Sky Business News Articles

Alok Sharma, the business secretary, will this week ask an interim chairman to head the competition watchdog amid confusion over Britain’s post-Brexit state aid regime.
Sky News has learnt that Mr Sharma has picked Jonathan Scott, a board member at the Competition and Markets Authority (CMA) since 2016, to replace Lord Tyrie on a temporary basis.

An announcement, which is expected on Tuesday, will underline ministers’ desire to address the leadership vacuum at the UK’s principal competition regulator more than two months after the former Conservative MP was effectively forced to step down.
Lord Tyrie left the CMA three years early after becoming involved in a stand-off with Andrea Coscelli, its chief executive, over the chairman’s leadership of the organisation.
Mr Coscelli is said to have indicated that he would resign if Lord Tyrie, a respected former chairman of the Treasury Select Committee, did not stand down.

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Where jobs have been lost in the UK economy
Where jobs have been lost in the UK economy

Mr Sharma’s decision to name Mr Scott as interim chair of the CMA will install an experienced corporate lawyer in the post, although it was unclear on Monday whether he was a candidate to be the long-term successor.

Mr Scott headed the competition practice of Herbert Smith, the City law firm, for more than a decade, and went on to become senior partner and chair of its successor firm, Herbert Smith Freehills.

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His appointment will come amid questions about the future of Britain’s state aid regime, which is unlikely to be finalised until well into 2021.
On Monday, the Department for Business, Energy and Industrial Strategy announced that John Penrose, a former Tory minister, would oversee a review of UK competition policy.
“Competition drives down prices, creates a wider choice for consumers and leads to better quality products and services,” Mr Sharma said.
“This review will ensure the UK’s competition regime is in the strongest possible position as we build back better from the pandemic and start our fresh new start outside of the EU – delivering for businesses and consumers in every corner of the UK.”
BEIS declined to comment on Monday on Mr Scott’s appointment.

New Look’s biggest landlords will vote against the fashion retailer’s latest rescue plan on Tuesday, throwing its survival into further doubt amid the UK’s deepening high street crisis.
Sky News has learnt that British Land, which owns 19 New Look stores, and Landsec, which owns 10, will oppose its planned company voluntary arrangement (CVA) in a crucial vote on Tuesday.

Hammerson, the owner of London’s Brent Cross shopping centre and Birmingham’s Bullring, is also said to be leaning towards voting against the CVA.

Where jobs have been lost in the UK economy
Where jobs have been lost in the UK economy

In total, the three retail property giants own just over 40 New Look stores – a small proportion of its 490 UK shops.
The fashion retailer, which is attempting to push through its second major financial restructuring in under two years, has a particularly fragmented landlord base, with roughly 350 different owners of its UK outlets.

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If approved, its CVA would result in the company switching its rent payments at the majority of its stores to a formula calculated according to their turnover – a proposal that has angered the British Property Federation, which represents commercial landlords.

A New Look spokesperson said: “Our proposed CVA and consequential recapitalisation transaction, which involves a material reduction of debt, extension of the company’s banking facilities and a cash investment of £40m represents the best outcome for all stakeholders, including employees, suppliers, landlords and all other creditors.

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“Our landlords have given us valuable and constructive feedback since we initiated discussions in May regarding a required move to turnover rents.

Can the economy recover as furlough ends?

“Our CVA proposal recognises this in a number of material changes we have made since our initial proposal, including enhanced landlord break clauses, unchanged service charges, minimum rent levels, and an elevated ranking of leases.”
Alongside the rent cuts, New Look is also proposing a further debt-for-equity swap.
Its effort to find a solvent buyer was unsuccessful, although The Sunday Times reported at the weekend that Boohoo, the online clothing retailer, was interested in buying New Look if it collapses into administration.
The chain employs 12,000 people, making it one of the largest retailers to face an existential crisis since the start of the COVID-19 crisis.
Debenhams is among the other chains in danger of disappearing from UK high streets.
British Land and Landsec declined to comment, while Hammerson did not respond to a request for comment.

Shares in security firm G4S have surged by a quarter after a Canadian rival went public with a takeover bid worth almost £3bn.
Canada’s GardaWorld (GW) , which walked away from talks over a similar offer for G4S last year, accused the board of its much larger opponent of refusing “meaningful discussions” following three separate approaches.

