Sky Business News Articles

Administrators to one of Britain’s biggest care home operations have resumed a delayed break-up of the group by entering talks to sell its business in Northern Ireland.
Sky News understands that Alvarez & Marsal, which has been overseeing the bankrupt parent company of Four Seasons Health Care (FSHC) for almost 18 months, has begun a process to sell a portfolio of 42 sites in the country.

The sale process comes amid a crisis for the UK’s care homes sector, which has been attempting to deal with the catastrophic impact of the coronavirus pandemic.
The auction of Four Seasons’ business in Northern Ireland, which is at an early stage, involves homes accounting for just under a quarter of the company’s remaining 184 sites across the UK.
Roughly 2,200 people work for the Northern Irish operation, out of a total of 12,000 across the group.

Advertisement

Four Seasons’ parent company collapsed in April last year, sparking fears for the future of what was then Britain’s second-largest care home group.

Since then, the management of the vast majority of its leasehold homes has been taken over to other operators such as Barchester.

More from Business

The company’s future had effectively been uncertain since 2017, when owner Terra Firma Capital Partners failed to meet a debt repayment deadline.
Terra Firma first invested in the company in 2012, having paid £825m for it.
In August, Four Seasons said that admission levels had begun to recover after falling to more than 70% below pre-coronavirus levels.
It added that shielding and self-isolation had driven up staff absenteeism to just under 11%, although this had since reduced.
A spokesperson for Four Seasons Health Care said this weekend: “Our utmost priority remains ensuring the safety, quality of life and continuity of care for all of our residents.”
A source close to the company said that significant progress had been made in the restructuring of Four Seasons since last year, including the unification of its care home business’ operations, and the successful migration of its onerous leasehold portfolio.
They added that the sale of its operations in Northern Ireland made “strategic sense” because it operated in “a separate territory and under a different regulatory regime”.

The housing market is the most unequal it’s been in a decade, according to experts.
Despite the UK entering a recession the market is booming, with house prices rising 5% on an annual basis in September, according to the Nationwide House Price Index.

But the state of the economy has left lenders anxious and many aren’t granting mortgages to those with smaller deposits.
The availability of 90 and 95% mortgages has plummeted.

Please use Chrome browser for a more accessible video player

PM’s fixed-term mortgage pledge

These two concurrent trends mean that despite the boom, there’s increasing inequality in housing, with the less well off and many first time buyers even further away from entering the market.

Advertisement

One of the government’s social mobility commissioners described the situation as “deeply damaging,” and exclusively told Sky News that the current state of the housing market will “widen inequality.”

Dan O’Toole is a first-time buyer and looking to purchase his first home with his fiancee Sophie.

More from Business

They were due to get married this year but opted to postpone the wedding and use the money to save for a 10% deposit.
They started house-hunting in earnest this summer and found something they loved, but soon ran into problems.
“We tried to do the online mortgage agreement in principle, with about three different lenders,” he says. “Each time it said ‘declined, rejected, big red cross’.”

From the shops to the skies – tracking the UK economy’s recovery from lockdown

They discovered that lenders were tightening up, 10% was no longer going to be enough – most were asking for 15 or even 20%
“We’re looking at a small-ish two bed flat on the outskirts of London,” says Mr O’Toole “We’re talking, we need £70,000 for a deposit now, which is an enormous amount of money, double the amount we were initially looking at.
“So we’re in a bit of limbo.”
Their experience is far from unusual. Mortgage lenders have pulled their riskiest products, raised borrowing rates and tightened lending criteria.
In fact, data from Moneyfacts Group shows that the availability of high loan-to-value mortgages has plummeted in recent months.
At the beginning of the year there were 386 95% mortgage mortgage products available, but on 1 October there were just 12 and many of those were aimed at commercial bodies rather than individuals.

