Lift off: Home Office privatises MI5's spy plane operations

Lift off: Home Office privatises MI5's spy plane operations

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The Home Office has quietly privatised the spy planes used by MI5 to gather information on UK suspects.

Previously, three specially kitted-out planes known as Islanders were given the task of flying over the UK on surveillance missions. 

The nature of their work is speculated to include scooping up mobile phone conversations and sending them to GCHQ for analysis.

However, according to investigation by, which monitors aviation movements, the work has been given to fast-growing private aviation group 2Excel with three brand-new aircraft called the Piper PA-31 Navajo. 

They continue to operate from RAF Northolt by 2Excel’s Scimitar business unit, according to the reports. Run by former RAF officers, 2Excel is also thought to run air surveillance flights for the military. Its directors did not respond to requests for comment.

There are no public tender documents for the work.

A government spokesman said: “We do not comment on matters of national security.”

2Excel’s turnover leapt by a fifth last year to £16.8 million. operating profits jumped 34% to £3 million.

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October 19, 2018 |

Women have given the jobs market a helping hand — but now the Brexit handbrake is on

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Practically every piece of major economic data released these days has become a battleground in the Brexit culture war, and this week’s jobs figures were no exception.

You could hear the social media jeering from Leave supporters when the Office for National Statistics — the referee in this particular scrap — revealed a 47,000 fall in unemployment in the quarter to August and the lowest jobless rate for more than 40 years. Look how well we’re doing #DespiteBrexit, they laughed; Guido Fawkes crowed that he was “still waiting” for the big spike in unemployment promised by the Remainers.

The trouble is that the yah-boo stuff barely even begins to scrutinise the data and tell us what’s really going on. It’s much easier to pick out a selective statistic, post a smug tweet declaring victory and move on rather than actually read the figures you’re shouting about. 

For example, the fall in unemployment — technically defined as those actively looking for a job, but not able to find one — was driven by a rise in the number of “economically inactive” people neither in nor seeking work. Reason for cheer? I’m not so sure. And though the Leavers were keen to talk about the extra 289,000 in work over the past year, there was less mention of the 5000 drop in employment in the latest quarter, compared with the March-May period. That could be a signal of far less solid recent momentum in the labour market. Except in times of outright recession, the number of employed workers usually rises.

Besides, one of the main drivers of the jobs market is less to do with leaving the EU and more with structural levers pulled in the early days of the Coalition, when Brexit was just a twinkle in the eye of the fanatics.

The raising of the pension age for women has had a dramatic effect on the jobs market over the past three years, although it rarely merits a mention in the press. To recap, David Cameron’s government accelerated the process of increasing the women’s state pension from April 2016 — when it was 63 — to reach 65 by this November rather than in April 2020. The state pension age for women is rising by three months every four months, and the savings are huge. 

Back in 2011, the government estimated a cumulative £30 billion would be saved in unpaid pensions, as well as an extra £8 billion in tax paid, although it spawned a campaign group against the changes, Women Against State Pension Inequality.

Protests aside, the ONS’s breakdown of the jobs market since the referendum period — roughly when the female pension age began to rise more steeply — underlines the impact of these extra women. 

Between the Brexit vote and the quarter to August, the number of economically active women jumped three times faster than male counterparts. There were an extra 282,000 “active” women, taking the total to 15.87 million, compared with a much lower 88,000 increase in men to 17.9 million. Among older workers, economically active women aged 50 to 64 increased 6.5%, and, among women 65 and older, “actives” rose 11.4% to 512,000. 

Measured by average weekly hours worked, the UK is up 2.3% to 1.04 billion since the vote. But by sex, women’s hours are growing almost four times as fast as men, up 4.1% compared with 1.1%. Participation rates are up for women, and down for men, since mid-2016.

