Published: 20 November 2023
By Suzanne Evans, Director, Political Insight
Chancellor Jeremy Hunt has given his strongest hint yet that he is likely to make tax cuts in his Autumn Statement on Wednesday. In an interview with the BBC yesterday, Hunt said he has not ruled out cutting income tax telling Sunday with Laura Kuenssberg that his speech would, however, focus on removing barriers to growth. If he did cut taxes, he said, it would be in a responsible way" that did not "sacrifice the progress on inflation". Hunt also gave an interview to Times Radio, saying there id that his “priority is backing British business” and that “lower tax is essential to economic growth”. Last week, there was speculation Hunt would either scrap completely or cut Inheritance Tax, but this now seems unlikely. Tax levels in the UK are at their highest since records began 70 years ago and are unlikely to come down soon, according to think tank the Institute for Fiscal Studies.
Brexit has boosted wage growth in the UK just as the Leave campaign predicted, various economists are quoted by The Daily Telegraph as saying. Near record-wage growth has been driven partly by a crackdown on EU immigration, meaning employers have been forced to pay higher wages for low-skilled roles previously filled by Europeans. Marion Amiot, a senior European economist at rating agency S&P, said UK employees now have “better bargaining power and it means they can get higher wages,” while Mabrouk Chetouane, the head of global market strategy at French investment bank Natixis, said the change in the labour market was “obvious” but that Brexit appeared to have become “taboo” when talking about it. “We have decent labour demand but when you look at the supply, it has been cut massively due to Brexit,” he said. “It creates an imbalance that continues to fuel wage growth and this situation is here to stay.” Figures last week showed that wages, excluding bonuses, were growing at a near-record pace of 7.7%, the highest since comparable data began in 2001. Jack Kennedy, a senior economist at hiring website Indeed, agreed Brexit was “certainly likely to be a contributory factor” towards faster than expected wage growth for lower-skilled jobs. A letter signed by Michael Gove, Boris Johnson and Gisela Stuart in May 2016 said: “Wages will be higher for working people outside the EU… because pay will no longer be undercut by uncontrolled migration.” This is “true at the end of the day,” Amiot said.
Some MPs are horrified by news that civil servants have been given the green light to work remotely from overseas. Staff at the Department for Energy Security and Net Zero (Desnz) are among those able to apply to work abroad for up to five days at a time, up to a maximum of two weeks a year, if they are visiting friends and family overseas. The move comes in response to calls by senior civil servants and their FDA union that staff with connections outside the UK should be eligible for “international remote working” for the benefit of their “family life,” rather than be forced to take annual leave “for personal reasons” when abroad. Greg Smith, the Conservative MP for Buckingham, said: “Hard-pressed taxpayers will be raising eyebrows across the country at the thought of civil servants kicking back, sipping cocktails on the beach whilst delivering public services. We need civil servants in Whitehall, in their offices, delivering on the priorities of this Government, not saying they’re working, from the beach – we all know the reality of that. Just doing your day job from the beach is preposterous.” Sir Iain Duncan Smith, the former Conservative party leader, added: “This is absolutely stark raving bonkers. I’ve never heard something more idiotic, stupid and pointless for a long, long time. Working from overseas? I mean really? By the beach perhaps? In the sea? On a holiday? Really? If the Civil Service chiefs think that is sensible, then we need a complete clearout. You’ve got to ask yourself, of course, it’s not their money, it’s the taxpayers’ money, so they don’t care. Just bonkers.” A government spokesman told the Telegraph that civil servants are “not allowed to work remotely overseas unless there are exceptional circumstances” adding that “we have always been clear on the benefits of collaborative face-to-face working”.
The Labour Party appears to have hired PR firm Brunswick to help it build relationships with business, the Mail on Sunday (MoS) said yesterday, after seeing a letter sent to the CEOs of several FTSE 100 firms that said: “We are partnering with Brunswick Group on this work and with Sir Alan Parker, the (Brunswick) founder and chair”. A meeting with business titans has been scheduled for the evening of December 12th at Brunswick's offices at Lincoln's Inn Fields in central London, the newspaper says, as it notes that “disclosure of Starmer's decision to use Brunswick as a conduit to some of Britain's biggest firms is likely to be controversial” because of the inevitable questions of conflicts of interest that will arise. “FTSE companies invited to take part in the discussions at Brunswick may believe that they have little choice but to use the communications group as advisers if they are to maintain good relations with a prospective Labour Government,” the MoS City Editor Alex Brummer writes. “The partnership with Parker is likely to be pro bono, but it is hard to think that Brunswick will not eventually benefit from government advisory contracts. In turn the firms can expect a closer bond with Downing Street and Whitehall” he adds.
