PRESS DIGEST – British business – June 7

Monday June 7 2010

Daily Telegraph

RACING REQUIRES URGENT REFORM, SAYS WILLIAM HILL BOSS

A 20 percent fall in betting turnover at Saturday’s Epsom
Derby has prompted Ralph Topping, the chief executive of
bookmaker William Hill (WMH.L: ), to call for an “immediate and
urgent” reform of the horse racing industry. Topping said the
decline in interest should serve as a “wake up call” to racing
and argued for the event to be restored to Wednesday when it
will face less competition from other leisure activities.
Topping’s call comes amid growing concern within the betting and
racing industries that falling visitor numbers could impact on
the horse racing levy which funds the sport. Bookmakers
currently contribute around 10 percent of their gross profits,
equating to about 85 million pounds ($124.4 million), to the
levy each year.

BRITISH COMPANIES FEAR BP BACKLASH IN UNITED STATES

British companies fear their US operations could be
embroiled in an anti-British backlash in the United States
following criticism of oil firm BP (BP.L: ) over its response to
the spill in the Gulf of Mexico. Business Secretary Vince Cable
was reluctant to comment on the saga, but there are signs that
the government is becoming increasingly concerned by the
prospect of “punishment sanctions” which could result in the
loss of US government contracts. Cable has voiced concern about
the effect the fallout from the spill could have on the British
economy. A collapse in BP’s share price would hit the FTSE 100
and damage pension funds which are dependent on BP’s dividends.

THINK-TANK SAYS END PROTECTION ON SAVINGS

Think-tank Policy Exchange has called for banks to be forced
to make their savings accounts “bomb-proof” rather than relying
on the protection offered by state deposit guarantee schemes.
Economist Andrew Lilico, who authored the proposals, said the
existence of the current guarantee encourages banks and savers
to take risks with their money. Lilico proposes that banks
should be forced to offer savers a “storage deposit” which would
be 100 percent backed by government gilts and fully insured by
the state. The “storage deposits” would also run as separate
legal entities within banks.

AEGIS CHIEF GIVEN 274,000 POUND PAY RISE

Marketing services company Aegis Group (AGS.L: ) awarded its
chief executive Jerry Buhlmann a 274,000 pound pay rise, despite
pre-tax profits at the group falling by 27 percent last year.
Buhlmann was promoted to the job last month on a base salary of
750,000 pounds – 57 percent more than the 476,000 pounds he
received as chief executive of the group’s media buying division
Aegis Media. Aegis reported full-year pre-tax profits of 91.2
million pounds in March, compared to 124.6 million the prior
year, but expects “modest growth” this year following “improving
quarterly revenues”.

The Independent

RETAILERS URGE AGAINST RISE OR EXTENSION OF VAT

The British Retail Consortium has urged the government to
neither increase the rate of VAT nor extend the range of items
to which it applies. The trade body claims that increasing the
rate of VAT from 17.5 percent to 20 percent would cost 163,000
jobs and decrease consumer spending by 3.6 billion pounds over
four years. Stephen Robertson, director-general of the BRC,
said: “Zero-rated items, such as food, books and children’s
clothing, shouldn’t have VAT applied to them as it would hit the
most vulnerable in society the hardest.”

TAX EXPERTS WARN AGAINST RUSHING THROUGH CGT REFORM

The Chartered Institute for Taxation has warned the
government that rushing through reforms to capital gains tax may
result in “unintended consequences”. John Whiting, tax policy
director at the think-tank, said: “It is important that the
government handle these changes carefully and allow adequate
time for consultation on the details, inside and outside of
Parliament.” The CIT has suggested the formation of a new joint
committee on tax involving both the House of Commons and the
House of Lords which will examine any CGT reforms.

NUMBER OF STAFF ‘THROWING SICKIES’ FALLS TO A 23-YEAR LOW

The number of sick days taken by British employees fell to a
23-year low in 2009, according to research conducted by trade
body the Confederation of British Industry and pharmaceutical
firm Pfizer (PFZ.L: ). Workers collectively took 180 million days
off, costing the UK economy 16.8 billion pounds. The average
employee took 6.4 days off, compared to an average of 6.7 days
in 2007. Surveys of human resources staff suggest that
approximately 15 percent of sick days were not genuine, leading
to estimates of 27 million false sick days being taken during
2009, costing the economy 2.5 billion pounds.

SUPPORT URGED FOR HIGH-TECH FIRMS

A report by the public endowment the National Endowment for
Science, Technology and the Arts has called on the government to
offer greater support to small high-tech companies in order to
boost the British economy. NESTA argues that a focus on
manufacturing would be misguided, and that the government should
focus on assisting “the small minority of high-growth businesses
that generate the bulk of job creation and which have been shown
to be disproportionately innovative.” It suggested that the
government emphasise small-scale projects over programmes such
as Business Links which offer general support.

The Guardian

DISCOUNT BOOZE SPELLS LAST ORDERS FOR PUB CHAINS

New figures from the accountancy firm Wilkins Kennedy have
shown that 23 bar and pub firms went out of business in the
first quarter of this year, more than double the amount of the
same period last year. This brings the total number of drinks
company collapses for the last year up to 87. The figures have
been used by drinks sector companies to argue against the
introduction of minimum pricing on alcoholic drinks, a proposal
currently under consideration by the government. Apart from the
firms which have been bankrupted, many other drinks companies,
such as Punch Taverns (PUB.L: ), have struggled with financial
difficulties.

The Times

MANUFACTURING’S SHOT IN THE ARM FOR THE ECONOMY

Figures produced by the manufacturers’ organisation EEF and
the accountancy firm BDO Stoy Hayward on UK manufacturing
activity between March and the end of May have shown a large
increase in new orders and factory output. The index of
measurement of output rose from 8 in March to 30 in May, its
highest point for fifteen years, and the index of new orders
rose from 2 to 34. It is hoped that the strong manufacturing
boost will fuel GDP growth in the second quarter, as it did for
the first quarter. However, producers still fear a double-dip
recession, with the gauge of manufacturers’ expectations for the
next quarter falling from 28 to 22.

Investing Basics

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PRESS DIGEST – British business – June 7