NEWS – FRIDAY 4TH DECEMBER 2020
NEWS – FRIDAY 4TH DECEMBER 2020
TAX NEWS – FRIDAY 4TH DECEMBER 2020
PM vows to overhaul business taxes
Boris Johnson has pledged an overhaul of business taxes in a bid to drive Britain’s post-coronavirus recovery. The Prime Minister said the Government would be looking at taxation and regulation in a bid to encourage and support businesses. During an online Q&A, Mr Johnson said Chancellor Rishi Sunak is looking at the fiscal and regulatory environment required “to make sure that this is the best place in the world to start a business, the best place to invest.” The Telegraph’s Harry Yorke says the PM’s comments could “set him on a collision course with fiscal hawks in the Treasury”, with the Chancellor considering ways to cover the nation’s coronavirus costs. The paper says that while Mr Sunak is studying proposals that suggest bringing capital gains in line with income tax and mulling a cut in pensions tax relief for higher earners, he is understood to be sympathetic to calls for cuts to business rates. The FT notes that the Chancellor hinted in his spending review that tax rises may be imminent, with the outlook for public finances “clearly unsustainable”.
INDUSTRY NEWS – FRIDAY 4TH DECEMBER 2020
Retail failures will shine a spotlight on auditors
Menzies partner James Hadfield says corporate failures in the retail sector could see focus turn to auditors. This week has seen Arcadia and Bonmarche collapse into administration, while it was confirmed that Debenhams is being wound up – and Mr Hadfield said he can foresee further failures. He told a webinar: “It wouldn’t surprise me if there were more failures coming through … It’s been such a challenging time for businesses.” He argues that auditors “don’t have a crystal ball, and there’s only so much that we could be expected to predict” but suspects “the spotlight will once again fall on the auditor” in some cases. Noting that many of the firms that collapse will have had their last audit signed off during the pandemic, Mr Hadfield says: “You would hope that auditors will have taken the right level of risk aversion in their opinion and made the necessary disclosures, but there will be some examples where there are unforeseen circumstances”.
BUSINESS RATES NEWS – FRIDAY 4TH DECEMBER 2020
Supermarkets to pay back rates relief
Asda, Sainsbury’s and Aldi have announced they will repay business rates relief received during the coronavirus pandemic, with Tesco and Morrisons having already committed to the move. The announcements mean the supermarket chains will collectively return more than £1.7bn. Asda yesterday said it will pay back its £340m relief in full, while Sainsbury’s will hand back £440m of rates relief and Aldi has pledged to repay £100m. They follow Tesco and Morrisons, who promised to repay £850m between them. Meanwhile, John Lewis, which owns Waitrose, said it has no plans to repay rates relief, insisting the support measure “remains crucial to help us navigate the crisis.” Reflecting on the business rates relief rolled out amid the coronavirus crisis, the Times’ Alistair Osborne says it highlights issues with the rates, saying there is a need for reform as retail increasingly moves online. He argues that the tax regime is skewed in favour of online retailers. Louisa Clarence-Smith in the same paper says repayment of the rates by the retailers has renewed scrutiny of the tax.
The Daily Telegraph The Times, Page: 45 Financial Times, Page: 14 The Daily Telegraph Daily Mail, Page: 79 The Guardian, Page: 35 The Independent, Page: 49 The I, Page: 9 The Times, Page: 50 The Times, Page: 47
CORPORATE NEWS – FRIDAY 4TH DECEMBER 2020
Arcadia could see half-price sale
Experts suggest that brands under the Arcadia umbrella could be sold for less than half of the amount they were worth at the start of 2020 following its collapse into administration. Arcadia’s brands were valued at £800m by consultancy Brand Finance in January, with Topshop alone accounting for almost £400m. However, Richard Haigh of Brand Finance says the brands will now be worth less than half that figure. He said: “Ultimately, you are always going to see a reduction in price when you go into administration because people know you have to sell”. He added that with the coronavirus crisis adding further damage, “I would say the price will be below 50% of what we had valued.” The Telegraph says Arcadia’s administrator Deloitte will be seeking to preserve as much of the business as possible, meaning buyers are likely to get preferential treatment if they are wil ling to take on the entire operation, rather than just the brands and online platforms.