The Telegraph reports that five UK university vice-chancellors now earn over £500k, with Professor Alice Gast of Imperial College the top earner on a salary of £714k. 10 earned more than £400,000 in 2021-2022m, data from the Higher Education Statistics Agency confirms, with all having significant increases since 2019. Meanwhile, students have faced significant disruption to their studies because lectures were delivered online during covid lockdowns, and because of numerous strikes by University and College Union (UCU) members since 2018, which led to further denials of teaching contact hours and delays in issuing grades. The newspaper notes that the financial burden for many graduates is also set to increase, as the latest student loans, which came into force in September, will not be wiped until 40 years after graduation, as opposed to after 30 years under the previous scheme. The changes mean that most graduates will make repayments past the Normal Minimum Pension Age of 55, and begin repaying their loans earlier. The new ‘Plan 5’ loans will see the Student Loans Company take 9% of anything over £25,000 instead of £27,295 under existing ‘Plan 2’ loans. According to financial journalist Martin Lewis, the new plan could see the cost of a university education increase by over 50% for the average graduate, the Telegraph says. The Minister for Skills, Apprenticeships and Higher Education, Robert Halfon, said: “Vice-chancellor salaries must be justifiable and should not be excessive”, however Bob Seely, MP for the Isle of Wight, said Gast’s increased salary raised “significant questions”. “I’m all for paying big bucks for big successes,” he said. “But I wouldn’t trust anything that comes out of Imperial after their Covid-19 modelling, which has been criticised by senior academics and scientists. I’d love to know how this money has been justified considering this massively controversial research”.
Barclays Bank is reportedly exploring a potential acquisition of Tesco's banking operations, according to Reuters, which cites two people familiar with the matter as saying that the UK supermarket chain has asked prospective buyers to submit non-binding offers for Tesco Bank by the end of the week, as part of efforts to shrink its financial services footprint. It is understood that Barclays has made an indicative bid and is particularly interested in Tesco Bank's credit card and saving account products. No clear value has been placed on the bank. Tesco Bank was launched in 1997 as a joint venture between the supermarket chain and Royal Bank of Scotland, with Tesco later taking full control of the company.
Capital G, the growth fund set up by Alphabet, the owner of Google, is in advanced talks to take a stake worth between £300-500m in Monzo, the British digital bank which now has more than 8m customers, as part of a pre-IPO fundraising that will value it at about £4bn, Sky News reports. Capital G has invested a total of roughly $4bn (£3.2bn) into 55 companies, including Airbnb, Stripe and SurveyMonkey. More than a dozen of these businesses have subsequently gone public - a path Monzo is also expected to pursue in the next couple of years.
Canadian private equity group Brookfield is said by the Financial Times to have scrapped its proposed £4bn sale of Center Parcs because of weak investor confidence in the UK’s leisure sector. It had hoped to sell the entire business of six UK and Ireland holiday parks, but is now understood to be considering selling only a minority stake, or recapitalising the business. Center Parcs was put on the market in May, but no formal bids materialised before the July deadline.
Amigo Loans has terminated reverse takeover talks it hoped might have provided some payout to shareholders, the Press Association reports. It seems an exclusivity agreement it signed a month ago with investor Craven House Capital and others has come to nothing and so the company says it will continue to wind down while remaining “open to any expression of interest from third parties in all or any assets of the business”. Amigo offered sub-prime guarantor loans at high rates of interest but, after having found to have mis-sold loans, agreed to pay customers compensation to avoid large fines, as it was close to collapse.
Media and sports investment fund Redbird IMI is reportedly throwing its weight behind the Barclay family’s attempt to reclaim control over the Telegraph Media Group. Redbird, which is led by former CNN chief Jeff Zucker, is said to be helping the family’s strategy to table a fresh offer for the titles in the form of a complete repayment of the £1.1bn debt the family owes to Lloyds bank, which led to the bank taking over the titles when it called in the loan. According to Sky News, an unknown member of the Abu Dhabi royal family will also contribute an equal amount to Redbird. An auction of the titles kicked off last week, with analysts expecting the titles to fetch in the region of £600m, in theory making the £1.1bn offer from the Barclay’s attractive. However, to date, Lloyds has refused the Barclays’ offers. Other bidders are concerned the anonymous Middle Eastern support raises regulatory and national security concerns, City AM says, and Sky News revealed yesterday that Oliver Dowden, the deputy PM, and the culture and business secretaries are being urged by a handful of MPs and peers to launch a full government probe into the Barclay family’s efforts to part-fund repayment of their debt with Gulf money.
Meanwhile, Germany's Axel Springer has reportedly pulled out of an auction to buy the Telegraph Media Group. The Financial Times says it believes the £600m price tag to be too high for an asset primarily rooted in print rather than digital distribution.