Image: Availability of high loan-to-value mortgages
It means that the market is increasingly only accessible to those with large amounts of credit, either in the form of an existing property, or loans from family members.
At the same time wealthy buyers are active in the market, buoyed by a cut in stamp duty and pent-up demand during lockdown.
In fact, the sale of properties over £500,000 were a much higher proportion of transactions in the third quarter of 2020 than in 2019.
All of this is leaving younger, first-time buyers with little cash and no access to the bank of mum and dad.
“The problem for [first time buyers] is they’re excluded from the market, they just they don’t count in effect towards housing market activity or house prices,” explains Neal Hudson, a housing analyst at BuiltPlace.
“It’s people who are in the market that count. And with a low turnover market, we can have a very small number of buyers actually driving activity.”
The impact of these trends is beginning to show. Zoopla’s September House Price Index showed that demand from first-time buyers has started to wane significantly below that of house movers – many likely priced out.

Image: Demand in the housing market
According to Zoopla, Nottingham is the city in the UK where house pieces rose the most steeply this year.
Houses there were on average 4.7% more expensive this August than they were the same month last year.
Richard Cardwell is a senior valuer at Walton & Allen estate agents in the city. He’s been selling houses there for two decades.
He says there are still options out there for first-time buyers but the market is challenging.
“We’re seeing more money from London and the Home Counties than I’ve seen in over 20 years coming into the city,” he says.
“[They’re] looking for those yields, looking for those investments. It’s bad news for first-time buyers, because those ones are the great properties to buy to rent out.”

The expansion of the government’s job support scheme will put close to one million roles at risk and is like throwing whole sections of the economy on the “scrapheap”, Labour has said.
The shadow business secretary, Ed Miliband, also said fewer than one in 15 jobs in shut-down businesses stand to benefit from the move.

Mr Miliband added that workers in sectors such as weddings, cinemas and events and conferences, which are not “legally closed” but have been forced to “shut in all but name”, will not enjoy protections from the programme.
The government has announced employees off work for more than seven consecutive days because their workplace was legally required to close due to local or national restrictions will get two-thirds of their salaries covered, up to £2,100 per month.
The scheme will be in place for six months from 1 November.

Advertisement

Labour said there was a “massive hole in the new safety net” because businesses “shut in all but name” due to the restrictions employed hundreds of thousands of workers in sports clubs, events and conferences, cinemas, the wedding industry as well as live music venues and theatres.

The opposition party said reduced capacity, less trade and strict public health measures mean many businesses will be severely restricted and essentially closed without meeting the threshold of being “legally required” to shut, as will many suppliers who face a knock-on hit.

More from Covid-19

Mr Miliband said ministers should “urgently rethink their damaging sink-or-swim approach which consigns whole sectors of our economy to the scrapheap”.
He said: “The government has been forced into a climbdown about the principle of supporting shut-down, so-called ‘unviable’ businesses and jobs.
“But there are massive holes in the new safety net.
“Businesses including weddings, theatres, cinemas, events, and many suppliers will still be left out on a technicality.
“They are not legally closed but they’ve been forced to shut in all but name.”
Labour said of more than one million jobs in severely restricted sectors, just over 73,000 people – those working in nightclubs, or in theatre and live music in Scotland and Wales – stood to benefit from the extension, equivalent to fewer than one in 15 jobs.

Please use Chrome browser for a more accessible video player

Rishi Sunak on job support scheme expansion

A Treasury spokesman said: “We do not recognise these figures.
“The expanded job support scheme is designed to support jobs where businesses are legally required to close – so the number of people that benefit from this scheme will obviously depend on the path of the virus and the restrictions we need to put in place.
“In addition, this incorrectly lists some sectors as not benefitting from the scheme when they will.
“It is also incorrect to suggest that those who aren’t fully closed will not get any help. Companies that are open can use the other element of the job support scheme which is aimed at those able to open but at lower levels of demand.
“And of course they can also access the other help we have made available, including billions of pounds of grants, loans and tax cuts.”

:: Subscribe to the All Out Politics podcast on Apple Podcasts, Google Podcasts, Spotify, Spreaker
The government intends for those employed by business conferences, exhibition centres, and sports stadia unable to reopen will be covered by the expanded scheme, with further details to be set out soon, it is understood.
Labour shadow chancellor Anneliese Dodds said the scheme needs to include a training element so workers can “develop their skills and prepare for the future”, adding it should be “targeted so that those sectors hardest hit by the virus, and which will be critical to our economic recovery, are supported, not just those which have been closed. This virus is having a much broader impact”.
She told the Co-operative Party online conference on Saturday that re-training schemes for workers needed to be implemented right away, saying the “vast majority of what the government has announced on training does not kick in until next April”.
The Labour and Co-operative MP for Oxford East went on: “Overall all of the government measures taken together to support those people who’ve become unemployed will just be helping one in five of those the government itself expects will be out of work by the end of this year.”

