Business news 29 March 2022
James Salmon, Operations Director.
Support scheme for SMEs flounders. Bank of England expects 1970s-style energy shock. P&O signals willingness to pay minimum wage if rivals do. Brexit jobs exodus fails to materialise. Natwest. And more business news.
Support scheme for SMEs flounders
Government figures show 1,270 business leaders have so far signed up for the Help To Grow management scheme – launched last July to help boost the productivity of British SMEs. The Government had a target for 30,000 businesses to complete the programme, but just 402 have done so to date. The Federation for Small Businesses (FSB) said the slow take-up was partly due to its criteria being too strict and that all businesses with two employees should be able to access it. The FSB has also encouraged the Government to reduce the participation fee to £250, from the current £750. A spokesperson for the British Chambers of Commerce said the take-up figures for the scheme were “disappointing and we would encourage the government to extend the timescale” for SMEs to enrol.
Bank of England expects 1970s-style energy shock
Bank of England Governor Andrew Bailey has warned of a further slowdown in UK growth as the country faces a “shock from energy prices this year…larger than any single year in the 1970s.” The increase in the price of energy and other goods and services would likely cause growth and demand to slow, Bailey said, explaining that this pressure on demand is expected to weigh down on domestically generated inflation. “For that reason we do expect inflation to return to target, two years or so out from now.” Analysts expect the Bank to raise interest rates to 1% in May, but Bailey said inflation could go either way. There was a high degree of uncertainty facing the UK economy, Bailey continued, adding: “We’ve got a pandemic followed by a European war, in any scale that is a very difficult position to be in for policy.”
Covid Parties
London’s Metropolitan Police are set to issue at least 20 fines to government officials close to the prime minister who broke U.K. lockdown rules by organising parties during lockdown. The first of the fines are expected as soon as Tuesday, though Prime Minister Boris Johnson is thought unlikely to be in the initial tranche. Some people may face more than one penalty notice. The prime minister has repeatedly claimed he was assured that no rules were broken and that it was his belief that a party he attended was a “work gathering”.
P&O signals willingness to pay minimum wage if rivals do
P&O Ferries has indicated that it would be willing to pay workers operating in British waters the national minimum wage if other ferry operators did likewise, in a move suggesting the company could reverse its sacking of 800 seafarers so it could hire cheaper agency staff. A spokesman for the company said: “We fully welcome the Government’s commitment to increasing the minimum wage for all seafarers working in British waters. From the outset we have called for a level playing field when it comes to pay and conditions on British ferry routes.” The Telegraph points out that a change in the law planned by Transport Secretary Grant Shapps could mean many small operators go out of business. “P&O has ruined it for everyone,” one Whitehall source said. An EU directive enforced in the UK in 2018 meant ferry operators only had to inform the “flag state” of their vessels of redundancies. This loophole will be closed imminently and new legislation requiring operators to pay the minimum wage will be introduced.
Natwest
The UK Government announced it has reduced its stake in NatWest to below 50% (48.1%), with the Treasury selling 549.9m shares back to the banking group at a price of 220.5p per share. The transaction, netting the UK Government £1.21 billion, reduced ownership below the important threshold. More than a decade has passed since the taxpayer bailed the bank out during the Financial Crisis.
NatWest small business bank Mettle gains fivefold increase in customers
NatWest’s digital bank for small business customers, Mettle, has had a fivefold jump in users since the start of 2021 as the pandemic drove a wave of new business creation.
Brexit jobs exodus fails to materialise
City firms have defied predictions of a jobs exodus from the financial sector after the vote to leave the EU. PwC predicted in April 2016, before the referendum, that as many as 100,000 financial jobs could go. But the latest EY Brexit Tracker reports 7000 job relocations from the UK to Europe in total, down from 7600 a year ago and 10,500 in March 2017. Omar Ali, a Financial Services Leader at EY, said: “As firms gained greater clarity on what the post-Brexit landscape would look like, plans were consolidated and, in some cases, firms revised down the number of people they would need to relocate.” Paris has attracted the most UK employees (2,800), followed by Frankfurt (around 1,800) and Dublin (around 1,200).
Under fire Sunak defends Spring Statement
The Chancellor has defended his Spring Statement after he was accused of failing to do enough to help Britain’s poorest as living costs soar. Appearing before MPs on the House of Commons Treasury committee, Rishi Sunak said higher government borrowing posed a risk to the economy and he had to prioritise getting debt down and borrowing under control. “That provides for me a constraint as to what is possible, and then there’s a choice about where to target that support.” Sunak went on to deny that he styled himself as a tax-cutting Chancellor, insisting that spending had to increase during the pandemic and now taxes needed to rise to pay for improvements in care, leveling up and other plans. The promise of a tax cut in 2024 was designed to set the direction of travel, he added. But Conservative MP Sir John Redwood said the Chancellor needs to cut taxes to boost the flagging economic recovery. “We need tax cuts to promote growth and to ease the squeeze on real incomes,” he said. “The Treasury has collected billions more tax this year than they planned thanks to faster growth. Promoting growth is the way to get the deficit down.”
Number of ‘nudge’ letters for offshore income or gains soars
HMRC has issued nearly 177,000 so-called “nudge” letters in respect of offshore income or gains since they started the practice in the 2016/17 tax year. Data released to tax consultants Andersen also reveal that the number of offshore income or gains letters issued by HMRC peaked in the 2018/19 tax year, with 53,327 letters sent out. However, only 28,609 letters were issued in the 2020/21 tax year and only around 13,000 have been issued so far in the current tax year. “This is the first time that HMRC has been transparent about the number of “nudge” letters sent to the taxpayer in recent years,” said Drew Park, Tax Investigations Partner at Andersen in the UK. “Although 177,000 may seem impressive, it is not a hugely surprising figure – “nudge” letters are cheap for HMRC to generate as they rely on computers automatically cross-comparing intelligence information with that already disclosed in submitted tax returns.”
Bellway
Bellway expects its average selling price to be more than £305,000, up from previous guidance. In half-year results, revenue rose 3.5% to £1,780m, up slightly on 2021’s figure of £1,720m. The housing developer said forward visibility provided by the order book meant that the average selling price is now expected to be over £305,000 for the full financial year.
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