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The countdown to the end of the furlough financial lifeline has begun, with employers facing increased costs amid a warning that millions of jobs now hang in the balance.From Thursday, the government’s contribution to furloughed workers’ wages falls.It is also the deadline for some firms to issue redundancy notices before the furlough scheme ends on 31 October.The current scheme is being replaced by a less generous jobs support package.Labour claims that as a result of the government’s “flawed” support, almost three million people working for small businesses are at risk of losing their jobs.New analysis from the party says that at the start of September an estimated 2.8 million workers in small and medium size firms (SMEs) were furloughed under the current Coronavirus Job Retention Scheme (CJRS).Since then new Covid restrictions have been imposed that mean 133,055 SMEs – including in the hospitality and events sectors – cannot operate or are trading at reduced capacity, it says.More than a million SMEs are still suffering a fall in turnover, with about 310,000 making less than half the amount they did over the same period last year, the analysis claims.Changes coming into effect on Thursday, along with other cost increases for employers, were announced in July.The government’s contribution towards furlough wages is dropping from 70% to 60%, up to a cap of £1,875 a month. And employers have to pay a minimum of 20% of wages, bringing monthly earnings to at least 80% of salary.In August, employers were required to meet the cost of pension contributions and National Insurance for employees placed on the scheme.There are also fears that the winding down of the furlough scheme could trigger a new wave of redundancies. Thursday is the deadline for employers to issue redundancy notices if they are planning to lay off between 20 and 99 workers before the scheme ends.The replacement jobs support scheme shifts more of the financial burden away from the taxpayer and on to employers. But the aim is to subsidise staff to work reduced hours so that employers resist mass redundancies.Critics say it will be more expensive to bring back furloughed workers. Sonia Hawkins, who runs Disco Equipment Hire, a music and lightening rental service for the entertainment industry, told the BBC the numbers just do not add up. She said: “We have next to no income. We’ve got people on furlough. We would have to bring them back and pay them just to get a subsidy. It’s nuts.”Employment lawyer Merrill April, from CM Murray, acknowledged that the new jobs support scheme would not make much financial sense for some employers. She told the BBC: “One of the condition is that employees have to work 33% of their normal hours so, in short, employers will have to pay at least 55% of an employees usual wage where the employee only works 33% of their usual hours.”However, she said that many firms supported the new scheme and would not rush to cut jobs. Redundancy is expensive, she said, adding that many firms would want to retain people and skills for as long as possible.The British Chambers of Commerce (BCC) said it was a critical time for employers, with its members facing cash flow difficulties ahead of what was likely to be a challenging winter.BCC co-executive director Claire Walker said further support may be needed.”As the Jobs Support Scheme replaces the furlough scheme, and employers are asked to pay more towards staffing costs, the government must stand ready to offer further support to businesses who may be unable to cover their contribution due to continued restrictions and reduced demand.”‘There are no jobs. It’s terrifying’Events manager Lisa, on furlough since March, was optimistic about returning to work over the next few weeks as Christmas festivities are always good for business.But the further restrictions on hospitality and imminent changes to the furlough scheme give Lisa’s employer no incentive to bring her back, she told the BBC. “Work has all but vanished since Covid. We have gone through a consultation period for redundancies. I’ve just no idea what is going to happen,” said Lisa, who did not want to disclose her surname nor employer for fear of saying anything to jeopardise future work. “The latest jobs support scheme does nothing to help those of us on furlough. I have been brought back one day a week, but what is happening now gives my employer no incentive to give me more days,” Lisa adds. She has asked her employer to take unpaid leave until March, but there has been no decision.”I have a lot of experience and have been applying for other jobs. I have searched and searched for different jobs since March. But there’s nothing.””I can understand what Mr Sunak is trying to do [to help the economy]. But it is so difficult for us. He doesn’t seem to have done anything that will help people like me.”Read more: ‘We have next to no income. There is no help.’Chancellor Rishi Sunak’s latest support measures announced this month have nevertheless received significant support, and were broadly welcomed by the CBI employers’ group and union leaders at the TUC.The Federation of Small Businesses (FSB) singled out for praise the pay-as-you-go scheme that allows firms more time to repay loans, saying it should