is yet to be determined and will be developed in consultation during the development phase. 89

96 Cumbria Business Survey 2015/16 Final Report BAe Systems expansion Proposals to extend the Devonshire Dock Hall and build a new Central Yard Complex which will support the Successor programme at Barrow shipyard, boosting job opportunities in South Cumbria. 8.1 Key points Around one in five businesses (19%) sell or provide services to organisations in the nuclear industry, which suggests that the development at Moorside will have a significant impact on the local economy. The majority of businesses and organisations (82%) were aware of the Moorside Nuclear Plant development prior to taking part in the survey. A quarter of all (24%) consider themselves quite/very knowledgeable about it. Awareness and knowledge of the plans is greatest in the district of Copeland (98% aware; 57% quite/very knowledgeable). One in six businesses and organisations (17%) thought it likely that their business would pursue supply chain opportunities from the Moorside development, increasing to 29% within the district of Copeland. Most businesses and organisations that consider it likely or are undecided with regard to pursuing such supply chain opportunities think some support in doing so would be helpful (89% specify any support). This is most likely to be with regard to information about goods and services required and how to access these opportunities (75%) and support to help build linkages with potential partners and suppliers (71%). In terms of the impact of the Moorside nuclear development on businesses and organisations, the most positive anticipated impact is the increase in local expenditure resulting from incoming construction workers, while the most negative impact is likely to be from the volume of traffic during construction and this is more pronounced in the district of Copeland. When it comes to the development s impact on the local economy, the views of businesses and organisations are very positive. Very few anticipate a negative impact. Around three-quarters of respondents anticipate positive change to the extent of new job opportunities, the retention of young people locally as a result of these new opportunities and a benefit to the economy as a result of the expenditure of workers and suppliers. In contrast, the most frequently mentioned negative impacts are with regard to potential increases in house prices and the cost of general goods and services locally due to greater demand. Between one in four and one in five anticipate this. In terms of other infrastructure developments in Cumbria, 70% of respondents have heard of the Walney Off-shore Wind farm; 49% have heard of the BAe Systems expansion; 33% have heard of the West Cumbria Tidal Lagoon; 28% of the West Cumbria Mining project and 25% of the West Cumbria Water Supply project. Respondents are most knowledgeable about Walney Off-shore Wind farm (14% are quite/very knowledgeable) and the BAe Systems expansion (11%). On the whole, most of those that are aware of these projects have little knowledge of them. 90

97 Focus On Infrastructure Developments in Cumbria More than half of respondents that have heard of any of these infrastructure developments (53%) do not anticipate any impact from them on their business. The majority of the remainder (38% of all those aware of any) anticipate a positive impact. This increases to more than half of respondents in Barrow in Furness (53%) and Copeland (51%). 8.2 Sample profile Since the questions regarding infrastructure developments were only asked prior to the December 2015 flooding events, the responses and these findings are only based on a partial sample. Ultimately, while two-thirds of the total sample for the 2015/2016 business survey participated in the survey in 2016, after the flooding, and thus were asked questions about the impact of the flooding, around a third of the total sample participated in the survey in October/November 2015 and answered questions about local infrastructure developments. It is important to review the sub-sample to provide evidence of the representativeness of responses. The data was weighted on the basis of the total Cumbria business population to minimise the effects of under- and over- sampling on the statistics. A comparison between the unweighted and weighted samples shows little difference across size bands and districts, suggesting that interviews were well distributed across these variables, while there is more, although still insignificant, variance before and after weighting by industry sector, which reflects differing response rates by sector. Table 8.1: Sample profile infrastructure development questions Achieved interviews no. Unweighted sample % Weighted no. Weighted sample % ABDE: Primary (agriculture, forestry, fishing, mining, quarrying, electricity, water supply) C: Manufacturing F: Construction G: Wholesale and retail H: Transport and storage I: Accommodation and food services J: Information and communication K: Financial and insurance activities L: Real estate activities/ N: Administrative and support service activities M: Professional, scientific and technical activities O: Public administration and defence P: Education

98 Cumbria Business Survey 2015/16 Final Report Achieved interviews no. Unweighted sample % Weighted no. Weighted sample % Q: Human health and social work activities R: Arts, entertainment and recreation S: Other services No employees employees employees employees employees Allerdale Barrow in Furness Carlisle Copeland Eden South Lakeland Total Results from this part sample may be presumed accurate (with a 95% confidence level) within a maximum sample error of +/-3.5%. The margin of error on sub-sets of the total sample is larger, depending on the unweighted number of respondents. Similarly to the overall total 2015/2016 sample, the majority of respondents represent private sector businesses (83%), while one in eight are charity/voluntary organisations (12%) and around one in twenty (4%) operate within the public sector. Around threequarters of organisations (73%) operate from a single site, with the majority of the remainder branches or subsidiaries of larger organisations (19%) and a minority of all organisations (7%) head offices. Around one in ten businesses or organisations (11%) have been established for less than 4 years. This proportion is higher than average amongst businesses and organisations in other services (25%), accommodation and food services (23%) and real estate/administrative support (21%). A review of where key decisions are made by businesses and organisations in this sub-sample highlights the fact that the vast majority are made within Cumbria. There will be a sharp focus on investment within the county as a result. 92

