Category: General Interest


Will it be “no jab no job”?

At the end of August the CEO of Australian airline Qantas said that the pandemic had cost “billions” in lost revenue. No shock there – but on the same day another airline did come out with a surprising announcement. 

America’s third-largest airline, Delta, said that it would impose a $200 (£145) monthly surcharge on employees not vaccinated against Covid-19. In addition, it would only pay sick pay for Covid to people who had been double-jabbed, but still became infected. 

In a memo to staff CEO Ed Bastian said that the average hospital stay for Covid-19 now cost the company $50,000 (£36,300) which was “untenable.” He added, “this surcharge will be necessary to address the financial risk the decision not to vaccinate is creating for the company.” 

There have been plenty of stories of companies insisting that staff are fully vaccinated before they return to the office, and plenty of rumours of pay-cuts for staff who opt to work from home. Delta, though, seems to be the first company to take direct financial action against staff who decide – for whatever reason – not to get vaccinated. Could other companies follow suit? And could it quickly become a case of ‘no jab, no job?’ 

As long ago as February, Prime Minister Boris Johnson was stating that vaccinations would not be compulsory. “That’s not the way we do things in this country,” he said. This was followed by vaccines minister Nadhim Zahawi ruling out vaccine passports, saying they would be “discriminatory.” 

But while that was – and remains – the official position, could employers make vaccination compulsory in all but name? Around the time Boris Johnson was saying jabs wouldn’t be compulsory, Pimlico Plumbers, from London, had already set aside money to vaccinate its entire workforce and had stated that vaccination would be a condition of employment for new starters. As we’ve mentioned above, every week now seems to bring another story of an employer insisting on staff being vaccinated. 

It is easy to see the whole subject becoming a legal minefield. Nearly 18 months on from the start of the pandemic many employers – and their employees – will, inevitably, be attracted by the idea of a fully vaccinated office or factory. 

Can employers do that? Can they draw a line between new starters and someone who, say, joined just before Covid? It is certain to be challenged in the courts. Those opposed to the vaccine – on medical or ethical grounds – will make a very simple argument. ‘It wasn’t a condition of my employment that I had the MMR jab. How can you therefore insist I have the Covid jab?’ There are certain to be claims for unfair dismissal. 

Will an employer be seen as discriminating against someone who opts not to have the vaccination? Will staff be able to refuse to work with someone who hasn’t been vaccinated? Will companies that previously had, say, the HR Team and the Accounts Team suddenly have the Vaccinated Team and the Non-Vaccinated Team? 

One thing is certain – the employment lawyers are not going to be short of work. And with the virus constantly changing and the need for booster jabs becoming apparent, this is not a subject that will be quickly resolved.


The rise and rise of the subscription economy

You may use it for beer or bread, for razor blades, watching films or even for the simple act of reading books on Amazon. The subscription economy is something that has taken a hold on a large and growing portion of the population. It used to be said that Britain was a nation of shopkeepers. Have we since become a nation of subscribers? 

In case you have not heard the term, what is the subscription economy? Simply put, it is the network of consumers paying a fixed monthly price for a product they know they are going to keep using. If you know you are going to keep shaving, or you know that you are going to keep watching films and reading books, then why not pay a simple monthly subscription that takes care of our needs? It sounds easier than buying the razor blades or the individual films or books as and when you need them.

Unsurprisingly, with so many people stuck at home over the last eighteen months, the subscription economy has boomed. The latest research from Barclaycard showed that it grew by almost 40% in the UK last year, and is now worth a whopping £323m per annum. 

The research throws up some other interesting facts: 

  • Almost two-thirds (65%) of UK homes are currently signed up to a subscription service, with an average of seven subscriptions per household
  • The average spend per individual is £46 per month. Men, averaging at £57 per month, spend more than women, who on average spend £35 per month. 

Clearly statistics like this represent a big potential market, and a challenge, for retailers. In fact, one in ten retailers launched some form of subscription service during lockdown, and one in five say they will continue to develop their subscription service despite the easing of lockdown. 

Amazon boss Jeff Bezos has dubbed the new, subscription focussed consumer the “divinely discontent customer.” Companies and brands now need to do more than just meet demand. According to Bezos, if they are going to keep their subscribers, they need to anticipate and shape demand as much as respond to it. 

Will the subscription economy continue to grow? It seems inevitable, and the UK subscription economy is a fraction of that worldwide, which has grown 435% in just nine years, with some commentators dubbing it “the end of ownership.” 

There appears to be growing consumer preference for subscribing over ownership. 71% of international consumers currently have a subscription service and 75% believe that in the future people will own less physical products.

