Pledge your support The £5bn cost to business of Labour's Employment Rights Bill.

22/10/2024


British businesses face an additional £5bn in costs every year because of changes to workers’ rights, according to the Government’s own impact assessment, which also finds smaller businesses in hospitality and retail will be hit hardest because of the fixed costs of administration and compliance burdens. The official report analyses the price tag of the 28 individual measures included in Labour’s Employment Rights Bill, among them ending ‘exploitative zero-hour contracts,’ offering workers ‘day one’ employment rights, and banning so-called ‘fire and rehire’ tactics. Ending zero hours contracts alone is estimated to cost businesses £1bn a year, while day one employment rights will cost around £100m a year extra. The report also noted that if businesses cannot pass the additional costs on to customers, they are likely to cut investment, reduce training expenditure, or cut staff numbers. It also warned that the Employment Tribunal, which is already stretched, could face a 15% increase in cases, and struggle to cope with demand. On the plus side, the report suggested better rights for workers “could have wellbeing benefits of over £3bn a year” and that repealing anti-trade union legislation could lead to better terms and conditions and less industrial action.

Care Minister Stephen Kinnock refused nine times yesterday to rule out a Budget tax hike for those earning more than £100,000 a year. Despite Labour promising before the General Election that it would not increase taxes on ‘working people’ when in Government, when asked by Kay Burley on Sky News, Kinnock refused to confirm whether those earning six figure salaries are included in Labour’s ‘working people’ definition. The confusion was sparked by a comment by Health Secretary Wes Streeting who suggested to Trevor Phillips on Sunday that the Budget would focus on “people on lower or middle incomes”, rather than help high earners. Kinnock said the Budget on 30th October would “make absolutely clear” what the definition of a working person was and said: “Look, what our manifesto made it absolutely clear that we will not be raising National Insurance, income tax or VAT on working people, and that is a pledge that will be delivered.” However, Labour has also refused to rule out a rise in employers NI and, during the election campaign, Prime Minister Sir Keir Starmer defined working people are those who are working but do not have meaningful savings.

Government borrowing came in at £16.6bn in September, the Office for National Statistics (ONS) has revealed this morning. The figure marks the third-highest September borrowing since records began in 1993, and was well ahead of official forecasts by the Office for Budget Responsibility (OBR), which had expected the government to borrow £15.1bn in September. Interest payments in the month totalled £5.6bn. So far this year, government borrowing has been £6.7bn ahead of the OBR’s forecasts. “While tax revenue increased, this was outweighed by increased spending, partly due to higher debt interest and public sector pay rises,” ONS Deputy Director for Public Sector Finances Jessica Barnaby said in a statement. Meanwhile, the ONS estimated public sector debt to be 98.5% of GDP, 4% higher than the same period last year.

The Growth Commission, the economic advisory group set up by former Prime Minister Liz Truss, has warned Chancellor Rachel Reeves that an aggressive Budget tax raid risks opening up a £84bn “black hole” in the public finances by crippling economic growth. The Commission suggests mooted tax rises in their most extreme form could knock 8.8% off GDP growth per capita by 2030, leaving the UK £3,788 per person poorer than it otherwise would have been. The package of tax rises would also completely outweigh the small increase in economic growth from Labour’s planning reforms, which the commission assesses will add 0.8% to GDP per capita by 2030. Douglas McWilliams, deputy chairman of the Centre for Economics and Business Research, who worked with the Growth Commission on the report, said: “Trying to run an economy on sharply higher taxes on business and capital is like trying to run a car on no oil: the engine may run on for a few miles but you know it will eventually seize up.” The cost of meeting net zero goals by the end of the decade, which include an ambition to decarbonise the electricity grid and ban the sale of new petrol and diesel cars, will also weigh on growth, the Commission said, undermining Labour’s manifesto pledge to “achieve the highest, sustained growth in the G7”. Shanker Singham, Chairman of the Growth Commission, said: “If the Government is to deliver on its growth pledge, it urgently needs to focus on making the public sector more productive, cutting the most damaging taxes and repealing the most economically detrimental regulations, which are contributing to the current economic stagnation.” The Commission urged the Chancellor to consider abolishing inheritance tax altogether, lifting the freeze on income tax thresholds and cutting Corporation tax from 25% to 19%. A Treasury spokesman said: “The Chancellor has vowed to lead the most pro-growth Treasury in history. We have already taken action to deliver more investment in the UK economy by fixing the broken planning system and setting up a new National Wealth Fund, and the International Investment Summit secured a record-breaking £63bn in investment commitments”.

The Financial Conduct Authority is interviewing 20 so-called ‘influencers’ under caution, using its criminal investigation powers, City AM reports. The FCA has ramped up its scrutiny of those pushing financial services products on social media, recently targeting several stars on TV show Love Island for running unauthorised financial promotions. The FCA has not named those under investigation but said they were asked to attend interviews voluntarily.  