99 Focus On Infrastructure Developments in Cumbria Figure 8.2: Location of key decision-making (all 2015 respondents) Unweighted sample base = 774 Recruitment 95% Training 92% Purchasing 91% Business or organisation strategy 88% Marketing 88% Investment 87% The types of customers that private sector businesses sell to is summarised in the figure below. One in five businesses (19%) sells or provide services to organisations in the nuclear industry in which significant infrastructure development is planned. Figure 8.3: Types of customer that businesses sell or provide services to (all 2015 private sector businesses) Unweighted sample base = 614 Domestic/individual consumers 76% Tourists visiting Cumbria 44% Public sector organisations, such as those in local government, health, education or defence 40% Organisations within the nuclear industry 19% Other private sector businesses (inc distributors etc if private companies) 60% While 22% of manufacturing businesses serve organisations in the nuclear industry, the proportion of businesses that do so is higher than average within transport (29%), accommodation and food services (29%), information and communications (31%) and professional, scientific and technical (33%) sectors. The proportion increases to 35% of businesses with between 10 and 99 employees. 93

100 Cumbria Business Survey 2015/16 Final Report 8.3 Moorside Nuclear Plant Respondents were asked if they had been aware of this development prior to it being mentioned during the interview. Overall, 82% of businesses and organisations were aware of this project. This includes 38% of all that said they knew a little about it and 24% that said they were quite/very knowledgeable about it. Businesses and organisations within manufacturing (34%), and the sectors of finance (31%), public administration (44%) and arts, entertainment and recreation (34%) were those in which respondents were particularly likely to consider themselves quite/very knowledgeable about it (see Figure 8.4). Awareness is highest in the district of Copeland (98%), where more than half of all businesses and organisations (57%) feel they are quite/very knowledgeable about the project. 94

101 Focus On Infrastructure Developments in Cumbria Figure 8.4: Extent of awareness and knowledge of Moorside Nuclear Plant development, by industry sector (all businesses) Unweighted sample bases in parentheses No not aware Heard of it but don't know anything more about it Know a little about it Quite/very knowledgeable about it All businesses (774) 18% 20% 38% 24% Primary (exc. Manuf and Construct) (58) 9% 26% 38% 25% Manufacturing (45) 11% 23% 33% 34% Construction (34) 24% 19% 27% 29% Wholesale and Retail distribution (173) Transport and Communications (23) Accommodation and Food (122) Information, communication (17) 24% 17% 24% 18% 17% 19% 20% 16% 39% 43% 33% 45% 20% 20% 23% 21% Financial intermediation (7) 69% 31% Business services (38) 17% 21% 43% 19% Prof. Scientific, Tech. services (51) 11% 15% 50% 23% Public services (11) 9% 47% 44% Education (55) 23% 33% 19% 26% Health services (42) 28% 20% 37% 15% Arts, Recreation (44) 10% 18% 38% 34% Other (54) 29% 36% 13% 22% All respondents were asked if their business would be likely to pursue supply chain opportunities from the Moorside development. Those unaware of the project had received a short description and were considering the possibility for the first time. One in six respondents (17%) thought it likely that their business would pursue such opportunities. This increased to 29% amongst those based in Copeland and was highest amongst those in businesses and organisations with between 25 and 99 staff (31%). 95

102 Cumbria Business Survey 2015/16 Final Report Just 4% reported themselves as undecided or unsure. The main reason given for being undecided or unsure was insufficient information from which to make a decision. Amongst those businesses and organisations that consider it likely that they will pursue supply chain opportunities from the Moorside development, including those that are undecided, most think that some support would be helpful. Three-quarters (75%) think information about goods and services required and how to access these opportunities would be helpful, while slightly fewer (71%) feel support to help the business build linkages with potential partners and suppliers would be helpful. More than half (53%) would like help navigating the procurement process and a third (35%) would like support to help recruit and train new workers and to up-skill existing staff. Business/organisation size is a key determinant of the need for support in this respect. While those with no employees are less likely than average to flag the need for help, those with fewer than 25 employees are more likely to do so than larger businesses or organisations. This is summarised in the figure that follows. Figure 8.5: Types of support that businesses and organisations think would be most helpful to their business, by size (where likely to pursue supply chain opportunities or are undecided) Unweighted sample bases in parentheses All businesses (155) No employees (29) 1-9 employees (83) employees (24) 25+ staff (19) Information about goods and services required and how to access these opportunities Support with navigating the procurement process Support to help the business build linkages with potential partners and suppliers Support to help recruit and train new workers and to upskill existing staff Any support 60% 75% 63% 70% 85% 53% 55% 58% 42% 39% 71% 50% 82% 69% 61% 35% 27% 33% 45% 45% 89% 70% 93% 97% 91% Those that are unlikely to pursue supply chain opportunities cited lack of relevance to their business or organisation in most cases. 96

