NEWS – TUESDAY 22ND APRIL 2020
NEWS – TUESDAY 22ND APRIL 2020
NEWS ROUNDUP NEWS – TUESDAY 22ND APRIL 2020
EMPLOYMENT NEWS – TUESDAY 22ND APRIL 2020
March sees thousands laid off in UK
Nearly 20,000 people became unemployed last month as a result of the coronavirus crisis, early estimates from the Office for National Statistics (ONS) suggest, while separate figures released by the Department for Work and Pensions show there have been 1.5m new claimants for Universal Credit since the middle of March. Labour market analyst John Philpott remarked: “Whether this has implications for how well the jobs market recovers after the lockdown is unclear but in any case we won’t be seeing the unemployment rate anywhere close to 4% for several years,” while KPMG UK chief economist Yael Selfin commented: “An additional spike in unemployment after the lockdown also seems likely, once government support via the Job Retention Scheme ends.”
SMEs NEWS – TUESDAY 22ND APRIL 2020
‘Future Fund’ to protect start-ups
The government’s new £250m ‘Future Fund’, which will be delivered by the British Business Bank, is due to launch next month. The Future Fund will provide government loans to UK-based companies ranging from £125,000 to £5m, subject to at least equal match funding from private investors. These convertible loans may be a suitable option for businesses that rely on equity investment and are unable to access the Coronavirus Business Interruption Loan Scheme (CBILS). Although the fund will officially begin in May, companies are preparing to apply on the GOV.UK website. A company is eligible to receive the funding if they are based in the UK; can attract the equivalent match funding from third party private investors and institutions; or the business has previously raised at least £250,000 in equi ty investment from third-party investors in the last five years.
North East businesses worried they will not survive pandemic
Research by Robson Laidler Accountants, together with other members of the UK200Group, has shown that 31.9% of struggling small firms in the North East do not believe they will emerge from the coronavirus crisis intact, compared with 30% across the UK. Meanwhile four-fifths of such businesses report encountering problems in getting help from their banks. Graham Purvis, MD at Robson Laidler commented: “Our concern is that these small businesses will simply run out of cash and that will result in many very good small businesses failing. Yet this is avoidable as there are grants and schemes that have been made available, but they are not easily accessible or understood.” He went on: “We are working with clients to support them in packaging their applications and then presenting them to the banks to ensure they have the best chance of a quick and positive response and thus can get the money they need to survive.”< /span>
Councils failing to deliver grants
Many local authorities have still not delivered grants due to small businesses putting the survival of many at risk. Data show under half of the £12.3bn distributed under the business rates relief scheme to councils in England has been distributed as of Monday, with the worst offenders only handing out 11% of funds. Mike Cherry, national chairman of the Federation of Small Businesses, said councils “must act now if they want to see small businesses survive on their local high streets when we reach the other side of this crisis. The funding is there to be used […] so it’s inexcusable for any council to delay.”
The Times, Page: 36 The Daily Telegraph, Business, Page: 7
Pandemic hands fintech lenders a chance to prove their worth
With banks criticised for being too slow to get cash to small businesses, fintechs such as Funding Circle see the COVID-19 crisis as a chance to show their value as alternative lenders. Now, Innovate Finance, the trade body for financial technology companies, is calling on the Bank of England to provide liquidity support for non-bank lenders to deliver emergency government loans.
INDUSTRY NEWS – TUESDAY 22ND APRIL 2020
COVID-19 pressures could reshape advice industry
New research by NMG Consulting shows advisers are facing a “significant” threat to revenue whilst dealing with the task of helping clients manage market volatility amid the COVID-19 pandemic. In a survey of 209 UK advisers, a fifth of respondents admitted the impact of market volatility caused by the outbreak had been much worse than expected. Mark Fox, principal consultant at NMG, said it was essential for advisers to communicate with clients, especially those tempted to make emotional decisions under stress.
ICAEW issues furloughing helpsheet
The ICAEW has compiled a helpsheet for members highlighting their respective responsibilities when providing furlough grant claim services. This follows the opening of a HMRC portal to both businesses and agents recently where a claim for grant monies can be made.
