Business News

Business leaders react to victory for the Tories in general election

2019-12-14 01:18:23 admin

Business leaders across various sectors, including banking, property and leisure, share their thoughts with the Evening Standard’s City desk on the December 2019 general election result….


There was a flood of relief from the water industry, a top priority for nationalisation in Labour’s planned first 100 days in government — although investors seemed to have priced in a Tory victory into the UK’s regulated utilities, with most shares up 15% since September.

Industry group Water UK said: “Water nationalisation would have been bad for customers, the environment and the economy — so it’s good news it’s off the agenda for now. But we’ve still got a lot of work to do with ensuring water efficiency is as embedded in policy as energy efficiency.” 


The Conservative election victory put a brake on Jeremy Corbyn’s rail nationalisation plans — and rail operators were managed to restrain their jubilation. FirstGroup said the election put “a welcome emphasis on public transport and its importance for both economic growth and decarbonisation.” But Paul Plummer, chief executive of the Rail Delivery Group, warned the new Government needed “to move forwards on a range of domestic issues — including building HS2 and seizing the opportunity to deliver root- and-branch reform of our railway.”


The vanquished threat of nationalisation put a rocket up the share price of listed giants including British Gas-owner Centrica and SSE — but industry body Energy UK’s director of policy Audrey Gallacher warned Boris Johnson must “quickly break the hiatus in energy policy”.

The Prime Minister has pledged net-zero emissions by 2050 but Gallacher added: “With just 120 quarters until 2050, there is no time to waste so we look forward to seeing clear policy direction.”


Economists cautioned the initial exuberance for the markets would probably cool off in the coming months. David Zahn, head of European fixed income at funds giant Franklin Templeton said: “Gilt yields are likely to fall and the pound is likely to strengthen going forward. Risk assets such as corporate bonds will probably rally, too. However, a market relief at a Conservative victory may be quite short-lived as investors pivot quickly to think about what’s next, particularly with Brexit.”


David Duffy, chief executive of Virgin Money, said: “I would like to congratulate the Prime Minister on securing a clear majority, that will bring some valuable certainty for the country. We are looking forward to partnering with the government in improving investor confidence and providing much needed finance and investment in all regions of the UK — there are huge opportunities to increase productivity and growth outside of London and create a thriving economy, especially for small business.”


Chief executives of estate agents, office developers and housebuilders all welcomed the verdict. OnTheMarket’s Ian Springett hopes it will “restore confidence amongst ‘wait and see’ buyers and sellers” who had put plans on hold.

Paul Williams at Derwent London said “greater certainty is good for business”. Donagh O’Sullivan at housebuilder Galliard said: “I look forward to seeing a significant release of investment — decisions that have been stalled on the back of political uncertainty will now get the green light.”

However, Brian Bickell, Shaftesbury boss said: “One element of uncertainty has gone but long term confidence won’t return until there is total clarity on our future trading and political arrangements with  the EU.”

Mortgage brokers and estate agents said they had seen a spike in enquiries as buyers sought to complete purchases following the general election result.

Trevor Abrahmsohn at upmarket estate agent Glentree International said buyers from Asia and Eastern Europe have agreed to respective £28 million and £25 million residential buys in north London following the result. They had been awaiting clarity before agreeing purchases.

Daniel Minsky, director at London-based agency Estate Office, tweeted: “Phone ringing off the hook here.”

Investment fund managers 

The UK’s investment industry reacted with bullish enthusiasm. Investment Association chief executive Chris Cummings, who speaks on behalf of funds running nearly £8 billion, welcomed the chance to  “promote the UK as the global leader for investment management” with Johnson’s new regime. Investec’s Alastair Mundy said overseas bidders “may seek to buy up cheap UK assets” due to the political clarity.

Hedge funds shorting sterling may have been caught out by the pound’s rally. Polls were accurate this time — unlike Brexit and Trump —lowering the likelihood of burnt fingers in Mayfair hedge fund land.


Sir Martin Sorrell, executive chairman of S4Capital said: “The good news is we now know clearly what the Electorate wants – “get Brexit done” and a rejection of Corbynism. Unfortunately, we won’t know what the trade deal with Europe will look like for some time, maybe even no deal. So some uncertainty remains.”

He added: “For S4 it clearly means we now build our business even more aggressively in the Americas and Asia Pacific. Western Europe remains important, but we have to pivot, like the UK as a whole to different markets including the Middle East and Africa and Eastern Europe. I hope the new government will pursue the “Singapore on steroids” approach. Low tax and regulation-lite, with an emphasis on education, mobility and infrastructure, both hard and soft.”


Retailers today pushed the new Government to come through on its manifesto pledge and urgently review business rates. British Retail Consortium chief Helen Dickinson said: “We will be bringing that up and making sure that review really takes place and does not tinker around the edges as we have seen before. Given the majority that Boris has the Government can bring a longer-term perspective perhaps more so than we have seen in recent years.” 