give confidence to invest and hire. Business leaders also welcomed new tax cuts and deferrals.However, FSB chairman Mike Cherry said: “It’s important to remember that small firms have already spent thousands on putting safety measures in place but received no funding to support their efforts to do the right thing.”And Mr Cherry remains worried about the plight of the newly-self employed and company directors, who he said have received no income support whatsoever. He told the BBC: “We are concerned that the chancellor had said nothing on support for those who were left out of the first round of support measures. The government urgently needs to come forward with an emergency relief package for these groups which have dutifully paid their taxes and deserve help too.”Shadow chancellor Anneliese Dodds said the government had a “sink or swim” mentality. “Millions of jobs are at risk because he’s forcing small businesses to choose which staff to keep and which to fire. These are viable businesses that just need support to cope with the restrictions the government has imposed on them.” She said the chancellor’s job support changes were “pulling up the drawbridge at the worst possible time”.A Treasury spokesman said the support has reached, and continue to reach, millions of firms and people – citing loan schemes, VAT deferrals, business rates holidays, bans of tenant evictions, and sick pay rebates.”The [new] Job Support Scheme is designed to protect jobs in businesses facing lower demand over the winter due to Covid, and is just one form of support on offer to employers during this difficult period.”We’re also continuing to innovate in supporting incomes and employment through our Plan for Jobs announced in July, helping employees get back to work through a £1,000 retention bonus and creating new roles for young people with our Kickstart scheme,” he said.How will you be affected by the end of the furlough scheme? 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US Customs and Border Protection (CBP) has blocked the import of palm oil made by a Malaysian producer over forced labour concerns. CBP cited physical and sexual abuse, debt bondage and abusive conditions as reasons for blocking FGV Holdings. Shipments from the company and its subsidiaries will be held at US entry ports. In a statement, FGV said it had taken “concrete steps” to improve workers conditions.CBP said a year-long investigation revealed “restriction of movement, isolation, physical and sexual violence, intimidation and threats, retention of identity documents, withholding of wages, debt bondage, abusive working and living conditions, and excessive overtime.” What does palm oil have to do with Kashmir?
Kellogg’s changes palm oil policy after sisters’ petition
The investigation also raised concerns that forced child labour is potentially being used in FGV’s palm oil production process.FGV is a publicly-listed company, and according to its website it accounts for about 15% of Malaysia’s annual production of crude palm oil. Palm oil is used for a wide range of food products, cosmetics, pharmaceuticals and biofuels. “The use of forced labour in the production of such a ubiquitous product allows companies to profit from the abuse of vulnerable workers,” said Brenda Smith, executive assistant commissioner of CBP’s Office of Trade.
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“These companies are creating unfair competition for legitimately sourced goods and exposing the public to products that fail to meet ethical standards,” she said.The US has increased its use of import bans since 2016, when a change in US law renewed CBP’s ability to act against products made with forced labour.Over the last few months, the US has issued a number of so-called Withhold Release Orders against Chinese companies over alleged forced labour concerns in the Xinjiang province. ‘Concrete steps’ FGV expressed disappointment at the decision, and said it had taken “concrete steps” to demonstrate “its commitment to respect human rights and to uphold labour standards”.”It is worth reiterating that FGV does not tolerate any form of human rights infringements or criminal offense in its operations,” the company said in a statement. What is sustainable palm oil?
Supermarkets’ sustainable palm oil not fully traceable
The company’s plantations rely heavily on migrant workers, including more than 11,000 Indonesians and nearly 5,000 Indians. FGV said it had strengthened its procedures to hire workers and invested around $84m (£65m) to upgrade housing facilities on plantations. It rejected claims that it confiscated workers passports and said it had installed 32,000 “safety boxes” throughout all its 68 complexes to help workers secure their documents. Previous concernsFGV itself noted that its labour issues have been publicly debated for the last five years. Other organisations have previously voiced concerns over FGV’s practices. In January, the not-for-profit Roundtable on Sustainable Palm Oil suspended the sustainability certification process for some of FGV’s plantations. It also re-imposed a suspension of its certification for FGV’s Kilang Sawit Serting facility, which it suspended two years earlier over labour concerns before reversing its decision. FGV’s share price fell 8% on Thursday.

