Rishi Sunak has set out the Government’s plans to protect jobs, pledging up to £30bn in support that includes a bonus scheme for companies that rehire furloughed workers.
The Chancellor introduced a widely-expected stamp duty holiday on properties, and introduced a new ‘Eat Out to Help Out’ scheme offering discounts at restaurants.
Follow our live updates below for the latest reaction from business and on the markets.
04:13 PM
VIDEO: What the mini-Budget means for the money in your pocket
Our personal finance reporter Jessica Beard explains in two minutes what Wednesday's announcements mean for the average consumer. As you've seen below there are significant changes for furloughed employees, young workers and anyone trying to buy a new home.
03:55 PM
Firms offered £2,000 to take on apprentices
British gas apprentice
Businesses are being given £2,000 for each under-25 they take on as an apprentice to help the “Covid generation” of youngsters entering the workforce who might otherwise struggle to find jobs.
However, there are fears the scheme that Chancellor Rishi Sunak hopes will triple the scale of apprenticeships over the coming year will not be enough to boost numbers of companies taking on trainees.
This is because £2,000 - or £1,500 for new apprentices aged over 25 - will not come close to covering the cost of equipping people with high-quality skills.
The warning comes from MakeUK, the trade body which represents the country’s manufacturing businesses and which is seen as one of the traditional homes of apprenticeships.
Tim Thomas, its employment and skills policy director, said: “The £2,000 for new apprentices is a welcome contribution to the cost of hiring an apprentice.
“But to set it in context, it can cost £100,000 over four years to train someone to a reasonable level and the maximum employers can claim from the apprenticeship levy over that period is about a quarter of that amount.
“Taking on an apprentice for high level training is a substantial commitment for an employer.”
The FTSE 100 closed 0.55pc lower today at 6,156.16 while the FTSE 250 fell 0.94pc to 17,186.26 as concerns relating to the pandemic continue to weigh on sentiment.
It came as gold climbed to $1,804.31 an ounce on the London Bullion Market, the highest level in 8.5 years, as recent dollar weakness also made the metal priced in the US unit attractive to investors.
David Madden of CMC Markets said: Volatility has been low as the health crisis has been bubbling away in the background. The health situation in the US seems to have a bigger impact on European stocks than it does across the pond."
My colleague Tim Wallace explains how the announcements made today will help British businesses, and why it might not be enough to save all of them.
The damage caused when the economy came to a stop with the pandemic is far greater than the help that is currently being made available.
03:20 PM
What about gyms?
gym
Gyms have been suffering from the same problems as other leisure businesses, but they have been left out of VAT reduction.
Sean Glancy, VAT & Indirect Taxes Partner at UHY Hacker Young, says: "French-style low VAT on food and drink in restaurants and pubs will be a significant help for our leisure industry – it should jump-start the sector and get people back in the doors. Gyms need just as much assistance from the Government, however – they haven’t even been allowed to reopen yet.
“There has been much talk about the risk of a wave of insolvencies among restaurants and bars but leaving gyms out of the VAT cut means that sector should now be on the watch list too."
03:08 PM
CV-Library boss: It will take 12-18 months for job market to recover
Lee Biggins, founder and chief executive of CV-Library, says:
Sunak's summer statement offers some hope to young people and those who are on the furlough scheme. However, it's always going to be met with criticism. The ongoing extensions to the Job Retention Scheme have been a lifesaver for businesses that are struggling, but it is also, sadly, delaying the inevitable; redundancies and mass unemployment.
Employers are working harder than ever to keep people on their books and ensure that there's a job available to them once furlough ends. With the introduction of trainee programmes for young people, and more funding for apprenticeships, businesses will be encouraged to create employment opportunities for 16-24 year olds; but whether they make them remains to be seen.
We know that organisations are struggling in a huge range of sectors. Job numbers are slowly picking back up, but they're nowhere near the levels that they were pre-pandemic. It's great to see the Chancellor focus his budget on jobs, but we must remember that, providing a second wave is kept at bay, it's going to take at least another 12 to 18 months for the job market to recover from COVID-19.
02:52 PM
Market update: Stocks stall on virus spikes
As a quick break away from the mini-budget news, here's how markets are looking in Europe and the US...
Europe's stock markets have slipped for a second straight session, with concerns about fresh spikes in coronavirus infections helping haven investment gold above $1,800 an ounce for the first time since 2011.
Europe's key indices were down by up to 1.2pc down in the mid-afternoon before recovering some losses
On Wall Street the Dow Jones posted slim gains at the opening bell after Tuesday's downturn
Connor Campbell of SpreadEx said:
Rishi Sunak’s summer statement didn’t end up doing much for the FTSE, nor did a positive open for the Dow Jones.
The FTSE was down 0.5%, worse off than it was just before the Chancellor’s announcement, while the DAX and CAC dropped 0.7% and 1.1% respectively.