103 Focus On Infrastructure Developments in Cumbria 8.4 Impact of the Moorside development on businesses All respondents regardless of prior awareness or depth of knowledge of the Moorside nuclear development were asked to consider the extent to which the proposed nuclear power station might have an impact on their business or organisation in a number of ways. Respondents are most likely to expect some impact from expenditure of incoming construction workers and least likely to anticipate an impact on their access to goods and services. Expenditure from incoming construction workers is anticipated to be a particularly positive impact, while the volume of traffic during construction is anticipated to be a particularly negative impact. In most respects, the proportion of respondents anticipating a positive impact exceeds the proportion anticipating a negative impact. The exception to this is with regard to the volume of traffic (25% anticipate a negative impact; 9% anticipate a positive impact), while a slightly higher proportion of respondents anticipate a negative impact on the volume of tourists and other visitors attracted to West Cumbria (20%; 18%). In both of these cases, nearly two-thirds of respondents anticipate no impact as a consequence of the Moorside nuclear development (64% each). Table 8.6: Perceived potential impacts of the Moorside nuclear development on businesses and organisations (all businesses) Unweighted sample base = 774 The local expenditure of incoming construction workers Major positive impact % Minor positive impact % Minor negative % Major negative impact % No impact % The volume of traffic during the construction The volume of tourists and other visitors attracted to West Cumbria The competition for younger workers The demand for housing and accommodation for workers The competition for local workers, including engineers and construction workers The access to goods and services your business requires The perceived impact of the Moorside nuclear development varies slightly by geographic area, with businesses in Copeland particularly likely to anticipate negative impact from the volume of traffic during the construction (see table 8.7). 97

104 Cumbria Business Survey 2015/16 Final Report Table 8.7: Perceived potential impacts of the Moorside nuclear development on businesses and organisations, by district (all businesses) Figures in bold are significantly greater than average minus the sub group tested The local expenditure of incoming construction workers The volume of traffic during the construction The competition for local workers, including engineers and construction workers The competition for younger workers The access to goods and services your business requires The demand for housing and accommodation for workers The volume of tourists and other visitors attracted to West Cumbria Major negative impact Major positive impact Major negative impact Major positive impact Major negative impact Major positive impact Major negative impact Major positive impact Major negative impact Major positive impact Major negative impact Major positive impact Major negative impact Major positive impact Allerdale % Barrow in Furness % Carlisle % Copeland % Eden % South Lakeland % Unweighted Bases Impact of the Moorside development on local economy All respondents were also asked to consider the extent to which the proposed nuclear power station might have an impact on the local economy as a whole. Again, this was regardless of prior awareness or depth of knowledge of the Moorside nuclear development. Respondents were most likely to anticipate the provision of access to new job opportunities for local people as a positive impact of the development, while most likely to anticipate that a possible increase in the cost of general goods and services locally and/or house prices due to greater demand as a potential negative impact. However, the possible increases in cost of living locally are impacts that are least expected. The views of respondents suggest that the development is considered in a very positive light, with very few anticipating it having a negative impact in any of the ways specified. 98

105 Focus On Infrastructure Developments in Cumbria Table 8.8: Perceived potential impacts of the Moorside nuclear development on the local economy as a whole (all businesses) Unweighted sample base = 774 Providing access to new job opportunities for local people Retention of young people locally through improved job prospects Change in local economic and business activity through the expenditure of workers and suppliers The growth of the nuclear sector and the associated supply chains Major positive impact % Minor positive impact % Minor negative % Major negative impact % No impact % Improvements in the skills of workforce Increase in house prices due to greater demand Increases in the cost of general goods and services locally due to greater demand By district, respondents in Allerdale are particularly likely to anticipate positive impacts in any of these aspects of the local economy (see table 8.9). Those in Copeland are particularly likely to anticipate the development having a positive impact on job opportunities locally. 99

