Archive forNovember, 2017

Forward Diary: 4th – 8th December 2017

Company and economic announcements planned for the week commencing 4th December 2017

Google faces mass legal action in UK over data snooping

Google is being taken to court, accused of collecting the personal data of millions of users, in the first mass legal action of its kind in the UK. It focuses on allegations that Google unlawfully harvested information from 5.4 million UK users by bypassing privacy settings on their iPhones. The group taking action – Google You Owe Us – is led by ex-Which director Richard Lloyd. He estimates affected users could be paid “a couple of hundred pounds each”. The case centres on how Google used cookies – small pieces of computer text that are used to collect information from devices in order to deliver targeted ads. The complaint is that for several months in 2011 and 2012 Google placed ad-tracking cookies on the devices of Safari users which is set by default to block such cookies.

Some lost rail routes may be ‘restored’

Railway lines closed in the 1960s could be reopened if they boost the economy, the government has said. Some 4,000 miles of rail routes were closed and became known as the Beeching cuts – after Dr Richard Beeching who was then chairman of British Rail. It is part of the Transport Secretary Chris Grayling’s rail strategy which will be unveiled on Wednesday. Labour, which wants to renationalise the railways, said the ideas were “flimsy re-announcements”. Mr Grayling said new rail lines could unlock jobs, encourage house building and ease overcrowding. “These could include rail services lost under the Beeching and British Rail cuts of the 1960s and 1970s where – if restored – these could kick-start crucial housing developments or help create new economic opportunities,” the Department for Transport said in a statement. “We’re already accelerating plans to reopen the railway line from Oxford to Cambridge. Now I want to see how we can expand other parts of the network to help make Britain fit for the future,” Mr Grayling added.

Banks pass Brexit stress tests

For the first time since the financial crisis, all of the UK’s biggest lenders have passed the Bank of England’s stress tests. The tests imagine a series of adverse economic scenarios to see whether the banks could continue to lend money to support the UK economy. The worst case scenario the Bank imagines includes a 33% fall in house prices and a rise in interest rates from 0.5% to 4% within two years. It also has unemployment up to 9.5%. Last year, both Barclays and RBS were told to strengthen their finances. This year, they both got a clean bill of health. The Bank also looked more closely at the impact of Brexit and concluded that even a disorderly Brexit would be no worse than the economic stresses the banks were asked to pass anyway.

Citizens Advice warns about subscription contracts

Many consumers still struggle to get out of unwanted subscriptions such as gym memberships and online streaming services, according to Citizens Advice. Analysis of almost 600 problems reported to the service found that in just three months consumers paid an average of £160 on unwanted services. Sometimes, consumers misunderstood terms and conditions, while some companies made cancellation difficult. The head of the consumer group, Gillian Guy, said firms must “act responsibly”. “Subscriptions are very easy to sign up to but can be difficult for consumers to get out of. We know people are wasting time and energy trying to cancel subscriptions while paying out of pocket,” she said. Companies refused cancellations by asking for more notice – stretching to six months in some cases – or told people they needed to cancel through a specific route, such as phone or email. CA said one person who contacted the service said they tried to cancel a subscription after they were made redundant, and were asked for proof from their employer – including a P45. Most payments are thought to be through a Continuous Payment Authority, where companies can change the date or amount of a payment without giving advanced notice. Frequently, consumers said they felt it was unclear they were being signed up to a recurring payment or that the contract may continue on an auto renewal basis. Under the Consumer Rights Act 2015, businesses can’t enforce terms on consumers that are unfair. CA’s report marks the start of National Consumer Week.