Yet, in a Trumpian display of ignorance-cum-optimism, the Dow Jones still climbed 130 points after the bell, despite the US being the epicentre of the market’s coronavirus concerns. That increase pushed the index back above 26030, recovering a chunk of yesterday’s large losses.
02:46 PM
Funding Circle reveals CBILS boom
Online business lender Funding Circle boosted its loan approvals by 30pc in June compared to the same month last year as demand for Government-backed loans drove record lending, my colleague Michael O'Dwyer writes.
Funding Circle has loaned £300m to British businesses under the Coronavirus Business Interruption Loan Scheme (CBILS) with a further £160m of loans approved.
The firm, which specialises in lending to small businesses, said it had accounted for 16pc of all CBILS loans approved since it joined the scheme in April. It signalled it will also begin lending under the 100pc government guaranteed Bounceback Loan Scheme.
Funding Circle has deployed its new instant decision-making technology for 40pc of CBILS applications, allowing firms to apply in about 10 minutes and receive an instant approval decision.
The firm did not provide details on the hit to repayments on existing loans during the pandemic. Some customers have been offered payment holidays and it expects the value of loans held on its balance sheet to be hit but did not say by how much.
The firm said it will not claim any Government funds to pay for employee furloughing.
02:34 PM
London will be the big winner of stamp duty tax change
Housing
Lucy Pendleton of estate agents James Pendleton says:
The London market is the overall winner from this intervention on stamp duty. It’s the only place in the country where buyers of all kinds will benefit en masse from more significant savings simply because property is more expensive.
Although buy-side incentives like this are always criticised for increasing home hunters’ budgets, and by extension prices, they nevertheless always seem to successfully stoke demand too, and this obviously is the Chancellor’s goal.
The national market takes its lead from the London market, and the latter has seen growth cooling more significantly than anywhere else lately, so this is a strategic move to lend what is arguably the country’s most important market a softer landing.
02:23 PM
Wetherspoon to invest more than €21m and create up to 200 jobs
Pub operator Wetherspoon is to open its new pub and hotel in Dublin on October 20.
The company is investing more than €21m developing the pub and 89 bedroom hotel, named Keavan’s Port.
Up to 200 full and part-time jobs will be created at the pub and hotel.
Additionally Wetherspoon is investing more than £12m to open two new pubs and refurbish a further eight pubs in the coming months.
These include new pubs in Crossgates, Leeds and Kingswinford in the West Midlands, as well as major refurbishments at its pubs, including those in Salisbury, Peterborough, Stafford and South Shields.
02:15 PM
Handover
It’s time for me to hand over to my colleague LaToya Harding, who will steer the blog through the afternoon and into the evening. Thanks for following along today!
02:12 PM
PM spox: More details on easing of lockdown this weekend
The Prime Minister’s spokesperson James Slack has told reporters there will be details of further easing of lockdown measures from this weekend.
01:58 PM
Mini-Budget: Winners and losers
There’s plenty to chew on in today’s mini-Budget for everyday people – especially homebuyers and young people who, let’s be honest, are usually quite distinct categories in the current economy).
For Telegraph Money, my colleague Richard Evans has broken down what the changes will mean for your finances.
Markets haven’t been shifted much by Rishi Sunak’s speech, with the FTSE 100 in fact hovering at session lows. There were few individual hospitality moves sparked by the Chancellor’s announcement.
One apparent beneficiary was Wagamama-owner the Restaurant Group, but its gains have subsequently cooled off a bit:
Housebuilder Persimmon has shed its early losses to trade positive following the announcement.
01:18 PM
IoD: Many director will feel Sunak ‘missed a trick’
A slightly muted reaction to Rishi Sunak’s speech from the Institute of Directors, one of Britain’s biggest business groups. Jonathan Geldart, its director general, said:
The Chancellor pulled a few rabbits out of his hat today, but many directors will feel like he missed a trick. We fully understand the Treasury’s desire to focus on the young, and particularly badly-affected sectors, but coronavirus has crippled many parts of the economy.
The JRS bonus offers something of an off-ramp from the furlough scheme, and firms will certainly be doing all they can to keep people on board. However, with cash so tight now, January may feel like a long way off for some businesses. Meanwhile, the Kickstart Scheme is a welcome idea, and we hope the system will be easy for employers to use. The boosts for apprenticeships and other training are also steps in the right direction.
He added:
The Chancellor’s greatest strength has been his willingness to adapt as the situation moves. While there were certainly things for businesses to welcome today, there is still a long hard road back to full economic health.
01:05 PM
Round-up: Our mini-Budget coverage
Here’s a round-up of our key coverage of today’s announcements:
VAT and meals vouchers will not be valid for alcohol
The i paper’s Hugo Gye notes that the Chancellor’s promises are not going to make buying alcohol any cheaper:
Slight devil in the detail - the VAT cut for hospitality industry, and the half-price voucher scheme, won't apply to alcoholic drinks. Pub industry won't be happy.
