Published: 24 January 2023
By Suzanne Evans, Director, Political Insight
The Office for National Statistics (ONS) has published the latest public sector finance figures this morning. Public sector net borrowing excluding public sector banks was £27.4 billion in December 2022. This was the highest December borrowing on record, largely because ofspending on energy support schemes and higher debt interest. Public sector net debt excluding public sector banks was £2,503.6 billion or around 99.5% of GDP, with the debt to GDP ratio at levels last seen in the early 1960s. The ONS says the increase has been driven by the cost ofsupporting households with their energy bills and rising debt interestcosts. The figures led Chancellor Jeremy Hunt to pour cold water on hopes of any early tax cuts: the interest payments on Britain’s debt mountain have now risen to £17.3billion, another record, and more than double what it was a year ago.
The ONS also says the UK’s net worth was £11.8 trillion in 2021, up £1 trillion on 2020 and the largest annual increase on record, with landaccounting for over 60% of net worth. In 2021, the average UK householdhad net worth of £437,685, with land and pensions making the largest contributions at 39.5% and 29.7% respectively. Government net worth also increased for the first time since 2018, by £61.6 billion, but remained at a negative £1.4 trillion, as financial liabilities exceed total assets.
Prime Minister Rishi Sunak has asked his independent ethics adviserSir Laurie Magnus to look into the HMRC tax case involving Nadhim Zahawi, the Conservative Party Chairman, telling reporters that there are "questions that need answering" and that he wanted “to get to the bottom of everything”. Sunak added he wanted to make sure he was confident former Chancellor Zahawi had "acted properly throughout" and complied with rules guiding ministers. "Integrity and accountability is really important to me,” he said, adding that Zahawi had agreed to cooperate fully with the investigation. Zahawi said he welcomed the move and looked forward to explaining the "facts of the issue", adding he would not discuss it further while the investigation was under way.
The appointment of Richard Sharp to the position of BBC Chairman Richard Sharp is to be reviewed following allegations he helped facilitate a loan of up to £800,000 for former PM Boris Johnson at around the same time he was appointed to his post in early 2021. The Commissioner forPublic Appointments, William Shawcross, said in a letter to Labour MP Lucy Powell that he would scrutinise the appointment to ensure it was conducted in line with the governance code for public appointments. Sharp said in an open letter: "I was not involved in making a loan, or arranging a guarantee, and I did not arrange any financing. What I did do was to seek an introduction of (an old friend) Sam Blyth to the relevant official ingovernment." Johnson told Sky News yesterday that the controversy was "absolute nonsense". Sharp said the government had confirmed he was appointed on merit and the recruitment process was followed appropriately.
The Government is poised to announce £600m in grants to help Britain’s energy-intensive steel industry go green, it was reported yesterday. According to the BBC, Chancellor Jeremy Hunt is set to confirm grants for British Steel (as reported in yesterday’s Daily Business News) and Tata Steel UK later this week. Each are understood to be in line to receive around £300m to help switch away from coal-fired blast furnaces as well as helping with energy costs. Although the reports are yet to be confirmed, the BBC said the Department for Business, Energy and Industrial Strategyhad confirmed it was working with the steel industry to ensure a "sustainable and competitive future". The Guardian also reported that any government support would be conditional on the companies also committing to invest in the plants themselves. Tata Group chair Natarajan Chandrasekaran said last year that its Port Talbot plant in Wales needed £3bn if it was to remain operational, including £1.5bn from the government.
Ministers have rejected a proposal from MPs on the Women and Equalities Committee to introduce "menopause leave" pilots in England, arguing it could be "counterproductive". The Government also dismissed a recommendation to make menopause a protected characteristic under the 2010 Equality Act.
Britain will experience a recession which could be deeper than previously thought but not longer, according to economists at consultancy EY. Faced with a worsening situation, less government support and higher taxes, the economists said they thought each of the next three years could be worse than they had previously expected. In October, EY’s Item Club had predicted a 0.3% contraction in GDP this year, followed by 2.4% growth next year and a 2.3% rise in 2025. But in an updated forecast released on Monday, it said GDP would drop 0.7% this year, followed by growth of 1.9% and 2.2% over the next two years. “The UK’s economic outlook has become gloomier than forecast in the autumn, and the UK may already be in what has been one of the mostly widely anticipated recessions in living memory,” said EY’s Chair Hywel Ball.
Begbies Traynor says it fears 2023 could see a wave of company collapses as the cost of living crisis continues. The number of firms on the brink of going bust jumped by 36% during the final quarter of 2022, and the insolvency firm expects this number to rise due to higher costs and consumers cutting back their spending. The number of county court judgments served against companies in the same period also jumped by 52% compared with 2021, however the situation could actually be worse as a backlog in the insolvency courts due to Covid lockdowns has also delayed some company collapses. Julie Palmer, partner at Begbies Traynor, said: "The courts were closed for business so nobody could take recovery action against non-payers, and we are beginning to see those cases pushed through now”. Her firm is receiving an increasing number ofcalls from businesses owners worried about carrying on, she added. A company is considered to be in critical financial distress if it has more than £5,000 in county court judgments or a winding up petition against it.
Cases of "advance fee" scams where a victim is asked to pay an upfront fee for products or services jumped by more than 80% last year, with victims losing £711 on average, according to Lloyds. Reports of loan fee scams have more than doubled over the last 12 months, up by 105% compared to the previous year, with the number of cases continuing to rise sharply. The average amount lost by victims last year was £214.
