UK

RED TORIES
Labour recruits City grandees as it declares it is ‘no longer sneering at business’


Michael Bow
Thu, 7 December 2023 

Labour has been on a long charm offensive within the business community to help feed into its election manifesto - Labour Party

Labour has hired 10 City grandees to advise the party as it declared it is “no longer sneering at business”.

Shadow economic secretary Tulip Siddiq MP has recruited advisers such as London Stock Exchange chief David Schwimmer, Prudential chair Baroness Shriti Vader and Bank of England director Sir Ron Kalifa, who will sit on the panel to help steer the party’s policy.

She said the group will debate issues like capital markets, competitiveness and consumer protection to help feed into the party’s election manifesto next year.


The move is designed to erase the anti-business era of Jeremy Corbyn and present Labour as a closer ally to the Square Mile.

Ms Siddiq said: “The message I have heard from the City time and time again is the need for the next Government to provide long-term stability and a clear sense of direction on policy priorities.”

She told the Financial Times that Labour has stopped “sneering at business”, having built on recent discussions with banks, insurers and asset managers.

Leader Sir Keir Starmer and shadow chancellor Rachel Reeves will unveil the panel on Friday as part of a review of the party’s approach to financial services.

The duo are in Edinburgh to mark one year since the Edinburgh Reforms, a raft of measures announced by Chancellor Jeremy Hunt to revive London’s flagging financial centre.

Key members of the 10-strong panel also include the chairs of Abrdn, Legal & General, Schroders and Barclays.

The members are sitting independently on the panel rather than as representatives of their companies.

Labour has been on a long charm offensive within the business community to help shore up its support.

Ms Reeves’ so-called scrambled eggs and smoked salmon offensive has kicked up a gear in recent months as Britain edges closer to the next election

Dozens of executives from financial institutions such as JP Morgan and Blackstone met the Labour leadership ahead of the Government’s Global Investment Summit earlier this month.

Closer to home, Labour’s plans to accelerate the rollout of banking hubs to help give people more access to cash has also triggered debate.

Many banks are shutting branches due to a fall in cash payments, although Labour’s move may complicate that process.

Other representatives on Labour’s City panel include Yorkshire Building Society chief executive Susan Allen, Amadeus Capital founder Anne Glover and the former chair of the Financial Conduct Authority Charles Randell.

\Labour MPs oppose house building in defiance of Keir Starmer’s fight against Nimbys

Ruby Hinchliffe
Thu, 7 December 2023 

keir starmer

Labour MPs are openly lobbying against more homes being built up and down England, despite Sir Keir Starmer’s pledge to side with the builders “not the blockers”.

Helen Hayes, MP for Dulwich and West Norwood, lobbied against a development in her constituency for 100pc affordable housing.

In an application for 76 homes, she responded saying the seven-storey building – set to be built on a site next to a train station – would be “too tall”.

In the West Midlands, MP for Birmingham Erdington Paulette Hamilton objected to one home being turned into seven flats. She said the plans, which would have housed people with learning disabilities, “might add to anti-social behaviour in the area”.

Anna Clarke, policy director at The Housing Forum, said “a fair bit” of the Labour opposition to new house building she’s seen has been urban MPs opposing high density areas.

She added: “This could lead to more pressure on greenbelt or other urban fringe or new town building, to avoid having to go too high on the density of cities.

“The problems will come for Labour if they win, and are actually proposing building in places where their own MPs are under pressure to oppose.”

But house building is not just a point of contention for urban constituencies.

In East England, Labour MP Alistair Strathern – who won the mid-Bedfordshire by-election in October – promised on his canvassing pamphlet “no new builds without proper infrastructure”. Just under a third of Mr Strathern’s constituency sits on the green belt.

At least 32 Labour MPs – including shadow secretaries of state Lisa Nandy, Ed Milliband and Yvette Cooper – hold seats in constituencies where half or more of land is classified as green belt, according to Telegraph analysis of data from The Countryside Charity (CPRE).

John McDonnell, Labour MP for Hayes and Harlington, said at a local level protecting the green belt is an undeniable vote-winner.

He told The Telegraph any changes to green belt policy will need to recognise “the reality” of the green belt’s role and the “scale of support there is for its protection”.

Shadow state secretary for health and social care, Wes Streeting, is MP for Ilford North – where 47.9pc of it is on the green belt.

Back in 2017, he helped locals win a campaign against Redbridge council which wanted to build 850 homes on 21 football pitches and nine cricket squares.

But Sir Keir has made his stance clear: if elected prime minister, this land won’t be protected in full at the expense of missed house building targets.

The Telegraph understands that tough rules and conditions will come with the release of any green belt land.

