The final route of the Manchester and Leeds branches of HS2 will be announced later, including a decision over its path through Sheffield. Contracts worth £6.6bn will also be awarded for work on the first stretch of the new high speed rail line between London and Birmingham. The transport secretary said HS2 would “drive economic growth and productivity in the North and Midlands”. But critics say the project will damage the environment and is too expensive. The first trains are not expected to run until 2026. The decision over its route through the North of England has been delayed for several years due to a series of disagreements, the most controversial of which has been which route it should take through Sheffield.
Nicky Morgan, the new chair of the influential Treasury Committee, has said she wants the body to extend its scope beyond banks and Brexit. Ms Morgan, a former education secretary, told the BBC she wants to look “at the wider Treasury remit”. She said: “We want to look at the management of the economy, public spending decisions. “We’ve got a Budget coming up, with issues like household debt, tax policy, investment in infrastructure. “These are all the things that actually our constituents put us in the House of Commons for, the things that make a difference to household budgets and to their economic security.” Ms Morgan, the first female chair of the Treasury Committee, saw off competition from five other Tory MPs to land the role heading the committee of MPs that scrutinises the Treasury. In the past few years, its members have grilled chancellors of the exchequer and governors of the Bank of England, as well as numerous chief executives.
Company and economic announcements planned for the week commencing 17th July 2017
The UK housing market is in a state of lethargy, according to property surveyors, with estate agents reporting the lowest stock of properties for nearly 40 years. In another gloomy survey, members of the Royal Institution of Chartered Surveyors (Rics) said the market might continue “flatlining” for a while. New instructions in June fell for the 16th month in a row. Most surveyors also saw further falls in the number of properties being sold. The average number of homes on the books of estate agents fell to 42.5 – the lowest number since the survey started in January 1978. “Political uncertainty” was given by 44% of surveyors as the main reason for the pessimism – nearly double the number who blamed Brexit. Simon Rubinsohn, Rics’ chief economist, said that uncertainty seemed to be “exerting itself on transaction levels, which are flat-lining, and may continue to do so for a while, particularly given the ongoing challenge presented by the low level of stock on the market”.
Fees for unplanned overdrafts are to be scrapped for the 20 million customers of Lloyds Banking Group, which includes the Halifax and Bank of Scotland. From November this year, any customer going over their overdraft limit will face no fees at all, Lloyds said. However, the bank may continue to block payments from the account until the overdraft is paid off. It follows criticism of high charges by consumer groups and the Competition and Markets Authority (CMA). The Financial Conduct Authority (FCA) is also expected to propose measures on overdraft fees within the next few weeks, as part of its inquiry into high-cost creditPreviously Lloyds customers taking out unauthorised overdrafts faced interest payments at an annual rate of 19.89%, a daily charge of up to £10, the monthly charge of £6, and up to £30 a day for returned (unpaid) items. These will all now be abolished. Fees for missed payments from basic bank accounts will also disappear. Lloyds said that it expected to make less money as a result of the changes, although it said fewer people now use an unauthorised facility than used to be the case. As well as scrapping charges for unplanned overdrafts, Lloyds is also simplifying fees for planned overdrafts, making it cheaper for many customers to borrow. Those with overdrafts of less than £500 are likely to pay less, while those borrowing more than £1000 are likely to see higher charges.
The author of a government review into work practices is calling for the end of the “cash-in-hand economy”. Matthew Taylor, whose report is out on Tuesday, said cash jobs like window cleaning and decorating were worth up to £6bn a year, much of it untaxed. Instead, the work should be paid through “payment platforms”. The review, commissioned by Theresa May, also tackles low-paid work, zero hours contracts and the gig economy. Mr Taylor, who is chief executive of the Royal Society of Arts and a former Tony Blair advisor, is set to call for cash jobs to be paid through platforms such as credit cards, contactless payments and PayPal. This would make it harder for customers and workers to avoid paying tax.
A government review into the rapidly changing world of work is to demand a radical overhaul of employment law and new guarantees on the minimum wage. The review is set to call for a new category of worker called a “dependent contractor”. Those workers – likely to cover riders for firms like Deliveroo and Uber – should receive benefits such as sick pay and holiday leave, it will say. And they will be covered by some of the minimum wage requirements. This will help clear up the present grey area between a fully employed and a self-employed person – presently called a “worker” in employment law. The review by Matthew Taylor, the head of the Royal Society of Arts and a former Tony Blair adviser, will outline a structure obliging firms to show that a person working for them can earn at least 1.2 times the present national living wage of £7.50 an hour for over-25s. The companies will do that by modelling the number of tasks – or “gigs” – an average person working at an average rate can achieve.