A technical problem has forced a full-day halt to trading on Japan’s stock exchanges, including the popular Nikkei 225 index. A Japan Exchange Group statement gave no details about the nature of the glitch and didn’t indicate when trading would resume again. Trading was also suspended at exchanges in Nagoya, Fukuoka and Sapporo, which are all linked to Tokyo. Officials say that there’s no evidence to suggest a cyber attack is to blame. “Trading in all shares on the Tokyo Stock Exchange is suspended due to glitches linked to the delivery of market information,” Japan Exchange Group said in a statement.Tokyo’s roughly $6tn (£4.6tn) stock market is the world’s third largest, after New York and Shanghai, according to data from the World Federation of Exchanges.The trading halt closed one of Asia’s few major regional markets on Thursday, with exchanges in Hong Kong, Shanghai, South Korea and Taipei all closed for holidays.The suspension soured the mood of some investors, who were expecting the market to rebound after an acrimonious US presidential debate pushed the Nikkei 225 1.5% lower on Wednesday. New Zealand stock exchange halted by cyber-attackThe trading halt was the exchange’s first significant glitch since 2018, when a trading system problem left some securities firms unable to make orders.The Nikkei 225 index includes the shares of many of Japan’s biggest companies including Honda, Nissan, Hitachi and Canon.Cyber-attacksMany stock markets have been hit with temporary glitches in the past. In August, the New Zealand Exchange was hit by cyber-attacks that forced it to halt trading over the course of one week. Over the past decade, the tech-heavy Nasdaq, the New York Stock Exchange, the London Stock Exchange, the Singapore stock exchange and Bombay’s Sensex have all faced technical glitches that have delayed trading. In 2017, a temporary market error saw the share price of several major tech firms wrongly listed at the same price on the Nasdaq.

Starting your own business as a young person can be a gamble.It might be just you and a friend taking a risk to build your idea into something sustainable.So what happens when a pandemic comes along?Three entrepreneurs tell Radio 1 Newsbeat how they managed to adapt their businesses to the “new normal” – and give their tips if you’re hoping to go it alone too.Zoe Lucock’Don’t be afraid to ask for help'”There is no right time to start a business, you just don’t know what’s around the corner”, food truck owner Zoe Lucock says.The 28-year-old runs Trailer Trash with her mate Jessica Buckley. Before the coronavirus pandemic, the pair had their summer booked up serving burgers and cocktails at weddings and festivals. But thanks to lockdown it was all cancelled, so they started looking for something more stable that would provide an income. They decided to throw their energy – along with some savings – into changing their business. So they bought an old train carriage and recruited some friends who were furloughed to help renovate it into a café. It now sits on a old train line in Stratford and they serve take-away coffees to passing dog walkers and cyclists.”Everyone is feeling safer outside, which is what we can offer, with outdoor seating and take-aways”, Zoe says. “Without having the breathing space and time to do it I don’t think we would have taken it on.”Zoe says you should never be afraid to ask for help “whether that’s from the county council, government grants or loans” to support your plans.Feedback from friends, family and existing customers helps too. “Take on positives that you hear, and just go for it,” she adds. The friends have plans to turn it into a proper café, serving food and wine, and they hope it will last as a long-term approach.”We know we can adapt this business model if we go into another lockdown,” Zoe says. How to be your own boss by 25Keaton Rich’Broaden your horizons to get work’Like Zoe, Keaton Rich’s entire year of work was cancelled. He’s a photographer who shoots artists at gigs, festivals and events all over the world.”I realised if I couldn’t go outside and take photographs, I’d have to go and do something else,” the 25-year-old tells Newsbeat. So he fell back on other skills he had and added these to his company’s portfolio. “I went back into my old path of graphic design, designing and rebranding websites, consultancy. It means in the long run I can make a similar salary as when I take photos.”Keaton’s taken on jobs he wouldn’t normally have done in order to pay the bills, and says you should put “ego” aside.And diversifying what he does has ended up been a positive step.As well as taking on new clients – from fashion to insurance – he’s ended up doing unexpected jobs he loved, including designing a vintage football shirt.He says when you work for yourself you’ve got to take every opportunity you see.”I don’t know if we’re all going to go out and do our day to day jobs in the future. But there’s a way to put yourself in a better position by taking jobs that come your way. Always ask for feedback, don’t be afraid.”Emily Hale’It’s about being agile, adapting