It said it wanted to force engagement but G4S later rejected the approach saying it “significantly” undervalued the business and its prospects.
Its statement said: “The board believes that the timing of the proposal is highly opportunistic, coming as it does at a time of severe turbulence in global financial markets.
“Furthermore the company’s financial performance following the outbreak of COVID-19 has been particularly resilient, as outlined in the company’s interim results for the six months ended June 30.”

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GW, the world’s largest privately-owned security firm, has annual sales above £1.5bn compared to £7bn for its listed peer in the UK, while it employs 72,000 staff.

G4S has more than 500,000 workers.

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Image: G4S has operations across more than 90 countries worldwide and is the largest-listed firm of its kind globally
The Montreal-based firm said its offer of 190p per share, valuing G4S at £2.96bn, represented a 30% premium to the London-based firm’s share price on Friday.
It accused the board of failing “its shareholders, employees, customers and the public for at least a decade” but said that it believed value could be returned.
GW’s founder and CEO, Stephan Cretier, said: “G4S needs an owner, not a manager. GardaWorld has 25 years of experience in the sector and we know how to improve and repurpose this business.
“As owner-operators, we believe that the combined business’s operations will offer a better future for all those who depend on G4S.
“We will turn G4S around, ensuring it delivers for its customers, its people and the public.
“The combination of GardaWorld and G4S is an important part of our strategy to create the world’s leading security services business. If successful, our commitment to the UK will be for the long-term.”
News of the hostile approach was welcomed by investors, with shares rising 25% to 182p by the close of trading.
Market experts said the offer reflected attraction in London stocks, which are yet to recover pre-coronavirus values and the relatively weak value of the pound.
Neil Wilson, chief market analyst at Markets.com, said: “Since the pandemic G4S’s valuation has made it more appealing, whilst revenues of about £7bn annually remain far ahead of GW.
“This will be the tiddler swallowing the whale.”

Mike Ashley and Newcastle United have instructed leading lawyers in an ongoing battle with the Premier League after they claimed the sale of the club to a Saudi-led consortium was unfairly blocked.
Ashley, the billionaire owner of Sports Direct, has appointed Blackstone Chambers law firm in a bid to prove the Premier League’s owners and directors test was not properly applied to the proposed buyers.

Such buyers included Saudi Arabia’s Public Investment Fund (PIF), which would have received an 80% stake of the club, and Amanda Staveley’s PCP Capital Partners and the Reuben brothers, of which both would have split the remaining 20%.
It also represents an escalation in the war of words between Newcastle United and the Premier League over the takeover, which failed when the consortium publicly withdrew their offer in July.

Image: Mike Ashley is hoping to revive interest in the deal
Last week, Newcastle United released a statement accusing the Premier League’s chief executive Richard Masters of not acting “appropriately” during the process of the owners and directors test.

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In response, the Premier League said that claims about the takeover being blocked were “incorrect” and that they were still waiting for “all appropriate information” from the proposed buyers.

The League also said it was incorrect to assert that any decision was taken by an individual, stating that the decisions were unanimously agreed by board members.

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It is understood that Ashley wants to revive interest from Saudi Arabia after the £300m deal fell through.
He believes this legal action could be the doorway to such interest.

Image: Saudi Crown Prince Mohammad bin Salman oversees the PIF
It comes after the deal was initially held up amid concerns about piracy and human rights in Saudi Arabia.
Hatice Cengiz, the fiancee of murdered journalist and Saudi critic Jamal Khashoggi, had called on the Premier League to block the takeover.
The assassination and dismemberment of Mr Khashoggi inside the Saudi Consulate in Istanbul in late 2018 has been linked to Saudi Crown Prince Mohammed bin Salman, who oversees PIF.
The crown prince has repeatedly insisted he had nothing to do with the killing of Mr Khashoggi, which was carried out by officials who worked directly for him.

April: Saudi Arabia moves in on Newcastle United

In a statement at the end of the July, the prospective buyers said they were pulling out of the deal with “regret” due to uncertainty caused by coronavirus.
It said: “Ultimately, during the unforeseeably prolonged process, the commercial agreement between the Investment Group and the club’s owners expired and our investment thesis could not be sustained, particularly with no clarity as to the circumstances under which the next season will start and the new norms that will arise for matches, training and other activities.
“As often occurs with proposed investments in uncertain periods, time itself became an enemy of the transaction, particularly during this difficult phase marked by the many real challenges facing us all from COVID-19.”