106 Cumbria Business Survey 2015/16 Final Report Table 8.9: Perceived potential impacts of the Moorside nuclear development on businesses and organisations, by district (all businesses) Figures in bold are significantly greater than average minus the sub group tested Change in local economic and business activity through the expenditure of workers and suppliers The growth of the nuclear sector and the associated supply chains Improvements in the skills of workforce Providing access to new jobs opportunities for local people Retention of young people locally through improved job prospects Increases in the cost of general goods and services locally due to greater demand Increase in house prices due to greater demand Major negative impact Major positive impact Major negative impact Major positive impact Major negative impact Major positive impact Major negative impact Major positive impact Major negative impact Major positive impact Major negative impact Major positive impact Major negative impact Major positive impact Allerdale % Barrow in Furness % Carlisle % Copeland % Eden % South Lakeland % Unweighted Bases Awareness and knowledge of other infrastructure development projects Respondents were asked if they had been aware of the following infrastructure developments prior to them being mentioned during the interview. The West Cumbria Water Supply project The Walney Off-shore Wind farm The West Cumbria Tidal Lagoon The West Cumbria Mining project BAe Systems expansion There is highest awareness of the Walney Off-shore Wind farm (70% are aware of it), with one in seven of all respondents considering themselves quite/very knowledgeable 100

107 Focus On Infrastructure Developments in Cumbria about it. In contrast, just 25% of all respondents are aware of the West Cumbria Water Supply project and 6% of all consider themselves quite/very knowledgeable about it. Around half of all respondents are aware of the BAe Systems expansion (49%); a third are aware of the West Cumbria Tidal Lagoon (33%) and just over a quarter are aware of the West Cumbria Mining project (28%). Figure 8.10: Extent of awareness and knowledge (all businesses) Unweighted sample base = 774 Not heard of Heard of, don't know more Know a little bit Quite/very knowledgeable The Walney Off-shore Wind farm 30% 25% 32% 14% BAe Systems expansion 51% 17% 21% 11% The West Cumbria Tidal Lagoon 67% 14% 14% 6% The West Cumbria Mining project 72% 12% 13% 3% The West Cumbria Water Supply project 75% 8% 11% 6% There is little variance in the propensity to be aware of these projects by sector or size, although respondents within the public administration and defence sector are more likely than average to consider themselves knowledgeable about the West Cumbria Water Supply project (28%), the Walney Off-shore Wind farm (21%) and the West Cumbria Mining project (17%). The sample base in this sector is small but it is probable that these projects have a higher profile within government funded local organisations. Knowledge of the BAe Systems expansion is greater than average within the sectors of arts, entertainment and recreation (22%) and education (19%). Awareness and knowledge of these projects varies considerably by district however. This in itself highlights the extent to which these projects are of more significance at a local, district level. Respondents in Barrow in Furness are significantly more likely than average to be aware of and knowledgeable about the Walney Off-shore Wind farm (96% aware; 43% quite/very knowledgeable) and the BAe Systems expansion (89%; 43% quite/very knowledgeable). Awareness of the Walney Off-shore Wind farm is also relatively high in South Lakeland (78%) and Copeland (76%). Respondents in Copeland are significantly more likely than average to be aware and knowledgeable of the West Cumbria Water Supply project (52% aware; 15% quite/very knowledgeable) 101

108 Cumbria Business Survey 2015/16 Final Report and the West Cumbria Mining project (61%; 14%). Those in Allerdale are particularly likely to be aware and knowledgeable of the West Cumbria Water Supply project (54%; 18%), while more likely than average to be aware of the West Cumbria Tidal Lagoon (49%) and the West Cumbria Mining project (43%). Table 8.11: Extent of awareness and knowledge, by district (all businesses) Please note: the % Aware at all includes the % Quite/very knowledgeable Figures in bold are significantly greater than average minus the sub group tested The West Cumbria Water Supply project The Walney Off-shore Wind farm BAe Systems expansion The West Cumbria Tidal Lagoon The West Cumbria Mining project Barrow Allerdale % in Furness % Carlisle % Copeland % Eden % South Lakeland % Aware at all Quite/very knowledgeable Aware at all Quite/very knowledgeable Aware at all Quite/very knowledgeable Aware at all Quite/very knowledgeable Aware at all Quite/very knowledgeable Unweighted Bases Anticipated impact of infrastructure development projects Respondents aware of any of these development projects were asked if, overall, they might have a positive or negative impact on their business. Just over half think there would be no impact on their business (53%), while the majority of the remainder anticipated a positive impact (38% of all those aware). Just one in twenty expect a negative impact (6%), and most of these (4% of all those aware) think it will be minor. 102