Exploited workers in textile factories in Leicester have been denied over £27m in lost earnings in the last three months, according to the British Retail Consortium.
It wrote to the home secretary in July to urge the government to implement a licensing scheme to tackle illegally low paid and unsafe conditions in some garment factories.

It received no response and has written again, telling the Home Office: “The BRC calculates that exploited workers in garment factories in Leicester alone are collectively being denied £2.1m a week in unpaid wages.
“This equates to over £27m since we raised this issue with you in July. This is entirely unacceptable.”
Ritu, who asked us to change her name to protect her identity because she’s afraid of the consequences of speaking out, has worked in textile factories in Leicester for the last six years.

Advertisement

Her payslip states she’s paid the national minimum wage, £8.72 per hour, for 42 hours of work each week.

But she says that doesn’t tell the true story, as she’s forced to work seven days a week for many more hours than she’s paid for.

More from UK

“It’s 65 hours, 75 hours a week,” she says.
“No sick pay, no benefits, only work. I’m working for £5 an hour.”
She says it’s not worth trying to find a job in another factory because “every factory, £5, £5”.

Image: ‘Ritu’ told Sky News she’s scared of her bosses

Image: Many of the factory buildings are badly rundown
Asked if she’s scared of the factory bosses, she replies “yes, of course”.
She doesn’t believe her English is good enough to find other work so feels unable to leave.
There are as many as 10,000 people working in hundreds of garment factories and workshops in Leicester.
The head of sustainability at the BRC, Peter Andrews, says there must be greater regulation of the industry.

Image: The BRC’s Peter Andrews wants a licensing system brought in
“We’re asking the home secretary to implement a tried and tested licensing system,” he tells Sky News.
“So that no business will be able to operate without having first had a check by the authorities that it is ensuring that the minimum wages are being paid, that their health and safety practices are up to scratch and that workers are treated fairly.”

Image: Thousands work in garment factories and workshops across Leicester
The number of calls to the national Modern Slavery Helpline have increased – from workers in Leicester and beyond.
Justine Corrall, executive director of the charity Unseen UK, says there is a systemic problem, with some workers earning as little as £3.50 an hour.
“It’s not just in one factory or one location, it’s right across the piece,” she says.
“So if workers raise the alarm, say there is an issue, then unfortunately the chances are that they won’t get a job in one of the other factories.
“Also there are threats of violence – of actual physical violence as well, not only to them but also to their families.

Image: Justine Corrall says workers and their families are sometimes threatened
“And some may not have regularised status in the UK, which means that they’re unlikely to speak out because it might jeopardise their situation further.”
A Home Office spokesperson told Sky News they had received the letter from the BRC and would respond in due course.
They added: “Exploiting vulnerable workers for commercial gain is despicable and we expect businesses to do all they can to tackle abuse and exploitation in their supply chains.”We are deeply concerned by the appalling reports of illegal and unsafe working conditions for garment workers in Leicester, and will ensure perpetrators face the full force of the law if evidence comes to light through the work of our new specialist Taskforce, led by the Gangmasters and Labour Abuse Authority.”

Malaysia Airlines could be forced to shut down if a restructuring plan fails to gain support, the airline’s boss has said.
Group chief executive officer Izham Ismail told Asian business news weekly The Edge that there would be “no choice but to shut it down” if lessors decided not to back the plan.

Mr Izham said: “There are creditors who have agreed already. There are others still resisting, and another group still 50:50.

Image: Malaysia Airlines chief executive Izham Ismail says some creditors have already agreed to restructuring
“I need to get the 50:50 ones with those who have agreed. I understand quite a sizeable amount of creditors have agreed.”
He said the five-year plan would see the airline break even in 2023, but this assumes demand in the domestic and southeast Asian markets is back at 2019 levels by the second and third quarter of 2022.