and being innovative’For some people, the pandemic has given them the drive to quit their “9 to 5″ job and start a business. Emily Hale was furloughed from her marketing job in March, which she says gave her the time to build her pilates brand online.She was already teaching some pilates in her spare time, and just before she was furloughed she was asked to do a live class for Gymshark.”That really gave me the confidence, that I could succeed as a pilates teacher,” the 22-year-old says. Emily had scoliosis and as a result, had a spinal fusion, so she found traditional styles of pilates didn’t work for her. She started exploring different techniques that worked for people with back conditions.”I made myself a website and I started to post more content and videos.” In lockdown she redecorated a spare room at her mum’s house, and turned it into a studio. She started streaming more classes and quickly got booked up.So she quit her marketing job to focus full time on teaching – and now makes more money from her bedroom than she did in her previous role.If you’re thinking of becoming self-employed, Emily says starting an online business is a sensible move.”Fitness was completely offline until a few years ago, but now there’s been an explosion in fitness apps and zoom classes – helped by lockdown.”It’s obviously a big challenge being at the start of a business during this pandemic, but it’s really helpful being online – it means you can change your strategy and how you operate with a click of a button.”Follow Newsbeat on Instagram, Facebook, Twitter and YouTube.Listen to Newsbeat live at 12:45 and 17:45 weekdays – or listen back here.

More than 100 sewing machines rattle away at a factory on the outskirts of Kigali, the capital of Rwanda.A cooperative of 83 of the African nation’s tailors established the company – the Kigali Garment Centre – last year.Located in an industrial area built on one of the rolling green hills surrounding the city, it was set up in line with the Rwandan government’s strategy of boosting the country’s clothing manufacturing sector.”We’ve trained 130 youngsters, of whom 97% are female, since the factory launched,” says the firm’s director general and co-founder Jerome Mugabo.Behind him on the main factory floor, employees, who all seem to be in their teens or 20s, are producing chino trousers.Rwanda’s efforts to boost its domestic garment industry have seen it fight a lonely, and continuing, trade battle with the US that dates back to 2015.Back then the six members of the East Africa Community (EAC) block of countries – Burundi, Kenya, Rwanda, South-Sudan, Tanzania, and Uganda – announced that they would all put in place high tariffs on the import of second-hand clothing or “chagua”.The idea behind the de-facto ban was to stop the importation of large quantities of cheap used clothing, mostly from the US and the UK, which the African nations said were stifling the growth of their nascent garment industries.The extent of the issue for the six countries was shown by widely reported 2015 figures from the US Agency for International Development (USAID). The USAID said that in that year, the EAC states accounted for almost 13% ($274m; £213m) of the global imports of used clothing.The study also found that almost two thirds of the combined populations purchased some second-hand clothes.Keen to hang on to its share of these exports, the US responded that the proposed ban would violate free-trade agreements, and it threatened to remove the EAC countries from the African Growth and Opportunity Act (Agoa).Enacted back in 2000, this allows 39 sub-Saharan African nations to export thousands of goods duty-free to the US.After the US’s announcement, all EAC members except for Rwanda backed out. It went on to introduce a tariff of $4 per kilogram on imports of used clothing in 2018. The US responded by putting tariffs of 30% on Rwandan clothing, where there had previously been none.While Rwanda was only exporting about $1.5m of clothing per year to the US at the time, this stopped that overnight, and meant that the African nation could not hope to increase it.However, Jerome Mugabo say he remains pleased by Rwanda’s decision to go it alone. “It helped us to set up our business, as we get more customers since the ban,” he says.Ritesh Patel, managing director of Rwanda’s oldest garment factory – Utexrwa, which was founded in 1984 – agrees.”Rwanda needs to do this to be able to grow its economy,” he says. “As people were able to buy a second-hand men’s shirt for 800 Rwandan francs [84 US cents; 64p], they were not interested in a new men’s shirts of 4,000 Rwandan francs that we could produce.”For years Utexrwa had focused solely on the production of uniforms, for the police, companies and schools. But since the ban on second-hand clothing imports, it has expanded into ordinary clothes, like men’s shirts.”It really helps that we no longer have to compete with cheap chagua, while we simultaneously witness a quickly growing middle class that will be able to afford “Made in Rwanda” products,” adds Mr Patel.Yet where there are