The Daily Telegraph, Business, Page: 3 The Independent, Page: 51 Daily Mail, Page: 17
EMPLOYMENT NEWS – FRIDAY 4TH DECEMBER 2020
Companies prepare to lift pay freezes
Private sector workers are set to receive average pay rises of 2.4% next year, according to Willis Towers Watson. While this year has seen a third of private sector companies freeze pay increases, this is expected to fall to just over 3% next year. The most optimistic industries include insurance, with an average increase of 2.9% on the cards, fintech (2.8%) and business and technical consulting (2.8%). The most pessimistic are leisure and hospitality (1.4%), construction, property and engineering (1.8%) and automotive (1.9%). Keith Coull, a senior director in Willis Towers Watson’s global data services business, commented: “After a difficult year for employers and employees, battling lockdowns, employee safety issues, working from home and declining revenues, many employers are finding ways to manage their employees with a more focused work and reward strategy.”
SMEs NEWS – FRIDAY 4TH DECEMBER 2020
Turnover troubles put small firms at risk
Labour Party analysis suggests an estimated 390,000 small businesses are worried they will not survive the next three months. The report says around 1m small businesses do not have cash reserves to last beyond three months, with more than 520,000 small firms having seen turnover fall by more than half amid the pandemic, even before the recent England-wide lockdown. Labour says a majority of businesses forced to close during the latest lockdown received smaller Government grants than during the initial shutdown, with most seeing payouts a third or half of those received in March. Shadow Business Secretary Ed Miliband said: “Small businesses are being let down by shrinking government grants … Unless ministers change course we’ll see hardworking businesses go bust and high streets crumbling before winter is through.”
Daily Mirror, Page: 58 Daily Express, Page: 52
ECONOMY NEWS – FRIDAY 4TH DECEMBER 2020
Economy shrinks, with services sector hit by lockdown
While the economy shrank in November due to the England-wide lockdown, the downturn was not as severe as analysts had feared. The IHS Markit/CIPS composite purchasing managers’ index (PMI) fell from 52.1 to 49 last month on an index where a figure above 50 points to growth. While this marks the first shrinking of the economy since June, it outperformed the fall to 47.4 economists had forecast. With the lockdown seeing the closure of many shops, restaurants and pubs, the service sector was the hardest hit, with the services sector PMI falling from 51.4 to 47.6 in November. An increase in Brexit-related stockpiling offered a boost the manufacturing sector, however, with the manufacturing PMI up from 53.7 to 55.6, its highest reading since December 2017. Economists note that the PMI captures whether business activity is rising or falling but not by how much. Samuel Tombs, an economist at Pantheon Macroeconomics, suggests the economy most likely shrank by 5% last month and will rebound by about 4% in December.
Sales up in November
Analysis from BDO shows that combined in-store and online retail sales rose 3.3% year-on-year in November amid heavy discounting on – and in many cases ahead of – Black Friday. The increase delivered the best November performance since 2017. While like-for-like lifestyle sales were up 17.6 %, fashion sales slid by 5.7%. Sophie Michael, BDO’s head of retail and wholesale, said: “While November results were promising, the figures have been heavily impacted by widespread discounting and lockdown’s knock-on effect on in-store sales and strong online demand.”
The Times, Page: 48 The I, Page: 51
OTHER NEWS – FRIDAY 4TH DECEMBER 2020
The problem with zero-carbon pledges
The FT looks at banks’ climate change policies, citing PwC research showing that only 29% of UK lenders have “a science-based or net-zero climate target”.
Contact Paul Southward