Advertisement

The airline would also need more cash over the next 18 months from shareholder and state wealth fund Khazanah Nasional.

Earlier, a group of leasing companies – claiming to represent 70% of the planes and engines leased to the airline – called the restructuring plan “inappropriate and fatally flawed”, according to a Reuters report.

More from Malaysia

However, Malaysia Aviation Group (MAG) – the airline’s parent company – said on Saturday that it was “pleased” with the level of support for the plan and talks continue.
“MAG reiterates that the spirit of its restructuring plan is not intended to create unnecessary pain among its creditors but is done in good faith to drive for the long-term survivability of MAG and its dependent value chain of partners,” it said.

Coronavirus: Where the jobs have been lost

Mr Izham said the lessors would need to decide by Sunday so the airline could proceed with restructuring or “execute Plan B”.
He said Plan B could involve moving Malaysia Airlines’ air operator’s certificate to a new airline under a different name or leveraging on the certificates of sister airlines Firefly and MASwings.
He said this plan was “credible”, adding: “We have all the skills sets in place.”
Like most airlines, Malaysia Airlines has struggled with the decrease in demand brought about by the coronavirus pandemic.

Image: Malaysia Airlines’ problems go back to 2014, when a plane disappeared and another was shot down over eastern Ukraine
Earlier this month MAG said the financial impact from the COVID-19 crisis had forced the group “to take drastic steps in revising its business plan to ensure relevance and survival”.
Some 25 of its 88 planes are currently in storage, according to aviation analytics company Cirium.
But its problems go back to the disappearance of flight MH370 and the shooting down of MH17 over eastern Ukraine, both in 2014, which both shook confidence.

One of Britain’s leading industrial groups is lining up a move to recruit Sir Andrew Parker, the former head of MI5, to its board.
Sky News has learnt that Babcock International Group is in advanced talks to appoint Sir Andrew as a non-executive director, in the latest stage of a boardroom overhaul.

The recruitment of Sir Andrew, who stepped down from the helm of one of the principal planks of Britain’s security services earlier this year, is understood to be going through a series of approval processes.
Insiders said an announcement could still be some weeks away.
It is not unusual for the heads of Britain’s intelligence services to join the boards of blue-chip companies after their retirement.

Advertisement

Sir John Sawers, who ran MI6 until 2014, is now a director of BP, while Sir Andrew’s predecessor at MI5, Lord Evans, became a non-executive director of HSBC Holdings for several years.

Hiring Sir Andrew would be a coup for the company which maintains the UK’s nuclear submarine fleet and owns the Rosyth naval dockyard in Scotland.

More from Business

He served as director-general of MI5 for seven years, but had spent three decades with the agency prior to taking over in 2013.
Sir Andrew led MI5’s response to the 2005 terrorist attacks on London’s transport network, and a year later oversaw the teams which disrupted Al-Qaeda’s attempt to attack aeroplanes with bombs hidden in drinks bottles.
In an interview with the Financial Times earlier this year, he warned about the changing nature of geopolitical risks to British interests, saying of China: “It’s not setting out to do [harm to the UK] as an aim… but it’s willing for that to happen for the sake of achieving its larger goals, which are economic.”
If his Babcock appointment is confirmed, Sir Andrew will be the latest member of a board which is being substantially overhauled by Ruth Cairnie, who became chairman last year.
The company’s directors include Sir David Omand, a former director of GCHQ, who is due to step down from its board shortly, having sat on it for 11 years.
Babcock has endured a torrid few years during which it has been forced to write down the value of Avincis, its helicopter division, and been targeted by a mysterious short-seller called Boatman Capital Research.
In July, it named David Lockwood, the former boss of Cobham, as its new chief executive following the retirement of Archie Bethel.
Mr Lockwood has moved quickly to replace other members of Babcock’s top team, appointing his former Cobham colleague David Mellors as its finance chief last week.
Among the company’s most important contracts is a deal to build the Royal Navy’s new Type 31 frigate, which it is on after competing with rival BAE Systems.
At its last trading update on June, Babcock said it had an order book worth £17.3bn and a bid pipeline valued at £17bn.
It employs thousands of skilled engineers in the UK and overseas, providing equipment support, emergency medical services and firefighting capabilities, as well as facilities maintenance through its Cavendish Nuclear division.
Babcock’s shares have almost halved during the last year, which is ‎partly the result of souring sentiment towards the outsourcing sector and concerns about intensifying pressure on MoD spending.
In 2018, Babcock was the target of a series of dossiers published by Boatman, which alleged that the company’s relationship with the MoD – its biggest customer – was “terrible”.
That suggestion was denied by both Babcock, which labelled the claims “false and malicious”, and the MoD.
The company has since been the target of an unsolicited takeover approach from the outsourcer Serco, but the talks did not progress.
Babcock declined to comment on Saturday.