In both 2021-22 and 2022-23, just under 235,000 new homes were built each year – some 65,000 short of the Government’s much-debated 300,000 new builds target.

As a result, Sir Keir has taken the decision to make Labour the party of housebuilders. “We’re the builders, not the blockers,” he has said time and time again – going as far as to identify as a ‘yimby’, or ‘yes in my backyard’.

In his party conference speech, addressing “those who say ‘we don’t want Britain’s future here’”, he said: “A future must be built and that is the responsibility of the Government, otherwise we will end up in a rut. We’ll get shovels in the ground, cranes in the sky, and build Labour’s next generation of new towns”.

Robert Colvile, director of the Thatcher-founded think tank Centre for Policy Studies, said the acid test will be whether Sir Keir can overrule the objections of his own MPs.

He added: “It will become more of a problem if Labour end up winning many of the home counties seats that they’d need for a majority. The line will hold up until the election, but it is if Labour makes it into power that we’ll see whether the party actually really means it.”

In an attempt to placate both sides, Sir Keir has come up with a ‘grey belt’ classification. This would reclassify “low-quality” land on the green belt as ‘grey belt’ in order to let developers build more new homes on it.

But some fear the ‘grey belt’ idea will backfire and lead to good quality green belt land slipping through the net too. Richard Knox-Johnston, of the London Green Belt Council, said major developers already hold options on lots of green belt land.

If developers were to let that land fall to waste or make it look ‘undesirable’, they may then – under a Labour government – be able to build on it, Mr Knox-Johnston said.

Asked over email whether this was a worry, Labour MP John McDonnell simply replied: “Exactly”.

Birmingham MP Paulette Hamilton objected a home in her constituency being turned into flats citing the potential for anti-social behaviour - Ben Birchall/PA Wire

Since 2009, 140,042 homes have sprung up on land previously classified as part of the green belt, according to construction data firm Glenigan.

This has angered nimby homeowners and campaigners, who say there is no need to spoil green spaces with new construction when there are other ways targets can be met.

One reason they cite is the more than one million homes in England yet to be built but granted planning permission over the past 12 years – a statistic analysed by Channel 4’s FactCheck.

Shadow chancellor Rachel Reeves has said she will tackle nimbyism by giving residents in new development hotspots something in return. She told The Times that homeowners deserve a “sweetener” if developers build right next to them.

But Elizabeth Woodward, planning policy lead at the CPRE, said this raises “concerns” over individual payments being seen as “bribes” to support certain planning applications.

She also questioned how Labour would choose who is and isn’t impacted by new developments, adding: “Where do you draw the line? Why should Number 28 get a subsidy and not Number 29?”

Ant Breach, of think tank Centre for Cities, said since Labour “seized the house building mantle”, expectations have been raised and that much of the party’s economic strategy now depends on it – including more construction jobs and more opportunities for investment.

He continued: “When it comes to housing, ‘sweeteners’ are difficult. Objections to new development are rarely about house prices or financial compensation.

“It’s not material concerns which locals are raising in the planning process, it’s concerns about infrastructure not keeping up with building.”

Rather than £5,000 or £10,000 for 2,000 houses built near them, Mr Breach said local authorities should be incentivised to invest in amenities and new infrastructure.

A Labour Party spokesperson said: “A generation and its hopes are being blocked by a Conservative prime minister too weak to stand up to his own party, who has allowed planning permissions to collapse, pushed house building off a cliff and exacerbated a housing crisis causing misery for millions.

“The Labour Party is serious about grasping the nettle and delivering a reformed planning system where the Tories have failed, restoring the local house building targets Rishi Sunak scrapped, jump-starting planning, and delivering a housing recovery plan.

“Labour will back the builders not the blockers, and take the tough choices that deliver the homes our country desperately needs.”

UK employers limit hiring permanent staff amid economic stresses


Richard Partington

 Economics correspondent

THE GUARDIAN
Thu, 7 December 2023 

Photograph: Bloomberg/Getty Images

Britain’s largest recruiters have warned the Bank of England that demand for permanent hiring among UK businesses has plunged at the second fastest rate since the pandemic, amid worsening headwinds for the UK economy.

Ahead of the central bank’s decision on interest rates on 14 December, the Recruitment and Employment Confederation (REC) trade body said lingering economic uncertainty and hesitancy to commit to new hires had weighed on activity in November.

A monthly snapshot of the UK jobs market produced by the REC and the accountancy firm KPMG, tracked closely by Treadneedle Street, showed availability of new job candidates increased at the fastest rate since December 2020.

But permanent staff appointments dropped at the second quickest rate since June 2020, when the first Covid-19 lockdown triggered an economic collapse.

