Published: 05 June 2023
By Suzanne Evans, Director, Political Insight
The Telegraph claimed on Saturday that Prime Minister Rishi Sunak wants to cut taxes by as much as 2p in the pound before the next General Election, expected in 2024. The newspaper cited unnamed Government officials as saying a slower-than-expected fall in the high inflation rate would not prevent a tax cut from April. Sunak has said previously he wants to cut taxes, but only when the economy is on a surer footing. He has also pledged to halve inflation this year.
The British Retail Consortium (BRC) is urging The Government to rethink plans for green levies to fund food packaging recycling to prevent a further rise in food costs. The BRC is warning that the so-called net zero grocery tax could push up shopping bills by up to £4bn a year, or £140 a year per household, in a letter to the Sunday Telegraph. BRC CEO Helen Dickinson said: “A raft of new regulations will burden retailers – and ultimately consumers – with higher costs,” she said, adding: “Just as inflation looks to be turning a corner, these new policies put this at peril”. Ministers should reconsider whether plans should be “postponed or scrapped,” she said.
Prime Minister Rishi Sunak and Chancellor Jeremy Hunt are said by City A.M. to be drawing up plans to revamp schemes designed to hand workers a stake in their employers. Currently, workers can buy discounted shares in the company they work for if they set aside up to £500 each month for either three or five years, using the Save As You Earn programme. The interest and any bonus accrued at the end of the contract is tax free, and participants don’t pay income tax or national insurance on the difference between what they pay for the shares and what they’re worth at market value. A separate package, called the Share Incentive Plan, allows firms to gift staff up to £3,600 of equity in their company or help employees with the cost of purchasing shares which, if held for five years, are also tax free. Capital gains tax reliefs is also available on both plans, which are targeted at low earners to help them build a portfolio of assets to strengthen their long-term financial health. The Treasury is currently consulting on the efficacy of the current schemes.
The City of London has brushed aside dire warnings at the time of the EU referendum that Brexit would see it lose its position as Europe’s top financial capital, drawing in more investors than ever since then. Foreign investors have pumped cash into 46 financial services projects in the capital last year, up from 39 in 2021, according to research by consultancy EY. Paris, meanwhile, drew in outside investment for 35 finance proposals, down from 38, while Madrid generated 22 foreign investment projects in 2022 compared to 29 in 2021. “London continues to lead Europe in attracting foreign direct investment in financial services, and the sector is proving resilient despite the global challenges facing the UK economy,” Chris Hayward, policy chairman at the City of London Corporation, told City A.M.
Oil prices have jumped more than $1 a barrel to $77 because Opec+ members have agreed to continued cuts in production in an attempt to shore up flagging prices. Saudi Arabia, the world’s largest oil exporter, is to cut production by another 1 million barrels per day from July. Opec+ countries around for around 40% of the world's crude oil production.
The number of breweries going bust has tripled in the past year as drinkers opt for mass-produced, cheaper brands rather than premium craft tipples, figures from accountant Mazars show. There were 45 insolvencies in the year to the end of March, up from 15 the year before. Mazars also attributes the increase to higher operational costs and greater competition.
The number of young people not working due to ill health has almost doubled in a decade, according to research by think-tank The Resolution Foundation. Worklessness due to ill-heath among 18- to 24-year-olds has risen from 94,000 in 2012 to 185,000 in 2022, it says, meaning almost one-in-four (23%) workless young people are now inactive because of ill health, up from less than one-in-10 (8%) in 2012. Those with poor qualification levels are the most affected, it adds, with four-in-five (79%) young people who are too ill only having qualifications at GCSE-level or below.
The Government has been told that delays to legislation covering electric bikes and scooters is preventing manufacturers and operators from expanding in the UK, and could even see them leave the British market altogether if new rules aren’t passed soon. In a letter seen by City A.M. to Transport Secretary mark Harper, Julian David, CEO of trade association TechUK said: “We are now rapidly losing pace as the EU has already taken steps to legalise e-Scooters and is drafting bloc-wide cargo bike regulations to come into effect from next year”.
