Business news 28 April 2022
James Salmon, Operations Director.
UK launches fraud squad to hunt down lost Covid billions. Brexit brings sharp increase in customs duties. UK car production down. Online Harms Bill a burden on small companies, threat to free speech. Sunak tells oil and gas giants, boost energy supply or face windfall tax. And more business news.
UK launches fraud squad to hunt down lost Covid billions
A counter fraud task force will be created by ministers to recover money stolen from state-backed pandemic support schemes. The move comes after the Treasury and the British Business Bank were heavily criticised for the billions lost to the fraud.
Brexit brings sharp increase in customs duties
Brexit has led to a 62% spike in customs duties for UK firms and consumers, according to UHY Hacker Young. A record £4.8bn was paid in customs duties on imported goods in the last year, up from £2.9bn previously. Sean Glancy, partner at the firm said: “Brexit related customs duty increases could not come at a worse time for British businesses and consumers. Inflationary pressures caused by COVID and the war in Ukraine are being exacerbated by those extra import duties.”
UK car production down
Car production in the UK has continued to fall as manufacturers struggle with global supply chain problems. Manufacturing dropped by nearly a third in the first three months of 2022 compared to last year, according to the Society of Motor Manufacturers and Traders (SMMT) with almost 100,000 fewer cars built. Mike Hawes, chief executive of the SMMT said that two years after the start of the pandemic, automotive production was still suffering badly. “Recovery has not yet begun and, with a backdrop of an increasingly difficult economic environment, including escalating energy costs, urgent action is needed to protect the competitiveness of UK manufacturing,” Mr Hawes continued. Responding to the figures, KPMG’s automotive partner Chris Knight said: “Once the market eventually moves beyond these constraints and stabilises, a continued focus on such high margin production will likely be at conflict with maintaining market share – particularly with increased, and lower-cost, competition emerging.”
Online Harms Bill a burden on small companies, threat to free speech
Lawyers have warned that the Government’s new Online Harms Bill poses a threat to small businesses and risks strangling free speech. The legislation seeks to address illegal and harmful content on the Internet with the aim of safeguarding UK citizens online.
But Rupert Cowper-Coles, partner at RPC, says smaller firms will be burdened with significant additional costs to monitor content posted on their sites, restricting new entrants to the social media market. Additionally, social media companies and newspaper groups operating online are likely to being overly cautious in removing content to avoid the risk of huge fines, severely impacting freedom of speech. “While measures taken to protect online users – particularly children – are very welcome, this can be done without legislation that disproportionately impacts small companies and threatens individuals’ freedom of expression,” Cowper-Coles explained.
Sunak tells oil and gas giants, boost energy supply or face windfall tax
The Chancellor has said energy companies could be hit with a windfall tax on their profits unless they do more to protect energy security. Rishi Sunak said he wanted more UK investment “to improve our energy security so we’re not reliant on importing” more expensive energy from abroad, which can drive up household bills. The comments come as European gas prices increased sharply after Russia said it was cutting off the gas to Poland and Bulgaria because of their rejection of Moscow’s demands to pay in roubles.
Probe clears Sunak over wife’s tax status
Rishi Sunak has been cleared of wrongdoing over his wife’s tax affairs and his possession of a US permanent resident’s card. Christopher Geidt, the adviser on ministers’ interests, found two instances where Akshata Murty’s tax status “could have given rise to a conflict of interest” for Sunak, but said in both cases the Chancellor had dealt with them properly and openly. He also concluded that there was no “inherent conflict of interest” in Sunak holding a green card.
Liberty Steel offices raided by SFO
The Serious Fraud Office (SFO) has raided the offices of Sanjeev Gupta’s Liberty Steel after it launched a money laundering probe into its parent firm GFG Alliance’s links with Greensill. It is understood a number of sites were visited across Scotland, England and Wales. A spokeswoman for the SFO said: “Investigators spoke with executives at multiple addresses, who co-operated with the operation.” The move comes after French police raided the Paris offices of GFG Alliance on Wednesday in its own probe of the tycoon’s business empire.
UK companies under-reporting workplace injuries
Corporate governance advisory firm PIRC has warned that Britain’s biggest listed companies are routinely under-reporting workplace injuries and fatalities to investors. The group checked annual reports from companies in the FTSE 350 against Health and Safety Executive (HSE) data and found that a total of 228 HSE enforcement notices were served at 116 listed companies for occupational safety breaches in UK operations between 2016 and 2021. Of the 57 companies to get one since 2019, just 30 had listed occupational safety as a “principal risk” in their company reporting. Only 19, meanwhile, shared data on incidents involving casual workers. “Safeguarding and improving the health and safety of the workforce – whatever the nature of the employment relationship – is both one of companies´ most important duties and one of the most significant positive impacts they can have,” said PIRC Labour Specialist Alice Martin. “But current reporting has both huge gaps and lacks comparability. Contingent workers are invisible to all intents and purposes in some companies´ reporting, even where businesses are heavily reliant on their labour.”
