FINANCE

Trade bodies can challenge late payments

New regulations coming into force at the end of the month will allow trade bodies to seek High Court injunctions on behalf of their members if contractors are paid late by state departments or private companies. The Sunday Times notes government estimates which predict the economy would get a £2.5bn boost if contractors were paid on time.

The Sunday Times

Sainsbury’s and British Land chairmen join late payments start-up

J Sainsbury chairman David Tyler and John Gildersleeve, chairman of British Land, have joined the advisory board of Previse, a start-up aiming to end the culture of late payment.

Financial Times

TSB to invest £100m in SMEs

TSB owner Sabadell is planning to boost its business banking operation in Britain with a £100m investment in small companies. An initial £30m is being provided to support a small business banking market “in desperate need of competition,” TSB said. The bank, which was bought by Spain’s Sabadell in 2015, added that “real competition is needed in this market to break the shackles the big banks have had on Britain’s small businesses for far too long.”

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Energy firms hold £100m from failed firms

As much as £100m is being held in dormant accounts by energy suppliers after businesses have failed, the Sunday Times reports. The paper says returning overpayments is often not possible if a company has been dissolved. Meanwhile, plans to use the money to help cut bills for small companies have stalled. Energy UK insists the industry has greatly improved its procedures for returning credit.

The Sunday Times

INVESTMENT

Britain is open for business

Graham Stuart, investment minister at the Department for International Trade, writes in the Telegraph that Britain is strengthening its position as Europe’s number one recipient of foreign direct investment. The UK secured a record number of foreign direct investment projects in 2016-17. Furthermore, the trade deficit has narrowed, with exports up by 13% in the last year. Mr Stuart concludes by declaring: “Britain is open for business and the UK Government stands ready to support investment in our strengthening economy from all parts of the world.”

The Daily Telegraph

UK venture capital firms collect £1bn of Chinese investment

Two UK venture capital firms – Eight Great Technologies and Future Planet Capital – have collected more than £1bn of funding commitments from Chinese investors to help back UK technology companies.

Financial Times

REGULATION

MPs to investigate small business scandals

The Treasury select committee is launching an inquiry to examine protections for small businesses in the wake of the RBS Global Restructuring Group scandal. The Financial Conduct Authority, which is to publish the full confidential report into the mistreatment of small businesses by the bank, acknowledged last month that SMEs had nowhere to turn to resolve financial disputes, and has proposed expanding access to dispute resolution provided by the Financial Ombudsman Service. Nicky Morgan, chair of the Treasury committee, said: “GRG has undermined the trust of small firms in banks, and highlighted the imbalanced and potentially exploitative relationship between banks and small companies.” Meanwhile, the business, energy and industrial strategy committee will run a separate inquiry into what can be done to boost productivity and how suppliers might be protected from unethical payment practices of larger companies. Rachel Reeves, chairwoman of the business committee, said: ” Often our small businesses lag behind their overseas competitors in terms of innovation and productivity and we want to explore what more the government could be doing to help to boost this and to enable them to access support, such as management training.” The Federation of Small Businesses said it welcomed the two inquiries.

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SUPPORT

BBB to provide £100m in support to SMEs hurt by Carillion

UK Finance has confirmed that the British Business Bank is to support up to £100m of lending to small businesses, including subcontractors, affected by Carillion’s collapse. Business Secretary Greg Clark said: “We want to signal very clearly to small and medium-sized businesses who were owed money by Carillion that they will be supported to continue trading.” Meanwhile, at least 377 former Carillion staff will be made redundant, the Insolvency Service has said, but it had found new employment for 919 staff, who will transfer to other companies.

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MANUFACTURING

Manufacturing outlook bright despite cooling growth

UK manufacturing growth suffered an unexpected dip in output last month, according to the latest IHS Markit/Cips survey. Activity came in at 55.3 for January, down from December’s reading of 56.2, with economists expecting a figure of 56.5. Any reading above 50 denotes growth. However, the report also revealed that output and new orders had enjoyed a “solid increase” across the consumer, intermediate and investment goods sectors. Andy Hall of Barclays said the figures “shouldn’t be too discouraging despite a slowing in output as manufacturing continues to register growth month after month. Continuing improvement in key export markets has helped boost order books though the flip side of the coin is that with elevated input prices and supply chain costs, the growing prospect of inflationary pressure looms large.”

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Small manufacturers fear skills shortage

Smaller manufacturers fear a lack of access to skilled workers could curb recent growth in domestic and export trade, the CBI has warned. The lobby group’s latest survey shows expectations of growth in export orders have hit record levels, but the number of manufacturers citing skilled labour as a factor likely to limit their output growth is at its highest since January 1989.