Addison Lee CEO Liam Griffin has blamed London Mayor Sadiq Khan for harming his business, highlighting policies such as the congestion charge and his expansion of the Ultra Low Emission Zone (ULEZ). Griffin told Bloomberg that there has been “an agenda to slow London down rather than speed it up.” “When you look at bus lanes, when you look at cycle paths, you look at the Strand, you look at local neighbourhood measures, and none of this is car-friendly,” he said. “We have definitely been victims of that, and our drivers struggle to get around and it means their earning potential is less than it should be.” When asked who was to blame, Griffin said “I would be in the Sadiq Khan camp, I’m afraid.” Khan is facing a growing backlash over his decision to expand the ULEZ and, under pressure from both Labour and Conservative MPs, announced an extension to the scope of the ULEZ scrappage grant scheme, which provides financial aid to those on low incomes to scrap or retrofit vehicles that do not meet ULEZ emissions standards, but will now be extended to a range of small businesses and all London families receiving child benefit.
Sky News reports that talent agency YMU, which until last week represented Philip Schofield, has for weeks been involved in talks about the state of its balance sheet following a slump in profits exacerbated by covid restrictions. The company - whose name stands for You, Me and Us - is one of the most prominent in the British entertainment industry, and is majority-owned by private equity firm Trilantic Europe. Its clients also include Schofield's erstwhile This Morning co-presenter, Holly Willoughby; Saturday Night Takeaway and Britain's Got Talent duo Ant & Dec; Davina McCall; Claudia Winkleman; Paris Hilton; and it manages several England rugby union internationals. Based in London, YMU employs about 350 people in offices in the UK and the US. Sky says insiders told journalists that Permira Credit and Lloyds Banking Group, which are said to be owed roughly £70m by YMU, had hired AlixPartners several weeks ago to undertake an independent business review of the agency, amid fears YMU was likely to breach one or more of its borrowing covenants, according to insiders. The company has been run since 2021 by Mary Bekhait, who previously ran its UK operations. However, another source close to YMU insisted that the company was "growing" and said there were no grounds for concerns about its future.
Shares in fast-fashion company Asos are surging almost 12% at the etime of writing this morning after reports it received a £1bn takeover bid from Turkish online clothing retailer Trendyol, which is backed by Chinese e-commerce giant Alibaba. The Times says Trendyol put in an offer valuing Asos at £10 to £12 a share in late December. Asos closed on Friday at £3.50 last Friday. The company is facing several financial headaches and was relegated out of the FTSE 250 index last week. Its share price is still down some 77% on the year.
A new business lobby group will be launched today by the British Chambers of Commerce (BCC) in a bid to "design and drive the future of the British economy". The Business Council has signed up Heathrow, BP, IHG Hotels & Resorts and Drax as its first members, among others. The creation of the new body comes just one day ahead of a crunch vote on the future of the scandal-hit Confederation of British Industry (CBI). BCC director general Shevaun Haviland said: "Over the past few months we have been talking to the nation's largest corporates and it has become clear to us they are looking for a different kind of representation. These businesses want to be part of a framework that's rooted in their local communities, but with the ability to shape the national and international debate". The BBC business editor Simon Jack said the timing of the announcement from the BCC was hard to ignore, saying the launch represented a "tussle for the trust of business and the ear of government". A CBI source called the timing “very opportunistic”.
Meanwhile, Sky News has learnt that Siemens, which employs 11,000 people in Britain, is coordinating a letter to members of the CBI which urges them to publicly endorse its survival. It is understood the letter has also been signed by Microsoft. Also, according to yesterday’s Sunday Times, Tony Danker, the former director-general of the CBI, is considering suing the business lobby group after being dismissed following allegations of workplace misconduct. The CBI has been hit by a series of scandals, including two rape allegations and several reports of sexual misconduct (none of them involving Danker). The City of London Police are investigating criminal allegations, and law firm Fox Williams is conducting an internal investigation.
HSBC has launched a £15bn fund dedicated to financing British small and medium-sized enterprises (SMEs). £3bn put aside for SMEs in London.
Amazon has revealed it paid £781m in direct taxes (business rates, corporation tax and employer’s national insurance) to The Treasury last year, £130m more than it paid in the previous year, when it contributed £648m. Including indirect taxes such as VAT, Amazon said it paid more than £3.6bn in total, up from £2.7bn paid in 2021, ranking the online giant among the top 15 largest UK taxpayers as measured by overall total tax contribution, according to data from PwC.
Diageo has appointed Debra Crew as interim CEO following the retirement of long-term boss Sir Ivan Menezes. Crew will be the drinks’ giant’s first female CEO and one of only a handful heading up FTSE 100 companies. She has taken over a month or so earlier than planned as Menezes has undergone emergency surgery to treat a stomach ulcer, and remains in hospital. Menezes joined Diageo in 1997 and became CEO in 2012.
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