The growing influence of women in the workforce may help to explain why wages — until now at least — haven’t really taken off. Despite the best efforts of campaigners, they’re much more likely than men to be in low-paid areas such as care, admin and secretarial jobs. They earn an average 9% less per hour than men in the same job, according to the ONS. Even more dishearteningly, in professional occupations such as science and engineering their pay is typically 11% below men. The average weekly earnings figures are exactly what they say on the tin: total wages divided by the number of workers. If there are more, lower-paid, female workers, that affects the average, and full-time women workers have entered the workforce at twice the rate of men since the Brexit vote.

There’s also likely to be a substitution effect, as the growth in workers from the EU stalls since June 2016. Helped by more women, the number of UK-born employees has risen moderately — around 1.5% since the vote. But over the same period there are now 5000 fewer EU 27-born staff working over here, after a slowdown in recent quarters. So a supply-side boost to the economy in raising the female retirement age has been negated by new EU workers staying away — even before the inevitable-looking curtailment of freedom of movement.

When the UK already has a major productivity shortfall compared with the rest of our major rivals, you can only marvel at the self-inflicted economic wound we’re gouging for ourselves.

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October 19, 2018 |

Anthony Hilton: Time to link chiefs' bloated pay to productivity not profit

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If Jeremy Corbyn gets in to Downing Street there might be something done about executive pay. A huge tax on the amount bosses earn might break the cycle of excess, albeit with unintended consequences. Nothing else seems likely to. 

Some business executives privately think things have gone too far — for other people though, less for themselves. They do not, however, make waves publicly, being instead like Trappist monks. Therefore it is down to the politicians to put some sense into the debate. Pity it has to be Corbyn, but the Conservatives have watched without doing anything for years. 

Pay is now at egregious levels. In 1998 in the UK, the chief executive earned  48 times the amount earned by the average person, and that was itself roughly double what they earned 10 years before. In 2016, however, it had risen to 129 times average earnings and is showing no sign of slowing down. Only in America is pay even more absurd.

In the Eighties chief executives were still constrained by the previous reality of 83% tax in the Seventies. This was reduced to 60% by Margaret Thatcher at the beginning of the decade, and then 40% by Nigel Lawson while chancellor in 1987. Salaries did not go up much in those days, After the tax cuts, the executives thought they were well off anyway. But gradually they started asking for more and to their astonishment they pushed at an open door. There was virtually nothing to stop them, other than peer pressure from other executives who were earning less in other companies — though that did not last long. Remuneration committees and consultants were put in to calm things down, but that only made things worse. 

Deborah Hargreaves, formerly of the High Pay Centre, saw these things at first hand and has written a book —  Are Chief Executives Overpaid?

This week the Centre for the Study of Financial Innovation, a think-tank, promoted a discussion of her book. The assortment of City bigwigs making up the audience might have been thought to be sceptical. But by and large they were not. 

One said that, in his experience, most executives were mediocre, some were scarily bad, and throwing money at them just made them worse. Another said that there seemed to be no sense of morality among executives; a third that, even if executives were well paid, there should be some way to stop rewards for failure, with unlimited liability for chief executives an option. And finally, there was the effect on culture; the chief executive wanted his bonus and sometimes the whole culture of the company was distorted to achieve it. Banks were a case in point.

But they were equally sceptical about stewardship with shareholders taking a stand. Few institutions actively engaged; many did not have a high number of shares as they invest overseas as well; and foreign institutions over here mostly did not get involved. Besides which, fund managers were fat cats themselves, earning pretty much the same as executives.

So the trouble with Hargreaves’ book is that, though it articulates the problem, its solutions are not likely to come to much. She does, for example, hold out hope of greater stakeholder governance but it is unlikely to happen any time soon. Basically she pleads for sanity, which may be a lost cause.

But there is an alternative. Andrew Smithers, a city economist for longer than most and still thriving at 80, said in his 2013 book Road to Recovery that excessive executive pay damaged productivity. Moreover, he had the figures to prove it.

If companies invest, productivity tends to follow. It is the key to growth. Lack of it means that wages stagnate, companies do not flourish, the tax take dwindles and public services are cut. But companies don’t invest because executives are focused on the short term and instead they put up selling prices to reap short-term profits. Investment is long term and therefore not for them.

