The Chancellor has been taken to task by MPs about the lack of diversity at the top of the Bank of England. Nicky Morgan has written to Philip Hammond asking for evidence proving that “all efforts” are being made to encourage gender and ethnic diversity in its recruitment process. The Treasury Select Committee’s concern follows two recent appointments to the Bank’s rate-setting committee. Silvana Tenreyro is now the only woman on the Monetary Policy Committee (MPC). She replaced Kristin Forbes, while deputy governor Sir Dave Ramsden filled the other vacancy on the MPC. That seat had previously been filled by Charlotte Hogg, who replaced Minouche Shafik in February. However, Ms Hogg resigned the following month for failing to declare that her brother worked for Barclays, which was deemed to be a conflict of interest. Ms Morgan has asked the Chancellor for “specific confirmation that all efforts are being made to encourage as diverse a range of candidates as possible” and that recruitment processes for the Bank’s policy committees followed the same rigorous standards used for other public appointments. The letter asked the Treasury to publish recent data, including a gender breakdown of applicants seeking a position on the MPC and the Financial Policy Committee. Ms Morgan said her committee wanted to hear evidence from Mr Hammond or another minister or senior official on the issue.
Company and economic announcements planned for the week commencing 23rd October 2017
UK banks may have been used to launder money stolen from South Africa, a former cabinet minister has alleged in a letter to Chancellor Philip Hammond. Lord Peter Hain said a South African whistle-blower had indicated the banks “maybe inadvertently have been conduits for the corrupt proceeds of money”. The Labour peer is due to raise the issue in the House of Lords later. The Treasury said it had sent his letter to financial regulator the Financial Conduct Authority (FCA). “We take allegations of financial misconduct very seriously, and have passed Lord Hain’s letter on to the Financial Conduct Authority and relevant UK law enforcement agencies, including the National Crime Agency and Serious Fraud Office, to agree the right action,” a spokesperson said.
Amazon and eBay are profiting from sellers who defraud UK taxpayers by failing to charge VAT, according to a report by MPs. The report estimates up to £1.5bn has been lost from third-party sellers on online marketplaces not charging the tax on sales they make in the UK. MPs in the Public Accounts Committee criticised HMRC for being “too cautious” in pursuing the “fraudsters”. Amazon and eBay said they were working with HMRC on the issue. Labour MP Meg Hillier, who chairs the committee, called online VAT fraud “hugely damaging” for British businesses and taxpayers. She added that “the response of HMRC and the marketplaces where fraudsters operate has been dismal”.
The boss of Vanguard, one of the world’s biggest investment funds, has expressed concerns about the record highs in stock markets. Bill McNabb, chairman of the US company, told the BBC the markets could be on course for a “decent-sized correction at some point”. US stocks closed at fresh highs on Monday, days after the UK’s FTSE 100 index hit a new record. Mr McNabb said Vanguard was also watching Brexit “very carefully”. Vanguard, which manages $4.5 trillion (£3.5tn) of funds worldwide, employs about 400 people in London. The firm’s main focus is on providing tracker funds for do-it-yourself investors which follow the rise and fall of indices such as the FTSE 100.
The Bank of England should hold off from raising interest rates next month, according to a forecasting body. Bank governor Mark Carney has said rates could go up in the “relatively near term”, with many analysts expecting a hike in November. However, the EY Item Club said such a move risked hurting the UK’s “fragile economic outlook”. The group called on the bank to wait another year before raising the benchmark rate from 0.25% to 0.5%. It comes after the British Chambers of Commerce and ratings agency Standard & Poor’s suggested economic growth was not strong enough to warrant a rate rise. The EY Item Club, which uses the Treasury’s forecasting model, predicted GDP growth would slow to 1.5% this year and 1.4% in 2018.
The UK economy grew at a muted rate in the third quarter of 2017 despite progress in the manufacturing sector, the British Chambers of Commerce says. The number of manufacturers reporting improved domestic sales and orders rose in the quarter to its highest level since early 2015, the BCC said. Export sales and orders in the sector also improved. But in services, domestic sales and orders remained static, as did the sector’s employment expectations. The BCC said its survey also showed the prevalence of recruitment difficulties facing UK businesses, which worsened further during the quarter. Almost three-quarters of manufacturers reported difficulties hiring staff, and in services, the percentage rose to its highest since early 2016.