Budget 2017: Tax move will penalise savers, says insurer

Millions of small savers may be hit by a little noticed tax change in the Budget that affects long term policies sold by insurance companies and sometimes collected door to door. When the chancellor announced he was abolishing the Corporate Indexation Allowance on Wednesday, the Treasury said it wouldn’t affect individuals. But Royal London Insurance said savers are likely to lose out. It said the total cost could amount to hundreds of millions of pounds. “From the early numbers that we’ve looked at we think that millions of people have these policies and they’ll be losing relatively modest amounts of money, perhaps £25 or £50, some of them a lot more,” said Steve Webb, director of policy at Royal London. “But this all adds up to huge amounts, hundreds of millions of pounds for the Chancellor,” he said. Royal London says the tax change announced in the Budget will affect a group of investment policies or endowments, sometimes lasting decades and designed to provide a lump sum or something to pass on to family. They are often bought from door-to-door sales reps, collecting a few pounds a week, or from adverts in magazines and papers or direct from the companies.

Forward Diary: 27th November – 1st December 2017

Company and economic announcements planned for the week commencing 27th November 2017

Broadband firms must ditch ‘misleading’ speed ads

Broadband firms will no longer be able to advertise their fast net services based on the speeds just a few customers get, from May next year. Currently ISPs are allowed to use headline speeds that only 10% of customers will actually receive. In future, adverts must be based on what is available to at least half of customers at peak times. It follows research that suggested broadband advertising can be misleading for consumers. The Advertising Standards Authority (ASA) looked into consumers’ understanding of broadband speed claims and found that many were confused by headline speeds that they would never actually get in their own homes. The concerns were passed on to the Committees of Advertising Practice (Cap) which consulted with ISPs, consumer groups and Ofcom to find a better way to advertise fast net services. Most argued that the fairest and clearest way would be to use the average speeds achieved at peak time by 50% of customers. As well as insisting ISPs use “average” instead of “up to” speeds, Cap also urged ISPs to promote speed-checking facilities in their adverts so that users could test out the speeds they were likely to get from any given service.

Budget 2017: Hammond must be cautious, say nervous investors

The chancellor has been urged to deliver a “cautious” Budget or risk alienating investors. Rupert Harrison, former chief of staff to George Osborne, said that Philip Hammond should not radically change strategy by increasing borrowing significantly. Mr Hammond is under pressure to be “big and bold” in the Budget which he will deliver at 12.30pm. He will say that he is “optimistic” about the future of the UK economy. But with a major downgrade expected to productivity – the ability of the economy to create wealth – his room for spending giveaways will be limited. Mr Harrison told the BBC that with Brexit uncertainty and nervousness about the direction the UK economy is heading, the markets would be keener on a “steady as she goes” message. “You don’t want to surprise the world by saying we’re embarking on a new strategy, we’re going to borrow lots of money, raise taxes,” he said. “I think in a moment when the world has got some question marks about the UK anyway, it’s time for a bit of consistency and a bit of patience.”

EasyJet profits fall after ‘difficult year’ for aviation

EasyJet’s profits have fallen during what the airline called a “difficult year for the aviation industry”. Pre-tax profits in the year to 30 September fell 17.3% to £408m, in line with guidance given last month. Passenger numbers rose 9.7%. These are the last results overseen by chief executive Carolyn McCall, who is moving to become head of ITV. “EasyJet’s model is resilient and sustainable and we now have a huge amount of positive momentum,” she said. The headline profit figure would have been higher, but the airline was hit by “an adverse headline currency impact” of £101m. “We are hedged on currency, but the devaluation was quite significant on 24 June, 2016,” Ms McCall told the BBC’s Today programme, referring to the fallout from the Brexit referendum vote. “We started the year knowing exactly that, there was no surprise there for the market.” She said that the airline was in a healthy state, despite the industry having had “a couple of years where it was a very tough market”. In October, EasyJet announced an agreement to acquire part of Air Berlin’s operations at Berlin Tegel airport for €40m (£35m). The deal is expected be completed in December, and will result in the airline entering into leases for up to 25 A320 aircraft, and offering employment to up to 1,000 former Air Berlin crews.