Smithers has been trying to get government to see this as a problem, or at least talk about the issue, but to no avail, even though government is desperate to get productivity up. He did, however, notice September’s IPPR report Economic Justice, which the Archbishop of Canterbury co-authored, arguing that pay should be linked to productivity rather than profit.

With this he is totally in agreement. If executives had to concentrate on productivity and actually made the company better, there might be no need for Corbyn.

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October 19, 2018 |

Property whizzes head to Mipim UK

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Thousands of property whizzes on Wednesday descended on London’s Olympia for the industry’s largest annual get together in the UK before Britain leaves the EU.

Organisers of the two-day Mipim UK event, comprising conferences, drinks and deal-making meetings, expected 3000 delegates to attend.

Aviva and Legal & General were among the UK firms in West Kensington, and international investors such as Saudi Aramco, Temasek from Singapore and China’s Fosun were also in town.

The strong turn-out comes despite concerns that the  real estate market here could be less attractive after Brexit, with jitters that demand for homes and offices could slow.

Ronan Vaspart, managing director, Mipim UK, said:  “It’s never been more critical to explore the expanding needs and interests of the built environment, which plays an even more critical part in the success of our people, places and cities.” 

Attendee John Slade, executive chairman of Evans Randall Investors, said: “London is a stable market in or out of the EU and is looked at favourably by the investment community. As a showcase for the London and wider UK opportunity, Mipim UK is as relevant as ever.”

Developer Palace Capital’s director Richard Starr said: “London will remain a focus for real estate investment.”

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October 17, 2018 |

Footasylum trips up as it swings to £4 million loss

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Sportswear seller Footasylum’s punishing start to life as a listed company took another tough turn on Tuesday as it slumped into the red.

The retailer, which floated on London’s junior AIM market in November, posted a loss of £4 million for the six months to August 25, compared with pre-tax profits of  £2.3 million the year before.

Footasylum was forced to slash prices to shift its wares and continued to invest in the business, it said. It will now open two shops a year, down from four, in the next few years “to conserve cash” and focus on refurbishing and expanding some of its existing 66 stores.  

Executive chairman Barry Bown said: “A retailer has to do what a retailer has to do to move [the business] to a better place.” 

Revenues, however, were up to £98.6 million from £83.2 million. The shares, which floated at 164p last November, fell 2.5p to 29.9p on Tuesday. 

Footasylum, which will open stores in both of London’s Westfield shopping centres this autumn, shocked the City with a second profit warning in September.

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October 16, 2018 |

Collapse of apprenticeship provider 3aaa 'sounds alarm bells' for employers

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The collapse of one of the UK’s largest apprenticeship providers 3aaa has triggered “alarm bells” among employers, the EEF manufacturers’ organisation said on Tuesday.

3aaa, which trained apprentices for companies like sandwich maker Greencore, went into administration on Thursday after the government pulled its funding.  It was also referred to police over fraud concerns. 

EEF’s Verity Davidge said employers had been “left in limbo” by the collapse, which has stoked fears about the sector.

“The collapse of large training providers such as 3aaa, that manufacturers are currently using, will send alarm bells ringing. 

“The apprentices must be protected first and foremost and employers will do everything in their power to find alternative provision. There will be nervousness among employers as to whether we will see the events of this week repeated.”

3aaa, based in Derby, folded last week after the Education and Skills Funding Agency – an arm of the Department for Education – cancelled its contracts. 

The company provided training for apprentices hired by the likes of Greencore, Ocado, Mitie, Thomas Cook, and National Grid. 

Greencore said it was “working closely” with the government skills agencies to ensure that all learners from 3aaa will be able to continue their programme.

Ocado also said it was reviewing the potential impact on any apprenticeships although currently it had only two staff on the scheme. 

Apprenticeships have come into greater focus since the government introduced a levy on businesses to fund apprentices. 

The scheme has been roundly criticised although Chancellor Philip Hammond unveiled a shake-up earlier this month to improve the plan. 

