Jaguar Land Rover announces production break
Jaguar Land Rover (JLR) have announced a two week break in production due to a slump, in conjunction with large fluctuations across the global markets.
The Solihull plant will be temporarily closed from October 22nd 2018 for two weeks. Staff have been advised that they will still receive their salary during the closure, and customers orders will not be affected. According to reports, staff at the Solihull plant will be placed on a 3 day working week until Christmas.
JLR announced total retail sales to date of 57,114 – 12.3% lower than the previous year, even with demand for new models. Figures released are understood to be due to the manufacturing move of the Discovery Model from the UK to Slovakia, as well as a lesser demand for diesel cars and ongoing concerns over emissions.
Bosses at JLR have warned that thousands of jobs could be at risk if a ‘no Brexit deal’ is made. Representatives from Unite, the second largest trade union in the UK describe JLR’s recent announcement as “deeply troubling”, despite employees being advised that their positions are safe within the company.
A spokesperson for JLR said,“As part of the company’s continued strategy for profitable growth, Jaguar Land Rover is focused on achieving operational efficiencies and will align supply to reflect fluctuating demand globally as required”.
They explained that the decision made to introduce a company shutdown was an act to achieve these ‘operational efficiencies’. Figures showed a fall in new car sales across the UK during the last financial year of 5.7%, amid falling confidence amongst both business and consumers.
Des Quinn, the National Officer for Unite at JLR explains that the combination of Government ministers condemning diesel cars in the UK, and the chaotic management of Brexit is causing irretrievable damage to the UK car industry. “Over the past decade Jaguar Land Rover workers have worked tirelessly to turn the carmaker’s fortunes around. Ministers now risk turning them and their colleagues in the supply chain from hero to zero.”
Acting Regional Secretary, Howard Beckett from Unite, is also worried following the news of the shutdown, and believes that workers and their colleagues from JLR should be concerned. JLR is a massive dynamo within the West Midlands and one of the main resources offering well paid employment in the area.
Patisserie Valerie in flaky situation
A £20 million loan from the chairman of Patisserie Valerie, Luke Johnson has cushioned the company following a shock accounting scandal and the arrest of its Finance Director, Chris Marsh.
The loan has saved 2,500 jobs across the UK as well as saving the company from collapse following its plunge into financial crisis following the discovery of accounting irregularities, and receiving a tax bill of over £1 million. The full extent of the financial damage was announced earlier this month when an urgent plea for £20 million was received to prevent the company from collapsing; it was also revealed that the estimated core earnings will be approximately £12 million, 60% less than expected.
It has been confirmed that Marsh was suspended from his position following his arrest, and has since been placed on police bail. A full criminal investigation will take place – Marsh has refused to comment since his arrest and release.
Patisserie Valerie was introduced to the streets of the UK back in 1926 when Belgian-born Madame Valerie opened the first store in London’s Soho. In 2006, the business was bought by Risk Capital Partners, a private equity firm owned by entrepreneur Luke Johnson. Johnson became the Executive Chairman of Patisserie Valerie, already made his name and fortune when building the successful restaurant chain Pizza Express.
Marsh joined Patisserie Valerie in 2006 and has been a vital part in the companies’ success. In 2008 the chain owned 8 stores across the UK, and now successfully boast over 200 stores / retail outlets selling their Franco-Belgian range of niceties of Mille-Feuilles and Eclairs.
The trading of the company’s shares has been suspended following the announcement of the financial crisis. An extraordinary general meeting has been scheduled for 1st November 2018. It is understood that 31.5 million ordinary shares have been placed with ‘institutional investors’, costing just 50p per share, compared to the pre-suspended price of over £4.
Johnson has loaned £10 million of his own funds on an interest free basis over a three year period, and a bridging loan up to £10 million has also been put in place (a bridge loan is a type of short-term loan, typically taken out for a period of 2 weeks to 3 years pending the arrangement of larger or longer-term financing), which is due to be repaid upon receiving proceeds of the placement.
Directors firmly believe that based on current information provided to them, and upon completion of the equity and debt fundraising, the company will be in a firm position to continue trading for the foreseeable future in its current form. The Financial Reporting Council have confirmed that they are considering further action, however cannot act appropriately until more information is made available to them. Accounting firm, Grant Thornton, have made no comment on Patisserie Valerie’s financial affairs to date.
Calls for Insurance Premium Tax freeze
Households have been forced to pay up to an additional £200 per year on their insurance policies when paying an hitherto unknown ‘stealth tax’, otherwise known as insurance premium tax (IPT). IPT is found when paying car, home, pet and medical insurance, and on average can add an additional £200 to your insurance payments during a 12-month period.
In November 2015, the IPT rate was 6%, however since then the rate has been increased by the government to a staggering 12% over a three-year period, leaving households with extra household insurance charges according to the Association of British Insurances (ABI).
An increase in car insurance policies by an average of £25 has been seen, as well as rises in pet insurance by £19, and home insurance by £16. The largest price hike has been seen in the Personal Private Medical Insurance market with a staggering £117 rise.
The UK has been announced to have the 6th highest rate of IPT across Europe, according to information released by the ABI. The Social Market Foundation (SMF) have revealed that the hardest hit are the households with the lowest incomes. This is due to 10% of underprivileged and poorest households spending a large amount of their disposable income to cover household insurance in the first instance.
The ABI are urging the government to freeze the tax in this month’s budget. The Director General of the ABI, Huw Evans recently commented on the situation. “The Chancellor has a difficult task ahead of him this budget but he should realise a raid on the responsible is the wrong way to balance the books”…“People buy insurance because it is a legal requirement or because they are wisely protecting their homes, businesses, families and health”.
Evans believes that another rise in tax would be a punishing and inexcusable act. A spokesperson from HM Treasury, in an interview with the press said that it is the decision of the insurance companies to pass on this cost to their customers and that the IPT is directly targeted to the insurers rather than the consumers.
Royal Bank of Scotland finally issue dividends
Royal Bank of Scotland shareholders have seen their first dividends paid since the bank was on the edge of collapse during the 2008 financial crisis. 62% of the bank is still owed by the government, when RBS received a £45 million bailout from the taxpayer during the 2008 crisis.
The payments have been an “important milestone” according to Ross McEwan, the Chief Executive of RBS. It is understood that approximately 190,000 shareholders have received a 2p dividend, a miniscule step in a bid to rebuild its trust with investors, something which, it is believed could take another 10 years to do so.
The government sold a portion of RBS shares at 271p per share, half of what they were paid for these a decade ago. RBS announced in August that they planned to pay dividends to investors as soon as a £4.9 billion clearance with the US Department of Justice over mortgage-backed securities was resolved.
McEwan said that the small return was an important milestone in the many years of patience that the shareholders had held, and that after nearing 10 years to the day that RBS was ‘rescued’ by the British taxpayer, the bank has started to generate sustainable profits.
McEwan admitted that although they have been able to create a “smaller, safer bank”, and are seeing profits, they are a long way from rebuilding the trust of the customers and shareholders. Its capital is now above expected targets. RBS are looking to ensure that shareholders receive released excess capital once they can do so.