Published: 22 February 2021
By Suzanne Evans, Director, Political Insight
Chancellor Rishi Sunak is set to use the upcoming March budget to announce a pathway for increasing corporation tax, according to reports in The Times, with a planned Autumn increase of 1%, taking it to 23% over the parliament. Each percentage point rise will raise around £3bn, according to HMRC modelling, the newspaper said. However, previous estimates by the Office for Budget Responsibility have suggested that the rise could knock 0.5% off business investment spending.
The High Court has ruled that health secretary Matt Hancock acted unlawfully when his department did not reveal details of contracts it had signed during the Covid pandemic. Mr Justice Chamberlain was ruling on a legal challenge brought by three opposition MPs and the Good Law Project over contracts running into hundreds of millions of pounds to supply face masks and other personal protective equipment, all awarded without competition. The Judge found Mr Hancock "breached his legal obligation" by not publishing details within 30 days of contracts being signed. He added in his ruling that the public had a right to know where the "vast" amounts spent had gone and how contracts were awarded, noting too that the health secretary had spent £207,000 of taxpayers’ money fighting the case.
UK redundancy rates during the coronavirus pandemic have increased faster than during the 2008-09 economic downturn, according to the Office for National Statistics. The ONS found that administrative and support services had the highest redundancy rate between July and November last year, at 35.8 per 1,000 employees; that disabled employees had higher than average redundancy rates; and that vacancies in the accommodation and food service activities industry declined the most, being down 64%. Redundancies increased the most (400.4%) in the transport and storage industry in the year to November 2020
1,476 European firms applied to be regulated in the UK ahead of Brexit, the response to an FOI request to the Fincancial Conduct Authority, filed by financial regulation consultancy Bovill, shows. Around 1,000 were setting up operations in the UK for the first time, having previously relied on passporting to serve UK clients from elsewhere in Europe. “The numbers…suggest that London is set to remain a key financial centre," said Mike Johnson, a managing consultant at Bovill.
UK TRAVEL NEWS: The industry has written an open letter to the government requesting collaboration on a roadmap to recovery and tailored financial support, ahead of a key announcement of the end of the current national lockdown by PM Boris Johnson today. The letter, organised by the Association of British Travel Agents (ABTA) in partnership with the Save Future Travel Coalition, and co-signed by firms such as TUI, easyJet and Airlines UK, notes that around 160,000 jobs have been lost so far, and that many businesses have closed their doors for good. It urges the government to facilitate travel through a recognised vaccine certificate; to return Foreign Office travel advice on COVID-19 to a regional basis, as opposed to a whole country level; and review existing government advice against travel in specific sectors, such as school travel, in light of the improving medical situation and vaccine rollout. Saga, meanwhile, which specialises in products for the over-50s, is in talks about a £170m debt package as it looks to weather the coronavirus pandemic, according to Sky News. The company rejected a takeover offer last year, and has begun talks with a group of debt funds about refinancing part of its existing borrowings. Sky cited City sources as saying that Saga was considering trying to secure the new debt against its insurance arm, which is the stronger of its two businesses, but the move may not result in a deal.
AIRLINE NEWS: British Airways owner IAG announced this morning that it has boosted total liquidity by £2.45bn, via a loan deal and deferred pension deficit payments. The company, which also owns Iberia and Aer Lingus, said a deal had been reached on a £2bn loan partially backed by the UK government and deferral of £450m in pension deficit contributions. Guillaume Faury, chief executive of Airbus has called for COVID-19 travel restrictions to be eased, saying in a radio interview on Saturday: “We are extremely frustrated by the barriers that restrict personal movement and it is almost impossible today to travel in Europe by plane, even domestically.” He also urged a ceasefire in a transatlantic trade war over aircraft subsidies, saying that tariffs on planes had added to the damage caused by the health crisis. From 2019, Washington slapped Airbus with import duties of 15% on its jets and the EU in return responded with a matching tariff on Boeing jets the following year. Thai Airways meanwhile has cut around 240 executive positions in an attempt to avoid bankruptcy. The airline must submit its restructuring plan to the Thai Central Bankruptcy Court on 2 March, with the plan to be voted on by creditors in May. The national carrier employs around 21,000 people and is an important part of the country’s vital tourism industry.
McKesson UK, the owner of the Lloyds Pharmacy chain, is facing questions from a prominent MP Robert Halfon, about staff pay conditions. Sky News has seen a letter from Halfron to McKesson’s boss Toby Anderson which calls on the company to reverse changes to staff sick pay and overtime. McKesson is proposing to slash overtime and sick pay, including only paying employees on sick leave from their third day of illness onwards, as well as moving its workforce to a six-day working week including Saturdays. The company is also looking to cut bonuses and remove a heavily-subsidised private healthcare scheme.