And why not? The subscription economy is more than just boring old razor blades. You can get cat litter on subscription, Japanese snack boxes and newspapers that only focus on good news. And why settle for Christmas just once a year? One subscription service guarantees that a box of festive goodies will arrive every four weeks, whether it’s December or July. It is worth noting that they do turn up on your doorstep, not down the chimney.


Is there any reason to worry about inflation?

If you’re the sort of person who likes their glass half-empty then there will be plenty of opportunities to find something to worry about at the moment. The recovery from the pandemic, global tensions and all the staff shortages in the news can turn anyone into a pessimist. 

On top of that, some are suggesting that we need to start worrying about a word that has hardly been on anyone’s lips for the last few years – inflation.  There are even fears that the policymakers could “choke off” the economic recovery because of worries about inflation. 

In the recent past, most economies have been worrying not about inflation, but about deflation – which can cause economies to stagnate. Seemingly suddenly, the effects of Covid are causing prices to rise, and we’re hearing more and more about supply chain inflation. Simply put, manufacturers are having to pay more for raw materials because of delays and disruption caused by the pandemic. That cost carries down the line, and inevitably, this will result in higher prices to consumers. 

The Bank of England’s departing chief economist Andy Haldane has warned that inflation is “rising fast” and could reach nearly 4% this year – well above the Bank’s target rate of 2% (which was exceeded in May, when inflation reached 2.1%). 

The Bank’s Monetary Policy Committee is slightly less hawkish, saying that it expects inflation to go above 3% “for a temporary period.” The Resolution Foundation, a well-known think tank, sides with Mr Haldane, arguing that as the economy opens up and consumers start to spend the savings they accumulated during lockdown inflation will be driven up. 

Concerns are also being voiced in Europe – which has suffered from too little inflation for almost the last decade – and in the US, with the Wall Street Journal forcibly making the point that it is supply problems causing the rise in prices, not an increase in consumer demand. 

Whoever is right, inflation is something worth keeping an eye on. Inflation has the potential to impact the value of savings and investments, and interest rates paid on deposit accounts remain at, or very close to, historic lows. If inflation does reach 4% then a deposit account paying less than 1% is going to look remarkably unattractive. 

It’s not all doom and gloom, as with most things, a little planning goes a long way. Regular contact with your financial professionals and regular reviews of portfolios is as important as ever.


Can we avoid being caught by the “Scamdemic?”

There has been a rapid rise in phone and online scams over the past sixteen months as criminals seek to take advantage of people’s insecurities regarding Covid. With many processes moving online and onto our mobile phones, comes new opportunities for people to take advantage. This phenomenon has been dubbed the “scamdemic.

Scams have come a long way from the apocryphal general from a far-away nation who was desperate to share £30m with you. Although some people do fall victim to fraud of that design, the sage advice of grandmothers everywhere;  “if it seems too good to be true then it probably is”  has oftentimes been enough to protect the vast majority of us. 

There is a huge difference, however, between £30m and £2.99. While it is hard to believe that we’ve been chosen to receive a share of a king’s fortune, it is all too easy to believe the text message that appears to come from the Royal Mail. They have been unable to deliver a parcel, there’s £2.99 to pay and all we need to do is click the link to this website. After all, with the rise and rise of online shopping, who isn’t waiting for a parcel? 

According to the credit-reporting agency Credit Karma, more than half the people in the UK have been targeted by text scams since lockdown began. Worryingly, a third of us have fallen for them and, with the average person receiving four scam messages a week, it is easy to wonder if sooner or later we won’t all be a victim. 

Along with the Royal Mail, messages supposedly from PayPal are most likely to have caught us out, but criminals posing as the NHS and HMRC – saying you’ll shortly be in jail if you don’t pay a tax bill immediately – are also high on the list. 

The official term for all this is Bulk Telephony-enabled Fraud (BTF). There are services allowing customers, legitimate and otherwise, to send up to 30,000 messages a minute. Looking on one company’s website, the cost of sending 100,000 messages is just over 2p per message. For the criminals it is purely a numbers game. With so many messages going out, some of them are bound to hit the target. And while the average age for postal scams is 74, the age group most likely to fall victim to text scams are the under-35s. 

It’s unlikely that this problem is going away any time soon. You may ask, well, why doesn’t the Government do something? The problem is that so many of these scams and frauds are based offshore. 