Helen Brocklebank, boss of luxury goods trade body Walpole, said her industry is looking for “swift and positive” progress on Brexit. 

Diamond jewellery retailer Boodles’ managing director Michael Wainwright said: “There are definitely a lot of business people out there who are our customers saying they are ready for a Christmas spend if the Tories get a majority.”


Chief executives of pub operators said cheers to the result, including Patrick Dardis at Young’s: “Huge relief — best of a poor lot.” Nick Mackenzie at Greene King said: “We hope that a majority government will bring greater certainty to the UK economy, encouraging businesses to invest and go on to benefit employees and consumers across the country.” He urged the Government to address regulatory and cost pressures facing the industry, such as high business rates.

Kate Nicholls at trade body UKHospitality, which counts restaurant chains as members, tweeted: “Clarity and certainty likely to reduce volatility and that will be helpful for food price inflation.”


The technology industry welcomed the end to “three years of uncertainty” but pressed Government to help address its skills crisis. Russ Shaw of industry body Tech London Advocates said: “Our big focus is on talent. We are just not filling the jobs that we need and the government needs to look at immigration and lifting the cap on Tier 2 visas.” Shaw said Johnson’s support for the technology industry during his time as London mayor was encouraging for the future. Bruce Daisley, European Vice-President for Twitter, said: “I hope this election win isn’t seen as a victory for the most ungracious campaign in living memory.”


Philip Jansen, BT chief executive said: “There are lots of things for the new government to get done, few more important to the UK than speeding up the delivery of full-fibre broadband.  Our new Ministers can take some simple, immediate steps to cut through the red tape and help us build like the clappers.  We’ve got 33,000 brilliant Openreach engineers ready to roll.”


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Warren Buffett's protégée strikes out with London stock market listing

2019-12-14 01:18:15 admin

Warren Buffett’s protégée Tracy Britt Cool joined the board of a new $340m ((£258 million) acquisitions vehicle floating in London on Thursday.

Britt Cool, 35, will sit on the board of a venture led by US private-equity veteran Will Thorndike of Housatonic Partners and aerospace chief Nicholas Howley from TransDigm. They have launched EverArc, a shell company listing on the main market of the London Stock Exchange.

Britt Cool, raised on a farm in Kansas and educated at Harvard, recently announced plans to leave Buffett’s Berkshire Hathaway to pursue her own deals.

She was hired by Buffett when she was 25 and sits on the board of ketchup maker Kraft Heinz. 

The EverArc listing was hoping to raise $300 million but demand led the offer to be increased.

The founders will plough in $15 million of their own cash and the other $325 million has come from institutional investors. Shares start trading December 17. 

It is the largest listing of a special purpose acquisition vehicle in London in three years.

The deal was led by Morgan Stanley and UBS. 


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Watchdog says Amazon's deal with Deliveroo could hurt UK takeaway market

2019-12-12 01:10:20 admin

The Competition and Markets Authority today warned Amazon and Deliveroo their merger could face a full probe.

The UK competition watchdog said it is worried the merger could significantly reduce competition in the UK online takeaway and grocery market.

The CMA has given the two companies five days to propose remedies before it launches a full-scale investigation.

Andrea Gomes da Silva, CMA executive director, said: “Millions in the UK use online food platforms for takeaways, and more than ever use similar services for the same-day delivery of groceries. There are relatively few players so we’re concerned Amazon having this kind of influence over Deliveroo could dampen the emerging competition between the two businesses.”

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Will Parliament's refurb hit the buffers with ex-Crossrail boss?

2019-12-12 01:10:12 admin

The former chief executive of the late and over-budget Crossrail project has quietly been given oversight for another of the country’s biggest infrastructure programmes, the multi-billion pound revamp of the Palace of Westminster estate.

Campaigners and some sources close to the project said the appointment of Simon Wright to the post of adviser to the Strategic Estates team in Parliament made a mockery of claims it was striving to keep costs down on the sprawling job. 

Originally projected to cost around 

£4 billion, those close to the scheme suspect the true bill for taxpayers will be far higher and subject to major delays. Neil Gray MP, a member of the joint committee for the Palace of Westminster, has publicly stated it could cost “billions more”. Work is slated to start in the mid-2020s.

Sources said as well as working on the revamp, Wright’s role includes overseeing the estatewide “engineering infrastructure resilience programme”, whose responsibilities cover projects reducing Parliament’s carbon footprint.


Wright adds the role to his existing one on the board of the organisation overseeing the restoration and renewal project. He got that job last July, four months before he left Crossrail amid shock news of delays which meant the government had to lend the project a further £350 million. He had been appointed as programme director of Crossrail in 2014 and was promoted to CEO for just eight months before stepping down and, according to a London Assembly Transport Committee report was among directors who “reluctantly” gave up their bonuses. Wright denies the claim.