The Times Yorkshire Post

INFRASTRUCTURE

Openreach plans faster broadband push

BT is to create 3,000 engineering jobs after Openreach vowed to introduce “ultrafast” internet connections to 3m premises by 2020. Openreach said Birmingham, Bristol, Cardiff, Edinburgh, Leeds, Liverpool, London and Manchester would form the first phase of the programme that will connect “up to 40 UK towns, cities and boroughs”. Openreach CEO Clive Selley said: “Working closely with central and local government and our communication provider customers, we will identify the cities, towns and rural areas where we can build a future-proofed, FTTP network that’s capable of delivering gigabit speeds to all homes and businesses at an affordable cost.”

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TRADE

New exporters should consider smaller emerging economies

Liam Kelly talks to Caroline Dent, a partner at the private equity firm ECI, about how small businesses should approach exporting to countries outside Europe. She recommends hiring people who “understand the local culture, the local economy and the competitive landscape” and suggests entrepreneurs take advantage of the demand for UK brands. Selling online to Chinese consumers is one good move, as is targeting countries such as Bangladesh, which has a faster rate of expansion than the EU, says Ms Dent.

The Sunday Times

RISK

Fake traders posing new fraud threat

The Times reports on a surge in fake companies registering with Companies House with sham accounts designed to generate positive credit ratings. The firms then approach legitimate firms with requests for goods which they never pay for. Trade bodies are now warning SMEs to be on guard for this “short firm fraud.”

The Times

ENTREPRENEURS

Self-employed losing sleep with money worries

A study by online accountancy firm Crunch has found that self-employed people are working an average of 65 hours a week – almost double the average hours of those in full-time employment, and typically take only 14 days of holiday a year. One in eight take no days off at all. A third of those surveyed (36%) said they regularly skip meals to keep on top of their workload, while 66% said stress means they frequently struggle to get to sleep.

The Daily Telegraph

TAX

HMRC won’t fine late filers with depression

Taxpayers suffering from depression are being treated with increasing leniency by HM Revenue & Customs if they file late returns. Tax experts say those who appeal against an automatic £100 fine on grounds that they were suffering from a mental health condition such as a depressive episode are more likely than ever to be let off.

The Daily Telegraph Daily Mail

EMPLOYMENT

Pensions inequality tumbles after launch of auto-enrolment

Pensions inequality is falling fast, with auto-enrolment ensuring millions more people are putting money aside for retirement. The ONS said British households had a total of £5.3trn in pension wealth in the period from July 2014 to June 2016, up by 20% on the previous two-year period. In the latest period 79% of people had pension wealth, up from 76% in the prior period.

The Daily Telegraph Financial Times

Minimum wage complaints doubled in 2017

The number of employees reporting underpayment of the minimum wage to HM Revenue & Customs more than doubled in 2017 as more workers fell within its scope, according to law firm Pinsent Masons. The firm’s head of tax investigations Paul Noble said: “This is a significant rise in whistleblowing . . . in just one year. Employees are now increasingly knowledgeable about their rights and they’re ready to take action if they don’t think they’re being paid correctly for their time.” Kerren Daly, an employment law specialist at Browne Jacobson, points out that employers are increasingly being caught out by the complexity of calculating national minimum wage.

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ECONOMY

New tax data show increased wage growth

New data gathered by HM Revenue & Customs using real-time PAYE information indicates that Britain’s wage growth rose by 3.1% in the year to September, substantially stronger than the 2.3% reported in official figures. The Telegraph notes that the new numbers do not cover the self-employed but do provide more information on pay by gender, age, region and other characteristics. Samuel Tombs at Pantheon Macroeconomics comments: “If the new figures reflect reality better than the average weekly earnings data, they would imply that the relationship between labour market slack and wage growth hasn’t deteriorated as much as we all thought, strengthening the case for another interest rate rise soon.”

The Daily Telegraph

Carney calls for change to inflation index

Bank of England Governor Mark Carney has said the retail prices index of inflation used to set the interest rate on student loans, rail fares and on £400bn of government debt has “known errors,” and called for the government to do away with it. He commented that “most would acknowledge that RPI has no merits” and “it would be better not to further embed RPI in contracts.”

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OTHER

Capita warns on profits

Outsourcing firm Capita has warned on profits and revealed plans to raise £700m by issuing new shares. New chief executive Jonathan Lewis said the company had become “too complex” and “driven by a short-term focus” and needed to change its approach. Capita is estimated to have net debt of £1.1bn, and a pension deficit of around £380m, but Theresa May insisted ministers were not concerned about Capita’s security, and denied there were relevant comparisons with collapsed Carillion.

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