London City Airport is to cut up to 239 jobs – or 35% of roles – as part of “crucial restructuring” prompted by the coronavirus pandemic.
The airport said it had begun a consultation with staff on cost-cutting measures, including voluntary redundancy.

It was closed for nearly three months from March 25 due to the coronavirus pandemic.
Chief executive Robert Sinclair said: “It is with huge regret that we are announcing this restructuring programme today and our thoughts are with all of our highly valued staff and their families.

Heathrow chief exec: PM needs to ‘get a grip’

“The aviation sector is in the throes of the biggest downturn it has ever experienced as a result of the pandemic.

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“We have held off looking at job losses for as long as possible, but sadly we are not immune from the devastating impact of this virus.”

Flights from the site resumed on 21 June but remain well below 2019 levels and this is expected to continue during the coming winter season, the airport said.

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Airport tests give ‘false sense of security’

It has already cut all non-essential spending and last month announced a “temporary pause” to its £500m development programme, including a new terminal extension.
Aviation has been one of the hardest hit sectors in the coronavirus jobs crisis, accounting for one in four of all publicly-announced cuts recorded in a Sky News tracker.
Gatwick has announced job losses totalling more than 1,300 while Sky News revealed earlier this month that Heathrow could cut 1,200 roles after talks with trade unions about pay and working conditions failed to land an agreement.
Airlines including British Airways, Virgin Atlantic and easyJet have also cut thousands of roles.

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Flights were brought almost to a standstill earlier this year and since reopening the industry struggled to return to normal levels, with much of the suppressed demand blamed on changing quarantine rules.
Last week, industry body Airlines UK wrote to the prime minister warning of “economic ruin” unless the government adopts airport testing as a “safe and effective” alternative to quarantine.

The estimated size of the unsustainable corporate debt mountain created by the coronavirus pandemic is to be slashed by an influential group of City figures as banks and ministers clash over how to resolve one of COVID-19’s biggest financial timebombs.
Sky News has learnt that the Recapitalisation Group (RCG), a panel headed by the former Aviva chairman Sir Adrian Montague, will say this week that it has reduced its forecast for the overall level of unserviceable borrowing from more than £100bn to approximately £70bn.

The sharp decline will be based on the latest data from the Bank of England and Office for Budget Responsibility, and will be attributed to the UK economy rebounding more rapidly than expected from the initial coronavirus downturn.

Chancellor: ‘Hard times are here’

Insiders said the RCG, which is sponsored by the lobbying group TheCityUK, would also significantly cut its £35bn estimate of the level of unsustainable debt created by the government’s own emergency lending schemes during the crisis.
The group is expected to say that take-up of programmes including the Bounce Back Loans Scheme and the Coronavirus Business Interruption Loan Scheme have been lower than anticipated when figures were originally outlined in the spring.

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Although in one sense the revised estimates will send a positive signal about the prospective level of unsustainable corporate borrowing, they will still highlight the risks of loan defaults worth tens of billions of pounds.

One source said that the default rate on Bounce Back Loans – which are capped at £50,000 per business and are entirely underwritten by the government – may be moderately higher than originally forecast.

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The latest figures will come just weeks before the end of the Treasury’s furlough scheme and, depending on the shape of the economic recovery in the coming months are likely to be subject to further adjustments.
In July, the RCG said the government should establish a ‘UK Recovery Corporation’ to help tackle the £35bn unsustainable state-backed debt burden accumulated by British businesses during the coronavirus crisis.

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The Treasury has been lukewarm about creating a state agency to help recover the emergency loans, and has made it clear that it does not share the City grandees’ pessimism about the scale of likely loan defaults.
TheCityUK declined to comment on Monday.

Wetherspoons has revealed a total of 66 members of staff have caught coronavirus since the pub chain reopened.
The company said it had reported 66 positive COVID-19 tests among its 41,564 employees since they returned to work from July.

It said those infected worked across a total of 50 pubs, while 811 of its branches had been free of coronavirus.
Live coronavirus updates from UK and around world

The firm said most of the reported cases among employees had been mild or asymptomatic – and that 28 of the 66 had already returned to work, after self-isolating in accordance with medical guidelines.