The bank’s policymakers, including its governor, Andrew Bailey, are closely monitoring Britain’s jobs market for evidence of inflation persistence after pausing a round of 14 consecutive interest rate increases in September.

With the economy under growing pressure from higher borrowing costs, the bank is widely expected to keep interest rates unchanged at the current level of 5.25%.

Bailey has said that rates would need to remain high for a prolonged period to tackle stubbornly high inflation. However, the latest figures from the REC and KPMG showed few signs that the jobs market could add significantly to inflation in future.

According to the latest figures, starting salary inflation dipped to a 32-month low, while job vacancies declined for the second time in three months. It comes before official figures on the state of the jobs market due on Tuesday from the Office for National Statistics

Claire Warnes, skills and productivity partner at KPMG UK, said employers were reining in hiring and pushing ahead with redundancies in response to “sustained economic slowdown”.

She said: “Businesses want to plan for the year ahead, but the prospect of faltering UK economic growth means the certainty they need isn’t there. This is now impacting starting salaries, as pay inflation isn’t as sharp as in previous months. With the Bank of England looking like it will be keeping interest rates high for now, businesses will need to stay resilient to manage this period of flux.”

The survey from the REC and KPMG showed that employer confidence receded amid the current economic climate. This, in turn, led to hiring freezes and reductions in vacancies, with the sharpest declines in London.

Neil Carberry, chief executive of the REC, said that 2023 had been a “testing year” for recruiters, but that there was anecdotal evidence that employers might be holding back until the new year to resume their hiring plans.

However, he said wage growth could strengthen next year if employers found it harder to recruit following the government’s announcement of tougher migration rules this week. “For policymakers any return to growth will put strain on a labour market with embedded shortages – this week’s pro-election rather than pro-economy decision on immigration will exacerbate that.”

UK
Half of first-time buyers in their 20s get help from Bank of Mum and Dad


Melissa Lawford
Thu, 7 December 2023

Bank of Mum and Dad

The Bank of Mum and Dad is behind almost half of first-time home purchases by buyers in their 20s, research has found.

A total 45pc of new buyers aged between 20 and 29 said they received loans or cash gifts towards their first homes, according to analysis of official data by the Institute for Fiscal Studies (IFS).

Of these, eight in 10 said the money came from their parents, with a further 7pc saying they received help from their grandparents.

The IFS found that those getting financial support for their first home are receiving an average of £25,000 from their family.

Soaring house prices are placing home ownership increasingly out of reach, but the IFS said many buyers receiving financial support are using the money to ease the burden on mortgage repayments.

Bee Boileau of the IFS said: “The role of parental transfers extends beyond just making homeownership possible. First-time buyers who receive larger amounts in transfers tend to use this to put down larger deposits rather than buying a more expensive home.”

The average rate on a two-year fixed-rate mortgage has nearly tripled from 2.34pc in December 2021 to 6.01pc today, according to Moneyfacts.

This means the monthly cost of taking out a typical £200,000 loan is now £1,290, £409 more than two years ago.

Based on 2019-2020 average mortgage rates, a first-time buyer who received a gift of £25,000 could reduce the size of their mortgage on a typical home from 90pc to 74pc.

Over the course of a five-year fix, this means they would save £8,500 in mortgage payments. This would be equivalent to a total real return of 15pc on the £25,000.

The IFS based its analysis on responses to the Office for National Statistics’ Wealth and Assets Survey between 2018 and 2020.

Previous analysis by the ONS showed the share of first-time buyers who had financial help from family members swelled from 22pc to 29pc in the decade to 2015-16.

Ms Boileau of the IFS said parental support for first-time buyers in their 20s has likely climbed more rapidly in recent decades than for other age groups because younger buyers have lower incomes and fewer savings.

She said: “They’re therefore less likely to be able to meet the increased financial demands required to get onto the housing ladder from their own resources when house prices are high.”

It came as prices unexpectedly increased in November, by 0.5pc on a month earlier, according to the Halifax house price index.

It was the second monthly gain in a row after six consecutive falls before that. It means a typical home is worth £283,615, up around £1,300 on the previous month.

On an annual basis, prices were down 1pc compared to November last year, a sharp fall from the 3.1pc decline in the year to October.

House prices are on track to defy gloomy expectations of a double-digit drop this year. The Office for Budget Responsibility had previously predicted in March that house prices would crash close to 10pc in 2023.

But in its latest forecast unveiled alongside the Autumn Statement it said prices are now expected to be up almost 1pc for the year.

UK

CEOs will moan about Government behind closed doors — so why won't they tell it like it is in public?

Jonathan Prynn

EVENING STANDARD
Fri, 8 December 2023 

The skyline of the City of London. (Yui Mok/PA) (PA Archive)

Today Rob Perrins, the boss of Berkeley, one of our biggest housebuilders, tells it as he sees it. And good for him.

