Big companies use apprenticeships to cut costs, according to report

Low-skilled jobs are being reclassified as apprenticeships by companies in a bid to gain subsidies for training workers, according to a report from the think tank Reform.

The centre-right think tank says companies are repackaging existing roles since an apprenticeship levy was introduced to incentivise their use. Reform says 40% of government-approved apprenticeship standards would not meet the traditional definition of an apprenticeship.

Companies with a payroll worth more than £3m now have to pay 0.5% of the total salary amount into an HMRC ‘digital account’ which can be ‘spent’ on apprenticeship delivery training through government-registered providers. Employers can claim back 90% of the cost of training.

Offering an apprenticeship enables employers to pay less than the national minimum wage. Minimum rates for apprentices range from £3.70 and hour to £7.38 per hour.

The government has previously said that apprenticeships have to be skilled roles, requiring substantial and sustained training of at least 12 months, leading to full competency and providing the apprentice with transferrable skills in the occupation.

However, large companies have been using the scheme to advertise low-skilled roles such as serving coffees and making fast food.

The report claims that some employers are using the opportunity to offer high quality apprenticeships, but others are simply using the system as a way to reduce costs.

Garden centres see lowest sales since 2013

The recent spell of wet weather has hampered growth in the UK gardening sector, with sales at the lowest level in five years, according to BBC News.

The Garden Centre Association says that sales so far this year are around 15-20% down on 2017 figures, with an early Easter adding to the woes.

The Association’s chief executive Iain Wylie said people opted not to buy plants when the weather was wet, as gardens would be waterlogged.

Wylie said: “We need a sustained period of good weather. The worst thing would be one good day, one bad day. It’s been too cold and too wet and we need better weather to pick things up.”

Figures from the Horticultural Trades Association indicate that the UK garden market is worth £5bn each year. Around two thirds of British adults visit a garden centre at least once each year. Plants sales have not been this low since 2013.

Wylie hopes that the weather will get warmer later in the year, making up for the missed sales: “There will be some lost sales, but hopefully [the garden centres] will catch up with later selling plants.”

He continued: “Nurseries produce crops that bud and flower at the time they should, but if the weather outside isn’t conducive, it’s very difficult to manage the production cycle.”

Jaguar Land Rover to shed 1,000 temp workers

Jaguar Land Rover has announced that the contracts of 1,000 temporary workers in the UK will not be renewed, according to BBC News.

The auto giant has cited ‘continuing headwinds’ impacting the car industry for the decision. The jobs will be lost from the Solihull and Castle Bromwich factory sites.

Jaguar Land Rover (JLR) said recruitment of apprentices and engineers in the UK would continue and that it remained committed to its UK plants. Earlier in 2018 JLR cut production at the Halewood, Merseyside plant, citing Brexit uncertainty and the dwindling market for diesel cars.

JLR employs 40,000 people in the UK, with 10,000 of the workforce based at Solihull. The firm’s Jaguar sales are down 26% so far in 2018 compared to 2017, while Land Rover sales have dropped 20%.

In the overall UK car market, diesel registrations have dropped by around one third in a year. JLR acknowledged that the current market is ‘tough.’

Cold weather sees biggest drop in construction since 2009

The ‘Beast from the East’  cold snap in March saw the UK construction industry experience its biggest drop in activity since the aftermath of 2016’s Brexit vote, according to Reuters.

An industry survey indicated that the snowy weather produced a larger decline than had been predicted (50.8). The IHS Markit/CIPS UK Construction Purchasing Managers Index (PMI) dropped to 47.0, down from 51.4 in February.

The unusual Siberian weather system brough snow, cold wins and the coldest temperatures seen in Britain for several years. It affected much of mainland Europe as well as the UK. House building was little affected but other sectors saw a significant effect.

For civil engineering firms, it was the biggest downturn in five years, with the biggest one-month drop since 2009.

Construction represents around 6% of British economic output but is seen as a guide to investment and sentiment in the rest of the national economy. According to official figures, construction output declined through the last three quarters of 2017. PMI respondents repeatedly said the UK vote to leave the European Union was suppressing new business.

A separate PMI survey showed the bad weather had little impact on manufacturing and that construction is making a rebound in April.

New Peugeot van to be built in Luton

Peugeot has unveiled plans to build its new van model at its British Vauxhall plant in Luton, according to Reuters.

Peugeot’s owner PSA’s announcement will be seen as a gesture of confidence in the UK economy pre-Brexit, and it increases pressure on the manufacturer’s sister brand Opel, based in Germany, to offer concessions in labour talks.

PSA purchased Peugeot/Vauxhall in 2016 from General Motors. The business will build new Peugeot and Citroen models in Luton as well as the next Vauxhall van, the Vivaro. Production is set to rise from 60,000 in 2017 to 100,000 vehicles.

French company PSA is currently in talks with Opel’s German workforce. The firm said the Luton investment was assisted by ‘responsible social dialogue with the Unite union guaranteeing production flexibility’ as well as support from the UK government.

The move will create around 350-400 jobs, adding around 100m Euros to the economy. Luton is currently the UK’s only van plant, employing around 1,400 people.

PSA head Carlos Tavares said: “I take on board the assurances that the UK government have provided us on seeking tariff-free and frictionless trade with the EU going forward. There is still work to do to ensure frictionless trade.”

The move adds to pressure on Germany’s IG Metall Union, as deals have now been struck with workers in the UK, Spain, Austria, Hungary and Poland. PSA has said van production had to be increased to meet growing demand but a decision about the future of the Ellesmere Port factory, where the Astra Sports model is made, will be put off until 2020 or beyond.