TAX NEWS – TUESDAY 22ND APRIL 2020
Tax reform required to rebuild economy
Prospect reports on how the economic effects of the coronavirus are likely to affect the UK’s tax system, which is described as “complicated, inefficient and beset with perverse incentives that do little to raise revenue or meet the government’s wider economic objectives.” It is advised that tax reform must take place to help ensure the revenue required to mend the economy after the pandemic subsides is raised “in the most efficient and least distortionary way possible.” Former Treasury minister and shadow chancellor Ed Balls is quoted as saying that winning “the argument for why” is necessary to convince the public of the need for reform.
CORPORATE NEWS – TUESDAY 22ND APRIL 2020
Cath Kidston closes high street stores
Cath Kidston has been sold back to its private equity owners, Baring Private Equity Asia, in a pre-pack deal that makes 900 workers redundant and closes 60 of its UK shops. About 30 staff are being kept on to work on its online business. Meanwhile, Primark has revealed that sales had dropped from £650m per month to zero as a result of all its stores closing in Europe and the US.
The Times, Page: 40 The Independent, Page: 49
Virgin Australia goes into administration
Virgin Australia has gone into voluntary administration due to the impact of the coronavirus pandemic. The airline’s board has appointed administrators from Deloitte, who will try to restructure the firm’s debt, pay off creditors and find a buyer – with private equity groups expected to be interested. Sir Richard Branson attacked the Australian government for refusing to bail out the company while Virgin Atlantic remains locked in talks with the British government about a separate rescue.
The Daily Telegraph, Business, Page: 3 The Independent, Page: 52 The Guardian, Page: 33 The Sun, Page: 43
PROPERTY NEWS – TUESDAY 22ND APRIL 2020
IFRS 16 Leases guidance analysed
With the International Accounting Standards Board issuing guidance on the application of IFRS 16 Leases for rent concessions related to COVID-19, Julia Penny FCA, principal of JS Penny Consulting notes that there are no changes to IFRS 16, but that the guidance includes explanation of how it should be applied. She advises: “Make sure you check the detail of the contract, including consideration of all relevant facts and circumstances, such as force majeure clauses being triggered or changes in legal requirements altering the effect of the contract,” and concludes that “Both lessees and lessors should ensure disclosures are sufficient to allow users to understand the impact of COVID-19 related changes in lease payments/receipts on the entity’s financial position and performance.”
WEALTH MANAGEMENT NEWS – TUESDAY 22ND APRIL 2020
Schroders Personal Wealth launches 11 offices
Schroders Personal Wealth is launching 11 offices across the UK to support its regional growth. The hubs will be set up as semi-autonomous adviser businesses within the Schroders Personal Wealth network. The hubs will be located in Birmingham, Bristol, Cambridge, Cardiff, Edinburgh, Exeter, Guildford, Manchester, Leeds, London and Oxford while a head office in London and a centralised operations centre in Leeds will provide the central support functions.
ECONOMY NEWS – TUESDAY 22ND APRIL 2020
KPMG UK chairman warns of coronavirus ‘economic disaster’
Bill Michael, the chairman of KPMG UK, has warned that the UK economy will not survive being in lockdown long enough for a vaccine to be available. In a memo to staff, Mr Michael said: “At some point, we run the risk that the economic disaster will transcend the human one. The difficult judgments governments face is to strike a balance between the health of our people and our economy.” He went on to forecast “a radical re-evaluation” of global supply chains and far-reaching consequences for the UK tax system when the time comes to address the soaring national debt. Elsewhere, Ben Harris-Quinney, chairman of the Bow Group think tank, said Britons will be forced to face the “chilling reality” of trillions of pounds of debt from the crisis, resulting in an “unholy trinity of spending cuts, tax rises and inflation”.
Andrew Bailey warns against easing social distancing too early
The governor of the Bank of England, Andrew Bailey, has warned that a premature end to coronavirus restrictions resulting in a further lockdown would have a severe impact of confidence and inflict further damage on the economy. In an interview with the Mail, Mr Bailey reiterated his desire to see banks getting cash to small businesses, conceding that assessing risk was “gumming-up” the operational side. “I gee up the banks regularly, he said. “The Chancellor and I are both extremely keen that credit flows to firms.”
Contact Paul Southward