Here’s some snap reaction to the Chancellor’s speech. Samuel Tombs from Pantheon Macroeconomics says the announcement is “not enough to underpin a V-shaped recovery”. He adds:
In total, the fiscal package could lead to a cash injection of £30bn, or about 1.5pc of annual GDP, though much will depend on how many firms bring back furloughed workers. Note that this fiscal support is spread out over the next three quarters. It will not, therefore, fully fill the void when the CJRS and Self-Employed Income Support Scheme end at the start of November. These two schemes cost the Treasury £33bn in Q2 alone.
Of course, the Chancellor hopes that economic activity will have rebounded sufficiently to ensure that employers bring back the vast majority of their furloughed workers, reducing the need for big fiscal support. Nonetheless, business surveys currently suggest that employment likely will be down about 4pc year-over-year in Q4, hitting households’ incomes, while surveys of consumers’ confidence point to a sustained rise in their saving rate. So despite the Chancellor’s efforts, we still expect GDP to be about 5pc below its pre-Covid level by the end of this year.
Marvin Rust, from professional services firm Alvarez & Marsal, said the steps don’t go far enough for some sectors:
Businesses have been paralysed by the pandemic, yet the Government has not gone far enough in its efforts to breathe new life into the sectors worst hit. A VAT cut that only applies to the hospitality and tourism sectors ignores industries like retail and aviation that are crying out for additional help.
These sectors have been shuttered for months and are struggling with cash flow, paying their rents and retaining employees. A cut to VAT and a national insurance holiday would have been a lifeline for these companies, but now they are forced to go without.
Monex’s Ranko Berich added that currency and bond markets have been left fairly unmoved by the Chancellor’s speech:
Sterling and gilts are largely unchanged, the former comforted by improving global risk appetite and the latter by BoE asset purchases. For now, these permissive conditions mean the Government’s measures are beside the point for markets. However, should a significant recovery fail to materialise in the third quarter, possibly due to lockdown re-imposition, Autumn will be a far more challenging situation for Rishi Sunak and UK markets.
12:31 PM
How the new stamp duty rules affect you
My colleague Adam Williams has taken a look at the new stamp duty rules. He writes:
Property buyers could save thousands of pounds thanks to a new tax break announced today by Chancellor Rishi Sunak.
Stamp duty is charged to the majority of people who purchase a home in England and Northern Ireland. However, it has been accused of slowing down the property market and discouraging people from buying new homes.
Mr Sunak has temporarily loosened the rules on stamp duty and offered exemptions to buyers of properties worth £500,000 or less.
Anneliese Dodds: Government must do more to support labour market
Shadow Chancellor Anneliese Dodds is offering Labour’s response now. She has criticised failures in the Government’s test and trace efforts, and said that the Government needs to do more to support the labour market.
Addressing specific points in the Chancellor’s statement, she asks how the Government’s Jobs Retention Bonus while avoid simply paying out to companies that already planned to rehire staff. She says the Government has a “duty” to prevent mass unemployment.
Ms Dodds calls on the Chancellor to offer more details on how it will support other sectors beyond the arts (which is subject to the £1.5bn boost announced at the weekend).
She says the Kickstart Scheme needs to provide genuinely valuable jobs for young people.
The Shadow Chancellor says the Government’s green jobs plans “barely touch” the levels pledged in other countries – saying that they fell well short of the amounts pledged in countries such as Germany.
A £1,000 Jobs Retention Bonus. New, high quality jobs for hundreds of thousands of young Kickstarters. £1bn to double the number of work coaches and support the unemployed. More apprenticeships; more traineeships; more skills funding. Billions of pounds of new, job creation projects around the country. A £3bn plan to support 140,000 green jobs. And in this vital period, as we get going again: VAT cut. Stamp duty cut. Meals out cut. Mr Speaker, all part of our Plan for Jobs worth up to £30 billion.
Time for questions...
12:03 PM
50pc discounts at restaurants and pubs
Another big policy for the hospitality sector – under a new ‘Eat Out to Help Out’ scheme, the Government will fund 50pc discounts at registered businesses for three days a week in August. He said:
Meals eaten at any participating business, Monday to Wednesday, will be 50pc off, up to a maximum discount of £10 per head for everyone, including children. Businesses will need to register, and can do so through a simple website, open next Monday.
Each week in August, businesses can then claim the money back, with the funds in their bank account within 5 working days.
12:01 PM
VAT cut to 5pc for hospitality and tourism
The Chancellor is now addressing the hospitality and tourism sectors, which he notes have been hit especially hard by the lockdown. He announces VAT in these sectors will be cut from 20pc to 5pc. He told MPs:
Eat-in or hot takeaway food from restaurants, cafes and pubs; Accommodation in hotels, B&Bs, campsites and caravan sites; Attractions like cinemas, theme parks and zoos; All these and more will see VAT reduced, from next Wednesday until January 12th, from 20pc to 5pc. This is a £4bn catalyst for the hospitality and tourism sectors, benefiting over 150,000 businesses, and consumers everywhere – all helping to protect 2.4m jobs.