Company and economic announcements planned for the week commencing 16th October 2017
James Murdoch is poised to defend his position as Sky’s (SKY.L) chairman at its annual shareholder meeting on Thursday. A trio of advisory firms have called on shareholders to rebel against Mr Murdoch, who is chief executive of 21st Century Fox and sits on its board. One investor, Royal London, which owns £44m in Sky shares, has criticised the dual position as “inappropriate”, amid Fox’s attempted bid to take over Sky. A Sky spokeswoman said Mr Murdoch was “uniquely well-placed” to be chairman. The spokeswoman cited his “deep knowledge of the global media industry”, adding: “It would be inappropriate for us to discuss these matters before all of our shareholders have voted.” Royal London, which has a 0.28% stake in Sky, resurfaced its concerns over the Fox-Sky deal ahead of the vote – saying the board’s chairman should have no affiliation to either company. “Minority shareholders at Sky would be better served by a truly independent chairman,” said Ashley Hamilton Claxton, the firm’s corporate governance manager. “Independent oversight of the board is particularly important given Fox’s ongoing bid to acquire Sky.”
A price cap on energy bills proposed by the prime minister last week is unlikely to take effect before winter. Theresa May had promised to revive a plan to cap charges for an extra 12 million consumers. Howewer, Ofgem said it would ensure that all consumers on standard variable tariffs would be protected as soon as possible “if legislation is in place”. Until then a more limited price cap will be extended to another one million low income households, Ofgem said. Restrictions on the cost of gas and electricity for those with pre-payment meters already saves some four million households about £80 a year. The regulator wants to extend the scheme to about two million other people who get certain benefits.
Higher prices for food and clothing prices driven up by the weak pound fuelled retail sales growth last month. British Retail Consortium (BRC) and KPMG figures showed that like-for-like retail sales rose 1.9% in September. That was far higher than the 0.4% increase for the same month last year. Total sales climbed 2.3%. Much of this growth was due to price rises filtering through, particularly in food and clothing, said BRC chief executive Helen Dickinson. “Retailers have worked hard to keep a lid on price rises following the depreciation of the pound, but with a potent mix of more expensive imports and increasing business costs from various government policies, something had to give at some point,” she said. “Spending is still being focused towards essential purchases; with consumers buying their winter coats and back to school items, but shying away from big ticket items such as furniture and delaying the renewal of key household electrical goods.” The survey showed that food sales rose by 2.5% on a like-for-like basis over the three months to September and 3.5% in total, while non-food sales rose by just 0.5%, or by 0.9% on a total basis. Non-food sales in stores slumped 2% last month, and slid by 1.5% in total in the three months to September. Yet online sales for non-food surged 10.7% in September – well above the three-month average of 10% – as shoppers responded well to online discounts. Paul Martin, KPMG UK’s head of retail, said: “With potential interest rate rises on the horizon, shaky consumer confidence and ever-increasing levels of household debt, uncertainty remains. “We’re now moving into the final quarter, which will ultimately define whether 2017 has been a good or bad year for retailers.”
Prices may rise and home deliveries could be slower unless the retail sector retains access to all EU workers after Brexit, a trade body has warned. EU citizens account for just 6% of the industry’s 170,000 workforce, the British Retail Consortium said. However, they are concentrated in warehouse and distribution jobs, its annual workforce survey suggested. More than half of retailers said their EU employees were worried about their right to remain in the UK. Just over a fifth of retail firms had had some European staff leave the UK already, the BRC survey suggested. The trade body said ending of free movement for EU nationals could lead to higher costs for businesses and consumers, “from the service delivered in a store to next day delivery of an online order… to the prices of what you buy”. It argued that the retail sector should keep access to non-graduate European workers without the need for employer sponsorship after the UK leaves the EU. BRC chief executive Helen Dickinson said the Brexit decision had created uncertainty for both business and their EU workers. “It is not right that 16 months after the referendum these people still don’t have the security they need to continue their lives,” she said. “And from our data it is clear that unless we have the right structures in place to support retailers attract, recruit and retain workers, consumers will soon start to see and feel an impact as they shop.”