FTSE 250 van rental firm Redde Northgate has made an estimated £1.4bn merger approach for London-listed Halfords. A City source told the Telegraph that Redde Northgate had proposed a nil-premium merger with the high street bike and car repair chain but the discussions were abandoned because of disagreements over the valuations of both companies. The newspaper understands that the Takeover Panel was informed of the discussions, which took place in the last few months. Founded in 1892, Halfords is one of the most recognisable and biggest names on the high street. It has roughly 12,000 employees, nearly 400 stores, and close to 650 garages providing full repairs, MOT’s and other services. Its annual turnover was £1.6bn last year. It is among the bidders for Wiggle, the online bike chain that collapsed into administration last month. Redde Northgate was formed from a merger between van rental specialist Northgate and Redde, formerly known as Helphire, which sorts accident claims from businesses and company fleets. It owns 130,000 vans and corporate cars in the UK and Spain, and also bought the remnants of vehicle repair provider Nationwide Accident Services. Both firms declined to comment on the story.
Second-hand smartphone seller musicMagpie is looking for a buyer, just two years after going public. Valued at over £200m in an initial public offering just over two years ago, the firm’s share price has plunged and the business is now worth just £20m. Shares were trading at around 18p on Friday.
X, the social media site formerly known as Twitter has had advertisements pulled by several major firms, including Apple, Disney and IBM. The European Commission, Comcast, TV network Paramount and movie studio Lionsgate have also pulled advertisements. The boycott was triggered by left-wing pressure group Media Matters for America, which claimed to have identified ads bought by high-profile firms next to posts including Hitler quotes, praise of Nazis and Holocaust denial. X denied it intentionally places brands "next to this kind of content" and said the platform is dedicated to combatting antisemitism. X owner Elon Musk said on Saturday that he would file a “thermonuclear lawsuit" against Media Matters "the split second court opens on Monday" arguing the group's report had "misrepresented the real user experience of X" in order to "undermine freedom of speech and mislead advertisers". However, on Wednesday, Musk did himself no favours when he replied to a post sharing a conspiracy theory which accused Jewish communities of pushing hatred against white people, calling it "actual truth". In his defence, Musk said his comments referred only to groups such as the Anti-Defamation League (ADL), rather than all Jewish people. However, the White House was quite to condemn what it called Musk's “abhorrent promotion of antisemitic and racist hate in the strongest terms”. This led Musk to announce measures to combat "calls for extreme violence" against Israel, saying in a post on X that anyone using such phrases as "from the river to the sea" would be suspended from the platform. Yesterday, he also posted: “This past week, there were hundreds of bogus media stories claiming that I am antisemitic. Nothing could be further from the truth. I wish only the best for humanity and a prosperous and exciting future for all”.
The Telegraph also reveals that British Government departments have stopped advertising on X, although the decision was taken months ago and is therefore not related to the current antisemitism row. Whitehall departments spent £5.4m on TWitter adverts in 2022, according to a Freedom of Information request. The Cabinet Office confirmed that departments were no longer advertising on Musk’s site, although they continue to advertise heavily on Facebook and Instagram, according to Meta’s advertising library, promoting issues such as tax-free childcare and rights for social housing tenants. Last year, government spent £20.5m on Facebook and Instagram adverts.
Meanwhile, one of Elon Musk’s other companies, SpaceX, has made a second test flight of its Starship rocket from Texas. The 120m-tall vehicle exploded during its April maiden flight, and about eight minutes after lift-off it exploded this time too, but did go further and higher than before, to the delight of the SpaceX team. SpaceX webcast commentator Kate Tice said: "It's such an incredibly successful day, even though we did have a 'rapid unscheduled disassembly' of both the Super Heavy booster and the Ship". "That's great,” she added. “We got so much data and that will all help us to improve for our next flight". In addition to his Starlink project which is establishing a global network of broadband internet satellites, Elon Musk has a long held ambition to take people and supplies to Mars to establish a human settlement.
Sam Altman, one of the highest-profile figures in the Artificial Intelligence (AI) industry was yesterday removed as the head of OpenAI, the company behind the ChatGPT bot, by the company's board but, almost immediately, he and co-founder Greg Brockman, were snapped up by Miscrosoft. OpenAI’s board said it had lost confidence in Altman’s ability to lead the company because he had not been "consistently candid with his communications". There was an immediate backlash to the sackings by investors and shareholders, and calls to reinstate Altman and Brockman, who was also fired before he quit. However, OpenAI is now reportedly set to name Emmett Shear as its interim CEO, despite having yesterday appointed current chief technology officer Mira Murati to the same position. Just weeks ago, OpenAI was reportedly in talks to sell shares in the company to investors at a price that would value it at more than $80bn (£64bn). Microsoft has invested billions in the business.
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