Marketing Newscast

(Edited 12 November 2024)

The Chief Secretary to the Treasury has suggested large businesses hit by the hikes to employer National Insurance contributions (NICs) raid must “suck it up”. Darren Jones MP told the BBC’s Laura Kuenssberg that “bigger businesses are more able to burden some of the contributions we need to make to the state”. Asked by Kuenssberg if that meant that big business had to “suck it up”, Jones replied: “Well, look, there are measures more broadly in the Budget, which we think are good for business, and good for growth, and good for the economy. But on tax contributions, yes, it’s been designed in that way.” Reeves hiked employer NICs from 13.8% to 15% and almost halved the level at which employers they have to start paying it to just £5,000, with both hikes effective from April next year.

Meanwhile, Trade body UK Hospitality, which represents Britain’s largest pubs, hotels and restaurants, is warning that Chancellor Rachel Reeves’ Budget will force them to shut sites and make “drastic” job cuts. More than 200 businesses have told Reeves in a letter that her sharp increases in employer NICs are “unsustainable”.  The changes will cost the sector an estimated £3.4bn annually, the letter read. It added: “We recognise the fiscal and economic challenge that you face: you are steering the economy at a moment of profound difficulty, and you have our support in doing so. However, the changes to the NICs threshold are not just unsustainable for our businesses, they are regressive in their impact on lower earners and will impact flexible working practices which many older workers and parents rely upon.” The letter noted that the lowering of the NIC threshold was especially damaging because of the hospitality sector’s reliance on part-time and low earning employees, hence many staff will be dragged into the tax bracket for the first time.  The letter also branded the tax “regressive”. NICs for a part-time worker on minimum wage are rising by almost 75%, it noted, compared to just 13.6% for a person earning £100,000. Signatories to the letter include JD Wetherspoon, Wagamama owner The Restaurant Group, Young’s, and Whitbread, which owns Premier Inn, the UK’s largest hotel chain.

UK Hospitality is not the only trade body with major concerns about the impact of the Budget. The Telegraph reports this morning that The Night Time Industries Association (NTIA), which represents bars and clubs, is warning that four in 10 of its members were at risk of closing down within six months. NTIA CEO Michael Kill said: “The autumn Budget has effectively signed a death sentence for many night-time economy businesses across the UK. This sector is being pushed to the brink.” Meanwhile, Andrew Goodacre, CEO of the British Independent Retailers Association, which collectively represents 8,500 shops across the country, said: “Our members have already told us they will be forced to reduce staff hours, reduce the number of employees and reduce the trading hours. In short, the Budget has made the revitalisation of high streets, a key mission for this government, very much harder.”  Alan Morgan, CEO restaurant firm Big Table Group, says he is looking at cutting back opening hours, telling the newspaper: “Nothing is out of scope at the moment as the damage caused by the National Insurance changes will be substantial.” Other options on the table cutting staff numbers and price increases. Big Table Group owns chains Bella Italia, Cafe Rouge, and Las Iguanas among others. It has more than 220 restaurants across the UK. Shadow business secretary Andrew Griffith said: “Having spent the summer trash-talking down consumer confidence, Labour’s tax rise Budget means the only way hospitality businesses can balance their books is with fewer hours, fewer staff or both. That’s going to leave our high streets like ghost towns many nights of the week. It’s only been a few months yet under Labour the lights are literally going out.”

Steve Perez, who runs hotels and restaurants in the East Midlands as well as the drinks company Global Brands, says he has scrapped plans to invest around £20m in his hospitality empire, blaming Rachel Reeves’ inheritance tax raid.  The potential cost to his family if he died means he no longer has any incentive to expand, he said, hence his plans to add a spa and 27 bedrooms to his Peak Edge hotel have been ditched, as have moves to install a new canning line at his drinks factory in Clay Cross, Chesterfield, which would have created 50 jobs.  “I have absolutely stopped it,” he said. “I’d be crazy to invest all that money because I’m just going to give my family a big headache in the future.” Previously, properties used for business purposes could be passed down to descendants free of inheritance tax but, from April 2026, properties valued at more than £1m will have to pay the levy at a rate of 20%. “What this is going to mean is insecurity for the working person in my business, because once I die, their jobs are on hold,” Perez warned. “The business may well be sold so straight away – that gives them insecurity, rather than security.” “This Budget is absolutely anti-entrepreneurs, anti-business,” he added.