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October 16, 2018 |

McAlpine gets £350m boost as it wins contract to build Deutsche's new home

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Sir Robert McAlpine has landed London’s biggest building deal of the year, overseeing the construction of Deutsche Bank’s new headquarters above Moorgate Tube station.

McAlpine — behind iconic projects in the capital such as the 2012 Olympic stadium — has landed the 21 Moorfields project from developer Landsec.

The construction deal, worth an estimated £350 million, is a boost for the privately owned contractor, which made losses of more than £20 million last year.

Deutsche Bank, which employs around 8000 staff in London, committed itself to the scheme last year in a morale-booster for the City after Brexit.

McAlpine has to build on a site directly above the station — where Tube lines must stay running throughout the development — as well as the new western ticket hall to Liverpool Street’s Crossrail station.

The firm will build on a steel frame which spans the full 60-metre width of the station, equivalent to the wingspan of a jumbo jet.

McAlpine beat off opposition from rival builders Skanska, Mace and Multiplex to win the deal.

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October 16, 2018 |

Purplebricks in European launch as it teams up with Germans

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Online estate agent Purplebricks is expanding its empire into Europe after striking a joint venture with German giant Axel Springer on Monday.

Purplebricks has teamed up with the Bild publisher to buy a 25.9% stake in German online estate agent Homeday, tapping into a fast-growing market in Europe’s biggest economy.

The UK firm, which has launched in Australia, Canada and the US since floating four years ago, is paying €12.7 million (£11.2 million) for a 12.9% stake in Homeday. 

Its foray into continental Europe comes as the property market at home has been hit by lower household spending and uncertainty over Brexit. 

Homeday launched in 2015 and now has nearly half of Germany’s fledgling online market. 

The duo also have the option to increase their holding to 54.4% next year. 

Purplebricks shares added 3%, or 6.1p, to 224.1p.

The firm said current trading was also in line with expectations despite a tough market.

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October 15, 2018 |

Margareta Pagano: Tories must prove they want to be the party of business

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In her recent speech to conference, the Prime Minister, Theresa May, tried hard to reassert that the Conservatives party is one which backs business. Her Chancellor, Philip Hammond, went further, saying that the party “is, and always will be, the party of business… That means we listen to business.”

But there’s a problem. Most businessmen and women don’t believe either of them. They are more inclined to believe that the sentiment expressed by ex-foreign secretary, Boris Johnson, when he said “f*** business” in a rant at the CBI over Brexit, is a more accurate reflection of the Tory stance.

Some go as far to say that relations between the business community and the Conservatives have never been so bad. In the words of one company chief I spoke to last week, the relationship is “irrevocably broken, maybe for a generation”. In his view: “They just don’t get business. It’s not that they are anti-business, more that they don’t understand the nature of enterprise anymore. Apart from Hammond and Jeremy Hunt, no one in the Cabinet has run anything. No wonder they are tone deaf.” 

To many like him, the Tories have become the party of stealth tax and nannying, with price caps on energy to the latest idiocy of size caps on pizzas. “At least you know where you are with Labour. Corbyn is anti-business, full stop. We are caught between the devil and the deep blue sea.”

What a choice. This breakdown in trust between business and the Tories is a remarkable rupture, one that runs from the top of Britain’s biggest companies down to the smallest, and it’s despite Brexit, not because of it. You see how bad relations are when it took No 10 a year to recruit a new government relations director as a new “business envoy”, and then for the job to go to an unknown UBS investment banker.

You only have to look at the collapse in financial support from business donors over the past decade to see how deep the rupture has become. Today the party relies on a handful of hedge funders and maverick billionaires hoping for a peerage to fund its election war chest; hardly an endorsement of Britain’s entrepreneurial spirit.

Yet big business is doing just fine, and can certainly cope with Brexit. As Lord Wolfson of the Next fashion retailer said yesterday, the country will survive whatever the outcome and politicians should stop spreading fears over the “catastrophisation” and scaremongering about a no-deal Brexit.