11:58 AM
Stamp duty cut on home up to £500,000
As widely expected, the Chancellor has announced a temporary cut to stamp duty, which will take effect immediately. He told MPs:
Today, I am increasing the threshold to half a million pounds. This will be a temporary cut running until 31st March 2021. And, as is always the case, these changes to stamp duty will take effect immediately. The average stamp duty bill will fall by £4,500. And nearly nine out of ten people buying a main home this year, will pay no stamp duty at all.
11:57 AM
£3bn for green schemes
Two green policy announcements from the Chancellor:
“A new, £2bn Green Homes Grant. From September, homeowners and landlords will be able to apply for vouchers to make their homes more energy efficient and create local jobs. The grants will cover at least two thirds of the cost, up to £5,000 per household.”
“£1bn of funding to improve the energy efficiency of public sector buildings
11:55 AM
£1.2bn to DWP
The Chancellor is pumping another £1.2bn into the Department for Work and Pensions, “to support millions of people back to work”.
11:53 AM
Bonuses for employers who take on trainees and apprentices
More payout promises. The Chancellor says:
We’ll pay employers £1,000 to take on trainees, with triple the number of places
We’ll provide £100m to create more places on Level 2 and Level 3 courses
We’ll pay businesses to hire young apprentices, with a new payment of £2,000
We’ll introduce a brand-new bonus for businesses to hire apprentices aged 25 and over, with a payment of £1,500
11:51 AM
‘Kickstart’ scheme announced
As widely trailed in today’s papers, the Chancellor has announced a new ‘Kickstart’ scheme to create new jobs for young people. He told MPs:
The Kickstart Scheme will directly pay employers to create new jobs for any 16 to 24-year-old at risk of long-term unemployment. These will be new jobs - with the funding conditional on the firm proving these jobs are additional. These will be decent jobs – with a minimum of 25 hours per week paid at least the National Minimum Wage.
And they will be good quality jobs – with employers providing Kickstarters with training and support to find a permanent job. If employers meet those conditions, we will pay young people’s wages for six months, plus an amount to cover overheads. That means, for a 24-year-old, the grant will be around £6,500. Employers can apply to be part of the scheme from next month, with the first Kickstarters in their new jobs this autumn.
Mr Sunak is initially committing £2bn to the programme, which he says is enough for hundreds of thousands of jobs.
11:49 AM
Three-point plan for jobs
Rishi Sunak has laid out a (pretty simplistic) three-point plan for jobs:
First – support people to find jobs.
Second – create jobs.
Third – protect jobs.
11:49 AM
Job Retention Bonus announced
The Chancellor says:
But while we can’t protect every job, one of the most important things we can do to prevent unemployment – is to get as many people as possible from furlough back to their jobs. So, today, we’re introducing a new policy to reward and incentivise employers who successfully bring furloughed staff back – a new Jobs Retention Bonus.
He continues:
If you’re an employer and you bring back someone who was furloughed – and continuously employ them through to January – we’ll pay you a £1,000 bonus per employee. Its vital people aren’t just returning for the sake of it – they need to be doing decent work. So for businesses to get the bonus, the employee must be paid at least £520 on average, in each month from November to the end of January
He says this will be a £9bn policy if everyone who has been furloughed returns to work.
11:47 AM
Furlough scheme ‘cannot go on forever’
Mr Sunak says the Government’s hugely popular Coronavirus Job Retention Scheme will wind down as planned at the end of October, adding:
It is in no-one’s long term interests for the scheme to continue forever – least of all those trapped in a job that can only exist because of government subsidy.
11:45 AM
Budget and Spending review arriving in Autumn
The Chancellor says his announcements today represent a “second phase” in the Government’s Covid-19 response.
Stage one: Supporting businesses
Stage two: Protecting jobs
Stage three Rebuilding
He tells MPs that the Government will produce a Budget and Spending Review in the autumn.
11:44 AM
Sunak: Intervention has protected most vulnerable
The Chancellor says he will publish analysis today that shows the Government’s actions “significantly protected people’s incomes, with the least well off in society supported the most”.
11:43 AM
Sunak’s greatest hits
The Chancellor is singing the praises of the UK’s schemes to tackle Covid-19, which he says represent one of the “largest and most comprehensive economic responses” in the world. He told MPs:
Our £160bn plan protects people’s jobs, incomes and businesses:
We supported more than 11 million people and jobs through the job retention and self-employment schemes, alongside billions of pounds for the most vulnerable;
We supported over a million businesses to protect jobs, through tax cuts, tax deferrals, direct cash grants, and over a million government-backed loans;
And we supported public services, with new funding for the NHS, schools, public transport, and local authorities. In total, we have now provided £49bn to support public services since the crisis began.