109 Focus On Infrastructure Developments in Cumbria Figure 8.12: Anticipated impact of infrastructure development plans on businesses (where aware of plans) Unweighted sample base = 589 Major positive impact 17% Minor positive impact 21% No impact 53% Minor negative impact 4% Major negative impact 2% Don't know 2% Respondents based in Barrow in Furness and Copeland are most likely to anticipate a positive impact as a result of the infrastructure development plans; 34% and 26% respectively anticipate a major positive impact. Figure 8.13: Anticipated impact of infrastructure development plans on businesses, by district (where aware of plans) Unweighted sample bases in parentheses Figures in bold are significantly greater than average minus the sub group tested Don't know Major negative impact Minor negative impact No impact Minor positive impact Major positive impact Allerdale (133) 4% 3% 3% 52% 13% 16% Barrow in Furness (44) 5% 4% 36% 19% 34% Carlisle (98) 1% 1% 4% 64% 17% 10% Copeland (70) 3% 3% 6% 27% 25% 26% Eden (88) 2% 3% 68% 12% 8% South Lakeland (205) 3% 1% 3% 50% 26% 10% 103

110 Cumbria Business Survey 2015/16 Final Report 9 Business/Organisation Profile 9.1 Key points The agriculture, forestry and fishing industry accounts for the largest proportion of businesses and organisations within Cumbria (18%) while slightly fewer (16%) operate within the wholesale and retail sector. The majority of businesses and organisations (83%) employ fewer than 10 staff. This includes 30% of all businesses or organisations that do not have any employees. Just 6% of all businesses and organisations employ 25 or more staff, which increases to 30% of businesses or organisations in the education sector. Just over three-quarters of businesses and organisations (77%) operate from a single site. This increases to 80% of private sector businesses. The majority of businesses and organisations (87%) operate within the private sector. Around one in ten of all businesses or organisations (9%) are a charity/voluntary organisation, whilst 2% are a local government-financed body and 1% a central government-financed body. Seven in ten private sector businesses in Cumbria (70%) have been established for more than ten years. Of these, most have been established for more than twenty years (43% of all private sector businesses). Eight per cent of private sector businesses in Cumbria have been established for less than four years. South Lakeland is home to a quarter of businesses and organisations within Cumbria (26%), with around one in five each based in Allerdale (19%) and Carlisle (19%). One in seven is based in Eden district (14%), while one in eight is in Copeland (12%) and one in ten in Barrow-in-Furness (10%). Two-thirds of businesses are located in a rural area (66%), varying from rural hamlets and sparsely populated areas (around one in five) to a rural town in a more populated area (also around one in five). One in three businesses is located in an urban city and town. 9.2 Industry The industrial profile of the sample reflects that of the Cumbrian business population. This is ensured by weighting the sample data using actual population data. The following figure summaries the detailed industrial profile, highlighting (as in previous years) the importance of agriculture, forestry and fishing (18%) and wholesale and retail (16%) in the area in terms of the number of businesses they represent. Businesses within the professional, scientific and technical activities sector account for 12% of the population, while construction accounts for one in ten businesses (10%). 104

111 Business/Organisation Profile Figure 9.1: Standard Industrial Classification of Businesses (SIC 2007) Unweighted sample base = 2186 A : Agriculture, forestry and fishing 18% B, D, E: Mining and quarrying ; Electricity; Water 1% C : Manufacturing 5% F : Construction 10% G : Wholesale and retail trade; repair of motor 16% H : Transportation and storage 3% I : Accommodation and food service activities 9% J : Information and communication K : Financial and insurance activities L : Real estate activities 2% 2% 2% M : Professional, scientific and technical activities 12% N : Administrative and support service activities 5% O: Public administration and defence 1% P : Education 3% Q : Human health and social work activities 5% R : Arts, entertainment and recreation S: Other services 2% 3% 9.3 Employment profile Reflecting the actual business population profile (which it does because the data is weighted in order to do so) the majority of businesses (83%) in the sample are small, employing fewer than ten staff. Three in ten businesses (30%) have no employees. This proportion increases to 59% of businesses within the professional, science and technical activities sector; 42% within business services; 40% within construction and 38% within transport and communication. Around one in twenty businesses (6%) have 25 or more staff. This proportion increases significantly within the education (30%) and health services (20%) sectors. These larger businesses account for one in eight within manufacturing and public services (both 13%). 105

112 Cumbria Business Survey 2015/16 Final Report Figure 9.2: Number of staff employed (All respondents) Unweighted sample base = employees 36% No employees 30% 5-9 employees 17% 100+ employees 1% employees 5% employees 11% 9.4 Number of sites Just over three-quarters of businesses or organisations (77%) operate from a single site. This proportion is higher within the private sector (80%) than in the public sector (65%) or amongst charity/voluntary organisations (58%). It is significantly higher amongst businesses in rural areas than those in urban areas (81%, compared with 68%). It declines as business size increases: 92% of those with no employees; 77% of those with 1-9 employees; 57% of those with employees; 44% of those with 25+ employees). Of the remainder, most are branches/subsidiaries of a multi-site organisation (15% of all businesses), while 8% are a headquarters, increasing to 13% of charities/voluntary organisations. Multi-site organisations are most likely to be found within health services (54%); wholesale and retail (41%); financial intermediation (39%) and public services (33%). 106