Ryanair chief executive Michael O’Leary has written to the airline’s pilots to offer them better pay and conditions. The improved conditions came after the airline was forced to cancel thousands of flights in recent weeks. In a letter to pilots, Mr O’Leary also apologised for changes that caused disruptions to their rotas and urges them not to leave the airline. His apology came after he accused the pilots of being “full of their own self-importance”. But in the letter seen by the Irish Independent newspaper, he urges pilots to stay with Ryanair “for a brighter future”. Ryanair has been in crisis after the rota changes – brought about to comply with new aviation rules – led to a shortage of pilots because the airline failed to plan for enough leave.
Company and economic announcements planned for the week commencing 9th October 2017
The UK and Europe must agree on a Brexit transition deal by Christmas or risk banks triggering their contingency plans, the Bank of England has warned. Deputy governor Sam Woods said that while the UK is committed to an implementation period, the EU’s position “is not yet clear”. If no deal is reached, banks will begin a potentially disorderly shift of operations overseas. He said that would mean banks becoming more complex and harder to supervise. Speaking at the annual Mansion House City banquet in London, Mr Woods said: “If we get to Christmas and the negotiations have not reached any agreement on this topic, diminishing marginal returns will kick in.” He said: “Contingency planning is a sliding scale of increased commitment, investment and momentum through time. It is much more prudent and prosaic than hovering over the relocate button or rushing to the exit door.” While he said that the first phase of banks’ contingency plans would have a relatively modest impact on jobs, “re-structuring by firms will in general increase their complexity”. “I struggle to see an outcome in which banks and insurers do not get harder to supervise and harder to resolve for all involved,” said Mr Woods, who heads the Prudential Regulatory Authority, which oversees large lenders in the UK. In her speech in Florence last month, Prime Minister Theresa May said there should be a transition period of “about” two years after Brexit.
Tesco chief executive Dave Lewis has hailed “strong progress” at the supermarket as sales rose for the seventh quarter in a row. Like-for-like sales, which strip out new store openings, rose 2.1% in the second quarter. Pre-tax profit was also up, rising to £562m for the first half compared with £71m for the same period last year. Tesco said that despite “challenging” market conditions, it had “worked hard to minimise price increases”. The results come as Tesco is awaiting the results of an in-depth competition probe into its proposed £3.7bn takeover of wholesale giant Booker. The Competition and Markets Authority (CMA) is expected to report its provisional findings next month, with a final decision due in December. The CMA has said there are 350 areas where there is an overlap between Tesco shops and Booker-supplied independent stores.
Equifax has revealed 2.5 million more Americans than previously thought may have had information compromised in a huge cyber security breach at the firm. The credit report giant said on Monday about 145.5 million of its US customers might have been affected, up from a previous estimate of 143 million. The update came a day before former boss Richard Smith testifies in Congress about the attack. Mr Smith apologised ahead of the hearing for the firm’s failings. Critics say the company failed to take proper steps to guard information – such as Social Security numbers, birth dates and addresses – and waited too long to inform the public. Equifax disclosed the attack last month, estimating that about 400,000 Britons and 100,000 Canadians may also have had data compromised. On Monday, the firm raised its estimate for US customers, but lowered it to only 8,000 Canadians after further investigation.
Monarch Airlines has ceased trading and its 300,000 future bookings for flights and holidays have been cancelled, the Civil Aviation Authority has said. About 110,000 customers are currently overseas and the government has asked the CAA to charter more than 30 planes to bring them back to the UK. The process is the UK’s “biggest ever peacetime repatriation”, Transport Secretary Chris Grayling said. Monarch employs about 2,100 people and reported a £291m loss last year. The airline – the UK’s fifth biggest and the country’s largest ever to go into administration – collapsed at 04:00 BST, while passengers were at airports. The airline reported a loss of £291m for the year to October 2016, compared with a profit of £27m for the previous 12 months, after revenues slumped. It had been in last-ditch talks with the CAA about renewing its licence to sell package holidays and had until midnight on Sunday to reach a deal, but failed to do so.