11:40 AM
Sunak begins speech
The Chancellor is speaking now. He opens by outlining the broad strokes of today’s plan, saying:
Mr Speaker, I stood here in March saying I knew people were worried. I know they’re worried still. We have taken decisive action to protect our economy. But people are anxious about losing their jobs, about unemployment rising. We’re not just going to accept this. People need to know we will do all we can to give everyone the opportunity of good and secure work. People need to know that although hardship lies ahead, no one will be left without hope.
So, today, we act, with a Plan for Jobs. Our plan has a clear goal: to protect, support and create jobs. It will give businesses the confidence to retain and hire. To create jobs in every part of our country. To give young people a better start. To give people everywhere the opportunity of a fresh start
11:36 AM
Speech coming up
The House of Commons has been briefly suspended in order for MPs to enter and exit. Rishi Sunak will begin speaking shortly.
11:35 AM
Analyst: Pound could be vulnerable during Sunak speech
Ned Rumpeltin, an analysts at Toronto-Dominion Bank, has said sterling looks a little vulnerable to downwards movements during the Chancellor’s speech today. He said (per Bloomberg):
The pound looks a little vulnerable to a modest pullback if the Chancellor simply delivers as expected. It has had a decent run over the last couple of days, suggesting a lot of whatever good news we may get today is already in the price.
11:29 AM
One view on Britain’s Budget processes...
Financial statements from HMT should be published at 6am. The budget process is the single stupidest thing about our state. https://t.co/1innxsqvOp
The Chancellor should begin his speech in a couple of minutes.
11:17 AM
Young people take hardest blow from lockdown
The youngest workers in the country are facing the toughest blow from the lockdown recession as they are the least likely to be able to work from home, while businesses in the services sector are slashing hiring at the fastest rate.
My colleague Tim Wallace reports:
Just 30pc of 16- to 24-year olds were working from home in April, the Office for National Statistics said, far below the rate for other age groups.
Collapsing hiring and falling wages underline the pressure on Rishi Sunak, the Chancellor, to improve the prospects of the younger generation.
It is key for their financial future and that of the nation as prolonged periods of unemployment for those leaving school and university can hit their careers and earnings for many years to come.
By contrast those with more work experience are far more likely to have jobs that allow them to work remotely.
Prime Minister’s Questions is underway in Parliament. You can follow the latest updates here, and watch along live using the video stream embedded at the top of the blog (refresh the page if you can’t see it). I’ll start bringing you updates here once the Chancellor starts speaking at around 12:30pm:
#PMQs is really just the warm up act for the summer statement today...
Metro Bank names ‘bad boy” Robert Sharpe as new chair
Metro Bank - Nick Ansell/PA Wire
Metro Bank has hired building society “bad boy” Robert Sharpe, one of the sector’s key figures during the financial crisis, as its chairman to replace founder Vernon Hill.
My colleague Lucy Burton reports:
Mr Sharpe, famous for his lucrative pay-off at Portman Building Society and a scandalous affair with a colleague half his age, was credited with transforming Britain's seventh-largest society West Bromwich after the 2008 crash.
He is chairman of Bank of Ireland UK and will join Metro in November. Sir Michael Snyder will remain interim chairman until then.
Before the crisis Mr Sharpe turned Bournemouth-based mutual Portman from the 13th largest society into the third biggest through multiple acquisitions, before it merged with Nationwide in 2007.
He also earned notoriety for going to a rival lender when he wanted a mortgage for his £2.4m luxury mansion in Cobham, Surrey while running West Bromwich.
The pound has edged slightly lower against the dollar since morning ahead of Rishi Sunak’s speech.
10:05 AM
Sunak: UK is through ‘first phase of crisis’
Chancellor Rishi Sunak has told the Cabinet that the UK is through the “first phase of the crisis where we supported closed sectors, businesses and families”, according to a statement.
He told ministers that “the challenge now is to support the economy opening up”, adding this would mean protecting as many jobs as possible in the face of a tough outlook.
He outlined details of today’s ‘Plan for Jobs’ statement, and “emphasised the government’s commitment to delivering a green economic recovery”.
09:56 AM
French economy could rebound in third quarters, says stats agency
Eiffel Tower - THOMAS SAMSON/AFP via Getty Images
France’s economy could bounce back to pre-Covid levels by the end of the year, according to new survey data from the country’s statistics agency.
AFP reports:
INSEE released updated economic forecasts for the year that see a strong 19 percent rebound in gross domestic product in the quarter that begins in July and then a small increase in the fourth quarter.
Nevertheless, with the output lost during the lockdown that stretched from March into May, the French economy is heading for a nine percent drop for the year, “the strongest contraction since national accounts began to be compiled in 1948”.
