SUPPORT

Support for small firms hit by Carillion collapse

The government has set up a task force aimed at supporting small businesses and workers affected by the collapse of Carillion. The group is chaired by Business Secretary Greg Clark and includes representatives from business, trade unions, construction trade associations and lenders. Meanwhile, three banks have said they will provide money to support small business customers who are struggling after the failure of the construction services company. Lloyds is creating a £50m fund, while RBS is offering £75m worth of assistance and HSBC £100m. Mr Clark commented: “It is essential that small businesses exposed are given the support they need by their lenders, and I look forward to other banks following suit.” But Mike Cherry, policy chairman of the Federation of Small Businesses, has said help offered by banks to businesses owed money by Carillion will be no more than a “sticking plaster” solution. The support would “probably” not be enough for many businesses and self- employed contractors, he said. Mr Cherry added that Carillion’s collapse highlighted the problem of late payments, which should be stopped “as a matter of urgency.”

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REGULATION

Regulator criticised over RBS report

Sir Vince Cable has criticised the Financial Conduct Authority (FCA) for failing to publish a full report into the mistreatment of small businesses by the Royal Bank of Scotland. During a parliamentary debate into the now defunct Global Restructuring Group, Sir Vince also named former RBS employee Nathan Bostock – now chief executive of Santander UK – as one of the bankers “responsible” for GRG. Meanwhile, Treasury committee chair Nicky Morgan said the Treasury should explore putting corporate lending under the oversight of the FCA and establishing a specialist tribunal to mediate between banks and small business customers. Elsewhere, RBS CEO Ross McEwan is interviewed by the Mail on Sunday’ s City Editor Ruth Sunderland. Mr McEwan reveals his horror at being confronted with stories of people ruined by the actions of the bank’s Global Restructuring Group, which squeezed cash from SMEs in the wake of the financial crisis to the point of bankruptcy. Mr McEwan says: “There are some things we just have not got right for customers, and for that we apologise. We are doing our best to turn this organisation round. I apologise and it is a genuine apology.” His comments will provide little comfort to those who lost their businesses, says Ms Sunderland, but are part of Mr McEwan’s effort to restore the bank’s reputation, which he says is “even harder than fixing the balance sheet.”

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More small businesses get access to FOS

The FCA wants to widen access to the Financial Ombudsman Service, enabling more firms to act if they feel badly treated by banks. An additional 160,000 small firms would be able to use the service, the FCA says. Currently, only individuals or firms with fewer than 10 staff can use the Ombudsman to settle financial disputes. Under the FCA proposals, firms with up to 50 staff could use the service. Larger businesses will still have to use the courts to settle disputes. Launching a consultation into the idea, the FCA said there needed to be an effective dispute resolution mechanism for businesses. But Mike Cherry, national chairman of the FSB, said the changes were disappointing: “During the downturn, we had entrepreneurs forced under by complex, unregulated products. They then struggled to achieve redress because their businesses no longer existed. It’s not clear that, under these proposals, there would be enough protection for small businesses if they were faced with similar circu mstances in future.”

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Mifid II caution hits small business research

Research on SMEs has fallen since Mifid I regulations were introduced in 2007, and Mifid II rules have left SMEs and their brokers concerned about SME coverage, the FT reports.

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START-UPS

Government teams up with private funds to back start-ups

The government is teaming up with private equity investors in a scheme to put money into technology start-ups. The £7.3m pilot is intended to keep Britain on the front line of technology and innovation by combining the extensive reach of government programmes with investors’ expertise in picking winners. Under the new scheme, companies can apply for support of up to £150,000 to test ideas. Seventy per cent of this will be a non-repayable grant, with the remaining 30% coming from one of seven selected private equity firms including IP Group, Longwall Ventures, Mercia Fund Management, Oxford Sciences Innovation, Rainbow Seed Fund, Syncona Investment Management and Touchstone Innovations.

The Times

Time to end rip-off bills for SMEs

The government and Ofgem need to do more to ensure small businesses get a fair deal from energy suppliers, says the Sunday Times’ Peter Evans. Although some changes have been made, such as banning automatic rollover contracts, small companies are still suffering disproportionately at the hands of energy suppliers and unscrupulous brokers, adds Evans.

The Sunday Times

EMPLOYMENT

PM vows crackdown on bosses who betray workers

Theresa May is preparing a series of measures to crack down on company bosses who “line their own pockets” while failing to protect workers’ pension schemes. Writing in the Observer , the Prime Minister says a white paper to be published in March will outline how directors will face heavy fines for wrongdoing and regulators will have new powers to block takeovers that put pension schemes at risk. Mrs May adds that she is determined that bad businesses do not threaten the concept of public-private partnerships and that, although the government should not be involved in the day-to-day management of businesses, “the state can and should help to rebalance the system in favour of ordinary working people.” But Roger Barker, head of corporate governance at the Institute of Directors, has urged the PM to be cautious over proposals to crack down on company bosses who fail to protect workers’ pensions. “If the Prime Minister is serious about these proposals, there needs to be extensive consultation, with involvement from industry, to ensure we strike a balance that safeguards all stakeholders including current employees, pensioners and shareholders,” he sa id. Meanwhile, the FT reports that questions remain about how rules were changed in favour of Carillion management in 2016 to prevent clawback of bonuses worth millions in the event of a collapse.