In blunt language he warns that a minefield of planning, tax and regulatory obstacles threatens to “drive investment away from urban areas, restricting growth and preventing homes and other tangible benefits being delivered.”

We need more of that from the leaders of the wealth generating sector who for too long has been happy to moan behind closed doors about how much they feel betrayed by the Government but rarely have the courage to speak out in clear simple terms in public.

A symptom of that are the now barely readable results announcements from the majority of quoted companies.

Too often they are an impenetrable soup of numbers, industry jargon and financial acronyms - topped by that dread phrase “in line with guidance” - with barely a hint of the broader social, economic and human context in which these major employer organisations operate.

Lord Wolfson at Next is a rare exception and his company’s financial statements are a treasure trove of insights into “what is really going on out there.”

But the majority of CEOs who run UK plc have become too risk averse, persuaded by a protective phalanx of advisers that it is better not to speak out for fear of upsetting the ministers and regulators of their sector.

They are happy to sub-contract their fears and concerns to trade bodies and business organisations that, with rare exceptions, do not carry the weight of the C-suite individuals actually running the show.

Britain faces a chronic growth crisis that, ultimately, only the private sector can liberate the country from.

The boss class needs to find its voice and forcefully engage with the debate about the multiple long-term challenges facing the UK. Otherwise, the powers that be will continue to believe, in the famous words of one previous Prime Minister, that it can F*** business.

The Squad review: AOC, the rise of the left and the fight against dark money



Charles Kaiser

The Guardian
Sat, 9 December 2023

Photograph: Stephen Lovekin/Shutterstock

Ryan Grim’s sprawling new book is called The Squad, but it is about much more than Alexandria Ocasio-Cortez and her progressive allies in the US House. It does provide mini-biographies of AOC, Ilhan Omar, Rashida Tlaib, Ayanna Pressley, Cori Bush and Jamaal Bowman, but it should have been called The Squad and Its Enemies, given the amount of space it devotes to their adversaries.

Related: ‘She got so mad at me’: book on the ‘Squad’ details AOC-Pelosi clashes

Grim also gives a blow-by-blow replay of the 2020 Democratic presidential primaries, and extremely detailed accounts of how Joe Biden’s infrastructure and domestic spending bills finally made it through Congress.

The book seems to have been written at great speed without much time for editing. At times that makes it a little hard to follow. For example, on page 30, we learn that Justice Democrats, an organization founded in 2017 to elect “a new type of Democratic majority in Congress”, suddenly pulled out of AOC’s first race because she wasn’t raising enough money herself.

“She was crushed and considered dropping out,” Grim writes. But then, two pages later, we learn that Justice Democrats “just went all in and just diverted it all” to AOC. “We stopped raising money for anybody else,” an organizer explains.

There are small, easily checkable errors. The Rayburn House Office Building, we’re told, was “built in the 1950s during the postwar boom”. Actually its cornerstone was laid in 1962 and the building opened in 1965.

Grim is a big fan of hard-left, hard-edged judgments against middle-of-the-road Democrats. On the very first page, we are told of the “rubble of the Obama administration’s pivot to austerity in the wake of the 2008 financial crisis”. Nine pages later, Obama is accused of encouraging more home foreclosures “to keep the bailed-out banks alive”.

According to Grim, the present House Democratic leader, Hakeem Jeffries of New York, has a “visceral hatred toward the radical left”; gets “roughly half” of his campaign money from corporate political action committees; and has the additional sins of being a “vocal supporter of charter schools”, an ally of the former New York governor Andrew Cuomo and a supporter of Hillary Clinton.

Grim is on more solid ground when he attacks the Problem Solvers, a group that “claimed it would solve problems by bringing together moderate Democrats and reasonable Republicans for common sense solutions” but whose primary goal is to block “tax increases on private equity moguls and hedge fund executives” who funded dark money groups linked to No Labels, the “centrist” group threatening to run a third-party candidate for president, potentially hurting Joe Biden and helping Donald Trump.

Grim offers very long sections about the debilitating effects of dark money on the entire political system, and the negative effects of the extremely large amounts spent by the American Israel Public Affairs Committee (Aipac) and the rest of the lobby for Israel. He is at his best when he describes Washington alliances that are mostly invisible to casual students of the Capitol scene. There is a long narrative about Josh Gottheimer, a former Clinton intern and speechwriter turned New Jersey congressman elected with the support of Aipac, a Problem Solvers founder .