The answer, for now, is in our own hands. Caution and a healthy skepticism can help to protect you. If you’re feeling tired, burnt out or otherwise distracted, ask whether now is the time to be dealing with your messages. Question them when you receive them:  ‘Am I really expecting a parcel?’ ‘My accountant deals with everything, so why are HMRC contacting me?’ Questions like that may not be as straightforward as grandma’s advice, but asking them could save you a lot of money, and an equal amount of heartache. 


Could a shortage of staff de-rail a recovery?

Older readers may remember the TV drama Boys from the Blackstuff and, in particular, the catchphrase uttered by Yosser Hughes. “Gizza job. Go on, gizza job. I can do that.”

Forty years later could we be about to see a complete role reversal? Could employers be standing plaintively outside their shop, office or factory saying, “Want a job? Come on, mate, you can do this.”

As the pandemic unwound we heard plenty of tales of woe from the hospitality sector. Pubs, bars and restaurants were ready to reopen but were unable to do so. They simply couldn’t find enough staff, with widespread reports that up to 20% of workers had left the sector. 

With “Freedom Day” now having arrived there are stories of yet more staff shortages. There are pictures of empty supermarket shelves in all the papers, apparently caused by a shortage of delivery drivers. There are warnings of cancelled operations and missed diagnoses because of a lack of NHS staff. 

The recent culprit was the “pingdemic”, the results of the Government’s test and trace app forcing so many people to self-isolate. That, presumably, will be sorted out, but is there a longer term problem? Could a shortage of staff – and, in particular – skilled staff, de-rail our economic recovery? 

In the manufacturing sector 38% of manufacturers reported problems finding staff with the right skills before the pandemic: that figure has now risen to 65%. Problems also remain in the service sector: while the latest Purchasing Managers’ Index shows a high level of optimism, small firms are struggling to meet demand because of staff shortages.

This seems unlikely to change any time soon. The pandemic has made people increasingly aware of their work/life balance and the long hours, night-time and weekend working that much of the service sector demands is simply no longer seen as attractive. 

Research by Broadbean Technology, the world’s largest network of jobs boards, showed that overall job applications in the UK fell 24% between May and June of this year. This came despite vacancies being up 10% in the same period, illustrating the mismatch between the supply and demand for workers. 

However many incentives, grants or support packages the Chancellor unveils businesses can do nothing without staff. Employers will need to be more creative with remuneration packages and embrace flexible and home working much more than they have previously done. We as consumers may need to modify our behaviour as well, accepting that things we may previously have taken for granted are no longer available. Want to eat out at 10pm? It may mean sitting in the car with a takeaway…


Is Facebook really worth a Trillion Dollars?

You may have seen the film The Social Network. In the film, Jesse Eisenberg, playing Facebook founder Mark Zuckerberg, is musing on wealth. “A million dollars?” he says, and shrugs. “But a billion dollars… that would be cool.”

The film was released in 2010. Eleven years on the scriptwriters may need to add three more zeros.

At the end of June the company won a legal battle against US regulators, the shares rose 4.2% taking Facebook’s valuation past the $1tn mark, making it the last of the big five tech firms, along with Amazon, Google, Netflix and Apple, to reach that milestone.

A trillion dollars is £729bn, but is Facebook really worth that much? It is an interesting question for many investors, with traditional ways of valuing companies increasingly seen as irrelevant.

Go back a few years and investors were concerned about a company’s price/earnings (PE) ratio. A company’s share price relative to its earnings-per-share. A high PE ratio usually indicated a company that was growing quickly: but one that was too high, especially when compared to other, similar companies, often made investors wary.

Then there was the dividend yield, a simple ratio showing how much a company paid each year in dividends, relative to its share price. Investors looking for income went for solid companies with a good dividend yield. Investors looking for growth would accept a lower dividend yield, especially if the company was reinvesting profits, rather than paying them out in dividends to shareholders.

Underlying both these traditional measures was, of course, the belief that a company’s job was to make a profit.

How times change. Uber went public in 2019. At the time the company freely admitted that, while it had 91m users, “it may never make a profit.”

Such a statement would have been incomprehensible to a traditional investor. If a company never makes a profit, how can it pay a dividend? If it never makes a profit, how can it even continue in business?

Facebook, of course, does make a profit. In the first quarter of this year it reported revenue of $26bn (£19bn) which was up 48% on the previous year. The company’s net receipts grew 94% to $9.5bn (£6.9bn) as the average price of its ads increased by 30% and the number of ads it delivered rose 12%.

Many companies with spectacular valuations don’t make a profit, though. They are valued on expectations of future profits, on potential market share and on their perceived ability to disrupt traditional markets.