winners, there are also losers. “Life has become very difficult,” says Rajabu Nzeyimana, who stands behind a wooden market table piled high with second-hand boxer shorts, and a basket full of second-hand socks.The 42-year old father has sold used clothing for seven years, but since 2018 has been forced to start buying it at a much higher price from traders who smuggle it from the Congolese border town Goma into Rwanda.”My sales plumped because I had to increase my prices fivefold to be able to make a living,” he says.Mr Nzeyimana adds that he now struggles to pay his children’s school fees.The withdrawal of the Agoa trade benefits for apparel also makes Rwanda less attractive as a manufacturing base for international garment producers.Chinese firm C&H Garment closed its factory in Kigali a few months after the US retaliated. It had exported more than half of its production to the US.Another Chinese clothing firm with an operation in Rwanda – Hong Kong’s C&D Products – agrees that the stand off with the US is an issue. “It is obviously a problem,” says Maryse Mbonyumutwa, co-owner of its Rwandan subsidiary.Such Chinese firms are increasingly interested in opening factories in Africa, as the labour costs are much lower than in China. What C&D is now doing is exporting to Europe from its Rwandan factory, while planning to build two manufacturing sites in Tanzania to focus on the US market.To help the country’s clothing manufacturers, the Rwandan government has removed import taxes on raw materials such as cotton. And new factories get grants and loans.Some experts, however, doubt if Rwanda will be able to build a competitive clothing industry. While Uganda, Kenya, Tanzania, Ethiopia and Burundi are major cotton producing countries, Rwanda needs to import this raw material, as the tiny state isn’t suitable for major cotton production, being a mountainous and extremely densely populated country.Water and electricity are also costly, and road transport is extremely bureaucratic and expensive as Rwanda is a landlocked country. The ban on used clothes also seems to have a totally different – unintended – effect as it pushes Rwandans to start buying cheap, imported new Chinese clothes.”The government should have waited until the country had build a mature textile industry before banning chagua,” says clothes seller Felicien Maniraguha. He has switched from selling imported used clothes to imported new Chinese ones.Global TradeMore from the BBC’s series taking an international perspective on trade:Mr Maniraguha says that local clothing production is still on too small a scale, and that the garments are not fashionable enough.”Local garment factories currently only ensemble boring clothes that look like uniforms,” says the 30-year-old.He contrasts this with the fashionable Chinese-made jeans and floral pint T-shirts that he is currently selling. “Rwandans prefer clothes that look modern,” he says. “I doubt if the local textile industry will ever be able to produce nice, fashionable clothes that will become more popular than cheap Chinese imports.”

The government was warned in May that its flagship loan scheme to help small firms affected by Covid was at “very high risk of fraud” from “organised crime”, it has emerged.The state-owned British Business Bank (BBB) which supervises the Bounce Back Loan Scheme, twice raised concerns. A BBC report revealed that criminals were setting up fake firms to get loans worth tens of thousands of pounds. The Bounce Back Loan Scheme has already paid out more than £38bn.In early May, just two days before the scheme launched, the chief executive of the BBB, Keith Morgan, wrote of the “very significant fraud and credit risks”, adding that it was “vulnerable to abuse by individuals and organised crime”. The bank, he said in a letter to Business Secretary Alok Sharma, could not guarantee “robust controls”. Other concerns included an “extensive reliance on customer self-certification” and “potential for market distortion”. He said that the BBB had commissioned a review of the scheme by accountants PwC, which had classified its fraud risk as “very high”. In his letter, dated 2 May and which followed a email warning the day before, Mr Morgan also raised concerns that the quick introduction of the scheme had “created huge operational challenges”.However, Mr Sharma said the scheme should go ahead despite the risks, because of what he called the “unprecedented situation facing the country”. Bounce Back Loans are 100% government-backed loans of up to £50,000, and were introduced to mitigate the huge pressure on small businesses after the economy went into coronavirus lockdown. They do not have to be paid off for six years, and are interest-free for the first 12 months.According to latest Treasury figures, there have been 1.55 million applications, with 1.26 million approvals and £38.02b paid out.At the weekend, the BBC’s Angus Crawford revealed how fraudsters were targeting the loan system. One bogus company, Tellings Home Made Furniture, “borrowed” £50,000 by stealing the personal details of a man called Mark Telling.