British Gas scraps standard tariff for new customers

Energy giant British Gas will scrap its standard variable tariff (SVT) price category by April for new customers. It comes after draft legislation designed to lower the cost of energy bills was published by the government. The Draft Domestic Gas and Electricity (Tariffs Cap) Bill would give energy regulator Ofgem the power to cap SVTs. Rival energy firm E.On has already said SVTs will no longer be the default option for customers coming to the end of their existing tariffs. SVTs are usually among the most expensively priced tariffs. Announcing the change, Ian Conn, chief executive of British Gas parent firm Centrica, said: “We have long advocated that the end of the Standard Variable Tariff is the best way to encourage customers to shop around for the best energy deal.” Although the development only applies to new customers, Mr Conn said the company was keen to move all its customers off the SVT. “We will contact all of our customers at least twice a year to encourage them to move away from the SVT,” he said. British Gas contacted all its SVT customers in the first half of 2017, and it says that 10% switched away from the tariff.

Credit card limits ‘need control’

More than a million credit card users who are struggling financially have had their credit limits increased without asking, a charity has said. Such borrowing could make their financial problems worse, so Citizens Advice is calling for a ban on unsolicited increases in credit card limits. It wants Chancellor Philip Hammond to include such a move in the Budget. But providers say protection is being improved. Citizens Advice said its research, based on a sample of 1,300 people with credit cards, suggested as six million cardholders may have had their credit limits put up without their consent in the last year. Some 1.4 million of those would be struggling financially.

Forward Diary: 20th – 24th November 2017

Company and economic announcements planned for the week commencing 20th November 2017

Labour’s John McDonnell demands ’emergency Budget’

Shadow chancellor John McDonnell is to demand “an emergency Budget for our public services”. He is to lay out five proposals for next week’s Budget, including funding to lift public sector pay.He will also claim that the government is failing to stop tax avoidance, and that it wants to cut corporation taxes in a “race to the bottom”. In reply, the government said Labour’s plans would lead to more debt, higher taxes, and fewer jobs.Chancellor Philip Hammond is due to give his Budget speech next Wednesday afternoon. Mr McDonnell, who is due to lay out his proposals in a speech at Church House in Westminster on Thursday, is expected to say that there must be “a genuine and decisive change of course” by the government.

Supreme Court decides on Scottish minimum alcohol pricing

The UK’s highest court will decide later whether Scotland can finally implement its policy of minimum pricing for alcohol. Legislation was approved by the Scottish Parliament five years ago but it has been tied up in court challenges amid claims it breaches European law. Ministers said a 50p-per-unit minimum would help tackle Scotland’s “unhealthy relationship with drink”. The Supreme Court appeal was brought by the Scotch Whisky Association (SWA). It said the policy was a “restriction on trade” and there were more effective ways of tackling alcohol misuse. Last year, The Court of Session in Edinburgh ruled against the Scotch whisky industry but allowed it to appeal to the Supreme Court. That appeal was heard in July and judges retired to consider their verdict. If the SWA appeal is dismissed, Scotland could become the first country in the world to establish a minimum price for alcohol – with ministers saying it would become law “as quickly as is practicable”, possibly early next year.

Tesco takeover of Booker gets go-ahead

Tesco’s £3.7bn takeover of food wholesaler Booker has been provisionally cleared by the UK’s competition regulator. The Competition and Markets Authority (CMA) said the deal could even increase competition in the wholesale market and reduce prices for shoppers. It added that Tesco and Booker did not compete head-to-head in most of their activities. In particular, it said Tesco does not supply goods to the catering sector. The CMA concluded that the wholesale market would “remain competitive in the longer term” , because Booker’s share of the UK grocery wholesaling market, at less than 20%, “was not sufficient to justify the longer-term concerns”. Simon Polito, chair of the CMA’s inquiry group, said: “Our investigation has found that existing competition is sufficiently strong in both the wholesale and retail grocery sectors to ensure that the merger between Tesco and Booker will not lead to higher prices or a reduced service for supermarket and convenience shoppers.” Tesco said it welcomed the CMA’s provisional decision and added that it would continue to work with the competition regulator, which is due to publish its final report by the end of the year. “We anticipate completion of the merger in early 2018,” it added. Booker is the UK’s largest food wholesaler, and also owns the Premier, Budgens and Londis store brands. Despite rising competition from the likes of Aldi and Lidl, Tesco remains Britain’s biggest supermarket.