Gottheimer’s most important ally is Mark Penn, a key Hillary Clinton strategist and the former head of the PR powerhouse Burson-Marsteller. Gottheimer, a congressional champion of Israel, was paradoxically aided by Penn’s longtime work for Saudi Arabia. The Saudis and the United Arab Emirates “built an alliance with the Israeli lobbying operation in Washington”, Grim explains. “Israel won Arab cred from the two autocracies even as its settlements in occupied Palestinian territory were rapidly expanding. And the autocracies were helped by association with one of Washington’s most powerful lobbies.”

“Israel and the Arabs standing together is the ultimate ace in the hole,” an Israeli embassy official tells the author.

Because of this unholy alliance, Gottheimer became one of the “top recipients of cash” from lobbyists and lawyers working for Saudi Arabia in his first re-election cycle.

Related: The Fabulist review: timely tale of the rise and fall of George Santos

We also learn in detail how the mere threat of opposition by Aipac in his Florida congressional primary transformed Maxwell Frost’s position on the Middle East. The young Democrat had signed a pledge to “heed the call of Palestinian civil society for Boycott, Divestment, and Sanctions” (BDS) and called for “an end to US political, military and economic support to Israel, and to all military security and policing collaborations”. But after Richie Torres, a New York Democrat, befriended Frost, the Floridian ended up “a candidate who wanted no strings attached to military aid to Israel” and who considered BDS “extremely problematic and a risk to the chances of peace and a two-state solution”.

Stories like this lend credence to the judgment of Summer Lee of Pennsylvania, who survived her own “near-death experience” at the hands of the Israel lobby. She tells Grim she knows people deterred from running for office “because this is a topic that they know will bury them. There’s absolutely a chilling effect”.

Lee continues: “It’s very hard to survive as a progressive Black, working-class-background candidate when you are facing millions and millions of dollars.” This also “deters other people from ever wanting to get into it. So then it has the effect of ensuring that the Black community broadly, the other marginalized communities are just no longer centered in our politics”.

As Grim demonstrates convincingly, that is one of the many big costs the US pays thanks to the gigantic role of dark money in its politics.

The Squad is published in the US by Henry Holt & Co

‘Excess profits’ made by big firms boosted inflation – report

Rebecca Speare-Cole, PA sustainability reporter
Fri, 8 December 2023 



“Excess profits” made by large international companies could have exacerbated inflation and passed on higher costs to consumers, according to a report.

Researchers from the Institute for Public Policy Research (IPPR) and Common Wealth – both British think tanks – analysed the financial statements of 1,350 firms listed on the UK, US, German, Brazilian and South African stock markets.

They found that UK-listed firms such as Shell, Glencore, Vodafone and Barclays saw their profits outpace inflation following Russia’s invasion of Ukraine, while ordinary families’ real incomes plummeted.


The report, released on Thursday, argued that because energy and food prices feed so significantly into costs across all sectors of the wider economy, this exacerbated the initial price shock – contributing to inflation peaking higher and lasting longer than had there been less market power.

Firms in other sectors such as tech, telecommunications and finance also saw high profit increases, the report said.

The researchers cited work by University of Massachusetts assistant professor Isabella Weber, who has argued that profits in “systemically significant” sectors – such as energy and commodities – can have an outsized impact on inflation across the wider economy.

The report said that large companies in these sectors have been able to protect their profit margins or even increase them during the period of inflation, setting prices higher than are socially and economically beneficial, and generating “excess profits” through a combination of high market power and global market dynamics.

It noted that nominal profits averaged at least 30% higher at the end of 2022, compared to the end of 2019 before the pandemic.

It also found that in the UK, 90% of nominal profit increases during this period occurred in only 11% of publicly listed firms.

UK oil major Shell’s average annualised profit rose from £15 billion to £44 billion, while BP’s rose from £7.7 billion to £23 billion.

Oil and mining giant Glencore’s average annualised profits rose from £1.9 billion to £14.8 billion, while Rio Tinto saw its own rise from £9 billion to £15.5 billion.

Vodafone, British American Tobacco and British banks Barclays, Natwest and HSBC were also among the top 10 UK-listed companies which saw increased profits over the period.

Firms across the world in other sectors such as tech, telecommunications and finance also saw high profit increases, the researchers found.

The report said a rise in nominal profits does not mean that firms have raised their profit margins, since for many it is the result of passing on their higher costs to consumers while maintaining the same degree of profitability as a percentage of nominal sales.

But it added that there is evidence some stock market-listed firms not only protected their margins but also increased them, which meant they not only passed on inflation but further amplified it.

The researchers found that if companies accepted a hit to their profit margins, similar to that endured by wage earners, then “pass the parcel” inflation would decrease.

The think tanks are now calling for policymakers to deploy a much broader range of policy tools to dampen inflation caused by external shocks and prevent a repetition of profiteering from big companies.