113 Business/Organisation Profile Figure 9.3: Number of sites, by sector, size and type (all respondents) Unweighted sample bases in parentheses tested Figures in bold are significantly greater than average minus the sub group Single site This site is a branch/subsidiary This site is HQ All businesses (2186) 77% 15% 8% No employees (396) 92% 5% 3% 1-9 emps (1132) 77% 15% 8% emps (394) 57% 30% 13% emps (229) 44% 41% 15% 25+ staff (264) 44% 39% 17% Primary (exc. Manuf and Construct) (172) 84% 4% 12% Manufacturing (137) 79% 14% 7% Construction (135) 90% 7% 3% Wholesale and Retail distribution (466) 59% 36% 5% Accommodation and Food (308) Transport and Communications (116) 83% 86% 13% 4% 7% 7% Financial intermediation (23) 60% 24% 15% Business services (128) 76% 13% 12% Prof. Scientific, Tech. services (165) 84% 9% 7% Public services (24) 68% 25% 8% Education (154) 83% 11% 6% Health services (163) 47% 40% 14% Arts, Recreation (89) 77% 18% 5% Other (106) 80% 12% 7% Private (1763) 80% 13% 7% Public (148) 65% 29% 7% Charity/ Voluntary (275) 58% 29% 13% 107

114 South Lakeland Eden Copeland Carlisle Barrow-in- Furness Allerdale Cumbria Business Survey 2015/16 Final Report 9.5 Organisation type The majority of businesses or organisations operate within the private sector i.e. are mainly seeking to make a profit (87%). Around one in ten businesses or organisations (9%) is a charity or voluntary organisation and this increases to 48% within other services, 46% within health services and 38% within the arts and recreation sector. The proportion is also higher than average within the education sector (28%). Local government financed bodies account for just 2% of businesses or organisations in Cumbria, but these bodies account for around half the businesses or organisations in the public services sector (65%), more than a quarter of education organisations (28%) and one in ten businesses or organisations within the arts and recreation sector (10%), Just 1% of businesses or organisations are a central government-financed body and this proportion increases to nearly one in four businesses or organisations within the public services sector (23%) and one in seven businesses or organisations in the education sector (15%). 9.6 Age of business The majority of private sector businesses (62%) have been established for more than ten years. Of these, most have been established for more than 20 years (40% of all). At the other end of the scale, just 4% of private sector businesses have been established in the last year, with a further 9% that could be classed as young businesses, having been established for less than 4 years. New and young businesses are particularly likely to be found in the other services sector (31%) and twice as likely as average to be found in the accommodation and food services sector (25%). Table 9.4: Age of business by district, size and sector (private sector businesses only) Figures in bold are significantly greater than average minus the sub group tested *denotes less than 0.5% Total Less than 1 year years years years years More than 20 years Unweighted Bases 1,

115 Other services Arts and recreation Health services Education Professional, science and technical services Business services Financial intermediation Transport and communications Accommodation and food services Wholesale & Retail Construction Manufacturing Primary industries Business/Organisation Profile Less than 1 year years years years years More than 20 years Unweighted Bases No employees 2-9 employees employees employees 100+ employees Any employees Less than 1 year * years years years years More than 20 years Unweighted Bases Geographical distribution South Lakeland is home to a quarter of businesses and organisations within Cumbria (26%), with around one in five each based in Allerdale (19%) and Carlisle (19%). One in seven is based in Eden district (14%), while one in eight is in Copeland (12%) and one in ten in Barrow-in-Furness (10%). Two-thirds of businesses are located in a rural area (66%), varying from rural hamlets and sparsely populated areas (around one in five) to a rural town in a more populated area (also around one in five). One in three businesses is located in an urban city and town. 109

116 Cumbria Business Survey 2015/16 Final Report Figure 9.5: Geographical distribution of businesses (all respondents) Unweighted sample bases = 2186 Allerdale 19% Barrow in Furness 10% Carlisle 19% Copeland Eden 12% 14% South Lakeland 26% Urban 34% Rural 66% Rural hamlet and isolated dwellings Rural hamlet and isolated dwellings in a sparse setting Rural town and fringe Rural town and fringe in a sparse setting Rural village Rural village in a sparse setting 11% 12% 12% 10% 9% 11% Urban city and town 31% Urban city and town in a sparse setting 3% 110