The food delivery firm Deliveroo has said it will pay sickness and injury benefits to its 15,000 riders in the UK if the law is changed. In a submission to the government’s review of the “on-demand” economy seen by the BBC, the firm says that at present the law prevents it from offering enhanced rights because it classifies its riders as self-employed. Deliveroo says it uses that classification to provide its riders with the flexibility to work when they want. It says employment rules should be changed so that people who work for companies like Deliveroo and Uber can receive enhanced benefits and not lose that flexibility. Sources say that the firm is willing to looking at enhanced payments to riders to cover things like sickness pay – and that the money would probably be administered under a government controlled scheme similar to national insurance or pensions contributions.
Company and economic announcements planned for the week commencing 10th July 2017
The boss of dairy giant Arla has warned that there could be a butter and cream shortage in the UK this Christmas. Peder Tuborgh, chief executive of the farmer-owned firm, says that the shortage will bite across Europe. “We know that as an industry, I know that from our forecasting,” Mr Tuborgh told the BBC’s Today programme. “It is going to play out differently in different markets. The first sign we will see of it is that the price of butter rises very sharply.” Mr Tuborgh, whose company is the UK’s biggest milk buyer, said prices rises would be different in different European nations, but did not want to predict a UK figure. He added: “At the moment we are trying to get as much butter and cream out of our producers.” Arla Foods is a massive European milk co-operative, owned by dairy farmers including British ones. Its brands include Anchor and Cravendale, and it has annual revenues of 9.6bn euros (£8.4bn).
London remains Europe’s number one hub for technology investment despite Brexit, with record levels of capital flowing in, say officials in the city. In the first half of 2017, private equity investment in the capital’s tech sector totalled £4.5bn, said the Mayor of London’s agency, London & Partners. At the same time, venture capital invested £1.1bn in London’s tech firms. That total was more than in any other six-month period in the past decade, the agency said. The city’s “fundamental strengths” as a centre for technology and business were unchanged, said London & Partners. “The Brexit vote has understandably created some uncertainty, but it is no surprise to see that London continues to attract more than double the amount of investment [of] any other European city,” said Laura Citron, chief executive of London & Partners. “We have everything companies need to be successful: policymakers, finance, infrastructure, world-class universities and talent.”
The UK will continue to co-operate with the European Union on medicine testing after it leaves the bloc, two senior ministers have suggested. Business Secretary Greg Clark and Health Secretary Jeremy Hunt said such a deal would be “in the interests of public health and safety”. “The UK would like to find a way to continue to collaborate with the EU,” they wrote in a Financial Times letter. There are fears Brexit may cause delays in UK patients getting new drugs. Currently the London-based European Medicines Agency (EMA) authorises drugs for use across the EU, including the UK. However, it is expected to move out of the UK after Brexit, raising uncertainty over whether the UK will need to develop its own separate drug approval system. Industry experts have warned that if this happens pharmaceutical firms could be slower to seek permission for their drugs to be used in just one country, focusing instead on getting their drugs approved for larger, more lucrative markets. The UK pharmaceuticals trade association has also warned that Brexit could undermine future investment, research and jobs in the country.
A price cap on energy bills could be extended to many more households on low incomes, under plans being considered by regulator Ofgem. A limit on the cost of gas and electricity for those on pre-payment meters already saves about four million people £80 a year. This could be extended to others on certain benefits. The proposals come after a much wider cap in the Conservative manifesto was absent from the Queen’s Speech. Instead, the government said ministers were “considering the best way” to protect those on the poorest-value tariffs. Business Secretary Greg Clark wrote to Ofgem to challenge the regulator to use its existing powers to reduce bills. The announcement from Ofgem lists a range of proposals covering billing and switching.
The culture secretary has said she is “minded to” refer Rupert Murdoch’s 21st Century Fox takeover of Sky to the competition watchdog. Karen Bradley’s decision is a blow to the media mogul’s hopes of having the £11.7bn deal waved through without further scrutiny. Mr Murdoch already owns 39% of the satellite broadcaster. An earlier attempt to take over Sky was abandoned in the wake of the phone hacking scandal. Ms Bradley told the Commons that Ofcom’s report into the deal found it risked the Murdoch family having “increased influence” over the UK’s news agenda and the political process. “On the basis of Ofcom’s assessment, I confirm that I am minded to refer to a phase two investigation on the grounds of media plurality,” she said.
