In Focus: North Devon
Just like many areas of the South West, North Devon is truly diverse. While its rugged beauty and stunning landscapes from moor to sea draw year-round visitors, there is much to be celebrated in the bustling towns and thriving business hubs.
Health, retail, and tourism account for nearly half of all employment overall, with agriculture, education, manufacturing, and construction closely following as key sectors that sustain North Devon’s economy.
As an accountant and business adviser on the ground and out and about in the local communities, I see and hear first-hand some of the key issues facing this area in 2023.
Tourism and leisure
While there is still some big challenges ahead for my tourism and leisure clients in North Devon, the signs for this year are good and the post-pandemic green shoots of recovery continue to grow.
2021 was one of the best years ever for several holiday parks in North Devon that I look after and 2022 was on par, or in some cases, better still.
Now that Christmas is out of the way, January is a key time for people making holiday plans for the year ahead. Although it’s still just a little too early to call 2023, there is some nervousness in the air. With the cost-of-living crisis continuing to bite and people having less disposable income it’s predicted visitor numbers might drop off slightly to 2019 levels.
Sensible pricing is key – accommodation providers will win out if they get this right. January is a great time to provide offers or incentives to encourage early bookings. I would encourage businesses to look at this now, get ahead of the curve and don’t price themselves out of the market. It’s about striking a balance.
Closing the skills gap
What has been striking over the last 12 months is the labour shortage in all sectors. Recruitment is still a real problem for many of my clients in North Devon from in-house finance teams to the care sector to construction and manufacturing – every industry has faced the prospect of operating at a reduced capacity on some level because of staffing issues.
One of my clients in the care sector is a third down on their workforce. Without skilled workers, businesses will struggle to survive. We’re encouraging our clients to have those conversations and review pay and renumeration now.
With inflation having increased exponentially and costs rising across the board, keeping up can be difficult, but businesses need to stay competitive when looking at specific job roles and what they can offer, considering not just pay levels but what other benefits they can offer employees.
Planning for the future
It’s not just the here and now that employers should be considering – it’s the longer-term succession planning that needs to be addressed.
We continually talk to our clients about the future, not just business ownership but the succession of all your key employees is prudent. What have you got planned if your skilled member of staff moves from the area? Have you got new blood coming through?
Having conversations about plans for retirees is important because the transition and process of closing the skills gap can take a significant amount of time.
The skills gap, coupled with the dramatic increase in costs and difficulty sourcing materials with longer lead-times, is still having a knock-on impact in the construction industry in North Devon. Some developers are putting projects on hold and site improvements across all sectors have been pushed back. Demand for housing is there but not at the prices companies want to sell for. Although the property market is starting to level out and, in some areas drop off, the new year is when property transactions begin to stir again. Good news also for smaller maintenance firms – they have more work than they can carry out, with jobs lined up for the next one or two years.
Naturally resourced opportunities
One of the biggest opportunities for North Devon is the development of renewable energy and exploiting some of the natural capital we have. In particular, the coastline for wind power.
But preserving the marine environment is important and the work that the North Devon UNESCO Biosphere does has grown in significance over recent years. It’s about promoting and preserving the unique environment we have, encouraging visitors to come and enjoy the diversity of our landscape, but doing this in a sustainable way.
We have a finite resource, and we need to protect this natural habitat – that’s what makes North Devon so special.
Both renewables and the biosphere have the potential to generate hundreds of jobs in the next 30 to 40 years, both directly and indirectly, for the wider economy.
Another positive driver of jobs creation in North Devon is the re-opening of Appledore Shipyard. 200 skilled jobs and millions of pounds for the local economy were lost when the facility closed in 2019.
Now operating under ownership by Harland and Wolff, the workforce is gradually building, and several large contracts agreed, it’s really encouraging to see this facility gathering momentum again. It’s hoped once it is running at full capacity, it will be one of the biggest employers in the area, and support employment in secondary businesses at the same time.
Funding farming’s future
With North Devon’s strong agricultural ties, farmers will need to start thinking about future sources of funding. With Brexit and the phasing out of EU money, the question is what will replace it? It’s estimated over £800 million could be lost from the region’s rural economy in the next four years as farm subsidies are withdrawn.
The Government has promised like-for-like cash, but as with anything, the devil is in the detail, and this could be a concern for farmers in North Devon. Small, family-run farms have relied on the EU funds, and it is the only way they’ve survived – how they will continue operating?
It’s not just farming affected by the withdrawal of EU funds – local authorities will be looking at how they can plug the hole for local regeneration, improvement, and jobs creation. ‘Levelling up’ is still the buzz phrase, but my concern is practical access to any replacement funding and how it’s distributed.
Another positive development in North Devon is the number of small independent retailers giving it a go on the high street – whether it’s Barnstaple or Bideford, it’s encouraging to see businesses taking advantage of the rates reliefs available to them and watching them succeed.
Diversification is key – the biggest winners in retail are ones that trade online, as well as on the high street. From handmade goods and gifts, homewares, accessories, and furniture makers, it’s great to see a comeback when you walk down the street.
Two considerations I’m encouraging clients to make is the overall structure of your business and protecting your assets. Structuring your company to strip property away from the trading activity is important, because if your sales suffer at any point, you don’t compromise your property assets. If you are generating cash now, do you look to protect that cash in a different vehicle?
R&D tax reliefs
Alongside business structure and asset protection, Research and Development (R&D) tax reliefs is an area of focus for many of my clients. How companies in North Devon, even if they are not directly linked to research and development, can access this benefit from HMRC.
Many may not have looked at it because they don’t think it applies to them. Some may not even know about the relief – part of my work has been explaining how they reduce their tax burden, leave more cash in the business or if they are in the start-up phase fund new ideas or products.
Lots of projects could benefit from this enhanced tax credit and is worth anything from £1,000 upwards. I’ve had claims of over £1 million so it could be substantial for those that qualify.
I’ve been advising businesses for over 20 years, much of that time in North Devon, and it’s a diverse and interesting place to work. Using my skills, combined with knowledge of the region, is what drives me, and I am seeing a real ‘drive’ in the economy ahead in 2023.