Published: 14 July 2023
By Suzanne Evans, Director, Political Insight
The Government sought yesterday to end months of crippling public sector strikes by accepting the recommendation of independent pay review bodies and offering teachers, doctors and other workers pay increases of 6% and above. The move will involve finding an additional £5bn over the next two years from existing departmental budgets, meaning cuts elsewhere. "This is a significant pay award, it's one of the most significant we've had in decades, and it is costing billions of pounds more than the government had budgeted for and that has consequences," Prime Minister Rishi Sunak said, adding: "Today's offer is final. We will not negotiate again on this year's settlements and no amount of strikes will change our decision". The pay offer comes despite repeated calls by the Bank of England, which have been echoed regularly by Government Ministers, that there should be no inflationary pay hikes as this would in turn drive inflation still higher. However, Sunak said yesterday that these pay rises would not push up inflation because there would be no new borrowing or spending to fund the increases. Teachers' pay rises would be funded by a reallocation of the existing department budget, he said, and other funding measures included raising the fee paid by international workers to access the NHS and raising the cost of securing a visa to enter Britain. Education unions agreed immediately to call off planned strikes following the news, saying they would recommend their members accept the deal. However, The British Medical Association, which represents about 45,000 junior doctors in England, who are currently on strike, said the government's offer was unlikely to end industrial unrest as it was still a pay cut in real terms, as inflation is running at 8.7%.
The Government lost a High Court battle with 13 trade unions yesterday over the former’s proposals to allow agency workers to cover for striking workers. More than 10 unions, including Aslef, Unite and Usdaw, took legal action against ministers, claiming legislative changes introduced by former Business Secretary Kwasi Kwarteng, the 2022 Conduct of Employment Agencies and Employment Businesses (Amendment) Regulations, were unlawful and undermined the “right to strike”. Mr Justice Linden quashed the regulations yesterday, having considered legal arguments at a hearing in May, in which unions relied on the argument that the changes were made without consulting them, relying instead on an outdated 2015 consultation. Unite general secretary Sharon Graham said: “This is a total vindication for unions and workers. The government’s decision to allow employers to recruit agency workers to undermine legal strike action was a cynical move to back their friends in business and weaken workers’ legal rights to withdraw their labour. A spokesperson for the Department for Business & Trade said it was disappointed with the ruling and that the Government was considering its next steps carefully. "The ability to strike is important, but we maintain there needs to be a reasonable balance between this and the rights of businesses and the public," they added.
Parliament’s Treasury Committee has launched a fresh inquiry into sexism in Britain’s finance industry. It will address whether progress has been made in removing gender pay gaps; how best to support diversity; and combating sexual harassment and misogyny. In a report five years ago, the committee criticised the ‘alpha male’ culture in finance, and now Harriett Baldwin, the committee chair, is asking: "Has the culture in this highly paid sector shifted at all in the last five years? This is a subject of marked importance to our Committee and we look forward to beginning work on this important topic".
The Office for Rail and Road’s (ORR) annual rail consumer report has highlighted a “sustained decline” in Network Rail’s performance over the last year, saying the rail infrastructure deliverer “missed” many of its yearly targets and has overseen a worsening of delays in all five of its regions. Delays caused by Network Rail meant 67.8% of trains arrived on time compared to 73.1% the previous year, the report said, with freight train performance seeing a particularly significant decline. The national Freight Delivery Metric (FDM) fell from fell from 93.5% to 86%, the lowest since 2014.
Feras Alshaker, the ORR’s director for planning and performance, said: “There is no escaping the fact that currently, the rail industry is not delivering enough punctual and reliable services. Our report highlights that Network Rail needs to make assets like signalling and tracks more reliable, build more resilient timetables, and recover from incidents more quickly.” Alshaker added: “There aren’t simple, quick, fixes, and there are still challenges, and it is good to see that Network Rail and the wider industry is pulling together to address the difficult issues. For passengers and freight users these improvement plans must be delivered on now, and we will step in if we do not see sufficient progress.” A Network Rail spokesperson said: “We are committed to delivering a network that delivers for passengers and freight customers. The last year has been a challenging time for the rail industry with bouts of extreme weather, strikes and industrial unrest, and a fall-off in infrastructure reliability, which has taken its toll. We recognise the issues and problems at the root of this and are working hard with our industry partners to make improvements.”
UK lenders expect demand for mortgages to fall sharply in the coming months amid rising borrowing costs, according to the Bank of England (BoE), following its survey on credit conditions. A net balance of 30.9% of lenders said the default rate on secured loans to households had risen in the last three months, the BoE said, the highest reading since the second quarter of 2009. Looking ahead, 41.2% of lenders expect mortgage defaults to rise in the June-August quarter, the highest proportion since the end of last year. The survey also revealed that lenders expect to restrict the availability of home loans and unsecured lending, such as credit cards, in the coming months.