Company and economic announcements planned for the week commencing 3rd July 2017
A global cyber-attack that affected companies around the world may have started via corrupted updates on a piece of accountancy software. Fingers are increasingly pointing to a piece of Ukrainian tax-filing software, MEDoc, as the source of the infection, although the company denies it. Malware generally infiltrates networks via email attachments that users click on in error. Microsoft described the method as “a recent dangerous trend”. The cyber-attack has caused disruption around the world and infected companies in 64 countries, including banks in Ukraine, Russian oil giant Rosneft, British advertising company WPP and US law firm DLA Piper.
The controversial businessman Sir Philip Green sold the BHS business to dodge responsibility for its insolvent pension schemes if the firm should go bust, says the Pensions Regulator. The claim is made by the regulator in its report on the sale of BHS in 2015 and its collapse a year later. In February, Sir Philip finally agreed, after months of pressure, to pay £363m into the BHS pension schemes. A spokesman for Sir Philip said only “the matter is now closed”. However the report gives, for the first time, some details of the warning notice that the regulator gave to Sir Philip in November last year as negotiations over resolving the BHS pension scheme deficits dragged on. “The main purpose of the sale [of BHS] was to postpone BHS’ insolvency to prevent a liability to the schemes falling due while it was part of the Taveta group of companies ultimately owned by the Green family, and/or that the effect of the sale was materially detrimental to the schemes,” the regulator says.
The US firm that supplied cladding used on London’s Grenfell Tower says it has ended global sales of the product for use in high-rise blocks. Arconic said it was discontinuing sales of Reynobond PE for tower blocks due to “issues” identified by the fire, which is feared to have killed at least 79. The government said 75 buildings in 26 council areas had now failed fire safety tests – every one tested so far. Theresa May said councils need to speed up tower block safety tests in England. Communities and Local Government Secretary Sajid Javid said all hospitals and schools had also been asked to carry out “immediate checks”.
Holland & Barrett, the UK’s biggest health food retailer, is being bought by a Russian billionaire for £1.8bn. L1 Retail, a fund controlled by Mikhail Fridman, is buying the 1,150-store chain from Carlyle, the US private equity firm, the Financial Times reported. Carlyle acquired Holland & Barrett as part of its $3.8bn purchase in 2010 of US firm Nature’s Bounty, now NBTY. The chain has about 600 stores in the UK as well as China, India and the UAE. The retailer, which employs more than 4,000 people, was founded in Bishop’s Stortford, Hertfordshire, in 1870. Holland & Barrett has opened more than 300 stores in the seven years since the private equity takeover, the Financial Times reported.
About three million EU citizens living in the UK would be allowed to stay after Brexit, Theresa May has proposed. A new “UK settled status” would grant EU migrants who had lived in the UK for five years rights to stay and access health, education and other benefits. Proposals were unveiled at a Brussels summit but are dependent on EU states guaranteeing Britons the same rights. German Chancellor Angela Merkel called the plan a “good start”, but Labour said it was “too little, too late”. Many EU citizens in the UK, and Britons living abroad, are worried about their status once Brexit happens. The UK’s exit deadline is 30 March 2019. Addressing other EU leaders at her first summit since the general election, the prime minister said she did not want anyone to have to leave or families to split up. “No one will face a cliff edge,” she said. “The UK’s position represents a fair and serious offer, one aimed at giving as much certainty as possible to citizens who have settled in the UK, building careers and lives and contributing so much to our society.”
Company and economic announcements planned for the week commencing 26th June 2017
UK summer fruit and salad growers are having difficulty recruiting pickers, with more than half saying they don’t know if they will have enough migrant workers to harvest their crops. Many growers blame the weak pound which has reduced their workers’ earning power, as well as uncertainty over Brexit. About 80,000 seasonal workers a year pick and process British fruit and veg. Most of them are from the European Union, mainly Romania and Bulgaria. One in five growers says they already have fewer pickers than they need. British Summer Fruits, the body which represents soft fruit growers, says labour shortages are now the worst seen since 2004. Recruitment was getting harder even before the vote to leave the EU. But the industry believes Brexit is exacerbating the problem and if access to non-UK workers dries up, it could cripple home-grown berry production.