Valuation of infrastructure assets delaying council audits
Further delays to the audits of 2020/21 local authority accounts have been attributed to issues over the valuation of infrastructure assets that are affecting a significant number of upper-tier councils. The president of the Society of County Treasurers (SCT) and director of corporate resources at Leicestershire County Council, Chris Tambini, said this was “potentially a major issue for all upper-tier local authorities”. He added: “The SCT is concerned about this issue given we believe that the vast majority of councils will not have the accounting records to meet requirements as currently interpreted. We are engaging with CIPFA, and hope CIPFA and key stakeholders DLUHC and the Financial Reporting Council (FRC) can work through this issue in a timely manner and agree a pragmatic and proportionate approach.” Commenting, Paul Dossett, head of local government at Grant Thornton, warned the infrastructure assets issue will “likely slow the progress further until after June 2022, and will also impact the preparation of the 2021/22 accounts”.
Metro Bank
Metro Bank reported a ‘solid’ first quarter, with lending and deposits broadly flat, and said it feels confident of a return to profit. Its loan book ended the first quarter at £12.34 billion, up from £12.05 billion at the same point last year and from £12.29 billion at the end of 2021.
WPP
Advertising giant WPP said its performance was well ahead of internal expectations in the first quarter, so it has upped its annual revenue outlook. Chief Executive Mark Read said ‘The year has started very well with continued momentum from 2021 resulting in strong growth across all businesses and regions. Demand is strong for our services, particularly in digital media, e-commerce, data and marketing technology,’
Barclays
Barclays beat analyst expectations for the first quarter, as strong investment banking performance helped drive income growth. The British bank reported first-quarter net profit attributable to shareholders of £1.4 billion, above analyst expectations of £644 million.
Unilever
Unilever has enjoyed rising sales and turnover levels in the first few months of the year, as it rewards shareholders with a maintained dividend of €0.42 apiece. The consumer goods giant had its turnover jump by nearly 12 per cent in the first quarter, while sales climbed by 7.3 per cent. However, underlying price growth has crept up 8.3 per cent, as inflations starts to bite for British businesses and consumers
Sainsbury’s
Sainsbury’s warned of a lower profit for the coming year as the grocer faces uncertainties including high inflation and cost of living pressures on shoppers. Sainsbury’s posted underlying profit before tax of £730m for the 2021/2022 financial year, a 104% boost on the year prior, but warned of challenges down the line. The grocer provided an estimate for underlying profit before tax of a range between £630m and £690m in the 2022/23 full year.
Archegos Capital Management
Bill Hwang was arrested in the US a year after the collapse of his secretive family office – Archegos Capital Management. His highly leveraged trade caused financial meltdown across global banks and markets. US prosecutors have painted a picture of a man who believed he could single-handedly manipulate global markets. Archegos defaulted last year, causing global banks including Credit Suisse, Deutsche Bank, Morgan Stanley and Nomura Holdings to lose more than $10 billion. Hubris and greed, the prosecutors contend, fueled his brazen scheme to deceive banks and manipulate markets.
Ministers consider minimum wage for social care workers
Plans being considered by ministers could see social care workers given their own higher national minimum wage to combat chronic staff shortages and end the reliance on “cheap” foreign labour. As a first step, the Government’s Migration Advisory Committee (MAC) has proposed that all care workers should get a compulsory minimum salary of £10.50 an hour, at least £1 above the national living wage. The MAC estimated an extra 236,000 social care workers would be needed in the next decade, a quarter of the current total of one million, where there are already 66,000 full-time vacancies. They said workers were undervalued and exploited and should be paid for all the hours they spent on the job, including travelling and sleeping, as they were effectively being “underpaid for their time spent at work”.
Covid care home policies were unlawful, High Court rules
Discharging thousands of patients from hospital into care homes at the start of the coronavirus pandemic was unlawful, the High Court ruled on Wednesday. Judges found that the Department of Health and Social Care failed to take into account the risk that moving asymptomatic elderly patients from a hospital to a care home could infect other residents. Two women, whose fathers died of COVID-19 in care homes in 2020, brought the case against the Government. They told the High Court in March that the policy represented “one of the most egregious and devastating policy failures in the modern era”. Paul Conrathe, a solicitor at Sinclairslaw who was instructed by both women, said: “It’s possible that care home providers and relatives who lost loved ones in the first wave could bring compensation claims. The Government was found to have acted ‘irrationally’ – that’s a very high legal hurdle.”
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The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections.