Published: 08 February 2023
By Suzanne Evans, Director, Political Insight
As anticipated, a Cabinet reshuffle took place yesterday, but Prime Minister Rishi Sunak also broke up two government departments – the Department for Business, Energy, and Industrial Strategy (BEIS) and the Department for Digital, Culture, Media and Sport (DCMS) - to create four new ones. Grant Shapps, the former head of BEIS, is now Secretary of State for Energy Security and Net Zero; former culture minister Michelle Donelan has been appointed to the role of Secretary of State for Science, Innovation and Technology; Lucy Frazer is the new Secretary of State for Culture, Media, and Sport; and Kemi Badenoch is now Secretary of State for Business and Trade. Badenoch also remains as President of the Board of Trade, and Minister for Women and Equalities. Former trade minister Greg Hands becomes the new Conservative Party Chair, replacing Nadhim Zahawi who was sacked for a “serious breach of the Ministerial Code” when he failed to declare his tax affairs were being investigated by HMRC. Lee Anderson, the MP for Ashfield in Nottinghamshire, who enjoys considerable popularity on Twitter, has been made Deputy Chair.
Transport Secretary Mark Harper has set out his proposals for reform of Britain’s railway system, saying that it is currently “not fit for purpose” and “financially unsustainable”. In the annual George Bradshaw Address in London yesterday, Harper described the railways as “mired in industrial action” and “historically unable to deliver major improvements at good value for the taxpayer”. His solution? Creation of a new arm’s length body named Great British Railways that will take over the running of trains and the network, but not one, Harper insisted, that signalled “a return to British Rail”. It will “take politics out of the railways,” he said, and was “the only way to build a truly commercially led industry”. He also confirmed reports yesterday that single-leg journey pricing would be rolled out, initially by reducing single off-peak fares to half the return fare on just the LNER network, before deciding whether to expand the system more widely; and announced the rollout of a pay-as-you-go ‘Oyster’ card system across south-eastern England. Finally, Harper insisted in his speech that HS2 will run from London Euston, rather than the suburban station of Old Oak Common in west London, via Birmingham to Manchester, as has been reported.
The Confederation of Passenger Transport (CPT), which represents bus and coach firms, is warning that hundreds of bus services across England could be cut unless government funding introduced to support bus companies during the covid pandemic is not extended. Up to 15% of services could be scrapped when funding and the temporary £2 fare cap ends at the end of March, the CPT says. It argues that passenger numbers have not returned to pre-pandemic levels, and that, together with rising fuel prices and driver shortages, are putting an increasing strain on commercial bus services. The Department for Transport has refused to comment on the issue, the BBC says.
Some 100,000 civil servants are set to strike on the day the Chancellor unveils the Spring Budget, the Public and Commercial Services (PCS) union has said. General Secretary Mark Serwotka says his union members will walk out on 15th March as part of an ongoing row with the government over pay and conditions. The PCS has been calling for a 10% pay rise, better pensions, job security and no cuts to redundancy terms.
Think-tank The National Institute of Economic and Social Research (Niesr) says it now believes the UK is likely to avoid a recession this year, but that it will feel like one for at least seven million households who will be unable to fully cover their and food and energy bills in the 2023-24 financial year. Middle-income households would also face a hit to their disposable income ranging from 7% to 13%, reaching up to £4,000 this financial year, it said. The think-tank’s prediction ties in with the latest Bank of England forecast, however both contrast with the International Monetary Fund (IMF) forecast that the UK will fall into recession this year and perform worse than any other advanced economy, including Russia. Still, as the BBC points out this morning, economic predictions are often wrong, and the IMF's own analysis found it had picked up fewer than 10% of recessions a year ahead of time between 1992 and 2014.
Inflation is set to add £18.2bn to non-food retail sales in 2023, according to Retail Economics. About 80% of retailers were planning to increase the price of products, with 40% suggesting rising costs will be the biggest challenge in 2023, the survey found.
A survey of 400 recruitment firms by The Recruitment and Employment Confederation (REC) shows pay for new hire permanent roles last month grew at slowest pace in 21 months, although the rise was still big by historic standards. Meanwhile, cautious employers are relying increasingly on temporary hires, hence billings for temporary workers last month rose at the fastest pace since September, pushing up pay. "Taking into account the high level of activity last summer and autumn, when the permanent slowdown started, activity levels for both permanent and temporary roles are still high," REC CEO Neil Carberry said.
Britain's largest housebuilder, Barratt, cut its half-yearly dividend today as higher mortgage rates and a fall in house prices hit demand for new homes. Barratt said forward sales - a key industry measure which reflects current demand levels - had plunged more than 35% year-on-year to £2.67bn by 29th January.
Research by recruiter Morgan McKinley and data analytics firm Vacancysoft has concluded that finance firms ramped up efforts to hire workers in the year after Brexit, with big banks Barclays and JP Morgan and fintech Revolut leading the charge. The figures, shared exclusively with City AM, show finance firms in England and Wales tried to hire just over 87,000 workers last year, the highest level recorded by the two organisations and up more than 27 per cent on 2021. “The new research indicates the financial services jobs market is holding up well despite greater trade friction between London and Brussels after Brexit” City AM said.
UK-focused equity funds registered £868m of outflows in January, in sharp contrast to global funds, which attracted investment as markets rebounded, funds network Calastone said yesterday. The latest data means UK equity funds have seen 20 consecutive months of outflows, with January's losses the third largest on record. However, London's FTSE 100 hit a record high on Friday, having gained about 4.3% in January.
Morgan Advanced Materials told investors yesterday that it expects to take a financial hit of up to £12m as a result of a cybersecurity incident revealed last month, the Daily Mail reports. The FTSE 250 firm, which makes ceramics for metal smelting factories, warns the incident could lead to full year adjusted operating profits coming in 10-15% below expectations. The group said that while its manufacturing sites are operational, 'some continue to use manual transaction processes' as a result of the breach, and a 'number of systems have proven irrecoverable'. It has been forced to delay its 2022 preliminary results.
Royal Mail is facing a fresh threat from ransomware group LockBit, which a month ago launched a cyber-attack on the postal firm, leaving it unable despatch items to overseas destinations. According to darkfeed.io, a website which tracks ransomware groups, LockBit has threatened to publish the data it stole on 9th February if Royal Mail fails to pay a ransom. Reuters reports Royal Mail as saying that evidence from its investigations so far suggested that the data allegedly obtained from its network did not contain any financial information or other sensitive customer information.
According to Sky News, West Midlands-based Aartee Bright Bar, a major customer of Liberty Steel, and which employs 250 people, has this week drafted in Alvarez & Marsal to handle an insolvency process. Aartee supplies engineering steel products to Liberty Steel, part of the industrial conglomerate headed by Sanjeev Gupta. Gupta is reported to have close ties to Ravi Trehan, Aartee's founder, while Greensill Capital, the controversial supply chain finance group which itself collapsed in 2021, is said to have financed a number of trades between the two. A steel industry source told Sky that Liberty Steel would be an obvious buyer of Aartee Bright Bar's assets out of administration, but a spokesman for Liberty Steel declined to comment.
A High Court case involving supermarkets Tesco and Lidl began yesterday, with the two arguing over the use of a yellow circle logo. Lidl sued Tesco in 2020, shortly after its larger rival adopted a yellow circle against a blue background to promote its "Clubcard Prices" discount scheme, saying a trademark, and copyright, had been infringed.
Nissan has launched the largest apprenticeship recruitment campaign in the history of its Sunderland plant with 140 opportunities available for young people to work at Britain’s biggest car factory.
HSBC has appointed Jamie Markham as head of global banking coverage for the UK and international Europe. He joins from JP Morgan and will be based in London.
In the ongoing round losses of job losses at major tech companies, this morning Zoom, the video conferencing company that became a household name when remote work spiked during the Covid pandemic, announced it is laying off 1,300 staff. The move affects about 15% of its workforce, which has seen user growth slow and profits fall recently. More than 300 tech firms have laid off nearly 100,000 workers globally since the start of the year, according to Layoffs.fyi, which tracks such announcements, the BBC says.
North Korea stole more cryptocurrency assets in 2022 than in any other year and targeted the networks of foreign aerospace and defence companies, according to a currently confidential United Nations report seen by Reuters on Monday. "(North Korea) used increasingly sophisticated cyber techniques both to gain access to digital networks involved in cyber finance, and to steal information of potential value, including to its weapons programmes," independent sanctions monitors reported to a UN Security Council committee. The sanctions monitors said South Korea estimated that North Korean-linked hackers stole virtual assets worth $630m (£524.41m) in 2022, while a cybersecurity firm assessed that North Korean cybercrime yielded cybercurrencies worth more than $1bn (£830m).
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