Equity release lending to new customers increased 31% in 2022 compared to the year before, with £6.3bn tapped from properties, according to equity release broker Key, which also said the number ofequity release plans taken out over the year increased 29%, taking the total to 52,295.
The Crown Estate, the independent commercial business that manages the King’s property portfolio, has begun court proceedings against social media platform Twitter over alleged rental arrears on its London headquarters. Reuters says that court lists showed the case had been filed at the High Court last week. Twitter laid off half its workforce soon after it was taken over by Elon Musk last October. In London, the office was left deserted and any evidence that Twitter had once occupied the building were erased. Twitter did not immediately respond for a request forcomment.
Telecoms and media regulator Ofcom is investigating BT Group to find out if the company had complied with rules on providing customers with a short and simple summary of contract terms. There is suspicion that its Plusnet unit, which provides internet services, has breached such regulatory rules. Ofcom has previously opened a probe against another BT subsidiary, mobile network operator EE, over similar non-compliance charges, Reuters says.
Funeral specialist Dignity has agreed to be taken over by a consortium backed by investment firms Phoenix Asset Management Partners, SPWOne V and Castelnau Group in a £281m deal. The consortium has agreed to pay 550p in cash per share for the 71% of Dignity it does not already own. The bid - which was revised from an earlier approach of 525p per share - represents a 29.3% premium to the closing price of the company's stock on 3 January, the last business day before the start of the offer period. The consortium said it was well placed to "unlock" Dignity's potential to become "the leading end-of-life business in the UK". The firm operates 46 crematoria and 28 cemeteries alongside a network of 725 funeral branches. It has unanimously recommended the offer to shareholders.
National Express Group said yesterday that its German business had won a €1bn (£880m) contract to operate the RE1 and RE11 Rhein-Ruhr-Express (RRX) train lines to 2033. The company took over the operation ofthe two lines in February 2022 through an emergency contract award. National Express now operates all three asset light RRX lots under long term contracts.
Luxury car manufacturer Bentley is seeking applicants for 200 new jobs at its Crewe headquarters as part of plans to launch five electric models by 2030. The BBC says the positions are available across engineering, software, electrical systems and more, and have been created as part of a £2.5bn plan to transform the Crewe plant into a "dream factory". Matthias Rabe, Bentley's member of the board for research and development,said: "Bentley is in the middle of the most significant transformative phase in the company's long and illustrious history”.
The Body Shop is to stop using a distribution centre in Corby, Northamptonshire, affecting 28 staff and 35 temporary workers. The site had been used by the brand's direct selling business, The Body Shop at Home after "a significant short-term rise in demand for The Body Shop at Home during the pandemic," the beauty outlet said.
The boutique Everyman cinema chain, part of Everyman Media Group has posted group earnings of approximately £14.5m, up by nearly three quarters compared to the £8.3m made the previous year, which was affected by Covid lockdowns. It also enjoyed a surge in revenues, to £80 million from £49 million in 2021. The business, which runs a chain of 38 upmarket cinemas across the UK, said its earnings were ahead of market expectations in the year to 29th December 2022. It added that the release of Tom Cruise's Top Gun: Maverick marked a symbolic return to post-Covid "business as usual", with the film enjoying record box office sales inthe year.
Tradesmen face yearly bills of more than £3,000 under London Mayor Sadiq Khan's plans to expand the ultra-low emission zone (ULEZ) across every London borough, because of a lack of compliant vans for sale, the Daily Mail reports.
Pub chain Fullers says it has taken a £4m hit because of rail strikes. Although sales over the Christmas and New Year period were up 38% on the previous year, when pubs were still suffering the impact of covid fears, they were still down 5% on 2019 levels.
In the latest round of staff layouts that have been revealed by the tech sector, Spotify Technology SA said yesterday that it plans to cut 6% of its workforce. The Swedish audio streaming and media services provider also said that its content chief, Dawn Ostroff, was set to depart. CEO Daniel Ek said the moves were part of a wider restructuring of Spotify's operations to drive efficiency.
Tesla boss Elon Musk has been given evidence at a trial in San Francisco to defend himself against claims that he defrauded investors in Tweetssaying he had "funding secured" to take Tesla private at $420 per share and that "investor support is confirmed." During roughly five hours oftestimony yesterday, he told jurors he was sure he had secured funding from Saudi investors, and that he could also used his stake in his rocket company SpaceX to fund a buyout. "With SpaceX stock alone, I felt funding was secured" for the buyout, he said. Tesla's stock price surged after the 2018 tweets, only to fall as it became clear the buyout would not happen. Investors say they lost millions of dollars as a result. "I was very upset because he had been unequivocal in his support for taking Tesla private when we met and now he appeared to be backpedalling," Musk said of his Saudi backer. However, the lawyer for the plaintiffs told the court written evidence did not support Musk's claim about the Saudis' original intentions, saying that minutes of their meeting showed only that the Saudis wanted to learn more about what Musk had in mind. He is expected to continue his testimony today. US Judge Edward Chen has already ruled that Musk's post was “untruthful” and “reckless”. Musk has also been sued by the US Securities and Exchange Commission over the tweets, leading to a combined $40 million in settlements for him and Tesla and a requirement that a Tesla lawyer screen some of his tweets in advance.
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