That forecast is nevertheless more optimistic than the French government's prediction of 11 percent, the French central bank’s 10pc, and the European Commission's 10.6 percent.
INSEE noted, however, that given the uncertainty about the evolution of the health situation as well further impacts on the economy, the forecasts should be considered with caution.
The country has led Europe in recent PMI surveys, which have suggested activity in its private sector is rebounding:
09:49 AM
Gold breaks through $1,800 an ounce
In a sign of the risk-off mood on markets today, gold prices have broken $1,800 an ounce for the first time since 2011, continuing a winning streak streak for the precious metal.
Markets.com’s Neil Wilson said:
The gold bull thesis rests not only on the requirement for safe assets given the economic uncertainty, but also longer term on fears of a surge in inflation caused by the massive increase in the money supply caused by central banks.In large part due to the corresponding fiscal actions, unlike the QE that occurred after the financial crisis, this time the excess cash is not going to get lost in the banking sector.
09:46 AM
FirstGroup shares plunge as it warns on future
FirstGroup - REUTERS/Mike Blake/File Photo
Shares in FirstGroup plunged on Wednesday after the group warned over its ability to continue as a going concern and annual losses tripled to almost £300m.
My colleague Chris Johnston reports:
Plunging passenger numbers during the pandemic sent the bus and rail operator to a pre-tax loss of £299.6m for the year to March 31.
That was far worse than the £97.9m for the previous year after the company took a raft of charges including a £21.5m hit for the coronavirus crisis.
Shares sank 17pc to 40.7p in morning trading, valuing the company at just under £500m.
FirstGroup flagged a "material uncertainty" over its ability to continue as a going concern due to risks around the pandemic, but stressed it had "adequate" resources to carry on operating for the next 12 months.
We don’t have a headline figure for the spending pledges set to be unveiled today – but we know that the Government’s total spending on Covid-19 relief passed £80bn last week.
That include more than a million bounce back loans, and income support for 12.1m workers.
Here’s a table of the total costs:
09:26 AM
Competition watchdog writes to Lloyds and Nationwide over PPI breaches
Lloyds - SHAUN CURRY/AFP/Getty Images
The UK’s competition watchdog has written to Lloyds and Nationwide after the groups breached an order requiring them to provide accurate annual payment protection insurance reminders to customers.
It also wrote to Cardif Pinnacle, part of the BNP Paribas banking group, issuing it with “legally binding directions” ordering it to appoint an independent body to audit its PPI processes.
All PPI providers are subject to a CMA Order which compels them to annually remind customers how much they have paid for their policy, the type of cover they have, and of their right to cancel.
The Competition & Markets Authority said it “cannot currently impose financial penalties on businesses for breaches of this kind, but it has called for the power to do so”.
It said Cardiff Pinnacle had sent more than 14,800 inaccurate reminders to 7,400 customers since 2012, which meant those affected “were unable to assess accurately whether they wanted to continue paying for PPI or change provider”.
It is the second time Lloyds and Nationwide have broken the rules. The CMA said:
Lloyds breached the CMA’s Order 18 times over an 8-year period. It failed to send reminders, or sent reminders containing inaccurate information, to more than 10,000 customers. Nationwide failed to provide annual reminders to more than 3,000 customers over a 4-month period, meaning some customers may not have been aware they still had PPI.
Lloyds is in the process of refunding those who would have cancelled their policy had they received an accurate reminder, and has paid out £96,000 to date. Nationwide is contacting customers and is offering to refund their PPI payments for 2020 should they wish to cancel their policy. Those refunded will also receive 8pc compensatory interest on the money they paid into their policy.
The CMA’s Adam Land said:
If providers fail to send important information on PPI policies, people could end up paying for insurance they no longer need. Not having this information also makes it harder to look around for a better deal.
That’s why we continue to act when we see PPI providers breaking the rules. We’ll be keeping a close eye on these firms – and others in the sector – to make sure they treat their customers fairly.
08:55 AM
Get your live politics fix
It’s a big day from the British economy, with Rishi Sunak’s statement today likely to cause major ripples for UK businesses.
I’ll bring you the top line from Mr Sunak’s speech, and the latest business news and reaction here, but if you want the pure politics, you should also follow my colleague Cat Neilan’s live blog:
It looks like Mr Sunak will begin his speech pretty promptly after 12:30pm (I’ve corrected my first post to reflect this).
08:45 AM
Amigo re-hires former boss after year of chaos
Amigo - Handout
Amigo Loans has turned to its former boss to lead it out of regulatory difficulties as the embattled lender prepares for life without its founder.
My colleague Michael O’Dwyer reports:
The high interest lender said Glen Crawford will join as chief executive from the beginning of August, 13 months after he stepped down as boss to receive treatment for a degenerating spinal condition.
Amigo has been thrown into disarray as its share price collapsed against the backdrop of regulatory problems and a row between management and James Benamor, the firm’s founder and majority shareholder.