Ryanair has been told to correct its compensation policy for passengers by Friday afternoon after thousands of its flights were cancelled. The UK’s Civil Aviation Authority says the airline must stop misleading passengers about the option to be re-routed with another airline. The regulator has ordered the budget airline to say publicly how it will re-route passengers who require it. Ryanair must also say how it will reimburse their out-of-pocket expenses. In addition, the airline must promise to help any of the passengers whose flights have been cancelled in the past two weeks, but who may have chosen an unsuitable option as a result of being misled by Ryanair, the regulator said. The demands – which must be completed by 17:00 BST on Friday – cover passengers who were due to fly to and from the UK. The CAA said if the airline did not meet the deadline, it would carry on with the “enforcement action” launched on Wednesday, which could ultimately see the airline taken to court, with the possibility of an unlimited fine. The airline recently cancelled flights affecting more than 700,000 passengers, from now until next March, in two separate tranches, because it had bungled the reorganisation of its pilots’ leave arrangements.
Company and economic announcements planned for the week commencing 2nd October 2017
Ryanair has been threatened with legal action for “persistently misleading” passengers about their rights following thousands of flight cancellations. The Civil Aviation Authority said it had launched “enforcement action” against Ryanair, the first step towards court action. Ryanair was wrong to claim it did not have to re-route passengers on rival airlines, it said. The action comes after Ryanair cancelled a further 18,000 flights. The fresh round of flight cancellations will be between November and March and affect the travel plans of a further 400,000 customers. A total of 34 routes will be suspended this winter, including Stansted to Edinburgh and Glasgow, Gatwick to Belfast and Newcastle to Faro. Earlier this month, the airline cancelled up to 50 flights a day through to the end of October, also affecting 400,000 passengers. The regulator said that on both occasions Ryanair had failed to provide customers with “necessary and accurate” information about their rights. The CAA said information provided on Ryanair’s website failed to make it clear that the airline was obliged to refund all expenses incurred as a result of the flight cancellation. Those expenses included meals, hotels, as well as transfer costs to re-route passengers on other airlines when there was no suitable alternative, the CAA said. The aviation authority said it had already written to Ryanair asking it to make a public statement to ensure customers were not misled after the first wave of flight cancellations. But it said the airline had so far not complied with its request.
EasyJet is backing plans to develop commercial passenger aircraft powered by electric batteries instead of conventional aero engines. The airline wants the proposed planes to fly passengers on its short-haul routes, possibly within 10-20 years. The prototype is going to be developed by a new US firm called Wright Electric, which has already built a two-seat battery-powered plane. The new, larger plane would have a range of 335 miles, the companies said. EasyJet said this meant it would be able to cover popular routes such as London to Paris, Brussels, Amsterdam, Cologne, Glasgow and Edinburgh. EasyJet’s possible involvement was first revealed in March 2017. Carolyn McCall, the chief executive of EasyJet, said she was now confident that such a plane, possibly carrying 220 passengers, would eventually fly. “We share an ambition with Wright Electric for a more sustainable aviation industry,” she said. “Just as we have seen with the automotive industry, the aviation industry will be looking to electric technology to reduce our impact on the environment.”
Oil prices jumped on Monday with the Brent benchmark hitting its highest in more than two years. Rising demand and geopolitical worries fuelled the increase, along with indications that production cuts by Opec members are starting to bite. Brent rose 3.8% to $59.02 a barrel, its highest since July 2015, while the US West Texas benchmark rose 3% to $52.22. “The production cut is starting to work and the rebalance is underway,” said Gene McGillian, at Tradition Energy. The oil market has been in a downturn for almost three years. But the head of BP’s oil trading division in Asia, Janet Kong, told a Financial Times conference the market was now “at a juncture”. As well as increased demand, especially from China, Turkey’s threat to disrupt oil flows from Iraq’s Kurdistan region, helped push up prices on Monday. Turkey has said it could cut off a pipeline that carries oil from northern Iraq to the global market, putting more pressure on the Kurdish autonomous region over its independence referendum. “If this boycott call proves successful, a good 500,000 fewer barrels of crude oil per day would reach the market,” analysts at Commerzbank said in a research note. Meanwhile, Opec, Russia and several other producers have cut production by about 1.8 million barrels per day (bpd) since the start of 2017, helping lift oil prices by about 15% in the past three months. At an Opec meeting on Friday, several countries said output curbs were having the desired impact on the market and price. Kuwaiti Oil Minister Essam al-Marzouq said the cuts had reduced global crude stocks to their five-year average, Opec’s target.