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And Tim Martin, founder and chairman of the group, said trading had been “very quiet” over the weekend, before the government tightened restrictions on larger social gatherings.

He dismissed earlier suggestions that larger groups may have flocked to the pub before the new “rule of six” came into force on Monday.
The restriction means people could face fines of up to £3,200 if they are involved in social gatherings of more than six people.

How ‘rule of six’ COVID-19 restrictions will work around the UK

Mr Martin said: “Trade was very quiet over the weekend, as the public weighed up the evidence about the alleged dangers of going out – Wetherspoon sales were 22.5% below the equivalent Saturday last year.”
Trade groups, including the British Beer & Pub Association, say the new rule will hamper the recovery of hospitality firms without extended financial support for the sector.

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Mr Martin told investors on Monday that he believed the safety of pubs during the pandemic had been “widely misunderstood”.
He said around 32 million people had visited its pubs since they reopened their doors at the start of July.
Wetherspoons says it has invested around £15m in social distancing and hygiene measures.
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Microsoft’s bid to take over TikTok’s US operations has been rejected by Chinese owner ByteDance, with database specialist Oracle securing a deal to operate the popular video-sharing app.
The move comes just a week before President Donald Trump’s threatened ban on the app – claiming national security risks – is due to come into force.

Mr Trump had ordered the sale of TikTok’s operations in the US, where it has 100 million users.

TikTok hits back at Trump’s ban threat

ByteDance had been in talks to either sell to Oracle or a consortium led by Microsoft, and including retail giant Walmart.
But those talks were thrown off track after China updated export control rules last month – giving it a say over the transfer of TikTok’s algorithm to a foreign buyer.

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Microsoft disclosed on Sunday that its bid had been rejected.

It was later confirmed on Monday that ByteDance was to pursue a partnership with Oracle that it hopes will spare it from a US ban while also allaying any concerns from Beijing.

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The Chinese firm said the cloud computing specialist would serve as TikTok’s “trusted technology provider.”
The Reuters news agency, citing sources, reported that TikTok would create up to 25,000 new jobs in the US should the White House agree to the partnership.
TikTok is best known for short video clips that go viral on social media, especially among young people, but American officials are worried that user information could find its way into the hands of the Chinese government.
The app has said it would never share such data with Chinese authorities.

Trump: ‘I don’t mind’ if Microsoft buys TikTok

It was not yet clear whether Mr Trump, who favours an American tech firm owning a majority of TikTok in the US, would approve the deal.

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Oracle, whose chairman Larry Ellison is a supporter of the president, has significant technical expertise but no experience in running social media – instead dealing largely with corporate clients.
Its shares leapt more than 5% on news of the planned partnership.

The leader of the UK’s six million trade union members has demanded an extension of the coronavirus furlough scheme to prevent “a tsunami of job losses”.
In a direct appeal to Chancellor Rishi Sunak, TUC General Secretary Frances O’Grady said the pandemic would not end in October, so neither should government support for jobs.

She pledged to work with Mr Sunak, as unions did in setting up the furlough scheme, to stop “the catastrophe of mass unemployment” and urged him: “Don’t walk away.”
Ms O’Grady’s plea came in her keynote speech at a two-day COVID-secure TUC conference in London, with a small invited group in Congress House and union members across Britain joining online.

Image: Frances O’Grady will also urge the government not to scrap the rise in the minimum wage
The Labour leader Sir Keir Starmer was due to speak in person and take questions from union members on day two of the conference, but that is now in doubt after he announced he was self-isolating.

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The TUC conference began with a debate on the impact of coronavirus, with union leaders complaining of abuse against shop workers and claims of employees being forced back to work in unsafe conditions.

Ridiculing the government’s handling of the pandemic, Ms O’Grady declared: “A useless app, a mutant algorithm and a half-baked test and trace system. Less ‘moonshot’, more a case of moonshine.”

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Ms O’Grady also hit out in her speech at claims that the chancellor is poised to scrap the rise in the minimum wage from £8.72 to £9.21 due next April because he cannot afford it after coronavirus.