Mr Benamor, a self-confessed former petty criminal, rejoined the board in December before quitting in March and launching a failed coup against the current directors.
Grant Thornton fined £1.95m over ethics and audit failures
Britain’s audit watchdog has fined accountancy firm Grant Thornton £1.95m over firm-wide failures to “ensure compliance with ethical standards”, as well as ethical breaches in its audit of Bargain Booze owner Conviviality.
The FRC said Grant Thornton, the UK’s sixth-largest auditor after the Big Four and BDO, has “admitted breaching very important standards designed to preserve the integrity, objectivity and independence of audit” between 2014 and 2017. It also conceded a “loss of independence” in its work for Conviviality.
The fine was reduced from £3m due to Grant Thornton’s admission of failings.
The watchdog lambasted the group of shortcomings in its ethical controls, saying:
In particular, its policies and procedures designed to ensure compliance were defective, as well as being inadequately implemented and monitored
The group also breached ethical standards by seconding a senior manager, Natasha Toy, to assist Conviviality with the production of its accounts, having previously been part of the team that audited the group.
The watchdog said Ms Toy subsequently attempted to remove a four and a half hour entry time in the group’s audit file. The FRC said: “She did this in order to conceal evidence of her involvement in both the Audit and subsequently the preparation of the company’s accounts, being aware of the threats to independence which those matters had created.”
It also announced sanctions against Kevin Engel, an audit engagement partner, who arranged for Ms Toy’s secondment and instructed her to conceal her prior involvement in the audit. The watchdog said that by doing so, Mr Engel “breached a number of standards designed to preserve the independence and objectivity of audit”.
Ms Toy and Mr Engel both received a “severe reprimand” from the watchdog. Mr Engel has received a permanent prohibition that bans him from signing audit opinions.
The FRC said Ms Toy’s sanction takes into account her “hitherto unblemished disciplinary record, her genuine contrition for the misconduct and the exceptional level of cooperation she demonstrated during the course of the investigation.”
It added that Mr Engel “provided an exceptional level of co-operation during the course of the investigation” but that his sanction took into account that he has been the subject of previous enforcement action by the FRC.
Both have left Grant Thornton since the incident according to the FRC.
The FRC’s Claudia Mortimore said:
It is vital that audit firms comply with ethical standards and requirements and create the necessary culture and control environment so that their people really understand their importance.
In this case, there were firm-wide failures over a number of years which not only led to numerous breaches of such requirements on individual audits but also the real risk of more such breaches which have not been, and will never be, reported or identified.
07:54 AM
Money round-up
Here are some of the day’s top stories from the Telegraph Money team:
There’s been one U-turn already for the Chancellor this week: Rishi Sunak last night dropped controversial plans to force workers to pay for coronavirus tests organised by their employers through their tax returns.
My colleague Christopher Hope reports:
HMRC guidance published this week had made clear that employees will face a taxable benefit in kind for private tests carried out in the workplace.
The decision would have meant that an employee could see their take-home pay cut by more than £3,000 per year if they have to be regularly tested, according to calculations seen by The Telegraph.
The decision immediately raised fears that people will be put off from testing to avoid being left out of pocket. MPs said treating a coronavirus test as a workplace “benefit” was “a joke”.
However, on Tuesday, within hours of Tory Treasury select committee chairman Mel Stride writing to Mr Sunak to complain about the plans, the Treasury dropped them late on Tuesday night, on the eve of Mr Sunak's statement to MPs about his plans to support the economy through the coronavirus crisis.
It’s been a poor open for European markets, with the FTSE 100 falling alongside Germany’s Dax and France’s Cac 40. Those losses extend yesterday’s poor performance.
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07:11 AM
Boohoo announces review of supply chain
Boohoo - Charlotte Rutherford
Fast-fashion giant Boohoo has announced an independent review of its supply chain, following a Sunday Times report than alleged labour abuses at one of the group’s UK suppliers.
The group – which owns brands such as PrettyLittleThing and Nasty Gal – has taken a battering on the markets over the past two days, with its share price dropping sharply as influencers shunned the brand and its products were dropped from other platforms.
A report in the Sunday Times said workers at one of the group’s Leicester-based suppliers were paid less than the minimum wage, and inadequately protected from coronavirus risks.
Boohoo’s board said today that they are “shocked and appalled” by the allegations, adding: “we are committed to doing everything in our power to rebuild the reputation of the textile manufacturing industry in Leicester”.
It has appointed Alison Levitt QC to undertake an immediate review of its UK supply chain, making a incremental £10m commitment to “eradicated supply chain malpractice”.
However, it disputed some elements of the Sunday Times’s report, saying the garments featured “were not actually manufactured in Leicester, but in Morocco”, and were only repackaged in Leicester. The group also said it had not yet found evidence of workers being paid £3.50 an hour, as the report said.