Meanwhile, home buyer enquiries across the country fell by 45% in June to an eight-month low, according to the Royal Institution of Chartered Surveyors (Rics). Newly agreed sales also fell by over a third.
London is using much less cash, according to figures from interbank network provider LINK. LINK found most cash in London is withdrawn in Westminster and the City, but the amount has halved in the past four years. Only £55m was withdrawn in May 2023, 49% lower than the £108m withdrawn in May 2019. The second most popular cash withdrawal area was West Ham, with over £30m in cash withdrawals in May 2023, a 34% reduction on last year. Twickenham, Putney and Wimbledon were among the areas in London with the least being withdrawn, with around £8.5m being taken out in each. Croydon South saw the least withdrawals in the capital with £6.4m, down a third on last year. The total value of transactions at ATMs fell from £116bn in 2019 to £83bn across 2022, City A.M. reports, and 17 of the 20 areas which saw the smallest reduction in cash usage were in the most deprived quintile of the country, seeing falls of under 20%. In contrast, of the 20 regions which saw the steepest decline in the value of cash withdrawn, none were in the most deprived quintile and eight were in the least. John Howells, CEO of Link said: “Five million people still rely on cash every day and deprivation is the biggest single indicator of cash dependency. There is evidence that increasing numbers of people have been using cash as a budgeting tool during the cost-of-living crisis…We must manage the transition to digital carefully to ensure that millions of vulnerable consumers are not left behind”.
The Competition and Markets Authority (CMA) has announced an in-depth probe of Adobe's $20 billion bid for cloud-based designer platform Figma, after the Photoshop owner failed to submit any remedies to ease the regulator's concerns. Last month, the CMA found the deal could lead to less choice for designers of digital apps, websites and other products, and identified concerns in the supply of screen design software, where the companies compete.
Haleon, the FTSE 100 consumer health product company spun out of pharma giant GlaxoSmithKline (GSK) last year, is said by The Guardian to be planning sweeping job cuts. It reportedly began briefing staff on redundancies this week as part of a consultation process that will last until August 25 and see some workers leave in September, and others transferred to different roles. The redundancies are part of a cost-cutting drive that aims to save £300m over the next three years and, to “help drive increased productivity”. Haleon has not said how many roles are at risk, but it is believed that hundreds may go. The company currently employs more than 24,000 people in 170 countries, and will very shortly celebrate the first anniversary of its listing on the London Stock Exchange.
ITV said this morning it is "still monitoring" the situation regarding its possible purchase of TV and film production business All3Media, which is owned by Warner Bros Discovery and Liberty Global. "ITV assesses all potential value-creating merger and acquisition opportunities against its strict financial criteria and disciplined capital allocation framework," it said in a short statement. Last month ITV said it was "actively exploring" a potential purchase of the maker of Fleabag and Gogglebox and estimated to be worth as much as £1bn.
Bosch has unveiled a major new push towards hydrogen technology, unveiling an investment of €2.5bn (£2.1bn) and a partnership with US electric truck firm Nikola. Bosch is aiming to generate €5bn (£4.2bn) in sales of hydrogen technology by 2030, with today marking the start of production of fuel-cell modules – which powers hydrogen vehicles. Bosch told City A.M. this investment would create some jobs in the UK, for associates developing sales channels for Bosch’s new hydrogen tech and products.
Senior solicitors at Allen & Overy, one of the City’s largest firms, were paid 7% less last year but still received an average salary of £1.82m, the Daily Mail reports, despite profits falling from £900m to £892m for the year-end in April, as it faced “challenging market conditions and a high inflationary environment”. The firm recently increased its pay for newly qualified solicitors in May, who now take home £125,000. One of the so-called “Magic Circle” of legal firms, A&O has yet to merge as planned with US rival Shearman & Sterling.
Cineworld said yesterday its lenders have agreed to appoint Eduardo Acuna as CEO of the newly-incorporated parent company of the group, and Eric Foss as Chairman. Acuna has served as president of Cinépolis Americas since 2015 and in his current role heads all operations for Cinépolis in 11 countries across North America and South America. "Eduardo is a seasoned executive with significant industry experience and a proven track record of driving growth and stakeholder value. I am confident that under Eduardo's leadership, Cineworld is well positioned to reach new heights and continue to grow its global business and further enhance its cinemas for guests around the world,” Foss said.
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