Image: The TUC is suggesting a scheme where workers are first brought back on shorter hours
And the TUC chief began her speech by fiercely criticising the GMB union after an inquiry found it was “institutionally sexist”, warning: “This is a #MeToo moment for our unions.”
In her plea for a furlough extension, Ms O’Grady said: “If the government doesn’t act we face a tsunami of job losses.
“The chancellor must learn the lessons of the job retention scheme and keep on supporting jobs.
“So my message to the chancellor is this: We worked together once before.
“We are ready to work with you again – if you are serious about stopping the catastrophe of mass unemployment.
“Rishi Sunak: stand by working families – don’t walk away.”
Responding to the TUC leader’s call, a government spokesman said: “Supporting jobs is an absolute priority which is why we’ve set out a comprehensive Plan for Jobs to protect, create and support jobs across the UK by providing significant, targeted support where it is needed the most.

How ‘rule of six’ COVID-19 restrictions will work around the UK

“We are continuing to support livelihoods and incomes through our £2 billion Kickstart scheme, creating incentives for training and apprenticeships, a £1,000 retention bonus for businesses that can bring furloughed employees back to work, and doubling the number of frontline work coaches to help people find work.
“We are also supporting and protecting jobs in the tourism and hospitality sectors through our VAT cut and last month’s Eat Out to Help Out scheme.”
But Ms O’Grady said: “The pandemic isn’t scheduled to end in October so neither should state support for jobs.
“When the crisis began, the chancellor said he would do ‘whatever it takes’. He must keep that promise.
“Some will ask can the country afford to do it? The answer is – we can’t afford not to.”
Demanding the national living wage rise goes ahead as planned, Ms O’Grady said: “Coronavirus is no leveller. It has exposed huge inequality in modern Britain.
“The minimum wage – the wage of two million key workers – must rise as planned. Don’t punch down on the working poor.”

UK-based chip designer Arm Holdings is to be sold to America’s Nvidia in a deal worth up to $40bn (£31bn).
But the sale was described as a “disaster” by Arm’s co-founder.

Nvidia said the company – which licenses its chip designs for use by major electronics brands such as Apple – would remain based in Cambridge and its site expanded.

Image: SoftBank bought Arm in 2016
However, Arm’s co-founder Hermann Hauser told Reuters: “It’s a disaster for Cambridge, the UK and Europe.
“It’s the last European technology company with global relevance and it’s being sold to the Americans.”

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Chip maker Nvidia is buying the business from Japanese technology empire Softbank, which acquired it four years ago for £24bn but has recently been seeking to raise cash.

The deal is likely to face close scrutiny from regulators and rivals.

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Nvidia chief executive Jensen Huang said: “Arm will remain headquartered in Cambridge.
“We will expand on this great site and build a world-class AI research facility, supporting developments in healthcare, life sciences, robotics, self-driving cars and other fields.”

2016: Arm co-founder Hermann Hauser comments on Softbank deal

Arm licenses its designs to most of the global semiconductor industry with customers including Intel, Qualcomm and Samsung.
The 180 billion chips sold based on its technology range from smartphones to toasters.
Nvidia’s acquisition of Arm is controversial because Arm’s customers are among Nvidia’s rivals.
The deal also puts the chip designer in the hands of a US-based firm at a time of trade friction between Washington and Beijing that is partly focused on technology – with Beijing trying to develop its own semiconductor industry.
Nvidia insisted that Arm would maintain the “global customer neutrality that has been foundational to its success”.
Mr Huang said the deal was “pro competition” and could create a “genuinely alternative” rival to Intel’s domination of the sector.
However, Mr Hauser – who previously expressed his dismay about Arm’s sale to Softbank – said the Nvidia deal would destroy Arm’s business model as “the Switzerland of the semiconductor industry”.
He called on the UK government to demand: a guarantee of jobs in Britain, the preservation of Arm’s open business model; and exception to US security reviews on client relationships.

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Nvidia will pay SoftBank $21.5bn in shares and $12bn in cash for Arm, with the transaction expected to complete by March 2022. Arm employees will also be issued with $1.5bn in Nvidia shares.
Softbank could receive an extra $5bn in cash or shares depending on Arm’s business performance.
Experts at the time of Arm’s sale to Softbank warned of a “brain drain” and there have been renewed concerns about its future in the run-up to the latest deal.
Last week, Labour’s Ed Miliband urged the government to obtain “legally binding assurances” that the business would remain in the UK “rather than see jobs and decision-making moved across the ocean”.