News in brief
9 March 2021: fears for 5,000 UK steel jobs as lender nears collapse; TUC and Heathrow call for government support for UK aviation; Deliveroo flags £223.7m loss in 2020.
The principal financial backer of one of the UK's largest industrial groups is set to fall into administration. Specialist bank Greensill Capital is the main lender to businessman Sanjeev Gupta's sprawling empire, which includes Liberty Steel. The move puts 5,000 jobs at risk at Liberty Steel and other firms. Union officials were already due to have crisis talks with Gupta, the BBC reported.
The Trades Union Congress and Heathrow have called on the government to cover UK airports’ operating costs while travel bans are in place. They also requested the Chancellor to extend the furlough scheme for as long as public health measures affect aviation, in a joint call for “survival support”. Demand for financial help and other measures are a matter of survival for businesses in the sector they argued. Aviation unions and the international ground-handling operator Swissport have also backed the call, the Guardian reported.
Deliveroo has flagged a £223.7m underlying loss during 2020. The news comes despite surging demand for its platform as the pandemic hit. The company has officially launched its London stock market flotation. While underlying gross profit almost doubled to £357.5m the total underlying loss for the year, at £223.7m, was significantly down on the £317.3m recorded in 2019, Sky News reported.
8 March 2021: Deloitte’s deputy CEO steps down over bullying allegations; China sets 6% 2021 economic growth rate target; Frasers Group warns of store closures after 'near worthless' budget support.
Deloitte’s deputy CEO and diversity champion Dimple Agarwal is stepping down following allegations of bullying from more than a dozen staff. Complaints were made over inappropriate working practices by Agarwal, including communicating aggressively and making employees attend extremely early meetings. Deloitte UK boss Richard Houston confirmed she is “stepping down from her leadership roles both in the UK and NSE”, City A.M reported.
China is aiming for an economic growth rate above 6% in 2021, after scrapping its target last year. The target marks a strong growth rebound after the COVID-19 pandemic hit the world's second largest economy, triggering a sharp 6.8% contraction in the first quarter of 2020. Although China's economy grew last year, it only managed 2.3% growth, its weakest result in decades, the BBC reported.
Frasers Group says it will be forced to close stores and cut jobs after a “near worthless” support package on business rates in the budget. The retailer, run by Sports Direct founder Mike Ashley, said larger companies needed a complete overhaul of the business rates model for the high street to survive, the Guardian reported. “The £2m rates cap on ‘businesses’ from July 2021 to March 2022 makes it a near worthless support package for large retailers,” the group said.
5 March 2021: women retirees win £2.7bn for underpaid pensions; ESMA reviews implementation of guidelines on enforcement of financial information; 2026 average earnings forecast to be no higher than 2008 level.
About 200,000 women could be in line for payouts averaging £13,500 to top-up the underpayment of their state pension for up to two decades. The Department for Work and Pensions revealed details of the underpayments, estimating the bill for tackling the shortfalls to be about £2.7bn. The errors focus on automatic cash increases for certain married women, widows and over-80s dating back to 1992 with "enhanced" pensions, the BBC reported.
The European Securities and Markets Authority (ESMA) has reviewed how its guidelines on enforcement of financial information are being implemented in the wake of the Wirecard case. ESMA highlighted a diversity of practices, actions, powers and resources across the EU. The review identified shortcomings which require modifications in the provisions included in the Transparency Directive, 2004/109/EC (TD). It also noted that new challenges, such as supervision of non-financial information or digital developments, have demonstrated that the TD requires targeted updates and modifications to ensure it remains fit for purpose.
Average earnings in 2026 are estimated to be no higher than their 2008 level according to forecasts by the Institute of Fiscal Studies. The report responds to the Budget’s freeze on personal allowance on income tax which implies a 7% real cut. The IFS found that freezing the higher rate threshold could see up to 5 million taxpayers in the higher tax bracket compared with the 4.1 million currently, City A.M reported.
4 March 2021: KPMG UK arm to be renamed Interpath after sale; Malaysia updates digital services providers tax guidance; contactless payment limit to rise to £100.
KPMG is selling its UK restructuring arm for £400m to private equity firm HIG Europe. The new standalone company, comprising of approximately 500 people, will be renamed Interpath Advisory. It will be the largest independent restructuring practice in the UK by number of employees, Sky News reported.
Malaysia has updated its tax guidance for digital services providers. The changes address the requirement on foreign service providers (FSPs) to collect 6% service tax on business-to-consumer (B2C) supplies of digital services from 1 January 2020. FSPs who provide digital services to consumers are liable to be registered as a foreign registered person when the total value of digital B2C services in Malaysia exceeds MYR500,000 (£85,395) in any year, Tax News reported.
The limit on a single payment using contactless card technology will rise to £100 later this year, the Treasury has confirmed. The pandemic has accelerated a move away from cash, with shoppers often being encouraged to use contactless for public health reasons. It has been less than a year since the limit was raised from £30 to £45. Regulators say businesses could still decide themselves whether to accept the higher limit, the BBC reported.