Fewer High Street shops closing down

The number of High Street shops closing down has fallen to its lowest level in seven years, research suggests. The Local Data Company, which studied the top 500 British town centres, said 2,564 outlets closed in the first half of 2017, equivalent to 14 a day. At the same time, there were 2,342 store openings, meaning that a net total of 222 High Street shops disappeared. Charity shops, women’s clothes shops and shoe shops were worst hit, it said. However, general fashion stores, banks and cheque cashing shops saw their lowest number of net closures in three years. Some sectors actually recorded growth, with tobacconists, coffee shops and beauty salons increasing in number. Ice-cream parlours are also on the up, thanks to expansion by the Ben & Jerry’s and Kaspa’s chains.

Christmas ad spend to hit record high

Advertising agencies are expected to rake in a record £6bn over the Christmas period, according to an industry body forecast. The Advertising Association says it is being driven by intense competition, especially within the retail sector, and the rise of big-budget campaigns. It believes spending on ads has jumped nearly 40% in just seven years. The figures come as campaigns by major retailers such as John Lewis, M&S and Asda get under way. “There have been so many blockbuster campaigns over the last 10 years,” says Karen Fraser, director of Credos, a think tank which compiled the forecast with the Advertising Association. John Lewis’ Christmas ads have become particularly anticipated by the public and advertisers in recent years. A recurring theme in John Lewis adverts has been to take out branding and centre on stories to grab people’s attention. Their latest campaign – launched this week – focuses on the tale of a little boy and his friendship with an imaginary monster living under his bed. Rival Marks and Spencer has launched an advert featuring Paddington Bear stumbling across a burglar he mistakes for Father Christmas.

Forward Diary: 13th – 17th November 2017

Company and economic announcements planned for the week commencing 13th November 2017

Sainsbury’s profits fall 9% but sales rise

The supermarket giant said profits came in at £251m in the 28 weeks to the 23 September, while like-for-like sales excluding fuel went up by 1.6%. It said the fall in profits was due to price cutting, wage cost inflation and the consolidation of Argos. Chief executive Mike Coupe said he was “very pleased with progress” at the company. The supermarket chain took over catalogue retailer Argos and Habitat last year in a £1.4bn deal. Mr Coupe said: “We have delivered a good performance across the group in the last six months, with more customers choosing to shop at Sainsbury’s in the first half than ever before. We are now three years into delivering our differentiated strategy and are seeing clear results.” Sainsbury’s is looking to make cost savings amid fierce competition from discounters and rising food costs.

M&S finance chief to quit as profit falls

Marks and Spencer has announced that its chief financial officer will step down as it revealed a 5.3% fall in profits for the first six months of its financial year. The retailer said Helen Weir had informed the board “of her her desire to pursue a plural career” and would stay on until a successor was found. Pre-tax profit fell to £219.1m, while sales rose 2.6% to £5.1bn. Like-for-like sales for the period fell by 0.3%. M&S said that like-for-like sales for food, which strip out revenue from new stores opened in the six months to 30 September, fell by 0.1%. Like-for-like sales in clothing and homeware were also ahead of forecasts, down 0.7%. They had been expected to fall by 1.4%.

Paradise Papers: Apple’s secret tax bolthole revealed

The world’s most profitable firm has a secretive new structure that would enable it to continue avoiding billions in taxes, the Paradise Papers show. They reveal how Apple sidestepped a 2013 crackdown on its controversial Irish tax practices by actively shopping around for a tax haven. It then moved the firm holding most of its untaxed offshore cash, now $252bn, to the Channel Island of Jersey. Apple said the new structure had not lowered its taxes. It said it remained the world’s largest taxpayer, paying about $35bn (£26bn) in corporation tax over the past three years, that it had followed the law and its changes “did not reduce our tax payments in any country”. In a further statement the company stressed that no operations or investments had been moved from Ireland. The Paradise Papers is the name for a huge leak of financial documents that is throwing light on the world of offshore finance.

