Marketing Newscast

(Edited 11 February 2025)

More evidence of an unproductive Public Sector has come in the form of the first new quarterly report on the issue from the Office for National Statistics (ONS). In particular, the official statistic body estimates that despite £31.5bn boost in funding since Covid, and an additional 313,000 more staff since then, annual NHS productivity is now lower than at any point since 1997 apart from during the 2020 Covid pandemic. Overall, the healthcare system’s productivity has fallen by 18.5% since the end of 2019, the ONS suggests, having measured NHS resources, including staff and agency workers, hospital buildings, equipment and medicines, against the volume of services delivered to patients. However the ONS does stress that its data collection methodology on this issue is “in development”. “We advise caution when comparing the latest estimates with those published before the coronavirus (COVID-19) pandemic, as the structure of inputs and outputs changed in response to the pandemic,” it said, adding that its estimates are “subject to revision as more up-to-date data become available”. An NHS spokesman said: “The NHS recognises that there are different methods for working out public sector productivity and we will continue to work with the ONS to ensure all figures used are as accurate as possible”. They added the service had “a sharp focus on slashing agency spend, improving retention of staff and using the latest technology to be more efficient.” The health and social care system now employs a record 2m people.

Civil servants expect Government spending on consultants to keep rising: some 96% of senior Whitehall staff polled by research firm Source said they expect consultancy spend within their own departments to increase over the next two years. Just 2% expected a fall. This, as The Telegraph notes, is despite Labour’s push to save £1.2bn by 2026 by slashing consultancy spending, introducing new rules requiring ministerial sign-off for any contracts worth over £600,000, or that last for more than nine months. Although more than 88% of civil servants polled said they had received specific instructions to cut spending, more than a fifth said they do not have the skills to complete their work alone, while another 16% claimed their departments were short-staffed, despite the public sector hiring an extra 600,000 staff since covid restrictions ended. HM Revenues and Customs is the most reliant on consultants, spending £1bn with them. The Cabinet Office and the Home Office both have active contracts worth nearly £500m each. The Government has £5bn worth of contracts with management consultancies, according to research firm Tussell. Accenture is the largest provider of consulting services to the Government, holding contracts worth £1.4bn, followed by “big four” accountant Deloitte, which has active agreements worth another £1bn. KPMG, PA Consulting, McKinsey, EY and PwC also have contracts worth hundreds of millions each. A Government spokesman pointed out, however, that the survey only consisted of 18 people working in central Government, and added: “We are focused on rooting out wasteful spending and driving efficiency across government and are on track to save £550m from reducing spending on consultancy services in 2024-2025.”

The Retail Jobs Alliance (RJA), whose members include Tesco, Marks & Spencer and B&Q-owner Kingfisher, is warning retailers face “a perfect storm” of additional costs come April, telling the Treasury that hundreds of thousands of jobs are at risk in the retail sector because of Chancellor Rachel Reeves’ Budget tax hikes. A higher national insurance bill, plus a new recycling tax and higher business rates, will see 300,000 jobs disappear by 2030, the RJA claims.

Gold prices have rallied to fresh highs, hitting over $2,908 per ounce on Monday, after US president Donald Trump’s pledge to impose 25% tariffs on all steel and aluminium imports into the US, in addition to existing duties on metals.

British oil giant BP may come under pressure to break itself up from activist investor Elliott Investment Management, which has taken a significant stake in the business. Bloomberg, which first reported the investment, said the US hedge fund was preparing to push for “transformative measures,” and is likely to lobby for significant changes, which could include selling off its renewables energy assets to refocus on oil and gas, and pushing for a new chairman. US bank Wells Fargo’s analysts have even raised the prospect of a full break-up of BP, which it said could unlock billions of pounds in value for investors by splitting off its drilling and exploration assets, refining business, oil trading arm and other operations. Under former CEO Bernard Looney, BP set out to cut oil and gas production by 40% by 2030, and increase 10-fold its investment in low carbon energy, but current CEO Murray Auchincloss has rowed back on that, and it has been suggested he may scrap BP’s net zero goals completely. The company has 16,000 British staff and is the country’s fifth largest publicly listed company. The extent of Elliot’s stake is as yet undisclosed.

English wine maker Gusbourne is considering delisting from the London AIM market. The Kent-based producer said it had received a letter from majority shareholder Lord Ashcroft, requesting it hold a meeting to consider going private. The announcement led to Gusbourne shares dropping more than 34% yesterday. The former Conservative party chairman, Ashcroft opened a “strategic review” of the company’s options in July, including a possible sale. However, the firm confirmed this review has now concluded; that Gusbourne has “terminated discussions with other parties” and is “no longer in receipt of any approaches;” and will hold a meeting to discuss the possible delisting in no less than three weeks, pursuant with the Companies Act 2006. Just under a hundred companies delisted from AIM last year, the most in 23 years. The AIM now has 688 firms, the smallest number of since 2001. Under the current rules, AIM company shares held for at least two years and still held at death are exempted from Inheritance Tax (IHT), but from 6^th April, this will reduce to 50% IHT tax relief - or a 20% levy.

Unilever is said by Sky News to be closing in on a £230m deal to buy Wild, which was founded by Charlie Bowes-Lyon and Freddy Ward, and sells refillable natural deodorants, lip balms, body washes and hand washes direct to consumers. It is backed by the founders of Innocent Drinks. The sale price is understood to include a sizeable earnout for the founders, Sky said.

Elon Musk is heading up a consortium which has offered $97.4bn to buy OpenAI, the maker of ChatGPT, the BBC reports, but OpenAI CEO Sam Altman has rebuffed the bid. Altman posted on Musk's social media platform X, saying: "no thank you but we will buy twitter for $9.74 billion if you want". Altman is said to be restructuring the company to become a for-profit entity, stripping it of its non-profit board - a move Musk argues means the company has abandoned its founding mission of developing AI for the benefit of humanity. "It's time for OpenAI to return to the open-source, safety-focused force for good it once was. We will make sure that happens," Musk said in a statement. However, his $97.4bn offer is in stark contrast to the $157bn the company was valued at in its latest funding round in October last year, and reports valuing it now at $300bn. The firm is also teaming up with US tech giant Oracle, a Japanese investment firm, and an Emirati sovereign wealth fund to build $500bn of AI infrastructure in the US called The Stargate Project. This was announced at the White House by President Donald Trump who billed it "the largest AI infrastructure project by far in history" and said it would help keep "the future of technology" in the US. Musk’s consortium includes his AI company xAI, and several private equity firms, including Baron Capital Group and Valor Management.