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Fewer jobs for graduates

The number of jobs for graduates who left university last summer fell by 5% from the previous year. High Fliers Research found the largest drop in graduate recruitment came in accounting and professional services companies, banking and finance and investment banking. Across the private sector, graduate recruitment fell 10.3% in 2017. Meanwhile, a study by Deloitte shows the number of jobs across the economy is declining in 160 occupations, and increasing in 206. Big growth areas include civil engineering, educational jobs, solicitors, pharmacists, dentists, business analysts, and speech and language therapists.

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CBI criticises short-term policies to improve skills base

The latest measures to improve Britain’s skills base are not working, the CBI employers’ group has warned. The organisation said programmes such as the apprenticeship levy had “alienated” firms. CBI managing director Neil Carberry criticised successive governments’ short-term approach to tackling the country’s skills shortage. “We need a skills approach that lasts for 50 years, not five,” he said. The CBI said 28 separate policy reforms in the past 30 years had led to confusion and failed to deliver on what was needed to improve skills. Meanwhile, the Times’ Alexandra Frean argues that a drive for more apprenticeships is the way to bridge the UK’s skills gap.

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Gender pay reporting questioned

Calls are growing for an audit of gender pay gap reporting, after it emerged a number of companies have altered their data several times since first filing it. Legal experts have also suggested that the government’s equal pay drive has overlooked the race pay gap. “The issue isn’t just related to women,” says Kiran Daurka of law firm Leigh Day, adding “The Government has missed an opportunity to introduce reporting on race pay difference. We don’t have proper data to monitor what that disparity is.” Meanwhile, research by the ONS shows a widening difference between what men and women get paid as they get older. Pay differences were found to be smaller at younger ages, but increased from 40 onwards.

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OUTLOOK

Digital revolution sweeping the north

The Centre for Economics and Business Research (CEBR) has ranked Newcastle upon Tyne first among all UK regions as the fastest-growing tech hub, measured by the growth in jobs over the past five years. The CEBR expects 70% of the growth over the next five years in the digital and media sector to be outside London, with much of it in the north. CEBR founder Douglas McWilliams believes the digital revolution has the potential to “rebalance” the country’s growth away from the southeast and towards the former industrial heartlands of the north.

The Sunday Times

Innovative SMEs likely to be hardest hit following Brexit

Analysis of a government survey of SMEs following the EU referendum suggests that Brexit-related concerns could result in a range of negative consequences for UK small businesses, with those focussed on emerging technologies and exports particularly likely to be fearful. “In other words, SMEs thought to be the most significant for boosting productivity and economic growth may be the most negatively affected by Brexit,” said Dr Ross Brown, reader in entrepreneurship and small business finance at the University of St Andrews.

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INVESTMENT

BoE’s Tenreyro expects productivity growth

Bank of England policymaker Silvana Tenreyro has warned that uncertainty surrounding Brexit means companies are holding off from investing, and is hampering Britain’s ability to close its productivity gap with other leading developed countries. Ms Tenreyro said 75% of the decrease in growth of output per worker since the financial crisis a decade ago was due to manufacturing and financial services. However, the monetary policy committee member is also positive that there is scope for the UK to catch up with competitor nations by “adopting technologies and processes that enhance productivity and are already tested and in place in other countries.”

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Treasury told to relax EIS rules

Investors have called on the Treasury to loosen new rules on investing in so-called knowledge intensive companies, claiming they are too tight. Investors can receive 30% in tax relief on investments of £2m after the limit on the enterprise investment scheme (EIS) was doubled in last year’s budget, but the business must spend heavily on R&D and create their own intellectual property. A business also qualifies if more than 20% of staff have master’s degrees or higher that are relevant to the industry they work in. However, Jenny Tooth, chief executive of the UK Business Angels Association, which represents more than 18,000 investors, says “the current definition is too restrictive for the kind of knowledge-creating business which should be attracting investment.”

The Sunday Times

TAX

Hardball approach leads to longer tax cases

Pinsent Masons’ Ian Hyde says businesses in the UK are being burdened by increasingly lengthy tax investigations carried out by HMRC. The average length of HMRC’s tax enquiries during the year ended March 31 ^st 2017 was 34 months, up from 31 months in 2015/16. The upward trend has been attributed, in part, to HMRC’s refusal to back down from arguments over disputed technical points. Mr Hyde says large corporates are no longer getting involved in avoidance schemes, leading to more challenges from HMRC over “routine” technical tax issues, such as whether the accounting treatment is correct or capital allowance claims have been dealt with properly.

The Scotsman

ECONOMY

Analysts predict strong start to 2018

Economists are predicting positive GDP and employment figures for the final quarter of 2017, with economic growth expected to be 0.4% for Q4 pushing GDP up 1.8% for the year. Analysts also predict the jobless rate will stay at 4.3% and may even fall to as low as 4% in 2018.

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Household spending returns to pre-crisis levels

Household spending has returned to levels last seen before the financial crisis, official figures show. Average weekly household spending rose to £554.20 in the 2016/17 financial year, according to data from the ONS.

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