Asda is cutting more jobs, it has been revealed. The supermarket laid off almost 500 head office staff – without notice - just days ago, and now those working on Asda’s IT overhaul are said to be in the firing line. No announcement as to how many more jobs are to go has been made, but management has said the number will be “meaningful”. Last week, Asda Chairman Stuart Rose criticised the Government’s “very, very damaging” tax rises, announced in the Budget, and warned it would force the supermarket to look closely at how many workers it can afford to employ. It was “perfectly” clear, Lord Rose said, that Chancellor Rachel Reeves had not delivered a Budget for businesses, saying extra taxes were “disproportionately heavy” on larger companies which employ a lot of staff. He added that Asda expected its tax bill to rise by £100m because of the increase in employer NICs. Justifying the decision to make staff redundant without first running a consultation, Rose said: “It is categorically not against the law. Why would I do something that was against the law?” He added this was also the most “humane way” to carry out the lay-offs, as it removed weeks of uncertainty for affected staff and because the company had awarded them more compensation than would have received during a consultation. However, a GMB union spokesman said: “GMB are concerned that Asada have circumvented the established legal process for ensuring mass redundancies are handled fairly”.

Meanwhile, Andrew Staniland, who was due to join Asda in March as its new Vice-President, has snubbed that position and taken one at rival Morrisons instead. orrisons said Staniland will join in early February as its group trading director and will sit on its executive committee. Most recently, Staniland was group buying director at Iceland Foods, and also has held senior posts at Aldi and Waitrose, as well as at Morrisons.

Amid all this, it has been revealed this morning that unemployment ticked higher in the run up to the Budget. According to the Office for National Statistics (ONS), the rate of UK unemployment rose to 4.3% in the three months to September, up from 4% in the three months to August. Meanwhile, the number of vacancies fell to the lowest level in three years, dropping 35,000 between May and July to 831,000.  These stats are being attributed to fears of tax hikes stoked even before Rachel Reeves took to her feet to deliver her maiden Budget last month. Meanwhile, the number of foreign-born workers employed in the UK hit 7m for the first time between July and September, the ONS said, representing an increase of 183,000 since Labour came to power, and an increase of 1.2m since early 2020, before Covid lockdowns. Wages also rose at the slowest pace in more than two years, with regular pay excluding bonuses dropping to 4.8% in the three months to September. Total pay including bonuses rose from 3.8% to 4.3%.

Direct Line says it plans to axe 550 jobs as part of a plan to make £50m cost savings because of “challenging” conditions in its motor insurance arm.

Audit watchdog the Financial Reporting Council (FRC) is planning to remove references to “sustainable benefits for the economy, the environment and society”. from a code setting standards for City investors, City AM revealed. The suggestion, put forward in a consultation document yesterday, is part of a bid to simplify reporting processes and get behind the government’s push “economic growth and investment,” the newspaper said. However, FRC chief Richard Moriarty denied the changes suggest that investors should abandon their duty to the environment. “It’s a conscious change. But I will challenge the observation that it’s a dilution, far from it. I think this is an enhancement,” he told the newspaper. The revised definition will allow investors to “define their view of sustainable value creation, report on it and to be held accountable for it”, he added. “The risk of a definition that says, ‘you need to do this, and you need to do that, and you need to do that’ is actually we infantilise people, rather than [get them] to think for themselves”.

Harrods’ staff are threatening to go on strike over the Christmas period, unless they get an annual festive bonus of £500; improvements to their working conditions; more staff; and annual above inflation pay increases. The United Voices of the World (UVW) union said there is a “strong possibility” strike action will go ahead from 19^th December, although workers have yet to be balloted, on 4^th December. Frontline staff are angry at £180m given in bonuses to Harrods’ owners, and the £2.1m salary of its managing director, while they face “stripped benefits, staff shortages and stagnant wages”, UVW said. Harrods is owned by the investment arm of Qatar’s sovereign wealth fund, which does not recognise of engage with the UVW union.

