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Job satisfaction levels high in London.

SME employees in the UK to remain optimistic in 2012.

Despite the economy slipping back into recession and growing concerns about the eurozone, employees of small and medium-sized enterprises (SMEs) in the UK remain positive, optimistic about the future and happy in their jobs in 2012, according to a new survey report from Bibby Financial Services.

In the survey of 500 businesses, 24 per cent of SME owners and managers throughout the UK reported a rise in motivation levels among their staff in the first quarter of 2012, a small increase on the previous quarter of 3 per cent.

Some 43 per cent said they are hopeful for the future and consider their businesses to be in better shape than ever.

London has seen the highest level of positivity with 42 per cent of owners and managers reporting happier staff. This was followed by people working for SMEs in Yorkshire and the Humber (34 per cent) and South East England (26 per cent).

As per the survey, 25 per cent of employers in the North East said their staff had been more positive during the first quarter of 2012, up from 11 per cent at the end of the last quarter of 2011. Reflecting the national picture staff contentment levels among firms in the South remained constant at 24 per cent.

Elsewhere, the survey found the East Anglia to be home to the highest drop in morale with just 11 per cent of managers observing a rise in their workforce’s motivation levels, compared with the same time last year when the figure was 43 per cent.

A contrasting picture surrounding job satisfaction levels also emerged between employees in Scotland and Wales, with  32 per cent of Welsh managers saying they had seen an upturn in staff morale compared to just 11 per cent north of the border.

Edward Winterton, executive director at Bibby Financial Services, said: "We conducted this research as we believe the issue of staff morale is intrinsically linked to the stability of any business. It is still a difficult time to keep staff feeling optimistic about their future prospects and if business owners are worried about cash flow problems or a lack of new customer orders that has a direct impact on staff.

"We have been working with SMEs for more than 27 years and understand how important it is for businesses to operate on a stable basis, including having access to funding - a facility such as invoice finance can help to maintain a healthy cash flow and support future growth."

The research also found that the outlook for business owners and managers is likely to remain equally challenging in the coming months with 21 per cent employees saying they are prepared to take unauthorised time off during this summer’s events, while many businesses are bracing themselves for a rise in staff absenteeism during the forthcoming Euro 2012 football championships, as fans stay at home to watch matches.

Winterton added: "An inspired and driven workforce increases a business’s chance of remaining productive and improving the quality of the goods or services they provide. It also means managers can focus their time and efforts on what is really important to a business, namely ensuring the required levels of funding are in place to enable it to thrive.

"A manager’s ability to keep these business-critical issues under control means the likelihood of pay freezes, cuts in employee training and job insecurity, all of which can have a detrimental impact on staff morale, are very much reduced."

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A simple U-Turn may not be enough to get the Conservatives out of their tax credit mess

The Tories are in a mess over cuts to tax credits. But a mere U-Turn may not be enough to fix the problem. 

A spectre is haunting the Conservative party - the spectre of tax credit cuts. £4.4bn worth of cuts to the in-work benefits - which act as a top-up for lower-paid workers - will come into force in April 2016, the start of the next tax year - meaning around three million families will be £1,000 worse off. For most dual-earner families affected, that will be the equivalent of a one partner going without pay for an entire month.

The politics are obviously fairly toxic: as one Conservative MP remarked to me before the election, "show me 1,000 people in my constituency who would happily take a £1,000 pay cut, then we'll cut welfare". Small wonder that Boris Johnson is already making loud noises about the coming cuts, making his opposition to them a central plank of his 

Tory nerves were already jittery enough when the cuts were passed through the Commons - George Osborne had to personally reassure Conservative MPs that the cuts wouldn't result in the nightmarish picture being painted by Labour and the trades unions. Now that Johnson - and the Sun - have joined in the chorus of complaints.

There are a variety of ways the government could reverse or soften the cuts. The first is a straightforward U-Turn: but that would be politically embarrassing for Osborne, so it's highly unlikely. They could push back the implementation date - as one Conservative remarked - "whole industries have arranged their operations around tax credits now - we should give the care and hospitality sectors more time to prepare". Or they could adjust the taper rates - the point in your income  at which you start losing tax credits, taking away less from families. But the real problem for the Conservatives is that a mere U-Turn won't be enough to get them out of the mire. 

Why? Well, to offset the loss, Osborne announced the creation of a "national living wage", to be introduced at the same time as the cuts - of £7.20 an hour, up 70p from the current minimum wage.  In doing so, he effectively disbanded the Low Pay Commission -  the independent body that has been responsible for setting the national minimum wage since it was introduced by Tony Blair's government in 1998.  The LPC's board is made up of academics, trade unionists and employers - and their remit is to set a minimum wage that provides both a reasonable floor for workers without costing too many jobs.

Osborne's "living wage" fails at both counts. It is some way short of a genuine living wage - it is 70p short of where the living wage is today, and will likely be further off the pace by April 2016. But, as both business-owners and trade unionists increasingly fear, it is too high to operate as a legal minimum. (Remember that the campaign for a real Living Wage itself doesn't believe that the living wage should be the legal wage.) Trade union organisers from Usdaw - the shopworkers' union - and the GMB - which has a sizable presence in the hospitality sector -  both fear that the consequence of the wage hike will be reductions in jobs and hours as employers struggle to meet the new cost. Large shops and hotel chains will simply take the hit to their profit margins or raise prices a little. But smaller hotels and shops will cut back on hours and jobs. That will hit particularly hard in places like Cornwall, Devon, and Britain's coastal areas - all of which are, at the moment, overwhelmingly represented by Conservative MPs. 

The problem for the Conservatives is this: it's easy to work out a way of reversing the cuts to tax credits It's easy to see how Osborne could find a non-embarrassing way out of his erzatz living wage, which fails both as a market-friendly minimum and as a genuine living wage. A mere U-Turn may not be enough. 


Stephen Bush is editor of the Staggers, the New Statesman’s political blog.