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Prime Minister Rishi Sunak sacked Conservative Party chair Nadhim Zahawi yesterday

   News / 30 Jan 2023

Published: 30 January 2023

By Suzanne Evans, Director, Political Insight


Prime Minister Rishi Sunak sacked Conservative Party chair Nadhim Zahawi yesterday following an investigation by the PM’s ethics advisor Sir Lauris Magnus which found he had committed a serious breach by not being open about a tax probe. Sunak had stood by Zahawi initially, before ordering the probe, after it emerged Zahawi had last year settled a bill for unpaid taxes plus a fine believed to total some £4.8m. It seems Magnus concluded that because Zahawi had failed to declare his tax affairs were being investigated when he was briefly made Chancellor of the Exchequer last year, or when Sunak appointed him to his current role, there had been “a serious breach of the Ministerial Code". Significantly, Zahawi had also dismissed media reports last July about his tax affairs as "clearly smears," and did not admit he had been investigated by HMRC until last week.  "I consider that this delay in correcting an untrue public statement is inconsistent with the requirement for openness," Magnus said in a letter to Sunak. "As a result, I have informed you of my decision to remove you from your position in His Majesty’s Government," Sunak said in his dismissal letter to Zahawi. In his response, Zahawi expressed concern at the conduct of some in the media in recent weeks and said he would support Sunak's agenda as a backbench MP. The Telegraph says it has been told by Zahawi that he plans to stay on as an MP.

Chancellor Jeremy Hunt said on Friday that he had some concerns about the United States' Inflation Reduction Act, which promises some $369bn (£298bn) in subsidies to green industries to tackle climate change. "Yes, we have some concerns about the Inflation Reduction Act, and the reason is that we believe in free trade," Hunt said in answer to a reporter's question following his first major speech on the economy since his appointment. "But are we worried about the long term future of our clean energy industries? Absolutely not," he added. Asked if Britain would offer its own subsidies, Hunt later told Bloomberg TV: "We will announce our plans. I have absolutely no doubt that we will be able to present a package that makes us highly competitive. But I don't think subsidy is necessarily the best way. I think what people want is creativity, innovation, ideas, a climate - a regulatory structure - that encourages investment." The European Union has previously also expressed serious concerns about the US Act, which came into force this year.

Levelling-up minister Michael Gove is set to close a deal worth £5bn with housebuilders including Barratt Developments and Persimmon to help resolve the national cladding crisis exposed by the 2017 Grenfell Tower disaster, Sky News reported on Friday.

A report in The Daily Mail on Friday quoted Toscafund chief economist Savvas Savouri as saying that Bank of England (BoE) Governor Andrew Bailey will “stage a humiliating U-turn” this week as he is expected to row back on “grossly exaggerated” forecasts about the UK's looming recession. In November, Bailey warned the country faces the longest recession on record and soaring unemployment that could leave an extra 1m workers jobless. However, when publishing its latest quarterly Monetary Policy Report on Thursday, the same day as the Monetary Policy Committee is expected to raise interest rates again, Savouri predicted the Bank would still suggest the UK faces recession, but a much shorter and milder one than outlined through last year. We expect the length of his recession forecast to be cut in half – a 'softer landing', Savouri said. The newspaper also quoted Philip Shaw, chief economist at financial services firm Investec, as also expecting Bailey to move away from his previous gloomy forecast.

“The declining relevance of UK equity markets over the last 25 years has been breath-taking,” a damning report released on Friday concluded. The Investor Forum, which represents shareholders with more than £680bn in UK equities warned in its annual review that the UK market needs reform as British stocks are no longer seen as must-own assets. The UK has been hampered by disagreements over executive pay, the ESG agenda, and box ticking on corporate governance it said, warning boards, investors and regulators must do more to attract investment. The Government is currently in consultation with financial regulators and the London Stock Exchange to improve rules governing British markets and develop businesses from start-ups to a point where they would list.