Shell has won an appeal against a landmark climate ruling in the Netherlands that tried to force the British oil and gas giant to scale back its carbon emissions by 45% by 2030. The appeals court in The Hague dismissed the earlier ruling, saying Shell was already on target to meet its own emissions goals. Shell CEO Wael Sawan said: “We are pleased with the court’s decision, which we believe is the right one for the global energy transition, the Netherlands and our company. Our target to become a net-zero emissions energy business by 2050 remains at the heart of Shell’s strategy and is transforming our business. This includes continuing our work to halve emissions from our operations by 2030. We are making good progress in our strategy to deliver more value with less emissions.” Friends of the Earth, which brought the original case, is expected to appeal this latest decision.

“London’s challenger stock market Aquis has accepted a £194m takeover offer from Swiss-based bourse operator SIX Group, in a move which will likely inflame fears over the health of the UK’s equity markets,” City AM reports. In a statement to the market today, Aquis said the offer would value its shares at 727p per share, a 120% premium to Friday’s closing price of 330p per share. The Telegraph notes the sale will net horse-racing banker Rich Ricci a £16m payday; Ricci is one of the largest shareholders in the Aquis.

Bitcoin has reached another record high, having climbed to $82,313 (£63,900) earlier this morning. Its recent rally has followed news of a second Trump Presidency: the President elect has promised to deregulate cryptocurrencies.  

While I was away…

The Bank of England cut interest rates by 25 basis points to 4.75%, the second cut this year, and heralded more cuts to come. “If the economy evolves as we expect, it’s likely that interest rates will continue to fall gradually from here,” Andrew Bailey, Governor of the Bank, said, while stressing cuts can’t be made “too quickly or by too much” because of the potential inflationary implications of the new government’s first Budget: Chancellor Rachel Reeves’ £40bn in tax rises last week to help fund a £70bn increase in annual spending, could “force up inflation” and boost growth. 

Bailey said.

The Competition and Markets Authority (CMA) called for a shake-up of the baby formula market, saying "limited incentives" for the industry to compete on price meant parents faced higher prices. The cost of the product had risen by 25% increase in the past two years, the CMA said. The watchdog also highlighted that Nestle and Danon controlled a combined 85% of the market. It said it was looking into what effect a price cap would have, ahead of publishing its final report in February.

NatWest announced it has repurchased £1bn of shares from the Treasury, lowering the Government's stake in the banking group to just over 11%.

Heathrow Airport recorded its busiest ever October. More than 7.2m passengers travelled through the hub, leading the airport to raise its traffic forecasts for the full year 2024 to 83.8m, 2.9m higher than the record high of 80.9m in 2019. This equates to 7,300 extra passengers every day.

Outsourcer Serco warned it has lost a long-running Australian immigration detention centres contract, at a cost of £165m next year – 6% of forecast earnings – and that changes to employer national insurance contributions will increase its labour costs by £20m a year. The FTSE 250 company said it would “proceed with a change programme” during the 180 day transition period after the Australia contract ends on 10^th December, and that it is “actively exploring ways to offset” the NI hike costs.

Shares in Resolute Mining plunged almost 36% yesterday when it confirmed CEO Terence Holohan and two other employees were detained “unexpectedly” by authorities in Mali regarding "general activities" related to the London-listed miner’s in-country business practices "and to progress open claims made against Resolute, which the company maintains are unsubstantiated".  Berenberg said in a note it believes the claims being made against Resolute by Malian authorities relate broadly to tax. "This is clearly an unexpected and negative release from the company," the bank said. "Limited details have been provided on the situation, which is not a major surprise, but the detaining of Resolute employees comes after certain Barrick executives were also detained by Malian authorities recently”. Barrick Gold Corporation is a Canada-based gold and copper producer. It’s shares also fell on almost 5% on the Toronto Stock Exchange yesterday.