Paradise Papers: Tax haven secrets of ultra-rich exposed

A huge new leak of financial documents has revealed how the powerful and ultra-wealthy, including the Queen’s private estate, secretly invest vast amounts of cash in offshore tax havens. Donald Trump’s commerce secretary is shown to have a stake in a firm dealing with Russians sanctioned by the US. The leak, dubbed the Paradise Papers, contains 13.4m documents, mostly from one leading firm in offshore finance. Sunday’s revelations form only a small part of a week of disclosures that will expose the tax and financial affairs of some of the hundreds of people and companies named in the data, some with strong UK connections. Many of the stories focus on how politicians, multinationals, celebrities and high-net-worth individuals use complex structures of trusts, foundations and shell companies to protect their cash from tax officials or hide their dealings behind a veil of secrecy.

Forward Diary: 6th – 10th November 2017

Company and economic announcements planned for the week commencing 6th November 2017

Alibaba revenues surge 61% on online shopping

Chinese e-commerce giant Alibaba has beaten market expectations with a huge jump in quarterly revenues fuelled by online shopping. Revenues for the three months to September rose 61% on the same period a year earlier, to 55.1bn yuan ($8.3bn; £6.4bn). It also raised its revenue predictions for the full-year forecast. Alibaba is expanding from its core online businesses to investments in supermarkets and stores. “We had an outstanding quarter,” Alibaba chief executive Daniel Zhang said in a statement. “We are seeing the early results from our efforts to integrate online and offline with our new retail strategy”. For the July to September quarter, income from operations surged 83% from a year earlier, to 16.58bn yuan. Alibaba, started by billionaire Jack Ma, is the dominant online retailer in China through its Tmall and Taobao shopping platforms. The company said mobile monthly active users of its Chinese retail marketplaces grew to 549m in September, up 20m from three months ago. The US-listed firm has been on a strong run, regularly beating revenue estimates, and its shares have more than doubled in value this year. It expects more good news for shareholders ahead: Alibaba raised its revenue guidance for the 2018 fiscal year to growth of between 49% and 53%. That’s up from 45% to 49% previously forecast. The Chinese firm is also gearing up for the annual blockbuster Singles’ Day event on November 11, a sales bonanza that moves more goods than the Black Friday and Cyber Monday sales days in the United States combined.

Facebook ad revenue tops $10bn

Facebook profits soared in the third quarter as it brought in more than $10bn from advertising. The firm said profits were $4.7bn (£3.5bn) in the three months to the end of September, up 80% year-on-year. Chief executive Mark Zuckerberg told investors the firm’s investments in security would “impact” profitability. US lawmakers are examining the possible use of the platform for Russian propaganda activities during the 2016 US presidential election. “We’re serious about preventing abuse on our platforms,” Mr Zuckerberg said. “Protecting our community is more important than maximising our profits.” Facebook has faced two days of questioning in Washington, with politicians asking for increased disclosure around political ads, and asking how the firm polices false content. The firm said it was focused on protecting the “authenticity” of activity. The firm said it had 2.07bn monthly active users at the end of September, up 16% year-on-year. Shares in the firm jumped more than 1% in after-hours trade.

Bookies brace for possible sales hit

Britain’s betting industry is bracing for lower revenues after the government said it will cap the size of stakes gamblers can make on fixed-odds betting terminals (FOBTs). Punters can currently stake up to £100 per spin on the controversial machines, dubbed by critics as the “crack cocaine of gambling”. The machines generated more than £1.8bn in revenue last year, helping to support growth for bookmakers. But the Department for Digital, Culture, Media and Sport (DCMS) has now launched a 12-week consultation into cutting maximum bets from £100 to either £50, £30, £20 or £2. The DCMS has also called for a review of the spin speed on FOBT games, and says gambling companies will need to collaborate on a two-year long campaign to promote responsible gambling. It’s the result of a government review into gambling industry practice that started in October 2016.