All this, inevitably, makes the job of the fund manager much more difficult, as they need to look at potential future results rather than what’s happened historically and it is, inevitably, further complicated by the changes the pandemic has brought about. To think of a company in the future being valued at a quadrillion dollars may sound far fetched, but there was a time when the same could be said about a trillion.


Will the four day week become the new normal?

The effect the pandemic has had on people’s mental health has been well documented. Many people have been juggling work, a home, a family, a relationship, as well as elderly relatives they haven’t been able to see, or daren’t take the risk of seeing. 

Unsurprisingly, the pandemic has changed attitudes to work and life, with millions of people now saying that they would accept a shorter working week – and less money – in exchange for a better work/life balance. 

But is that possible in the real world? Could people really move to a four day week? Or would that result in a loss of productivity and subsequent blow to the economy that would prove to be too much? 

An experiment has taken place in Iceland which suggests that a four day week may well be the way forward. The trial took place between 2015 and 2019 and was run by Reykjavik City Council and the national government – so comes with the caveat that it largely concerned public-sector workers. 

The trial covered 2,500 workers – around 1% of Iceland’s total workforce – and saw them move to a four day week with no loss of pay. The working week was reduced from 40 hours to, typically, 35-36 hours. The trial was hailed as an ‘overwhelming success’ with workers reporting less stress and burnout, better health and an improved work/life balance. 

Similar trials are now taking place in countries including Spain and New Zealand. Whether a four day week could be applied across all sectors of the economy remains a moot point. What is clear is that the pandemic has unquestionably changed working patterns and what people want from work. It seems clear that employers would like the majority of their staff back in the office: it seems equally clear that millions of people prefer working from home – spending more time with their family and less money on commuting – and want that to continue. 

A story published in mid-July suggested that staff may win the work from home battle. Zoom – which has become a staple of so many people’s lives over the past 16 months – has bet billions on hybrid working continuing, even as the Government urges us to return to the office. 

Zoom has struck a £10.7bn deal to buy cloud-based call-centre operator Five9. Zoom boss Eric Yuan says it will allow customers to “re-imagine the way they do business” as Zoom prioritises its cloud-calling product Zoom Phone and the conference-hosting Zoom Rooms. 

Whatever happens – and employers are going to find it very difficult to insist that people come back to the office – one thing is certain. The pandemic and the relentless march of technology has changed the face of work forever.


What lessons can businesses learn from Gareth Southgate?

In 1996 England went out of the Euros on penalties. The man who missed the crucial penalty was Gareth Southgate, now the England manager. 

Speaking about the miss recently he said, “I’ve had a couple of decades to think about it. I was a volunteer. The type of character I was, I felt you should put yourself forward.” 

As we all now know, England also lost the final of Euro 2020 on penalties. Football was not scheduled to come home – unless you live in Rome. But throughout the campaign – and the subsequent inquest – Gareth Southgate has won widespread admiration for his approach. It is not always easy bringing players from different clubs together, but as BBC pundit Karen Carney put it, “This isn’t a team, it’s a family.” 

So is it just football that can learn lessons from Gareth Southgate? Or can his approach be applied more widely – perhaps also in the business world, as the UK looks to recover from the pandemic? 

Everyone agrees that Southgate is modest and approachable. He has a clear vision and he communicates it well. These are key traits in any successful business leader. 

There is, though, an even more interesting point about the current England manager. He is prepared to surround himself with ‘non-football’ people. It’s something you often see in professional sport and in business: if everyone in your management group thinks in the same way and comes from the same background, you are by definition limiting your options. As the old saying goes, “If everyone thinks the same, no-one thinks very much.” 

From the start of his time as England boss in 2016, Southgate has surrounded himself with people who think differently. At the time of writing the FA’s Technical Advisory Board includes Sir Dave Brailsford, former performance director of British Cycling; Colonel Lucy Giles, from Sandhurst Military Academy; Kath Grainger, an Olympic rower; the rugby coach Stuart Lancaster and the tech entrepreneur Manoj Badale. 

“I like listening to people who know things I don’t,” Southgate says simply. “That’s how you learn.” 

Listening seems to be another of the England manager’s key strengths. Anyone watching the tournament couldn’t help but be struck by the number of conversations Southgate had with Steve Holland, his assistant manager. More often than not, it was Holland doing the talking and “the boss” doing the listening. 

Will those strengths of Southgate’s – a clear vision, an ability to communicate, an acceptance of new ideas and a willingness to listen – be enough to finally see England succeed in the 2022 World Cup? Who knows? You suspect Italy, France, Brazil and Argentina might have other ideas…

What is certain though, is that those characteristics are absolutely essential in business. As the UK slowly recovers from the pandemic, they’re traits every business leader needs to adopt. 