They recommended a new international approach to taxing excess profits, which could form part of pro-investment tax reforms to reduce inefficient behaviour by dominant corporations and encourage productive investment instead.

The organisations also called for a new direction for competition policy to stop overly powerful companies from taking advantage of economic emergencies, and more interventions such as price caps and excess profits taxes to help stabilise markets during economic emergencies.

Carsten Jung, senior economist at IPPR, said: “Our research finds that markets aren’t working efficiently, enabling large companies to make profits that likely amplified inflation.

“This has made the cost of living crisis worse for most people, and for many smaller firms across the economy.

“The original inflation spike was driven by global supply chains gumming up post-pandemic, and then by the energy price shock following the Ukraine invasion.

“Now economists considering the knock-on effects of ‘home made’ inflation have been focussing too much on the labour market.

“We should be scrutinising the role profits have played in amplifying inflation.

“If external shocks are made worse by business behaviour then new policy tools are needed to tackle this.”

Chris Hayes, chief economist of Common Wealth, said: “Inflationary shocks cannot be avoided, but they need not persist so long.

“Our analysis of companies suggests many large firms, beyond just the commodities sector, are using their power to preserve their profit margins. This pushes the shocks downstream to workers, consumers and labour-intensive industries that are less able to absorb them.

“This is not only unfair but has destabilised the economy and undermined growth.

“We need a new set of targeted and strategic macroeconomic policies to encourage companies to behave differently and bring down inflation, both now and in the future.”

Spotify ousts its finance chief after cutting 1,500 jobs


James Warrington
Fri, 8 December 2023

Mr Vogel has served as chief financial officer since 2020 - Variety.com

Spotify has ousted its finance chief as founder Daniel Ek overhauls the streaming service in a bid to strip out costs.

The Swedish music company said chief financial officer Paul Vogel will step down at the end of March.

It marks the latest effort by Mr Ek to shake up Spotify, which has struggled to deliver consistent profits.

The company earlier this week announced it would slash 17pc of its workforce – around 1,500 jobs – in the third round of job cuts this year.

The overhaul comes as tech companies face pressure from investors to demonstrate profitability after years of growth funded by low interest rates.

In a statement late on Thursday announcing Mr Vogel’s departure, Mr Ek said: “Spotify has embarked on an evolution over the last two years to bring our spending more in line with market expectations, while also funding the significant growth opportunities we continue to identify.

“I’ve talked a lot with Paul about the need to balance these two objectives carefully. Over time, we’ve come to the conclusion that Spotify is entering a new phase and needs a chief financial officer with a different mix of experiences.”

Spotify chief Daniel Ek says the company ‘needs a chief financial officer with a different mix of experiences’ - TORU YAMANAKA/AFP

The Spotify chief added that the company would select a “strong financial leader” as its next chief financial officer.

Spotify’s most recent job cuts raised eyebrows given the streaming service swung to a rare profit in the third quarter thanks to price rises and subscriber growth around the globe.

However, Mr Ek said Spotify needed to focus on efficiency, adding: “We still have too many people dedicated to supporting work and even doing work around the work rather than contributing to opportunities with real impact.”

He added: “Our cost structure for where we need to be is still too big”.

Spotify has been looking for new avenues of growth to help boost its profitability after a troubled $1bn (£800m) foray into podcasting.

The company spent heavily on shows by celebrities including Meghan Markle and Michelle and Barack Obama, but the gamble has so far failed to pay off.

In October, Spotify announced a move into audiobooks in a fresh effort to attract more subscribers.

Mr Vogel, who has served as finance chief since 2020, cashed in £7.2m of shares following the announcement of job cuts earlier this week but prior to news of his departure being made public.

He was one of several top executives to take advantage as Spotify’s shares spiked by as much as 8pc.

Ben Kung, Spotify’s vice president of financial planning and analysis, will take on an expanded role while the company looks for Mr Vogel’s successor.

CRYING WOLF

US retail group retracts claim that half of $94.5bn inventory loss was from theft

Edward Helmore
Thu, 7 December 2023 

Photograph: AndreyPopov/Getty Images

The powerful National Retail Federation (NRF) lobbying group has retracted a claim that “organized retail crime” accounted for “nearly half” of the shopping industry’s $94.5bn losses due to theft or “shrink” in 2021.

Related: Teens need malls. Malls need crowds. Why are they pushing kids away?

The industry group had said the impact of organized retail crime, which it previously claimed had increased by 26.5%, had become increasingly violent. Retail giants like Target, Walmart and Walgreens said it was threatening their businesses.

The NRF said the figure was based on a congressional testimony from Ben Dugan, the former president of an advocacy group, the Coalition of Law Enforcement and Retail, and that an analyst from K2 Integrity, a risk consultancy that co-authored the report, inferred the “nearly half” claim.