117 Appendix: Sector classifications and descriptions Appendix: Sector classifications and descriptions Main industry sectors (Standard Industry Classification 2007): Section A B C Division AGRICULTURE, FORESTRY AND FISHING 01 Crop and animal production, hunting and related service activities 02 Forestry and logging MINING AND QUARRYING MANUFACTURING 03 Fishing and aquaculture 05 Mining of coal and lignite 06 Extraction of crude petroleum and natural gas 07 Mining of metal ores 08 Other mining and quarrying 09 Mining support service activities 10 Manufacture of food products 11 Manufacture of beverages 12 Manufacture of tobacco products 13 Manufacture of textiles 14 Manufacture of wearing apparel 15 Manufacture of leather and related products Manufacture of wood and of products of wood and cork, 16 except furniture; manufacture of articles of straw and plaiting materials 17 Manufacture of paper and paper products 18 Printing and reproduction of recorded media 19 Manufacture of coke and refined petroleum products 20 Manufacture of chemicals and chemical products 21 Manufacture of basic pharmaceutical products and pharmaceutical preparations 22 Manufacture of rubber and plastic products 23 Manufacture of other non-metallic mineral products 24 Manufacture of basic metals 25 Manufacture of fabricated metal products, except machinery and equipment 26 Manufacture of computer, electronic and optical products 27 Manufacture of electrical equipment 28 Manufacture of machinery and equipment n.e.c. 29 Manufacture of motor vehicles, trailers and semi-trailers 30 Manufacture of other transport equipment 31 Manufacture of furniture 111

118 Cumbria Business Survey 2015/16 Final Report Section D E F G H I J K L Division 32 Other manufacturing 33 Repair and installation of machinery and equipment ELECTRICITY, GAS, STEAM AND AIR CONDITIONING SUPPLY 35 Electricity, gas, steam and air conditioning supply WATER SUPPLY; SEWERAGE, WASTE MANAGEMENT AND REMEDIATION ACTIVITIES CONSTRUCTION 36 Water collection, treatment and supply 37 Sewerage 38 Waste collection, treatment and disposal activities; materials recovery 39 Remediation activities and other waste management services. 41 Construction of buildings 42 Civil engineering 43 Specialised construction activities WHOLESALE AND RETAIL TRADE; REPAIR OF MOTOR VEHICLES AND MOTORCYCLES TRANSPORTATION AND STORAGE 45 Wholesale and retail trade and repair of motor vehicles and motorcycles 46 Wholesale trade, except of motor vehicles and motorcycles 47 Retail trade, except of motor vehicles and motorcycles 49 Land transport and transport via pipelines 50 Water transport 51 Air transport 52 Warehousing and support activities for transportation 53 Postal and courier activities ACCOMMODATION AND FOOD SERVICE ACTIVITIES 55 Accommodation 56 Food and beverage service activities INFORMATION AND COMMUNICATION 58 Publishing activities 59 FINANCIAL AND INSURANCE ACTIVITIES REAL ESTATE ACTIVITIES Motion picture, video and television programme production, sound recording and music publishing activities 60 Programming and broadcasting activities 61 Telecommunications 62 Computer programming, consultancy and related activities 63 Information service activities Financial service activities, except insurance and pension funding Insurance, reinsurance and pension funding, except compulsory social security Activities auxiliary to financial services and insurance activities 112

119 Appendix: Sector classifications and descriptions Section M N O P Q R S Division 68 Real estate activities PROFESSIONAL, SCIENTIFIC AND TECHNICAL ACTIVITIES 69 Legal and accounting activities 70 Activities of head offices; management consultancy activities 71 Architectural and engineering activities; technical testing and analysis 72 Scientific research and development 73 Advertising and market research 74 Other professional, scientific and technical activities 75 Veterinary activities ADMINISTRATIVE AND SUPPORT SERVICE ACTIVITIES 77 Rental and leasing activities 78 Employment activities 79 Travel agency, tour operator and other reservation service and related activities 80 Security and investigation activities 81 Services to buildings and landscape activities Office administrative, office support and other business 82 support activities PUBLIC ADMINISTRATION AND DEFENCE; COMPULSORY SOCIAL SECURITY Public administration and defence; compulsory social 84 security EDUCATION 85 Education HUMAN HEALTH AND SOCIAL WORK ACTIVITIES 86 Human health activities 87 Residential care activities ARTS, ENTERTAINMENT AND RECREATION 88 Social work activities without accommodation 90 Creative, arts and entertainment activities 91 Libraries, archives, museums and other cultural activities 92 Gambling and betting activities 93 Sports activities and amusement and recreation activities OTHER SERVICE ACTIVITIES 94 Activities of membership organisations 95 Repair of computers and personal and household goods 96 Other personal service activities 113