Legislation limiting the amount of interest that can be charged on credit card debts is being promised by the Labour Party. Under the changes, nobody would pay more in interest than they had originally borrowed. Shadow chancellor John McDonnell says more than three million people are “trapped” by credit card debt. He will unveil the planned change in the law in a speech at Labour’s conference in Brighton. Labour said the changes would work in a similar way to measures on payday loans, which came into force in 2015. The Financial Conduct Authority has called for new measures to help people in “persistent debt” as a result of credit cards. The regulator says over three million people are in persistent debt, which it defines as having paid more in interest and charges than they have repaid of their borrowing over an 18-month period. Labour said its “total cost cap” would help “tackle the persistent debt spiral”, claiming growing consumer debt was becoming a “threat to our economy”.
Facebook founder Mark Zuckerberg says his company will share 3,000 Russia-linked political adverts with US investigators. He also pledged to make political advertising more transparent on his network in future. “We will work with others to create a new standard for transparency for online political ads,” he said in a live address on his Facebook profile. He said political advertising will now carry disclaimers about which campaign or organisation paid for it. He added that the company was continuing to investigate instances of foreign actors abusing its advertising platform, including Russia and other “former Soviet states”. The move to share details with investigators comes after considerable public pressure for Facebook to be more transparent – and is being interpreted by some as an attempt to fend off any potential regulation from the US government.
Company and economic announcements planned for the week commencing 25th September 2017
A group of Ryanair pilots has rejected a cash bonus to work extra days after the airline cancelled 2,100 flights because it “messed up” crew holidays. In a letter seen by the BBC, pilot representatives from 17 of the company’s 80 or so European bases have told bosses that most are not enthused. They want new contracts and better working conditions instead. Ryanair had offered captains a one-off payment of £12,000 or 12,000 euros, and first officers £6,000 or 6,000 euros. But the letter said: “The pilot market is changing, and Ryanair will need to change the ways which the pilots and management work together to ensure a stable and common future for everyone”. New contracts, it says, “should help stop the large number of colleagues who are leaving for “greener pastures”. It also asks to bring in professional negotiators to help broker a deal. They have given the airline until tomorrow to respond.
Indian conglomerate Tata’s European steel business has agreed the first stage of a joint venture with German steel manufacturer ThyssenKrupp. The tie-up will lead to job losses, to be shared between the two companies. The deal would create Europe’s second-largest steel group, after ArcelorMittal. The two companies have been in negotiations since last year, when Tata scrapped plans to sell off its UK operations. The two partners expect the move will require a reduction in workforce of about 4,000 jobs, with half coming from administration and half from production. The job losses will be shared evenly between the two companies. In a statement, the chief executive of ThyssenKrupp, Heinrich Hiesinger, said the two companies needed to consolidate and become more efficient because of increasing pressure from imports and an overcapacity within the industry. “We will not be putting any measures into effect in the joint venture that we would not have had to adopt on our own,” he said. Roy Rickhuss, chair of the National Trade Union Steel Co-ordinating Committee, said: “The steel trade unions cautiously welcome this news and recognise the industrial logic of such a partnership.
Ryanair has published full details of which of its flights are being cancelled between now and 28 October. Customers whose flights have been axed will also receive an email, chief executive Michael O’Leary has said. The budget airline is cancelling 40-50 flights every day for the next six weeks, after it admitted it had “messed up” the planning of pilot holidays. Mr O’Leary said most people would be transferred to an alternative Ryanair flight on the same day. If not, they would be moved to flights the day before or the day after, and the airline would meet its obligations over compensation. Details of all the cancelled flights are available on the Ryanair website. More than 200 of the cancelled flights are either into or out of London Stansted, with a handful in Edinburgh, Manchester and Birmingham also affected.
Black, Asian and minority-ethnic staff (BAME) who work at PwC in the UK earn almost 13% less than other employees, according to figures provided by the professional services firm. The firm said its BAME workers were statistically paid less because more of them worked in administrative and junior roles, rather than senior ones. PwC said it had published the data to help it speed up progress on the issue. Currently reporting on BAME pay isn’t required under government regulations. PwC said it hoped that publishing the data would help the firm to tackle “ethnicity challenges”. “The more transparent we are with our diversity and social mobility data, the more we hold ourselves accountable to achieving real change,” said PwC chairman Kevin Ellis.