The inclusion of the claim in the NRF’s report was “taken directly from Ben’s testimony” and “was an inference made by the K2 analyst linking the results of the NRF survey from 2021 and Ben Dugan’s statement made that same year”, NRF spokesperson Danielle Inman told Reuters.

In an updated report on organized retail crime, the body still maintained that organized crime is “a high-priority concern for the retail industry for decades, having a harmful economic impact on retail companies and endangering store employees and customers”.

The study added: “These concerns have grown in recent years, as criminal groups have become more brazen and violent in their tactics and have utilized new channels to resell stolen goods.”

A K2 database of 132 organized retail crime groups dating between 2014 and 2022 found that luxury goods, often well protected, are only targeted 11% of the time.

Instead, organized retail crime tends to target everyday goods available from big retail outlets and favor clothing, health and beauty products, infant products, accessories, housewares, home improvement products, eyewear and office supplies.

Homeland Security Investigations, the primary federal agency that tackles organized retail theft, defines organized retail crime as “the association of two or more persons engaged in illegally obtaining items of value from retail establishments, through theft and/or fraud, as part of a criminal enterprise”.

Retailers concede that the causes of “shrink” – as retail theft is known – are notoriously difficult to track and include employee theft, shoplifting, administrative or cashier error, damage and vendor fraud.

Still, organized or unorganized theft has remained a preoccupation of retailers and politicians, particularly on the right, where city and suburban crime is a potent political topic.

In December last year, the Walmart CEO Doug McMillon told told CNBC that if theft did not slow down, the company would close stores across the country. “Theft is an issue,” he said. “It is higher than what it has historically been” and “if that’s not corrected over time, prices will be higher, and/or stores will close”.

The New York City mayor, Eric Adams, told retailers last month that they must require shoppers to enter stores without face masks and launched a task force to support a plan to reduce retail theft outlined in a retail theft report.

“New York City’s retailers are the heart and soul of our city, and retail theft hurts everyone, from our mom-and-pop shops to large department stores – and especially consumers,” the mayor said. The New York attorney general, Letitia James, added that “retail theft continues to harm New Yorkers, threaten businesses and threaten the safety of our communities”.

But larger retailers are now conceding that they too may have exaggerated the issue of “shrinkage”. During a January earnings call, Walgreens’ then chief financial officer, James Kehoe, said the company had seen “lower levels of shrink” in the second half of 2022. The loss of inventory attributed to theft, fraud and damage was over 3%. Kehoe said the shrink rate is down to roughly 2.5% this year.

PRIVATIZED
Royal Mail pays £26m to customers as complaints surge

James Warrington
Thu, 7 December 2023 

Royal Mail

Royal Mail paid £26m in compensation to customers last year amid rising complaints about the quality of its postal service.

The compensation, which is paid out when customers experience loss, damage or delay to letters and parcels, rose by 46pc compared to 2022.

The total number of complaints leading to compensation jumped 37pc to almost 1m, according to new figures from Ofcom, which found that the average amount paid rose by £1.76 to £26.93.

The figures highlight how a worsening service is adding to Royal Mail’s financial difficulties.

The company was hit with a record £5.6m fine by the regulator last month after it failed to deliver more than a quarter of first class post on time.

Royal Mail’s most recent quality of service reports show it remains significantly below targets, with the company blaming this on high levels of staff absence and vacancies.

However, in its report, Ofcom said: “We are concerned that Royal Mail’s performance has not shown any signs of improvement in recent months and are disappointed that it has been unable to provide us with a timeline for when its performance will improve.”

Royal Mail posted a £319m loss in the first half of the year, which was partly due to a pay deal struck with unions in April - SOPA Images/Getty Images Contributor

Martin Seidenberg, who took over as chief executive of Royal Mail owner International Distributions Service in the summer, has vowed to “pull out all the stops” to avoid disruption over Christmas.

Royal Mail has said posties will be paid a bonus of up to £500 if they meet delivery targets over the crucial festive period.

The company will also hire 16,000 seasonal workers and open five temporary sorting centres.

The downturn in delivery performance comes as Royal Mail attempts to stem deepening losses, which have been sparked by lengthy strike action and a decline in letter sending.

Royal Mail posted a £319m loss in the first half of the year, an increase of £100m compared to the same period in 2022.

This was partly due to a pay deal struck with unions in April, which saw workers handed a 10pc pay rise over three years and a one-off payment of £500.

But Royal Mail is also facing structural issues as fewer Britons send letters and as competition from couriers grows.

The Ofcom figures show that Royal Mail lost market share over the year, as parcel volumes were down almost 8pc on pre-pandemic levels, while letter volumes dropped by a quarter.