120 Cumbria Business Survey 2015/16 Final Report Priority and supporting sectors: Sector group description: Definition by division: Energy 05; 06; 24; 35; 38 13; 16; 17; 19; 20; 21; 22; 23; Specialist manufacturing 25; 26; 27; 28; 29; 30; 31; 32; 33 Food and drink 10; 11; 12 Visitor economy 55; 56; 79; 90; 91; 93 Construction 41; 42; 43 Digital or creative and media 14; 15; 18; 58; 59; 60; 61; 62; 63; 73; 90 Logistics and transport 49; 50; 51; 52; 53 Business Services 64; 65; 66; 67; 68; 69; 70; 77; 78; 80; 81; 82; 94; 99 Agriculture (land/sea) 01; 02;

121 Appendix: EA Flood Extent Areas Appendix: EA Flood Extent Areas The following broadly describes the EA Flood Extent areas that are referenced in this report. These areas are defined more precisely by postcodes, but these are not listed here as there are 1,428 of them. Flood_Extent Edenhall and Langwathby Culgaith Kirkby Thore Eamont Bridge and Brougham Melkinthorpe Sockbridge Mill Pooley Bridge Sandwick Askham Bampton and Bampton Grange Morland Kings Meaburn Newby Maulds Meaburn Crosby Ravensworth Shap Tebay Newton Reigny Greystoke and Little Blencow Little Blencow Patterdale Hartsop Glenridding Brockley Moor Plumpton Holme Head Plumpton Carlisle Keswick Chapel Bassenthwaite Threlkeld Portinscale Braithwaite Grange Lodore Rosthwaite Flood_Extent_Group Edenhall, Langwathby Edenhall, Langwathby Other Eden Eamont Bridge, Brougham Other Eden Other Eden Pooley Bridge, Glenridding, Patterdale Pooley Bridge, Glenridding, Patterdale Other Eden Other Eden Other Eden Other Eden Other Eden Other Eden Other Eden Other Eden Other Eden Greystoke, Newton Reigny, Plumpton Greystoke, Newton Reigny, Plumpton Greystoke, Newton Reigny, Plumpton Pooley Bridge, Glenridding, Patterdale Pooley Bridge, Glenridding, Patterdale Pooley Bridge, Glenridding, Patterdale Greystoke, Newton Reigny, Plumpton Greystoke, Newton Reigny, Plumpton Greystoke, Newton Reigny, Plumpton Carlisle, Crosby, Warwick Bridge Keswick, Braithwaite, Portinscale Other Allerdale Other Allerdale Other Eden Keswick, Braithwaite, Portinscale Keswick, Braithwaite, Portinscale Other Allerdale Other Allerdale Other Allerdale 115

122 Cumbria Business Survey 2015/16 Final Report Flood_Extent Seatoller Cockermouth Lorton Camerton Barepot Workington Allonby Allerby Bullgill Maryport Flimby Appleby Bolton Colby Great Ormside Great Asby Coupland Sandford Warcop Dry Beck Kirkby Stephen Brough Newbiggin-on-lune Ravenstonedale Soulby Warwick Bridge Armathwaite Stockdalewath Sebergham Aspatria Hayton Westnewton Blennerhasset and Baggrow Abbeytown Caldbeck Millhouse Wigton Windermere, Ambleside, Newby Bridge Backbarrow Coniston Hawkshead Rydal Grasmere Flood_Extent_Group Other Allerdale Cockermouth Other Allerdale Maryport to Workington Maryport to Workington Maryport to Workington Wigton, Aspatria, Abbeytown Wigton, Aspatria, Abbeytown Maryport to Workington Maryport to Workington Appleby Other Eden Other Eden Other Eden Other Eden Other Eden Other Eden Other Eden Other Eden Kirkby Stephen, Soulby Other Eden Other Eden Other Eden Kirkby Stephen, Soulby Carlisle, Crosby, Warwick Bridge Other Eden Carlisle, Crosby, Warwick Bridge Other Allerdale Wigton, Aspatria, Abbeytown Wigton, Aspatria, Abbeytown Wigton, Aspatria, Abbeytown Wigton, Aspatria, Abbeytown Wigton, Aspatria, Abbeytown Other Allerdale Other Allerdale Wigton, Aspatria, Abbeytown Windermere, Ambleside, Newby Bridge Other South Lakeland Other South Lakeland Other South Lakeland Grasmere, Rydal Grasmere, Rydal 116

123 Appendix: EA Flood Extent Areas Flood_Extent Troutbeck Bridge Milnthorpe Beetham Sedgwick Burneside Kendal Staveley Flood_Extent_Group Windermere, Ambleside, Newby Bridge Other South Lakeland Other South Lakeland Other South Lakeland Kendal, Burneside, Staveley Kendal, Burneside, Staveley Kendal, Burneside, Staveley For more information about the 2015/16 Business Survey, please contact: Ginny Murphy Senior Analyst Cumbria County Council / Cumbria LEP Tel: ginny.murphy@cumbria.gov.uk A copy of the full report can be downloaded from the Cumbria Intelligence Observatory website here: 117

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