British shoppers who repeatedly return goods bought online will send back £1,400 of products each this year, a total of £6.6bn, according to a report by return logistics company ZigZag and research company Retail Economics. So-called ‘serial returners’ account for 11% of all shoppers, but will account for almost a quarter of the £27bn forecast returns this year, the report said, adding that more than a fifth of non-food purchases made online in the UK are now returned to the retailer. It also highlighted generational divides in behaviour, showing younger shoppers are far more likely to over-order with the intention of returning goods. More than two-thirds (69%) of gen Z consumers said they had bought online in this way, compared with about a sixth (16%) of over-60s. The data is “likely to cause alarm for retailers” and add costs for customers, Al Gerrie, ZigZag CEO said. Because younger shoppers are “exploiting retailers,” he claimed, it will force sellers to “clamp down on spiralling costs and returns fraud by introducing paid returns and policies that home in on abusive returns behaviours.”

The Serious Fraud Office (SFO) is investigating the construction of the four-star, 195-bedroom Aloft Birmingham Eastside hotel and conference centre, built and owned by Unite the Union, the BBC reveals. Unite spent a total of £112m of its members’ money on the project, completing it in 2020. The then Unite General Secretary Len McCluskey championed the project and said in 2021 that it was “a fantastic investment”. However, the building has since been valued at just £29m, suggesting £83m has been wasted. A KC-led inquiry commissioned by Unite’s current General Secretary Sharon Graham, has also identified a missing £14m which has been described as a “mystery” and does not feature in the project’s final accounts. An SFO spokesperson said: “In line with long established practice to avoid prejudice to law enforcement activity, we can neither confirm nor deny any investigation into this matter."

Thames Water has initiated a process to raise at least £3.3bn in equity to stay afloat, Bloomberg News said yesterday, citing a person familiar with the matter. In July, Thames warned it would run out of money before the end of the year unless it had an injection of case. However, as reported in yesterday’s Daily Business News, Thames doubled its bonus payouts to executives in 2023, to £1.3m.

Harrods has told the BBC it is engaging in the process of settling more than 250 claims for compensation brought by women who allege sexual abuse at the hand of Mohamed Al Fayed, who owned Harrods between 1985 and 2010. The current owners have been investigating whether any current members of staff were involved in the scandal and subsequent cover up. Harrods’ compensation scheme for ex-employees who say they were attacked by Al Fayed is separate from legal cases against the department store being brought forward by several law firms. Fayed, who also owned the Ritz Paris hotel and Fulham FC, died aged 94 last year. He is accused of multiple counts of rape and attempted rape by several women who worked for him, many of whom felt unable to report what had happened until a BBC Panorama documentary exposed his abuses.

Travel operator FirstGroup has bought coach operator Anderson Travel for an undisclosed sum. Anderson Travel currently operates around 40 coaches of varying sizes in and around London from a depot near Tower Bridge in central London and a new, smaller depot near Heathrow airport. Its operations include school and other private hire contracts in London, contracted mini coach operations around Heathrow airport, a day trip excursion programme aimed at international visitors run out of London daily, and a private group tour offering. For the year ended 30th June 2023, the business reported revenues of £7.3m and earnings before interest and tax of £1m. Anderson Travel’s founder and majority owner Mark Anderson will continue to lead the day to day operations of the business as it is integrated into First Bus.

Ricardo has announced its intention to divest its defence business, part of a strategy by the London-listed company to position itself as “a leader in strategic and engineering consultancy at the intersection of transport, energy, and global climate challenges”.

International Distribution Services - the FTSE 250 parent company of Royal Mail – is buying a 20% stake in Greek courier firm ACS Postal Services from Quest Holdings for €74m (£62m).

Canal+, which owns the Paddington film producer StudioCanal, is reported to be seeking a valuation of up to €8bn (£6.7bn) when it lists on the London Stock Exchange in December. Such a valuation would make it the largest debut listing of the year.

HSBC is to separate its UK division from its Asia business, saying the move is to “simplify” its geographical governance structure into eastern and western markets, but fuelling speculation of pressure arising because of growing geopolitical tensions between China and the West. The bank will also restructure its operations into four distinct business lines: Hong Kong; UK; corporate and institutional banking; and international wealth and premier banking. All the changes will take effect from 1st January 2025. The 159-year old bank also announced the appointment of its first female finance chief: Pam Kaur, who has worked at the bank for more than a decade, is currently its chief risk and compliance officer.

The Walt Disney Company is to appoint Morgan Stanley's executive chairman James Gorman as Chair of the board in early January next year. Gorman joined Disney's board earlier this year and already heads up its succession planning committee. He will step down from Morgan Stanley at the end of 2024. He replaces Mark Parker. A successor to CEO Bob Iger is still being sought.

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