British regional airline Flybe went into administration again on Saturday, the second time in three years. The airline, which operated scheduled services from Belfast, Birmingham and Heathrow airports across the UK and 17 destinations across the UK and Europe, cancelled all fights and made all but a skeleton staff immediately redundant. 276 workers in total will lose their jobs. David Pike, MD of administrators Interpath Advisory said about 75,000 Flybe customers had future bookings that would now not be honoured. Flybe had struggled to withstand a number of shocks since its relaunch last year, he said, not least the late delivery of 17 aircraft from lessors which severely compromised its efforts to build back capacity and remain competitive after Flybe first fell into administration in March 2020. Then, 2,400 jobs were impacted, after the business was badly hit by Britain's covid lockdowns and other travel restrictions. In October 2020, Flybe was sold to Thyme Opco Ltd, a firm controlled by Cyrus Capital, and in April 2022 it resumed flights, albeit on a smaller scale. Meanwhile, both EasyJet and Ryanair, have both said they have jobs available for Flybe staff and are encouraging them to apply.  EasyJet said it had 250 vacancies for cabin crew, and Ryanair posted a message on the careers section of its website saying that it had vacancies in all categories, including pilots, engineers and ground staff. Ryanair has just posted its largest ever after-tax profit for the October-December quarter, and says bookings are "very robust", boosted by demand from Asian travellers and a strong U.S. dollar. "Bookings are showing no signs of recession at this point in time," Chief Financial Officer Neil Sorahan told Reuters.

The GMB union has called plans for a shake-up at Asda which could lead to 211 night shift job losses and less pay for some 4,000 staff "unworkable", and that management would have to make significant concessions to workers if a strike ballot was to be avoided. Asda also plans to close seven of its 254 in-store pharmacies, putting 62 jobs at risk, while more than 200 workers at in-store Post Offices will have their hours cut. A union source told Sky News that a "significant proportion" of workers were expected to take redundancy, but in a statement, GMB national officer Nadine Houghton said: "Many Asda workers feel this is just a cost-cutting measure, needed to alleviate the financial pressure of the debt leveraged bonanza to buy Asda[1] - but it's going to hit some of the lowest paid retail workers on the high street.”

Shares in Rolls-Royce fell 2.89% by close on Friday after CEO Tufan Erginbilgic, who took over at the FTSE 100 engineering group earlier this month warned staff in a global address that the company was “unsustainable” and a “burning platform”.  “Financially, we underperform every key competitor out there,” he said, adding: “It is at a level at which it cannot continue. Rolls-Royce has not been performing for a long, long time, it has nothing to do with Covid, let's be very clear. Covid created a crisis, but the issue in hand has nothing to do with it.' Nonetheless, he reportedly stressed that he believed the company could be turned around. Rolls-Royce said it was 'regrettable' that his comments had been leaked to Financial Times. Before the report, shares in Rolls-Royce had been at their highest in a year or so.

FTSE 100 mining giant Rio Tinto has lost a radioactive capsule that went missing in Western Australia this month, and is now working with the relevant authorities to try and find it. The tiny 6mm x 8mm capsule, which contains a small quantity of radioactive Caesium-137 which could cause serious illness if touched, left the Gudai-Darri mine in the north of the territory on 12th January, to be transported securely to Perth, and was reported missing on 25th January. State officials have issued a radiation alert across a vast swathe of Western Australia. "We recognise this is clearly very concerning and are sorry for the alarm it has caused," the firm said in a statement. Meanwhile, Rio Tinto has also faced a shareholder revolt over a $10m (£7.2m) bonus for its outgoing CEO Jean-Sébastien Jacques and other departing executives, because of the destruction of sacred 46,000-year-old Aboriginal rock shelters to expand the Juukan Gorge iron ore mine on their watch last May. 61% of votes cast at its annual meeting opposed the firm's executive remuneration package. However, all are still expected to receive their payouts, as the vote was only advisory.