…And perhaps we can throw in one final character trait: bravery. Gareth Southgate was brave enough to take a penalty in 1996, as were five young men a few weeks ago. As Italian legend Roberto Baggio famously said, “Only those who have the courage to take a penalty miss them.” 


Is the north east the new London?

When Chancellor of the Exchequer Rishi Sunak delivered his Budget speech in March much of the focus – inevitably – was on the economy’s recovery from the pandemic, and the cost of all the support measures. 

But Sunak also announced a host of new initiatives including freeports and a new campus for the Treasury. One of the freeports was at Teesport, the Treasury campus is to be in Darlington. Throw in developments in the private sector and the Prime Minister’s commitment to “levelling up” the UK and many people are wondering if the North East could soon rival London and the South East as one of the UK’s key economic areas. 

Freeports allow goods to be imported without paying the usual tariffs: the tariffs are only payable if the goods are then moved elsewhere in the UK – but they can be shipped back overseas without any tariffs ever being payable. 

The first, and biggest, freeport in the UK will be at Teesport, in a move that will “turbocharge Teesside’s recovery” and bring thousands of jobs and a reported £3.4bn boost to the local economy. 

The decision to relocate as many as 1,000 Treasury officials to Darlington may not have the same economic impact on the region, but it was a significant sign that the Government appears to be committed to areas outside London. It is expected that around 300 staff will have moved within a year, and that they will be joined by staff from other departments such as Business and International Trade. 

All this was swiftly followed by Nissan announcing a £1bn investment and major expansion of electric vehicle production at its car plant in Sunderland. This will create 1,650 jobs, plus thousands more in the local supply chain. 

July then brought planning approval for Britishvolt’s gigafactory which will eventually produce enough lithium-ion batteries for 300,000 electric cars a year. It will be based at Blyth in Northumberland. It is expected that this will create another 3,000 jobs, plus those in the supply chain. 

The title of this article is, of course, slightly tongue-in-cheek. The North East will likely not become the “new London.” What is possible, however, is that direct Government action can help to rebuild regional economies in the UK. Equally, companies are seeing that London and the South East is not the only answer if they are looking to expand. 

The next step, perhaps, is to persuade the tech giants – such as Facebook and Google – that their UK headquarters do not need to be in London. After all, Amazon now has more than a dozen fulfilment centres in the UK, stretching from the south to Inverclyde in Scotland. 

With many people now looking to escape to the country in search of a better work/life balance after the pandemic, it may be that the Government’s commitment to levelling-up has come at just the right time – for both the economy, and for people’s wider mental health.


Will Biden’s huge Stimulus Package work?

When Joe Biden was inaugurated as President back in January there was much talk of his proposed stimulus package for the US economy. The figure generally talked about was $1.9tn (£1.36tn), an eye-watering sum of money. To give you a comparison, the National Audit Office in the UK is currently saying that the Government has spent £372bn on Covid-19, with £150bn of that going towards support for businesses. 

By May, however, $1.9tn was looking like small change: when Joe Biden presented his Budget he revealed $6tn (£4.3tn) of spending commitments, largely funded by tax rises for wealthy Americans and business. Unsurprisingly the spending plans were condemned by the Republicans as “insanely expensive,” with claims that they would lead to record levels of debt. 

So what is the President planning to spend the money on? How will he pay for it? And, most importantly, will the huge level of spending work? 

Joe Biden’s budget is aimed at growing the US economy “from the bottom up and the middle out.” It includes more than $800bn for the fight against climate change, free school places for all three and four year olds, two years of community college for all Americans and massive investments in both physical and digital infrastructure. 

As we have noted above the plans have been fiercely criticised, and there is a chance that some members of the President’s own party may side with the Republicans over some of the proposals. The chief criticism, though, has centred on debt, with estimates that the proposals could add $14.5tn of debt over the next decade, taking US Government debt to 117% of GDP by 2031 – a level not even reached during the Second World War. 

Will the plans work? Your opinion on that almost certainly depends on your view of Joe Biden. Republicans are fiercely critical of something they see as taking US debt to a whole new level and – very possibly – driving up inflation. The Biden administration argues that inflation will stabilise at around 2% and that the higher taxes will see the whole programme paid for within 15 years. 

In 1996 Bill Clinton famously said that the “era of big Government is over.” Joe Biden appears to have brought it back. While his plans still have to go through Congress and the Senate, it seems certain that enough of his spending commitments will remain to make the fiscal hawks in both parties wince.