Business news 18 March 2022
James Salmon, Operations Director.
Outrage as P&O dismisses 800 staff by video call. Ukraine crisis could hit global growth, says OECD. Union warns of DWP job cuts. Bank raises interest rates and expects inflation increase. And more business news.
Outrage as P&O dismisses 800 staff by video call
P&O Ferries sparked outrage by summarily sacking 800 staff in a video call yesterday without following proper redundancy rules and announcing plans to replace them with cheap agency workers.
Staff refused to leave their ships in protest and were removed by security.
P&O said it was a “tough” decision but it would “not be a viable business” without the changes.
The government called the workers’ treatment “wholly unacceptable”.
Unios also protested, with the RMT union threatening legal action against the ferry company, labeling it one of the “most shameful acts in the history of British industrial relations”. TUC General Secretary Frances O’Grady said P&O’s “secret plan” to sack staff with no notice was “reprehensible”.
Ann Francke, chief executive of The Chartered Management Institute, said P&O had “got it very wrong”, adding: “It’s shocking and appalling. It’s like management behaviour from another era.”
A spokesman for Prime Minister Boris Johnson condemned P&O’s actions, saying they were “completely unacceptable”. Labour leader Sir Keir Starmer, who noted that P&O had furlough support during the pandemic, said: “It just makes my blood boil. It is a complete betrayal of the workforce. It’s just disgusting.”
Robert Courts, parliamentary under secretary for transport responded to the news with “Reports of workers being given zero notice and escorted off their ships shows the insensitive way in which P&O have approached this issue… I am extremely concerned and frankly angry at the way workers have been treated by P&O.”
The company have infuriated customers too by saying they would not run services “for the next few days”.
Ukraine crisis could hit global growth, says OECD
The Organisation for Economic Development (OECD) has warned that the war in Ukraine could cut global economic growth by more than one percentage point in the next year.
The report also warned that the conflict could push up prices globally by about 2.5%. Outside Russia and Ukraine, the OECD suggests that Europe will be hardest hit, with up to 1.4% knocked off the economy.
Those countries “that have a common border with either Russia or Ukraine” would feel the impact most, the OECD said. The report says governments could soften the blow for household budgets with a “targeted fiscal response,” saying: “Well-designed and carefully targeted fiscal support could reduce the negative impact on growth with only a minor extra impetus to inflation.”
Union warns of DWP job cuts
The Public and Commercial Services (PCS) union has warned that thousands of jobs are at risk at Department of Work and Pensions (DWP) offices, with the department set to close some offices and relocate staff at others to save money. The PCS said more than 1,000 jobs are at risk when 13 sites are scheduled to close by June 2023, while thousands more civil servants could be at risk when 29 other sites are closed and relocated.
DWP Minister David Rutley says around 12,000 officials will be asked to move to another DWP office in “close proximity.” He added that a further 1,300 staff members will not be able to move to another office but will be offered retraining for another role in the DWP or another government department. The DWP said the plan would bring annual savings of £80m-90m from the 2028/29 financial year onwards.
Help to Grow scheme seeks business mentors
The Government is seeking experienced business leaders to mentor small company bosses as part of the £520m Help to Grow initiative. The management training scheme, which started last year and aims to support up to 30,000 businesses over three years, is looking to move away from paid advisers and instead utilise volunteers to support 9,000 business owners a year. As it looks to recruit and manage business volunteers, the Department for Business, Energy and Industrial Strategy is tendering for an £8m-a-year contract.
A department spokeswoman said it wants to ensure that it creates “the best possible pool of business mentors.” The scheme is modelled on an initiative run by Goldman Sachs. It uses business schools to provide business owners with intensive training, combined with mentoring and access to people running scale-ups.
Bank raises interest rates and expects inflation increase
The Bank of England (BoE) has raised interest rates from 0.5% to 0.75% as it looks to tackle soaring inflation, which has hit a three decade high of 5.5% and is set to climb higher still.
The rate increase – the third in four months – takes rates to the highest level since March 2020. The Bank has warned that inflation is likely to reach 8% in April and possibly higher in the coming months, saying that Russia’s invasion of Ukraine has led to large increases in energy and other commodity prices and is “likely to exacerbate global supply chain disruptions.” It added that this has “increased the uncertainty around the economic outlook significantly.” The BoE’s Monetary Policy Committee (MPC), which voted by eight to one in favour of the increase, said more interest rate rises “might be appropriate in coming months, but there were risks on both sides of that judgement depending on how medium-term prospects evolved.”
The British Chambers of Commerce fears that higher rates risk intensifying the financial squeeze on consumers and businesses. Its head of economics, Suren Thiru, has urged Chancellor Rishi Sunak to tackle the “cost of doing business crisis” through his Spring Statement by delaying the National Insurance rise and introducing a temporary energy price cap for businesses.
Martin Beck, the EY Item Club’s chief economic adviser, believes the Bank will pause increasing rates after they reach 1% this year. He said officials are likely to put more emphasis on supporting growth than trying to rein in inflation, over which it has little control, “implying a slower pace of rate increases going forward”. Ian Stewart, chief economist at Deloitte, said the interest rate increase shows that the Bank “is more worried about the inflationary effects of surging commodity prices than the deflationary effects.”
Banks increase mortgage rates after BoE move
Several banks yesterday moved to increase mortgage rates after the Bank of England increased interest rates to 0.75%. Lloyds Bank said customers on tracker mortgages would pay 0.25 percentage points more, adding that it is assessing what the Bank Rate increase will mean for customers on variable mortgage deals. Santander said its standard variable rate would rise in line with the Bank of England’s increase to 4.9% from May, while Barclays said its standard variable rate would increase by 0.25 percentage points, from 4.99% to 5.24%. Yorkshire Building Society also announced its mortgage rates will increase, saying that while it protected its mortgage customers from higher bills after the two previous interest rate increases, it has now been left with no choice but to pass on the cost. In regard to the impact of the interest rate increase on savings, Santander is raising interest rates on a number of its accounts from April, but only by 0.09 percentage points, while Yorkshire Building Society will pass on the full interest rate rise to its savers.
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