Pub group Mitchells & Butlers, says sales plunged 69.8% from September to January amid the coronavirus pandemic, while cash burn was up to £35m a month since the start of the year. All of its sites have been closed since the end of 2020 as the government tightened restrictions over Christmas and then implemented a full national lockdown. Mitchells & Butlers also has debt servicing costs of £51m a quarter, and all non-essential capital expenditure continues to be suspended. The group had £113m in cash at January 16 with all lending facilities drawn. The company, which owns the Harvester chain, and the All Bar One and pub chains, has also revealed that three major shareholders had combined to control 55% of the pub giant. Piedmont, Elpida and Smoothfield consolidated their holdings under a newly incorporated holding company Odyzean, which has committed to take up its full entitlement under the open offer.
The buyout giant Providence Equity Partners is leading a £300m race to buy Node4, one of Britain's army of fast-growing IT services providers, in a deal that will net another big windfall for its founder, reports Sky News.
Canadian security services firm GardaWorld said on Monday that it will not raise its offer for G4S as it is not prepared to overpay, clearing the path for Allied Universal to buy its London-listed rival.
The billionaire Issa brothers, the owners of Asda, have made a fresh bid to take control of troubled coffee chain Caffe Nero by purchasing almost half its company debts, according to the Sunday Telegraph. If successful, the aggressive move would leave the brothers in a position to make a bid for control through a debt-for-equity swap, should Caffe Nero default on its debts, which currently total some £350m. However, at this point in time there is no certainty that a deal will be agreed.
Uber has lost a critical UK Supreme Court case on drivers' rights. On Friday, the court ruled that UK Uber drivers qualify as workers who are due full employment rights, rather than contractors, thereby upholding the judgment of a lower employment tribunal back in 2016. During the online hearing, Lord Leggatt cited Uber's control over fees, a lack of say in contract term, effective punishments for failing to take jobs, and other forms of control, which he said put them “in a position of subordination and dependency to Uber, such that they have little or no ability to improve their economic position through professional or entrepreneurial skill. In practice, the only way in which they can increase their earnings is by working longer hours while constantly meeting Uber’s measures of performance.”
A four-day strike at Centrica's British Gas began on Friday after talks between the GMB union and the company failed. GMB has already carried out several one-day strikes this year in protest over what it calls plans to "fire and rehire" and over cuts to workers' pay and terms. "Around 7,000 British Gas engineers downed tools…until February 23," the GMB said. The move will take the total number of strike days in this dispute to 22.
Insurance market Lloyd's of London has advertised for an archivist to examine its 3,000 or so artefacts – including paintings, swords and furniture - for historical links to the slave trade. It is not yet clear what will happen to the objects following the research. Last June, Lloyd's apologised for its "shameful" role in the trans-Atlantic slave trade.
Mark Carney, the former governor of the Bank of England and Bank of Canada has been appointed to the board of Stripe Inc. amid reports the financial technology firm is preparing a new funding round. Carney is also the United Nations special envoy for climate action, and a statement posted on the company’s website suggests he will help guide Stripe in its efforts to enable more businesses fund emerging carbon removal technologies.
Almost 20 million people in the UK have lost an average of £538 in income every month since the start of the coronavirus pandemic, according to the Office for National Statistics. That amounts to nearly a full week of spending for the average household, and equates to a total of £11bn nationally.
UK employers are reporting their strongest hiring intentions since the start of the COVID-19 outbreak, according to the latest data from the CIPD/Adecco’s Labour Market Outlook. This survey of 2,000 employers, taken online between 5 and 30 January, showed a 56% rise in the first quarter in businesses planning to recruit, and that the net employment intentions figure - which measures the difference between the proportion of employers expecting to add jobs and those planning to cut positions - rose to +11 for the first three months of 2021 - its highest in a year. This compares to -1 in the previous quarter.
The number of funds that have consistently underperformed in the markets they invest in this year has risen by a third, new data from Bestinvest’s Spot the Dog report shows. The report has exposed badly performing funds since it launched in 1994, and named 119 market investment funds in its latest report, collectively representing £49.6bn in customer’s long-term savings. A criterion for inclusion on the list includes delivering a worse return than the market it invests in for each one of the last three 12-month periods in a row. It must also have underperformed the market it invests in by more than 5% over the entire three year period under review. At least 15 funds on the current list are managed by some of the financial services industry’s biggest names, each holding more than a billion pounds of investors' cash.
Britain's FTSE 350 has banished all-male boards, according to new data from the 30% Club, which campaigns for gender diversity in global boardrooms. The group said on Friday that there was now at least one woman on all the boards of FTSE 350 companies, in which, overall, women now make up 36% of all board members.
Oil prices have fallen back below $60 but remain at levels not seen since January 2020.
Global dividends fell to $1.26trn in 2020, down 12.2% , according to the latest Global Dividend Index from Janus Henderson. The dividend cuts were most severe in the UK and Europe, which together accounted for more than half the total reduction in payouts globally, mainly owing to the forced curtailment on banking dividends by regulators.
The market value of all Bitcoin in circulation hit $1trn (£710bn) for the first time ever on Friday night after the price of each individual coin surpassed $56,000, data website CoinMarketCap revealed. The cryptocurrency extended its stellar two-month rally, rising to a record $56,620, meaning it has surged more than 92% this year alone. It has gained almost 20% this past week.
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