 

UK new car registrations fall 10% in two years

New car registrations are set to fall 5.5% in 2018, making the UK the worst performing economy of the major European nations, according to BBC News.

Spain, Italy, Germany and France are all predicted to see increased registrations but ratings agency Moody’s said the fall in the value of the pound following the EU referendum had impacted the affordability of imported cars.

Moody’s said Brexit is “weighing on consumer spending decisions.”

UK industry body SMMT said there were 2.7m new car registrations in the UK in 2016, the highest figure on record and a fifth successive year of growth year-on-year. However, in 2017 the figure fell 5.7% as purchasers started to avoid diesel cars and avoid large expenditure items.

Moody’s forecasts indicate that there will be 2.4m new car registrations in the UK in 2018, equivalent to a 10% drop in two years. A similar number of new registrations is expected for 2019.

Moody’s managing director of manufacturing Matthias Hellstern said: “The UK market will be the worst performer compared to all the other major economies in Europe, and, even worse, the only one that is declining.”

However, there is some evidence that the UK economy is performing better than expected. In March, the Office for Budgetary Responsibility revised its growth forecast up from 1.4% to 1.5% and said inflation was likely to fall to 2% by the end of the year, meeting the Bank of England’s target level.

Brexit fears dent confidence in financial sector

Brexit has had a stronger impact on Britain’s financial sector than the global financial crisis, according to a survey reported by Reuters.

Although the financial crisis sent some of the world’s biggest banks into collapse and plunged economies into recession, a quarterly poll by CBI and PwC found that optimism in the sector is at levels not since 2007-2009 and that declines in optimism have been more sustained than at that time.

The low levels of optimism were in spite of growing business volumes and growing employment in the quarter ending March 2018, and firms reporting that they plan to recruit more staff in the next quarter.

Rain Newton-Smith, chief economist at CBI said: “Financial services firms have performed well over the last three months, with business volumes and employment on the up and beating expectations. But there is no escaping the elephant in the room.”

An agreement between the UK and EU to put a transition period in place has quelled concerns in the sector somewhat, but it is still unclear how Brexit will impact access to EU markets from 2020.

PwC head of financial services Andrew Kail said firms were struggling with strong competition, changing consumer behaviour, rapid technological change, new regulation and increased costs. Kail said: “Collectively, it is denting confidence about the future.”

Prezzo to close one third of its restaurants

Italian restaurant chain Prezzo is to close around one third of its outlets as part of a restructuring plan to avoid the company going into administration, according to BBC News.

The restaurant chain, which is owned by private equity firm TPG Capital, has estimated that the closure of 90 eateries will result in around 500 job losses out of a total workforce of 4,500 people. All 33 Chimichanga TexMex restaurants run by Prezzo are to close.

The changes are part of a company voluntary arrangement which seeks to prevent the company from going into administration. Under the deal, rents will also be reduced by between 25% and 50% at 57 of the chain’s sites.

Jon Hendry-Pickup, chief executive of the chain, said: “While we continue to be profitable, the pressures on our industry have been well documented. Despite this being a tough decision, the support given today by our creditors shows that they believe we have the right approach to transforming Prezzo in the eyes of teams, customers and stakeholders.”

In 2014 TPG purchased Prezzo for just over £300m. The chain is one of a series to come under financial pressure in recent months. Jamie’s Italian and burger chain Byron have undergone restructuring, while Toys R Us and electronics store Maplin recently entered administration.

Businesses cite increased costs including a rise in the National Living Wage and higher business rates for retail woes. Competition from online retailers is also a major concern for high street retailers and restaurants.

Plans for new Northumberland coal mine scuppered

Plans to develop an open cast coal mine in the North East of England have been rejected on climate change grounds, according to Reuters.

Last year Northumberland County Council approved a proposal from the Banks Group to extract 3m tonnes of coal from near Druridge Bay, Highthorn. Supporters of the project said it would boost local employment.

However, the Minister for Local Government has rejected the plans. The UK is set to phase out coal power stations by 2025 in order to meet carbon emission targets in accordance with international agreements.

Following a public enquiry, Minister Sajid Javid decided against permitting the open cast or surface mine to go ahead. A government report said “the scheme would have an adverse effect on greenhouse gas emissions and climate change of very substantial significance.”

Banks Mining’s director Gavin Styles said the decision was made for “purely political reasons” and noted that Britain is still dependent on coal for some purposes.

Styles said: “The importance of securing investment in North East England, creating dozens of high quality local jobs, and opening up opportunities for regional suppliers to win substantial contracts could not be any clearer.”

Banks Group claimed the mine would employ 100 people and generate almost £50m in related contracts and community benefits.

Britain has a legally-binding target to but greenhouse gas emissions by 80% from 1990 levels by 2050.

Only 10% claim National Insurance top up for relatives providing childcare

Up to 90,000 older people are missing out on a top-up added to State Pensions, according to BBC News.

The Adult Specified Childcare Credit is available for those who look after young children and is worth up to £230 a year in retirement. The credit is applicable to those who look after the children of relatives.

In the year ending September 2017, 9,485 applications for the credit were made. That is a marked increase on the figure for the previous year, following a government campaign to improve uptake.

Insurers Royal London have calculated that around 90% of those eligible for the credits are failing to claim them.

The credits are available to family members caring for a child under 12, where the child’s main carer or parent is in paid employment. The credit helps to make up an individual’s National Insurance record for gaps in contributions. Workers now need 35 years of National Insurance contributions to qualify for a state pension.