Even if big business will survive, life is not so easy for the country’s small, often family-run businesses. They are the ones most distressed by the government’s tin ear and lack of empathy. These are the 5.7 million small and medium-sized enterprises which make up 99% of all private sector businesses and employ more than 16 million people — nearly two-thirds of all private employment. 

Last year, the annual turnover of all SMEs was £1.9 trillion, more than half of all private sector turnover, and over half of GDP. Unlike big multinationals, the profits earned by these companies tends to stay in the UK. Even usually docile trade associations, such as the Federation of Small Business, are getting twitchy. Its Mike Cherry says it’s make or break time for the Tories to prove they are the “party of business” and translate warm words into “action.”

The Chancellor has the chance to do so with his Budget on October 29. The FSB has a wish-list of excellent reforms for him to adopt which range from cutting business rates for struggling High Street retailers to a £400 million support package for sole traders and the self-employed.

Also excellent are the reforms being suggested by ProShare, the trade body promoting wider share ownership, which argues for even more incentives to spread ownership. There are already 2.4 million people who invest in Save As You Earn schemes or self-invested personal pensions (Sipps). Encouraging more workers to become share owners is a no-brainer for a Government that says it wants to spread the benefits of capitalism and increase productivity.

That’s just for starters: a long overdue root and branch simplification of the tax system  would be top of my list. The Conservatives must realise the only way they have a cat in hell’s chance of winning the next election is to admit that capitalism needs fixing, and start fixing it. They must show, not tell, what good, regulated capitalism looks like for the many, not the few. And quickly.

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October 15, 2018 |

Jim Armitage: Patisserie Valerie will be no cakewalk for investigators

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The Patisserie Valerie scandal will keep investigators and lawyers in luxury cake for months to come. 

As well as the obvious questions about why the auditor Grant Thornton didn’t spot anything amiss, the weekend’s revelations that the company had two secret overdrafts totalling £10 million raise a whole series of new issues. 

First, let’s correct something: reports have described “secret accounts” with HSBC and Barclays. That’s not quite true: last year’s annual report, which the board signed off on, referred to short-term overdraft facilities with an interest rate of Libor plus 3.5%. 

Also, Barclays requires overdraft terms to be signed off by the client’s chief executive and finance director. They also have to be discussed and approved by the customer’s board. So, were the accounts known about? If so, they clearly should have been checked. 

As for HSBC and Barclays, did they not consider it strange that a business claiming to be debt-free was running up such big overdrafts?

The way last week’s bail-out was orchestrated also leaves much to be desired, particularly for retail investors. Institutional funds were sold shares at 50p, compared with the last day’s trading price of 429.5p, but ordinary punters had no such luck. 

One private equity specialist in such situations says the company could have set up an additional facility to issue extra stock at the same 50p for small shareholders. At such a discount, even given how impossible it now is to trust this business, many might have considered it a gamble worth taking.

There’s another troubling factor. Amid the flurry of extraordinary announcements last week was one in which the company said it had just discovered a winding-up order against its principal trading subsidiary, Stonebeach. The company said it knew nothing of the action, even though it was advertised in the London Gazette on October 5.

The firm may not have been aware but it looks like somebody else was: records for that day show 1.5 million shares in the company were traded with a value of about £6.5 million. On a typical day only 200,000 shares change hands.

Either the seller got lucky or they knew the score.

Most of the trading that day was done through the Irish broker Goodbody and house broker Canaccord. Did they smell any rats, or serve any Suspicious Transaction Reports?

Also, the winding up petition was filed more than a month ago, on September 14, by HMRC. The taxman was owed more than £1 million. Suspended finance boss Chris Marsh was arrested on suspicion of fraud last week but surely a number of people must have been aware this issue was brewing.

Luke Johnson says he needs to get more closely involved in the day-to-day running of this business. Given the utter shambles he was presiding over as executive chairman, he might be better off leaving it to someone else.

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October 15, 2018 |
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