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The revelations come after the head of the National Audit Office told the Guardian Bounce Back Loans were the “riskiest” of all the bailout measures.But a government spokesman told the BBC the loan scheme had been vital for many businesses and that fraudsters would be pursued.He said: “Our loan schemes have provided a lifeline to thousands of businesses across the UK – helping them survive the outbreak and protecting millions of jobs. “Our support has been targeted to ensure we help those who need it most as quickly as possible and we won’t apologise for this.”He said the government worked with agencies to minimise fraud, “with lenders implementing a range of protections including anti-money laundering and customer checks, as well as transaction monitoring controls. Any fraudulent applications can be criminally prosecuted for which penalties include imprisonment or a fine or both”.

From today, the government is cutting the amount it puts towards the salaries of furloughed workers. That will put extra pressure on employers to lay off staff rather than keep them on furlough. Under the furlough scheme, staff are paid 80% of their usual wages. The government had been contributing 20% towards their pay. Now it is cutting its share to 10%. Three million people on the UK are on furlough. Many are worried that their jobs could now be axed. Chris Bailey, a hotel night manager, is one of them.

When you start a new company, don’t aim to attract the big clients. Feed at the bottom of the tank. That’s the advice of one Britain’s most renowned headhunters, Richard Spencer-Percival. He has founded a number of recruitment companies in this way and grown them into giant enterprises.Video by Jeremy Howell

A 19-year-old woman has begun a campaign to ban all unpaid work trials after she worked a five hour shift in a restaurant and didn’t get paid.Ellen Reynolds, from Glasgow, had to buy a shirt and trousers for a uniform as well so ended up £20 out of pocket.”In Britain it’s expected that companies pay for goods and services. A trial shift is no different.”For whoever is doing the trial shift they are working for the company, they are making them money.”Legal “grey area”Ellen says she’s lucky because she’s only relying on part-time work to support her while she studies; “I’ve got the luxury that if I need to my parents can help me out.”Other people don’t have that luxury and can’t afford to work for free. But at the same time they can’t turn down a potential job because they need the money.”So many people have lost their jobs but that doesn’t mean that businesses should take advantage of that.”There’s no specific law covering this issue and what the restaurant did wasn’t illegal.Instead the area is covered by legislation around the National Minimum Wage Act 1998.”The thrust of the legislation is that any person who performs work for a business or organisation is entitled to the National Minimum Wage” says John Skelly, employment partner at Baker Skelly LLP.”However, there are exceptions for individuals involved in a scheme for the ‘seeking of or obtaining of work’ or that is ‘designed to provide training, work experience or temporary work’.”In short, it’s a grey area under the law as it exists at the moment and it is open to abuse, especially in the hospitality industry where it does seem to be a feature of recruitment.”Ellen told Money Box she worked from 4-9pm and did everything a waitress would be expected to do: “I ran food and drinks to customers. If they needed anything like another drink, napkins, cutlery, parmesan, I got them that.”I cleaned the tables, set up the tables, swept the floor, took people to their seats, pretty much everything you’d expect of a waitress, took a few payments on the card machine.””Unfair”Even if the trial was unsuccessful and the restaurant didn’t want to give Ellen any more shifts she argues they should have at least paid her for the work she did do.”They didn’t ask me anything new, it really was just the trial that they wanted me there for. “It’s unfair that just because you don’t want to hire them later on you’re not going to pay them for the services they provided you. “Ellen’s now started a petition calling on MPs to have a debate in Parliament about banning unpaid work trials.It’s something SNP MP for Glasgow South, Stewart McDonald, tried to make happen in 2018 with a private members’ Bill; “Ever since the government talked out [did not support] my Bill to ban unpaid trial shifts, I’ve been trying to get them to see the error of their ways and fix it.”More than two years campaigning against exploitative, unfair, unpaid trial shifts, I still hear horror stories from people who are being asked to work hours unpaid, without knowing if they will get the job or if there even is one available. “The current law is not working, and the UK government must now commit to a ban on unpaid work trials – a fair day’s work deserves a fair day’s pay.”In response the government said; “It is already illegal to employ people on unpaid work trial periods for an excessive period of time, or where the trial is not part of a genuine recruitment process.”If you are a worker you should be paid at least the minimum wage. Businesses that are found to be breaking the rules can face unlimited fines, disqualification of directors or being named and shamed.” You can hear more on BBC Radio 4’s Money Box programme by listening again here.Follow Money Box and Dan on Twitter.