It has been revealed that the possibility oil giant Shell may pull out of its domestic energy and telecoms supply division puts 2,000 jobs at risk. Shell has unveiled a "strategic review" of the businesses, seeking “to maximise the value of our portfolio and address performance in tough market conditions". Its UK business has 1.4 million energy customers and about 500,000 broadband users. Shell said again that "no decisions" had been take on the future of its home retail businesses and the review process would take "a number of months". "Our priority remains to ensure our customers in those countries continue to receive a reliable and affordable energy supply, and to provide support for customers who are struggling with the cost of energy and wider cost of living pressures," Shell said.

Amigo Holdings said on Friday it has received a number of expressions of interest in its capital raise, but this remains below the guarantor lender's £45m target, meaning the business may have to be wound down. The company, after being hit by a deluge of customer complaints over alleged mis-selling, restricted lending at the start of the pandemic before suspending all activity in November 2020, and has only recently been allowed to resume lending by the Financial Conduct Authority, subject to conditions. "The board continues to seek the best possible outcome for creditors, employees, shareholders, and other stakeholders," it said.

BBC Panorama report claims thousands of NHS staff across the UK are facing pay cuts because of a change in Covid sickness policy. Analysis by investigative programme suggests that between 5,000 and 10,000 NHS workers may be off sick with long Covid, and that changes to special sick pay rules introduced during the pandemic mean that some of them may soon no longer receive full pay. The government says the Covid-19 public inquiry will examine the issue when it begins taking evidence in May.

London-listed speciality baker Finsbury Food Group has bought Lees, a UK market leader in the manufacturer of meringues, as well as making teacakes and snowballs, for £5.7m in cash. Established in 1931, Lees employs more than 200 staff at its site in Coatbridge, Scotland.

Commercial property investor Landsec said on Friday that it has sold One New Street Square, EC4, to Hong Kong-based property developer Chinachem Group for £349.5m. The sale price crystallises a total return on capital averaging 10% per annum since Landsec's acquisition of the site in June 2005 and subsequent redevelopment in 2016, Sharecast News says.The building is fully let to Deloitte, with a 14-year unexpired lease term remaining and a current annual net rent of £16.8m.

Tony Danker, director-general of the CBI, said the "whole world of work" had "gone crazy" since the pandemic and that most bosses "secretly" want all of their staff to return to working in offices. Speaking on the BBC’s Political Thinking with Nick Robinson, Danker added: "I just don't think that's going to happen overnight…but we're going to be talking about this for a few years."

Legal & General CEO Nigel Wilson is retiring after a decade in the top job but will remain in the post until a successor takes the helm, the British FTSE 100 insurer and pensions provider said earlier today.

Nissan Motor Co and Renault SA have agreed today to a sweeping revamp of their two-decade-old automaking alliance that will put them on equal footing and see the Japanese company invest in Renault's new electric vehicle business, Reuters reports. Under the deal, which is still subject to board approvals, Renault will reduce its stake in Nissan to 15% from around 43%, transferring around 28% of the Japanese automaker to a French trust, Renault said, to make the companies more equal partners. Their unequal relationship had long been a source of friction among Nissan executives. Although Renault bailed out Nissan two decades ago, it is a far smaller automaker by sales, the news agency says.

US technology company Philips is to cut as many as 6,000 jobs in an effort to restore profitability after its respiratory devices were recalled, wiping out roughly 70% of its market value. Sharecast News reports that Philips will make half of the cuts in 2023, and the rest by 2025. In October , Phillips said it was looking to lower its global workforce by 5% as it struggles to bounce back from a recall that saw millions of sleep apnoea ventilators get returned to the firm amid worries that foam used within the machines could be toxic.

India-based multinational conglomerate Adani Group’s shares have extended their sharp falls since a report by a US short-seller Hundenburg Research accused the firm of "brazen" stock manipulation and accounting fraud on Friday. Stock market losses for the companies have now hit $66bn (£53.27bn) over three days. Adani, led by Asia's richest man Gautam Adani, has insisted the Group complies with all local laws and has made all necessary regulatory disclosures. He has threatened legal action against Hundenburg. Adani’s diverse businesses include port management, electric power generation and transmission, renewable energy, mining, airport operations, natural gas, food processing and infrastructure, and it employs over 100,000 people worldwide.


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