Published: 12 February 2024
By Suzanne Evans, Director, Political Insight
From today, Ofwat can exercise new powers to fine English and Welsh water companies up to a tenth of their turnover for poor customer service. The regulator already had powers to fine firms, and block them from paying dividends to shareholders - last year it fined 12 of the UK’s 17 water firms, most notably giving Thames Water a £73m fine for missing targets around reducing pollution, leakage and supply interruptions - but Ofwat and the Department for Environment, Food and Rural Affairs claim these additional sanctions are necessary to improve customer satisfaction. Ofwat CEO David Black said: “From today we are putting water companies on notice to improve customer service and where we see failure, Ofwat can and will take action which could result in significant fines.” However, Liberal Democrat Environment Spokesperson, Tim Farron, has told The Guardian he thinks the new powers are just a “gimmick” and that “money should instead go right back in the pockets of the people affected, through compensation from the water firms”. “All those who suffered endless water outages without compensation, especially Thames Water customers, will have their heads in their hands at this latest announcement. This is yet more macho talk from a regulator which is about as tough as a wet paper bag,” he said.
Meanwhile, Environment Secretary Stephen Barclay has announced a consultation on a further raft of possible sanctions to weild against water companies, including giving Ofwat the power to prevent bonus payments if a firm causes environmental damage. It is time water company bosses "took responsibility," Barclay said, adding: "In cases where companies have committed criminal breaches, there is no justification whatsoever for paying out bonuses. It needs to stop now." If the plan goes ahead, it would affect bonuses for the financial year April 2024/25.
Shadow Business Secretary Jonathan Reynolds has vowed to create a “modern” tax system for foreigners living in Britain who receive income from elsewhere to replace what he has called the “colonial-era” non-dom regime. Reynolds has outlined his “case for modernisation” while on a visit to India, the Financial Times reports. Previously, The Labour Party committed to abolishing the scheme entirely, a move it claimed would raise approximately £3.6bn, but Reynolds is now saying the policy is to limit the number of years a non-UK national can live in the UK without paying tax on any foreign income to two years, down from the current 15 year limits. This, Labour claims will still raise £2bn annually for the Treasury. Shadow Health Secretary Wes Streeting has since told LBC that £1.6bn of that will go to the NHS, and the rest to primary school breakfast clubs.
The decision to close the blast furnaces at Tata’s Port Talbot steelworks with the loss of 2,800 jobs has led the Government’s ‘anti-dumping’ body to make a preliminary recommendation that current limits on the amount of certain steel products that can be imported to the UK tariff-free should be lifted, to avoid shortages. The Trade Remedies Authority said it is minded to advise Business Secretary, Kemi Badenoch to suspend safeguarding measures on imports of hot-rolled flat and coil steel for a temporary period of nine months, a decision that follows an application from Tata and the UK steel importer Kromat. TRA CEO Oliver Griffiths told the Guardian: “These reviews are designed to prepare the current steel trade regime for future changes in production at Port Talbot. We want to avoid a situation where new imports needed to backfill reduced domestic production pay tariffs of 25%, loading additional costs on to the UK economy.” The TRA suggested that, given Tata was the sole UK producer of these goods, it was unlikely that allowing more imports would create serious injury to UK producers. Tata intends to build four ‘greener’ electric arc furnaces at the Port Talbot site but these will only be able to process recycled steel, and will take up to four years to build.
A BBC investigation into seven senior Fujitsu executives who presided over the faulty Post Office Horizon contract has found they received £26m in pay and bonuses during the lifetime of the contract, as well as £11m in compensation for loss of office. The executives named by the BBC are Keith Todd, who was in charge at Fujitsu at the genesis of the Horizon system in the late 1990s, and his successors Richard Christou, David Courtley and Roger Gilbert. They also include the current Fujitsu UK & Ireland boss Anwen Owen, the Europe CEO Paul Patterson, and his predecessor, Duncan Tait. Fujitsu is forecast to earned a total of £1.5bn from the Horizon contract by the time it expires in 2025. Gilbert and Tait are the only two who commented to the BBC about the prosecution of sub-postmasters. Gilbert said the issue was only raised with him once during his tenure from 2009 to 2012. The Horizon team assured him the Post Office was managing the prosecutions “competently and honestly”, he said, adding that he said he was “shocked” by the Post Office’s actions and expressed sympathy with victims of the scandal and their families. Gilbert is not among the former Fujitsu bosses who have been asked to give evidence at the statutory Horizon Inquiry. Tait said: “I am appalled by the harsh treatment of the sub-postmasters and postmistresses and want to do all I can to support the inquiry. This has been a terrible miscarriage of justice and, like others at Fujitsu, I am sorry for the damage that has been done to the sub-postmasters and postmistresses’ lives and any role that Fujitsu played in that.” More than 900 people were prosecuted as a result of flaws in the system their company supplied. A report by the Treasury select committee, published over the weekend, found it won at least £1.4bn of other public sector contracts since the High Court ruled in 2019 that Horizon was riddled with “bugs”. Fujitsu declined to comment on the BBC’s story.