US tech firm Palantir, known for supplying controversial data-sifting software to government agencies, has fetched a market value of nearly $22bn (£17bn) in its debut on the New York Stock Exchange.It’s a lofty figure for a firm that has never turned a profit, been hit by privacy concerns and relies on public agencies for nearly half of its business.But the company, which takes its name from the “seeing stones” known for their power and potential to corrupt in Lord of the Rings, says the need for the kind of software it sells “has never been greater”.The firm, which launched in 2003 with backing from right-wing libertarian tech investor Peter Thiel and America’s Central Intelligence Agency (CIA), builds programs that integrate massive data sets and spit out connections and patterns in user-friendly formats.Palantir expansionThe firm – sometimes described as the “scariest” of America’s tech giants – got its start working with US soldiers in Iraq and Afghanistan, but now supplies software to police departments, other public agencies and corporate clients.It is active in more than 150 countries, including the UK, where it was one of the tech firms the government enlisted this spring to help respond to coronavirus. NHS uses tech giants to plan coronavirus response
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In the first half of 2020, Palantir revenue rose 49% year-on-year, topping $480m (£373m). And at its direct listing on Wednesday, in which investors sold some of their existing shares to the public, shares opened at $10 each – above the $7.25 reference price – giving it a value of roughly $22bn.Mark Cash, equity research analyst at Morningstar, who has estimated the firm’s value at $28bn – even higher than the valuation reached on Wednesday – said the firm is well-positioned in a growing industry.”Data integration at this scale for the government is very complex and I think if you tried to stop spending on that and it just goes away, you’re going to have some big problems,” he said. “We think it’s very hard to switch away from once you’re in as a customer.” ICE and privacy protestsBut Palantir’s rise has been shadowed by concerns from privacy experts, who say the firm’s tools enable surveillance and analysis of data – everything from drivers licenses and social media posts to DNA swabs – that skirts people’s right to privacy and is ripe for abuse.In the US, the use of its technology by immigration authorities to help round-up undocumented immigrants has drawn heated protests and in the UK, the health data handled by the firm has also raised alarms.Ahead of the firm’s listing, Amnesty International issued a report saying the firm was failing its responsibility as a company to protect human rights with inadequate due diligence into who it is working for.   “We have to move away from the idea that data analytics and data collection is objective or clean or immune from all the pathologies that we’re seeing play out right now,” said Paromita Shah, executive director at Just Futures Law, which focuses on immigration law. “Our governments are the problem because they don’t want to set up oversight, but Palantir takes advantage of it.”‘We have chosen sides’Palantir told Amnesty that it had deliberately declined some work with border authorities in the US due to the concerns.But the company has also vigorously defended its government work, maintaining that its clients own and control the data. It says it has a team focused on civil liberties issues, but it is government’s job to craft policy, not Silicon Valley’s. It has contrasted its commitment to some other tech firms, such as Google, which stopped work on an artificial intelligence project with the Pentagon after a backlash from employees.”Our company was founded in Silicon Valley. But we seem to share fewer and fewer of the technology sector’s values and commitments,” chief executive Alex Karp wrote in the filing announcing its plans to sell shares to the public. “We have chosen sides, and we know that our partners value our commitment”.The outspoken defence is perhaps little surprise, coming from a firm co-founded by Mr Thiel, who famously abandoned Silicon Valley in 2018, decrying its liberal politics. Mr Thiel, whose estimated $2.1bn fortune was fuelled by the sale of PayPal and an early investment in Facebook, funded the Hulk Hogan invasion of privacy case that bankrupted gossip news site Gawker and