John Lyttle, the group’s chief executive, said:
We wish to reiterate how seriously we are taking these matters and we will not hesitate to terminate any relationships where non-compliance with our Code of Conduct is found.
Our commitment to an incremental £10m of investment demonstrates our resolve to enforce the highest standards of ethics, compliance and transparency for the benefit of all garment workers.
06:51 AM
What time is Chancellor Rishi Sunak’s announcement – and what will he say?
Rishi Sunak - SIMON WALKER/HM TREASURY/PA
As usual, we head into today’s announcement with a pretty strong idea of what might be coming – a steady stream of Treasury leaks and selective briefings mean many of the components of Mr Sunak’s announcement are already out there.
My colleague Ben Gartside pulled together some of the policies that had been let slip or announced by today. You can read his full analysis here – I’ve picked out some highlights below:
Funding for traineeships: The Government would pay businesses £1,000 per trainee hired to incentivise firms to offer work experience to 16- 24-year-olds, which was confirmed by the Treasury.
Arts funding: The Government announced over the weekend that there would be a £1.57 billion bailout of the arts and cultural sector to ensure prominent institutions do not collapse. As part of the move, £880m would be given in direct grant funding, as well as £270 million in loans for Arts organisations.
Rail Bailout: According to a report in The Times, rail companies are set to see extensions to their emergency contracts, which are set to expire on September 20.
More help for jobseekers: The Treasury has also announced that the number of work coaches at job centres is set to double as Mr Sunak tries to accelerate the process of finding work for the unemployed. Numbers will jump from 13,500 to 27,000 at a cost of £800m.
Stamp duty holiday: Homebuyers will on Wednesday be offered an emergency stamp duty holiday as the centrepiece of the government’s coronavirus recovery plan.
Employment assistance: Mr Sunak will unveil an unprecedented scheme called Kickstart, to create hundreds of thousands of jobs for people aged 16 to 24 by directly paying their wages for six months.
National Insurance holiday: A National Insurance holiday was being considered by the Treasury as part of the economic statement, and that such a move could create between 595,000 and 892,000 jobs, according to Tax Payers' Alliance analysis.
Green jobs: The Government announced a £3 billion increase in green investment on Monday evening, as part of a move to create jobs in low carbon industries.
On top of those, it’s likely the Chancellor will be keeping some headline-grabbing surprises up his sleeve. One of those is a radical plan, proposed by the resolution Foundation think-tank, to give all adults £500 and child £250 in vouchers to spent within virus-hit sectors of the economy, such as hospitality and bricks-and-mortar retail.
06:35 AM
Sunak’s big day
Good morning. All eyes will be on Rishi Sunak when he gets up to speak in the Commons at around 12:30pm today. The Chancellor is expected to make a number of sweeping announcements to support the economy, from a stamp duty cut to a subsidy scheme for young workers.
It comes as stock markets fell yesterday on fears sparked by fresh lockdowns and bad economic news prompted profit-taking after strong gains the previous session. European indices slipped after a pessimistic growth forecast by the European Commission, which said the eurozone economy will contract by 8.7pc in 2020 due to the coronavirus crisis.
The FTSE was set to open 0.85pc lower while the Eurostoxx 50 and Germany's DAX were also tipped to open 0.7pc down.
5 things to start your day
1) Unemployment to hit 15pc if second wave strikes: Even without another spike in infections, the UK is already on track for an unemployment rate of 11.7pc by the end of the year due to the pandemic and its lockdown.
2) Number of jobseekers surges at fastest pace since financial crisis: Salaries for new starters are falling as more applicants chase fewer jobs, as employers across all industries cut back hiring, according to the Recruitment and Employment Confederation and KPMG.
3) DHL to cut 2,200 jobs: The logistics company has told its staff that 40pc of them working at JLR factories and delivering parts to car plants are likely to lose their jobs because of a combination of the slump in demand for vehicles and ongoing efficiency measures
5) Failed brands try to fashion a new life online: The new owners of brands including Laura Ashley, Karen Millen, Coast and Oasis are trying to survive online without high street stores
What happened overnight
Shares were mixed in Asia on Wednesday as uncertainty over the pandemic sapped the buying enthusiasm that has been driving prices higher.
The selling followed a deeper pullback on Wall Street and in France, Germany and elsewhere after the European Union's executive arm said this year's recession caused by the coronavirus pandemic will be deeper than forecast. It also said next year's expected rebound could be weaker than expected.
Japan's benchmark Nikkei 225 dropped 0.3pc in morning trading to 22,545.36. Australia's S&P/ASX 200 dipped 0.5pc to 5,982.10. South Korea's Kospi shed 0.3pc to 2,157.70 Hong Kong's Hang Seng reversed early losses, gaining 0.3pc to 26,059.92, while the Shanghai Composite also bounced higher, adding 0.3pc to 3,355.53.
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