Uber boss Travis Kalanick has resigned as chief executive after pressure from shareholders, a spokesman has said. Mr Kalanick will remain on the board of the firm, however, the New York Times reported. His resignation comes after a review of practices at the firm and scandals including complaints of sexual harassment. Last week he said he was taking an indefinite leave of absence. Five major Uber investors demanded Mr Kalanick’s immediate resignation in a letter on Tuesday, the newspaper said. Mr. Kalanick reportedly said: “I love Uber more than anything in the world and at this difficult moment in my personal life I have accepted the investors request to step aside so that Uber can go back to building rather than be distracted with another fight.” Last week Mr Kalanick took an indefinite leave of absence from the firm as part of an effort to create “Uber 2.0”. His leave also comes after the sudden death of his mother in a boating accident. The ride-hailing company has had a series of recent controversies, including the departure of other high-level executives.
The EU’s chief negotiator said there would be “substantial” consequences from Brexit after the first round of talks with the UK. Michel Barnier said he was “not in the frame of mind to make concessions or ask for concessions”. UK Brexit Secretary David Davis said talks got off to a “promising start”. The UK appears to have conceded to the EU’s preferred order for the talks which will mean trade negotiations do not begin immediately. Mr Davis and Mr Barnier gave a joint press conference after day one of the talks in Brussels. The initial focus will be on expat rights, a financial settlement and “other separation issues”.
Brexit Secretary David Davis will call for “a deal like no other in history” as he heads into talks with the EU. Subjects for the negotiations, which officially start in Brussels later, include the status of expats, the UK’s “divorce bill” and the Northern Ireland border. Mr Davis said there was a “long road ahead” but predicted a “deep and special partnership”. The UK is set to leave the EU by the end of March 2019.
Tesco is cementing its recovery in the UK after its first-quarter sales growth beat expectations. Like-for-like sales – which strip out the impact of new stores – rose by 2.3% in the three months to 27 May, boosted by demand for fresh food. Analysts had expected a rise of 2.2% after Tesco reported an increase of 0.7% in the fourth quarter. Tesco will face shareholders on Friday who are expected to query a pay deal awarded to chief executive Dave Lewis. Mr Lewis was given £142,000 to help him move to a house closer to Tesco’s headquarters. This was on top of his £4.1m pay packet.
Company and economic announcements planned for the week commencing 19th June 2017
A European Union (EU) law to abolish roaming charges for people using mobile phones abroad comes into force today. The new rules mean that citizens travelling within the EU will be able to call, text and browse the internet on mobile devices at the same price they pay at home. The European Commission said the end of roaming charges was one of the greatest successes of the EU. But a UK consumer group warned phone users could face “unexpected charges”. Until now roaming, or connection, charges have been added to the cost of calls, texts and internet browsing when consumers from one EU country travelled to another and connected to a mobile network there.
Uber boss Travis Kalanick plans to take time away from the company, and could return in a diminished role. It comes after a review of management and practices at the firm, which is facing a number of scandals including complaints of sexual harassment. Uber’s board on Sunday voted in favour of the recommendations from the review. But two days later, board member David Bonderman made a sexist remark at a meeting about the recommendations and has now stepped down. In the email to staff, Mr Kalanick said the decision to take leave, which also comes after the sudden death of his mother in a boating accident, is part of an effort to create “Uber 2.0”. “For Uber 2.0 to succeed there is nothing more important than dedicating my time to building out the leadership team,” Mr Kalanick wrote. “But if we are going to work on Uber 2.0, I also need to work on Travis 2.0 to become the leader that this company needs and that you deserve.” Mr Kalanick’s email did not say how long he would be away from the firm.
The government should rethink its Brexit strategy, following last week’s election, according to the engineering industry organisation, the EEF. It said without a more pro-business stance, the resulting political instability may force more firms to alter their plans “away from the UK”. The EEF is the latest business organisation to call for a rethink of the government’s Brexit plans. It wants access to the single market to be at the heart of Brexit negotiations. The EEF said even before the election firms were already altering or thinking about changing their business plans because of the Brexit vote. Terry Scuoler, EEF chief executive, said the government had already “wasted a year” and needed to “move away from its previous rhetoric and start repairing relations with EU partners”. For the EEF that meant putting access to the single market and staying in a customs union at the centre of the government’s negotiations and involving business groups in the talks over trade. It is also calling for a “suitable” transition period to be “firmly back on the table” as part of the Brexit talks.