Royal Mail has called for a relaxation of its universal service obligation, which requires the company to deliver letters from Monday to Saturday.

Ofcom is currently reviewing the rules but any changes will ultimately require Government approval.

A Royal Mail spokesman said: “Royal Mail takes every complaint seriously. To some extent the compensation figures reflect the market trends of increased parcel volumes and lower letter volumes.

“As people send more parcels over letters - which may contain items of higher value - we are likely to see increased compensation figures.”

UK

Aldi announces pay rises for staff

Aldi has announced new pay rates, saying it will be the first supermarket to guarantee all store and warehouse workers earn at least £12 an hour.

The minimum rate will increase by 40p an hour, and by 70p to £13.55 within the M25, with the increases taking effect from February.

Aldi said it is investing £67m in pay, adding it is also the only supermarket to offer paid breaks, which for the average store worker is worth more than £900 a year.

Giles Hurley, chief executive of Aldi UK and Ireland, said: “Just as we promise to provide the best value to our customers, we are also committed to being the highest-paying supermarket in the sector.”

Aldi is the UK’s fourth-largest supermarket and has more than 1,000 stores, 11 regional distribution centres and 40,000 employees across Britain.

Aldi staff will all earn at least £12 an hour - Christopher Furlong/Getty Images

Games Workshop hands staff £2,500 bonus as half-year profits rise 12%

Sarah Butler
Thu, 7 December 2023 

Photograph: May James/Reuters

The fantasy figurine retailer Games Workshop is handing its shop workers, model makers, designers and support staff a £2,500 Christmas bonus, £1,000 more than a year ago, after half-year profits rose more than 12%.

The Nottingham-based company behind the popular table-top gaming series Warhammer and Lord of the Rings figures said its workers would split a £7.5m bonus pool, up from £4.5m a year ago.

Games Workshop, which runs about 530 stores, said it was increasing the bonus as it expected half-year profits to be at least £94m as sales rose 9% to £247m. There was strong growth in its core gaming sales but a drop in licensing income.

Started nearly 50 years ago by three schoolfriends, Games Workshop enjoyed a boom during the pandemic and has continued to thrive despite tough times on the high street as hobbies and small treats that can be enjoyed at home have benefited from the cost of living squeeze.

Analysts said the company had recorded a slowdown in the second quarter of its financial year but had enjoyed the benefits of a strong first quarter helped by the launch of the 10th edition of its Warhammer 40,000 game, which features characters such as Space Marines and the squid-like Neurotyrant.

Shares in the group fell almost 11% to just under £95 as Andrew Wade, an analyst at Jefferies, said investors were likely to be disappointed that the business had only delivered sales and profits in line with expectations.

In the summer, analysts upgraded forecasts after strong early sales of the latest 40,000 edition while the cost of shipping goods and some materials fell. Wade said it appeared there had been “a pull-forward of demand” in the summer and Games Workshop now faced tougher trading conditions.

Warhammer maker Games Workshop pays staff £2,500 bonus — but £450m knocked off market cap as shares tumble

Daniel O'Boyle
Thu, 7 December 2023 


Warhammer maker Games Workshop has agreed a right deal with Amazon studios 

(Games Workshop/PA)

Warhammer maker Games Workshop is to pay all its staff a £2,500 Christmas bonus as half-year profits rose to nearly £100 million.

The payout, a combined £7.5 million, is up from £1,500 per employee last year. It comes as profit grew by 12.4% to £94 million, on sales of £235 million, also up on last year.

But investors, who have become used to upgrades, were not impressed. Jefferies analysts Andrew Wade and Grace Gilberg flagged “markedly slower” growth in the second quarter.

Peel Hunt analysts were less negative, saying that the numbers were “consistent with our full-year forecasts”.

The shares tumbled by as much as 13% to 9224p, knocking £450 million off the multi-billion-pound company's market cap. That’s 21% off their July peak, but still up more than 200% over the last five years and 20 times the price they were trading at in 2016.

The bonus is enough for a fan of Games Workshop’s flagship — and famously expensive — Warhammer 40,000 tabletop game to build the two-foot tall Mars Pattern Warlord Titan and equip it with a pair of power claws and a set of laser blasters.

Sold in parts, the figurine costs £1,674.50 to assemble and paint. It’s the most pricey model listed on the Warhammer website, which describes the Titan as “among the most ancient and feared of the Imperium's war machines”.

“Forged on the Red Planet itself, it is worshipped and venerated as the Omnissiah's will incarnate and each god-engine is encased in layered armour and powerful void shielding, and armed with weapons that are capable of reducing entire armies to ash,” the Warhammer website reads.