News Roundup Wednesday 1st May 2019

NEWS ROUNDUP

TAX NEWS

Lord Willets: The old should bear the burden of their rising welfare costs

David Willetts, executive chairman of the Resolution Foundation, welcomes Damian Green’s proposals to fund elderly social care saying it’s high time the debate was opened up again. Ending the triple lock on pensions and means testing the winter fuel allowance won’t come close to filling the funding gap – which is why “one has to conclude that taxes are going to have to rise” and it should not fall on the young people of today to bear this burden. In a piece for the Telegraph, Lord Willetts goes on to say that extending NI to workers aged 65 and over or redesigning taxes on their capital may be one way “to fund the pensions, health and social care that older people expect.”

The Daily Telegraph, Page: 14

SMEs NEWS

Small business funding will be boosted by fintech, says Carney

Mark Carney told the Innovate Finance global summit in London yesterday that financial technology has the potential to unlock finance for smaller enterprises. The Bank of England Governor said: “AI-enabled solutions are increasingly important in fraud detection, as well as automated threat intelligence and prevention. There is also significant potential in credit assessments, wholesale loan underwriting and trading.” Mr Carney’s comments kick off UK Fintech Week. According to Deloitte, the UK is the best in the world for fintech, home to 31 of the most 50 innovative firms and to 11% of the global fintech industry. City AM cites VC firm GP Bullhound, which last month predicted that the UK will be home to 25% of the billion-dollar companies Europe will see in the next few years, with many of those fintech firms such as Starling Bank, Lendinvest, Onfido and Callsign.

The Times, Page: 36 The Daily Telegraph, Business, Page: 5 City AM, Page: 9

Banks shun small business lending

Research by Oxford Economics shows lending by banks to small businesses has fallen by 3% since 2015 while credit provision to large companies has increased by 43%. The study, commissioned by Funding Circle, found that small business lending accounted on average for 2% of big banks’ balance sheets, resulting in poorer terms and conditions for SMEs than for larger ones. Sam Moore, managing director of Oxford Economics, said the challenges facing smaller firms risked curbing future growth.

The Times, Page: 36

INDUSTRY NEWS

Many UK businesses struggling

Almost one in six British businesses are struggling financially, according to Begbies Traynor’s latest Red Flag Alert, which indicates that 484,000 UK firms, or 14%, are in “significant financial distress.” The number of businesses in “critical distress” during the first quarter of 2019 rose by 17% and the property sector saw a 13% year-on-year increase in the number of companies in significant financial distress – rising to 48,000. Begbies Traynor partner Julie Palmer said: “Capital intensive sectors – such as construction and property – are suffering as both business and consumers have taken a cautious approach and limited their exposure.”

City AM, Page: 6 The Sun, Page: 43 The Independent, Page: 61 Daily Mirror, Page: 43 The I, Page: 40 Yorkshire Post, Business, Page: 5

CORPORATE NEWS

Crunch meeting today over Philip Green’s Arcadia restructuring

The board of Sir Philip Green’s Arcadia, which includes brands such as Topshop and Dorothy Perkins, will discuss the fate of the fashion firm at a crunch meeting today. Sir Philip is said to be mulling a Company Voluntary Arrangement (CVA) in a bid to reduce rents, and also seeking out potential occupiers to take over the stores – which cost Arcadia roughly £11m in annual rent.

City AM The Times, Page: 34 The I, Page: 41

Procurement fraud and how it can be prevented

Acquisition International considers the fraud which brought down Patisserie Valerie and triggered a probe into its auditor Grant Thornton by the Financial Reporting Council. The publication explores the issues around procurement fraud and how it can be prevented.

Acquisition International

PROPERTY NEWS

Estate agents see supply and demand drop

The supply of new properties on the UK market has hit a record low. The typical estate agency branch had 37 properties available for sale during March, according to data published by the National Association of Estate Agents – the lowest figure ever recorded for the month. This has left buyers reluctant to come to market as they have few homes to choose from, with the number of prospective buyers registering with estate agents down by 25% in the last two years, the trade body added. The NAEA said the current political climate and economic uncertainty had caused confidence to drain from the market.

The Daily Telegraph

Labour party plans to change land purchase law to cut prices

In a move designed to accelerate low-cost housebuilding, Labour would change the law so councils and developers could buy land at “near current-use value” rather than at the inflated prices when earmarked for development.

Financial Times

PENSIONS NEWS

Low paid quit workplace pensions as contribution rises bite

A HR adviser writes to the Mail to express concern over a rising number of lower-paid employees requesting to opt out of company pension schemes because of the recent increase in contributions from 3% to 5%. Even a small drop in take-home pay is proving too much for some, they say.

Daily Mail, Page: 58

EMPLOYMENT NEWS

Job hopping pays, but not for everyone, says ONS

Skilled personnel in London are most likely to benefit from changing jobs, the ONS reports, but generally, lower job mobility since the financial crisis has held back wage growth in the UK.

Financial Times

ECONOMY NEWS

UK top in Europe and third globally for foreign investment

Figures from the Organisation for Economic Cooperation and Development (OECD) show the UK remains the top destination in Europe for foreign investment despite a fall in new funds coming into the country. New investment fell from $100bn to $64bn, but the UK still had a £1,400bn stock of funds – more than Germany, Spain and Poland combined and only surpassed by the US and China. International Trade Secretary Liam Fox said: “The latest OECD figures show the UK remains one of the world’s most attractive destinations for foreign investment. International investors continue to recognise the fundamental strengths of our economy – everything from our predictable legal system to our world-leading financial services.” The OECD data follows an EY survey earlier this month which found that Britain was expected to be the most popular destination in the world for merger activity this year.

The Times City AM The Daily Telegraph, Business, Page: 1 Daily Express

INTERNATIONAL NEWS

Two Samsung employees arrested over alleged cover-up

Two Samsung Biologics executives have been arrested on suspicion of destroying evidence to cover up an alleged $3.9bn accounting fraud.

Financial Times, Page: 17

OTHER NEWS

Schools failing youngsters over workplace preparations, EY mentor warns

Schools are “setting youngsters up for a fall” by not teaching basic workplace etiquette for City jobs, according to corporate youth mentor Nilesh Dosa of EY . He said he has seen students “limply shake hands while seated,” fail to dress appropriately and not know how to write a CV, cautioning: “We’re churning out academically able students who just aren’t equipped for work.”

Evening Standard

Contact Paul Southward

Paul Southward