Meanwhile, five former sub-postmasters whose convictions were overturned have been told they will receive full compensation. They had been offered a lower sum by the Post Office because it did not believe evidence about faulty Horizon software was essential in their prosecutions, but Post Office Minister Kevin Hollinrake has now agreed they should have equal treatment. In a statement, Hollinrake told the BBC: "All affected postmasters should be treated equally and anyone who lost out due to the Post Office IT scandal will receive full and fair compensation”. “Those whose convictions are overturned can choose to take a fast-tracked £600,000 settlement, or can enter into negotiations if they feel they are entitled to more. All eligible people are entitled to an "interim" payment of £163,000 while their final settlements are processed,” he added.
A YouGov poll of 2,006 employers commissioned by the Chartered Institute of Personnel and Development (CIPD) suggests that one in five of them are struggling to fill job vacancies, and that 21% expect to encounter significant hiring problems in the next six months. Employers are also less inclined to put up wages to fill vacancies, the report found, suggesting they expect the rate of UK pay growth to slow this year. Survey respondents said they expect to raise basic pay by an average of 4% over the next 12 months, down from an expected rise of 5% through 2023 and in late 2022. Public-sector employers, however, expect to raise pay by just 3%, and to recruit staff at the slowest pace since 2019. One in 10 employers say they plan to reduce headcount. Across employers as a whole, the proportion saying that they were funding pay rises through reduced staffing rose to 21% from 12%, while the proportion who were absorbing higher wage costs in profit margins or general overheads dropped to 37% from 50%.
A separate poll from accountancy and business advisory firm BDO seems to indicate continued recovery for the service sector as business confidence returns “cautiously” The BDO Output Index rose in January for the third month in a row to 99.42, the highest level seen since July 2022. However, the BDO Employment Index has hit another 10-year low, suggesting a continued decline in hiring intentions.
Former staff who worked for fast-fashion brand Missy Empire have told the Guardian they were subjected to a toxic culture of bullying, abusive and degrading comments, despite the brand claiming its clothes empower young women. The logo of the Manchester-based retailer, owned by Frasers Group, is XX, which stands for “the female chromosome”, which the website says is “a subliminal reminder that we are for the female and we will continue to empower you by the power of clothes”. However, 18 former staff have described what they claim was a “toxic” working culture, where young women in particular were targeted for mistreatment by the managing director, Ash Siddique. Among other claims are that staff were bullied, shouted and sworn at; that Siddique made degrading comments about models’ body shape and physical appearance; and that formal complaints were ignored. Their claims are supported by emails, screenshots and testimonies seen by the Guardian, which says Siddique has failed to respond to its questions. The newspaper says Missy Empire’s junior ranks are staffed by predominantly young female workers, many in their first job, and that there is a very high rate of departures and dismissals. Frasers Group did not respond to a request for comment.
Sky News first reported on Friday that The Body Shop’s UK operations are preparing to file for administration in a move that will put a substantial number of jobs at risk. Just weeks ago, the global cosmetics retailer founded in the 1970s by Anita Roddick changed ownership for the third time since her death, being bought in November by private equity firm Aurelius, in a deal it said to be valued at £207m. Sky says FRP Advisory is being lined up to handle the insolvency process. There are around 200 Body Shop stores in the UK.
Tui Group’s shareholders will vote tomorrow on whether to back the company’s plans to delist from the London Stock Exchange. Tui is Europe’s biggest travel operator and is currently listed in both London and Frankfurt.
Parcel delivery firm Evri is said to be up for sale for around £2bn. Its private equity majority owner Advent International is working with advisers from investment bank Rothschild to explore options for the company, including a potential sale, The Sunday Times reported yesterday.
Virgin Media O2 (VM02) has revived takeover talks with TalkTalk, the Telegraph reports. Plans for YMO2 to take control of TalkTalk’s consumer division in a £3bn deal were shelved two years ago but a smaller deal is now back on the table as TalkTalk breaks up its business ahead of a crucial debt refinancing this year, the newspaper says. TalkTalk’s consumer division serves around 2.4m residential customers.
Two commercial property real estate investment trusts, Tritax Big Box and UK Commercial Property have reached an agreement on a possible merger, City AM reports. The deal would create the fourth largest UK real estate investment trust based on market capitalisation, at £3.9bn with a property portfolio worth £6.3bn. Its size would leave it on the edge of entering the FTSE 100. Tritax Big Box owns a range of mega box warehouses, with customers including Amazon, Ocado and Argos. UK Commercial Property has fewer large warehouses, but also owns hotels, retail parks and offices.
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