One source close to the work said: “The Palace of Westminster will be complex enough without bringing the legacy of a failed programme into the mix. Many MPs, not to mention industry, will question whether the ex-Crossrail CEO can be trusted with this iconic project.”

The Taxpayers’ Alliance chief executive John O’Connell said: “Taxpayers should be seriously concerned that one of the key architects of the Crossrail debacle is now overseeing the multi-billion pound restoration of the Palace of Westminster.” O’Connell was particularly concerned about having a repeat of where Crossrail failed to keep the Mayor’s Transport for London and the Department of Transport informed about how badly wrong the project was going. 

The situation could be even worse at the Parliament project, he said, because it did not have a government department sponsoring it.

It is unusual for such massive public infrastructure works to have no government department taking responsibility as sponsor of the project, unlike, say, the Department for Transport on HS2 and Defra and Local Government and Communities on the Thames Tideway supersewer. 

For that reason, a  “shadow” sponsor body was created, made up of MPs and experts. O’Connell warned: “With the restoration programme lacking external sponsors entirely, the stage seems set for yet another failure, again, under Wright’s direction.”

Others counter that Wright is ideal for the role. While Crossrail has been plagued by delays, the career civil engineer has run Arup’s project management business in the UK and Europe and was hailed a success for his work on the Olympics. 

In that project, acclaimed for being on budget and on time, he was on the Olympic Delivery Authority responsible for design and delivery of all infrastructure on the Olympic Park and the operations of the venues and athletes’ village during the Games. A House of Commons spokesman said: “Simon Wright has been an independent member of the restoration and renewal shadow sponsor board since its establishment in 2018, when he was appointed following a fair and open recruitment process. 

“He has recently begun working as an adviser to the Strategic Estates team in Parliament.”

Those working on the projects said while he was technically an adviser at Strategic Estates, he was “effectively running the show”.

Taxpayers and MPs will be hoping Wright delivers a repeat of the Olympics build, rather than another Crossrail. fiasco.



Renovating the Houses of Parliament

The Palace, designed by Augustus Pugin and Charles Barry and built in the mid-1800s, urgently requires restoration. 

While the work is going on, the Lords will decamp to the nearby QEII Centre. MPs have opted not to use existing buildings due to security and other concerns. Instead, they have decided a temporary debating chamber must be put up in a building in Whitehall called Richmond House. This is the key building among several to be revamped along Whitehall and Parliament Street known as the Northern Estate

The Richmond House and Northern Estate job is set to cost taxpayers up to £800 million despite the debating chamber potentially only being used as such for six or seven years.


The contractors

BDP is lead designer on the Northern Estate. Programme, project and cost management is being done by WSP and Gleeds. Wates is the main works contracting partner. Mace is project manager for Richmond House, with Lendlease the main contractor. CH2M, now owned by Jacobs, is leading on programme, project and cost management.

Strategic Estates

This is the organisation maintaining and improving the buildings of the Parliamentary Estate. Its Project Delivery Team is in charge of all construction and conservation projects. Simon Wright is said to be taking on the role of senior responsible officer. 

Restoration and Renewal Team

This is the group under Strategic Estates which is managing the restoration and revamping of the Palace of Westminster. It is under the control of a group known as a shadow board for now, until legislation establishes it as a standalone organisation. Wright is the sole civil engineer on the board made up of MPs, lords and other grandees.

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Jim Armitage: Saga's new CEO Euan Sutherland is damaged goods

2019-12-12 01:10:01 admin

Say what you will about Euan Sutherland; he must interview well.

Having walked out of the Co-op in a huff after his £3.6 million pay deal was leaked to the press, he was hired by Superdry, where he got kicked out three years later by investors having seen the share price crash. Both times he scooped big redundancy cheques. Today he’s picked up another doubtless big-paying role running Saga. 

It’s fair to say Saga isn’t exactly premier league. The place is struggling to find a purpose, with activist investors snapping at its heels. One assumes there wasn’t a long queue of top gun CEO heroes wanting the job. More like a parade from Dad’s Army. 

The board discussed Sutherland’s damaged goods factor but decided both Co-op and Superdry were hospital passes few could have coped with. 

At the Co-op, Sutherland faced a dysfunctional organisation, with too much power dispersed to regional committees with their own agendas. He laid the ground to reform it, and was regularly briefed against for his troubles. His petulant departure made him look ridiculous, but you can understand his frustrations. Sort of.

More troubling is his time at Superdry, when he brought in misguided initiatives such as kids’ ranges totally wrong for the supposedly edgy brand. He’d say shareholders backed him at the time, but that’s no excuse for failing to grasp the Superdry ethos.

At Saga, he has big judgment calls to make: whether to keep cruise ships and insurance together in one group being the biggest. Let’s hope it doesn’t end up with failure and another redundancy pay-off this time.

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