3 March 2021: energy firms overcharge switching customers £7.2m; FCA scraps executive bonuses after LC&F scandal; Hong Kong considers SPAC listings; Companies House pauses strike off processes; definitions of sectors in scope of new national security regime narrowed.
More than one million people were overcharged by energy firms during the process of switching suppliers, the regulator Ofgem says. When a customer decides to switch, the rules state they should be protected from price rises while moving - which could take up to three weeks. Eighteen suppliers made errors leading to overcharging of £7.2m. They are refunding the money and making extra payments in some cases, taking the compensation total to £10.4m, the BBC reported.
The Financial Conduct Authority (FCA) is scrapping performance-related pay and bonuses for senior executives, and also plans to impose salary cuts. The move follows criticism towards the City watchdog over its failures in policing collapsed firm London Capital & Finance. Giving evidence in the investment scandal to the Treasury select committee on Monday, Randell apologised for the FCA’s mistakes and said the board had to consider consequences for its staff, the Guardian reported.
Hong Kong is considering allowing Special-acquisition company (SPAC) listings as the popularity of blank-cheque vehicles starts to pick up outside the US. SPACs raise capital through a public listing with the purpose of acquiring an existing company. Nearly 180 SPACs have been filed or priced this year in New York and last month Frankfurt and Amsterdam both had their first listings. They offer private companies a faster and more predictable way to go public, City A.M reported.
Companies House has temporarily paused its strike off processes from 21 January 2021. The decision was made so that companies and creditors would not be adversely affected by processing delays. “This temporary measure will be lifted on 8 March 2021. We’ll resume the process to dissolve companies who’ve applied for voluntary strike off, and those we believe are no longer carrying on business or in operation,” Companies House said.
The Government has narrowed its definitions of “the sectors within scope of the mandatory notification regime” under the National Security and Investment Bill. The changes ensure investors and businesses who must tell the government about proposed acquisitions will have certainty over the targeted and proportionate approach, the Department for Business, Energy and Industrial Strategy announced.
2 March 2021: UK-Kenya trade deal to extend to all East Africa; female financial firm directors paid 66% less than their male counterparts; MPs warn chancellor not to raise taxes.
The recently signed trade deal between the UK and Kenya will be extended to all of East Africa, according to Kenyan media reports. The announcement follows weeks of threats by members of the House of Lords as well as Kenyan MPs not to ratify the trade agreement, which was signed in December of last year. The deal will be extended to cover Burundi, Uganda, Rwanda, South Sudan and Tanzania, meaning businesses in all six countries can export and offer their products into the UK on a no-tariff, no-quota basis, once it’s ratified, City A.M reported.
Female directors at the UK’s largest financial services firms are paid on average two-thirds less than their male counterparts, new research shows. Law firm Fox & Partners found that the average pay for female directors at FTSE 100 and FTSE 250 financial services companies stands at £247,100, 66% lower than the average £722,300 paid to male directors. It also found that 86% of the female company directors occupy lower-paid non-executive roles, the Guardian reported.
Chancellor Rishi Sunak has been told by the Treasury Select Committee that "now is not the time for tax rises". The MPs’ report concluded that a tax hike would strain Conservative manifesto promises to hold back income tax, national insurance and VAT. It does however say that a moderate hike in corporation tax, causing employees to pay more as their salaries rise, would help the government without damaging growth, Sky News reported.
1 March 2021: MPs call for cut in beer duty; green homes grant will only meet a fraction of target; Twitter to introduce feature charging followers; FRC calls for feedback on Technical Actuarial Standards.
A group of Conservative MPs is calling for a reduction in the tax paid on beer in next week's Budget. They wrote to Chancellor Rishi Sunak saying a cut in beer duty would support pubs that are struggling to survive the effects of the pandemic and called for a "significant" cut over the course of this Parliament. While the British Beer and Pub Association has already called for an extension to the VAT cut, charity Alcohol Change UK says the costs to society of drinking "far outweighs" the tax paid on it, the BBC reported.
The government’s flagship green homes grant scheme will help just 8% of its target 600,000 households switch to renewable energy by the end of March, analysis reveals. The £2bn for the scheme is being withdrawn at the end of next month. Analysis by the Energy and Climate Intelligence Unit thinktank reveals that at the current rate it will issue vouchers to just 49,000 members of the public by that time. In 2021/22 the chancellor has said that only £320m will be available for the green homes grant programme, the Guardian reported.
Twitter is to let people charge their followers for extra content with a new feature called Super Follows. Users would pay a monthly fee under the Super Follows system but Twitter did not say how much of a cut it would take. The feature could unlock special tweets, newsletters, videos, or deals and discounts that are not available to other users. The move follows the success of similar features used by sites such as Patreon and Only Fans, Sky News reported.
The Financial Reporting Council (FRC) has launched a post implementation review of the Technical Actuarial Standards. Alongside the review it is issuing a call for feedback on the current framework for TASs, Technical Actuarial Standard 100 (TAS 100), and potential actuarial standards in relation to IFRS. The FRC said the reviews were being carried out to ensure “they continue to support the delivery of high-quality technical actuarial work and satisfy the Reliability Objective”.