Throughout the pandemic the chancellor has been consistent on one key point. He’s always said “not every job and not every business” could be saved.
As recently as two weeks ago, when announcing his Job Support Scheme, Rishi Sunak repeated this mantra – the Winter Economy Plan was primarily focused on protecting “viable jobs”.

Today’s announcement is in many ways an extension of that mantra but is more focused than its predecessors.
Live coronavirus updates from UK and around world

This new expansion of the Jobs Support Scheme is specifically aimed at protecting those workers whose companies are “formally or legally” asked to close.

Advertisement

In other words, it’s pre-empting a winter of local lockdowns.

It’s specifically looking to protect those affected as part of the new ‘tier’ or ‘traffic light’ system of COVID-19 restrictions.

More from Covid-19

Under the scheme, the government will pay two thirds of the wages, up to a maximum of £2,100 a month, of staff who are unable to work because their employer is closed. The employer will only have to contribute national insurance payments and pension.
There will also be an increase of the “generosity and frequency” of grants given to businesses, up to £3,000 paid every fortnight.
It will be a relief to those working in hospitality, the businesses most likely to have to close again. But it’s also likely to be welcome to others such as hairdressers and shopkeepers who are unclear how their businesses will be impacted by a potential ‘tier three’ shut down.
It notably does not go as far as the furlough scheme which is due to come to finish at the end of October.
Under that scheme, workers were paid 80% of their salary to stay at home up to a cap of £2,500.
But it does go significantly further than the Job Support Scheme announced two weeks ago.
That will require workers to be on at least a third of their hours with the government topping up a proportion of the hours not worked. It doesn’t help those who can’t open at all.

Please use Chrome browser for a more accessible video player

Sunak announces job support scheme expansion

However even for those eligible this will still amount to a pay cut.
The fact it’s linked so specifically to mandated closure means inevitably there will be businesses excluded.
It does not look likely, for example, that it will support those which haven’t been “legally” asked to close but who aren’t able to operate, for example those working in the exhibitions, events or tourism.
For many businesses too, there are many other costs they’ll be liable for which this won’t cover. Bills from suppliers and rents will still need to be paid, many may struggle to afford even the NI and pension contributions.
There are also likely to be questions about timing. This scheme will start on the first of November, coinciding with the end of the furlough scheme, but closures could be mandated as early as next week.
And how much will it cost? Well, we don’t know yet. The chancellor said it would depend on take up. A treasury spokesperson said it would likely be hundreds of millions a month.
To put that in context the furlough scheme alone has cost £39.3bn to the Treasury and the cost of measures implemented to fight the pandemic are already at nearly £150bn.
The Treasury knows the long term cost of losing ‘viable’ businesses and jobs during new lockdowns will be larger than protecting them now.
It knew it would have to act and act quickly as policies to protect public health evolved.
It’s unlikely to be a perfect scheme and there will be plenty who fall through the cracks, but it will provide respite for some.

Vue International, one of Britain’s biggest cinema operators, has called in City advisers to help see it through the biggest financial crisis in the industry’s history.
Sky News has learnt that Vue has appointed Deloitte to work on options to shore up its balance sheet, days after rival Cineworld saw its shares crash after announcing the temporary closure of its multiplexes in the UK and US.