has given generously to conservative politicians. In 2016, he donated more than $1m to US President Donald Trump, though he is reportedly sitting out this election cycle.By contrast, chief executive Alex Karp, who met Mr Thiel when they both attended Stanford Law School, is a self-described neo-Marxist and “card-carrying progressive”, with a doctorate degree in neo-classical social theory from a Goethe University in Germany. He displays Tai Chi swords in his offices, according to Bloomberg and the firm’s presentation to investors this month opened with a video of him racing up a hill in orange exercise gear.Prospective investors have to be “comfortable” with the firm’s leaders – especially since, under the terms of the listing, they will continue to wield outsize voting power over the firm, even after ownership shifts to the public, said Mark Moerdler, senior research analyst at Bernstein Research.His team also warned in a recent note that the controversies could hurt the firm’s efforts to win private sector clients.”Politics has entered business in a way we haven’t seen before and you see large companies being influenced by employees and others in interesting ways,” Mr Moerdler told the BBC. But, he added, “I don’t think it will fundamentally impact their ability to grow the business if the opportunities are as large as they believe they are.” Palantir may be an American company, but it actually employs more people in London – just shy of 600 – than in either its Silicon Valley base or Denver headquarters.That reflects both the work it does for European clients including BP, Airbus and Ferrari – but also its UK government contracts, which predate the coronavirus pandemic by several years. These – a source told me – have included work with GCHQ’s cyber-spies as well as publicly declared work for the Ministry of Defence.Big data analytics may sound like a dry subject, but speak to the firm’s staff and they can speak passionately about a job that they say has involved helping fight drug cartels, catch child predators and prevent terrorist attacks.But while Palantir might like to highlight the lives it helps save, it has also been accused of having “blood on its hands” by civil rights protesters. They object to its tech bring used to identify places where illegal immigrants are working so the properties can be raided and those arrested deported.In fact, the firm has effectively become the boogeyman of surveillance tech.Shareholders will have to be aware that while many states and companies see benefit from using its software, there are also many with an interest in exposing any further controversies it might be involved in. Palantir financial prospectsJust how big those opportunities are remains an open question.While its efforts to make inroads in the corporate world were rocky initially, Palantir’s commercial business has grown. It now accounts for 53% of revenue and includes customers such as French airplane-maker Airbus and energy giant BP.And Palantir has said it is well-poised to continue to win government work, thanks to a lawsuit it won against the US military in 2016, which requires the government to consider commercially available products first. The firm’s finances have also improved in recent years, amid pressure from early backers to list shares publicly and allow them to cash out.In 2019, the firm brought in $743m in revenue, up 25% from the year before, with some 60% of sales from outside the US.But Palantir still posted a loss of nearly $580m last year and relies on a relatively small number of clients for the majority of its revenue. Its nearly $22bn opening valuation was only a bit higher than the $20bn private investors valued the firm when it fundraised five years ago.And as Palantir starts to trade publicly, scrutiny has only grown. This month, liberal US politicians, including Rep Alexandria Ocasio-Cortez, asked financial regulators to investigate the firm, saying the information it had provided to investors lacked transparency on key areas of risk, including data protections and work with foreign governments.Growth will depend on landing new, large deals every year while retaining their profitable clients – and the firm hasn’t shared much about its record, said Mr Moerdler. “If they can make the product critical to an organisation, it can be sticky, but the road there is long,” he said. “In terms of growing, it still needs to be proven.”