Business News

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

2018-10-19 00:19:13 admin

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

2018-10-19 00:19:06 admin

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

2018-10-19 00:18:59 admin

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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Property whizzes head to Mipim UK

2018-10-17 23:59:15 admin

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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Footasylum trips up as it swings to £4 million loss

2018-10-16 23:59:01 admin

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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