Vue, which is run by the ebullient entrepreneur Tim Richards, operates about 90 cinemas in the UK, employing roughly 9,000 staff in 10 countries across Europe.
Its debts were refinanced in June last year, and none of its borrowings are due to be repaid until 2025.
Nevertheless, with the recent postponement – for the second time – of the new James Bond film, No Time To Die, major cinema chains are having to contemplate efforts to secure new liquidity to weather the crisis.

Advertisement

Earlier this week, Mr Richards said he doubted the survival prospects of many rival cinema operators – particularly those with strained balance sheets.

A protracted period of regional or national lockdowns during the winter will deepen the financial pain being felt by the industry, like many others.

More from Business

Vue had been in the process of exploring its options, including a sale, prior to the pandemic, but this has now been put on hold.
It is majority-owned by ‎two Canadian funds: the Alberta Investment Management Corporation (AIMCo) and Omers, an Ontario-based pension fund manager.
Vue declined to comment on Friday.

HM Revenue & Customs (HMRC) is close to naming a new chairman to help it navigate a period in which the coronavirus pandemic has forced it to shift its priorities away from launching new tax probes.
Sky News has learnt that a Whitehall-convened panel will this month interview a shortlist of candidates to replace Mervyn Walker, who has chaired HMRC’s board since 2017.

City sources said that Odgers Berndtson, the headhunter handling the process, had contacted a number of FTSE-100 company chairs to gauge their interest in the job.
Several are understood to have turned down the approaches.
Mr Walker’s decision to retire from the HMRC board comes as the UK tax authority has refocused its agenda on implementing the government’s emergency economic support measures.

Advertisement

The nature of Britain’s exit from the Brexit transition period at the end of the year is also likely to have a bearing on HMRC’s workload over the coming months.

It is the latest senior management change to affect HMRC, whose previous boss, Sir Jon Thompson, left to become chief executive of the Financial Reporting Council.

More from Business

Responding to an enquiry from Sky News, HMRC chief executive Jim Harra said that Mr Walker had had “a tremendous influence on the strategic direction of HMRC throughout his time with us”.
The department said it was engaged in “a major programme of transformation to execute on its strategy for becoming a modern, trusted tax and customs authority”.
Mr Walker’s successor will take on the role for a fixed three-year term, with the possibility of a subsequent term.

Thousands of jobs are at risk at Edinburgh Woollen Mill Group after it filed a notice to appoint administrators and warned of “significant cuts and closures”.
The high street fashion chain, which owns Peacocks and Jaeger, has 24,000 staff.

It has now lodged a notice of intention to appoint administrators to look for potential buyers as it attempts to keep the business afloat.
Bosses told staff on Friday morning that national and local coronavirus lockdowns had hit sales hard.

Image: Edinburgh Woollen Mill also owns Peacocks and Jaeger
The company also blamed allegations, which it denies, that it and several rivals failed to pay some Bangladeshi suppliers during lockdown in an attempt to cut the cost of clothes they were unlikely to sell.

Advertisement

For now, EWM Group’s stores will continue trading while insolvency specialists spend 10 days preparing an urgent review ahead of further action.

The action will be announced later.

More from Business

EWM chief executive Steve Simpson said: “Like every retailer, we have found the past seven months extremely difficult.
“This situation has grown worse in recent weeks as we have had to deal with a series of false rumours about our payments and trading which have impacted our credit insurance.

Coronavirus: Where the jobs have been lost

“Traditionally, EWM has always traded with strong cash reserves and a conservative balance sheet, but these stories, the reduction in credit insurance, against the backdrop of the lockdown and now this second wave of COVID-19, and all the local lockdowns, have made normal trading impossible.
“As directors we have a duty to the business, our staff, our customers and our creditors to find the very best solution in this brutal environment.
“So we have applied to court today for a short breathing space to assess our options before moving to appoint administrators.
“Through this process I hope and believe we will be able to secure the best future for our businesses, but there will inevitably be significant cuts and closures as we work our way through this.
“I would like to thank all our staff for their amazing efforts during this time and also our customers who have remained so loyal and committed to our brands.”
An FRP spokesman said: “Our team is working with the directors of a number of the Edinburgh Woollen Mill Group subsidiaries to explore all options for the future of its retail brands Edinburgh Woollen Mill, Jaeger, Ponden Home, and Peacocks.”