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UK Edition
22nd April 2024
 
THE HOT STORY
PM announces benefit curbs to tackle ‘sicknote culture'
The Prime Minister has unveiled a new five-point plan to tighten the welfare system including removing benefits for unemployed people who refuse to take a job after 12 months. Rishi Sunak said recent rises in spending on sickness benefits were unsustainable, insisting that welfare should not be a “lifestyle choice” or the system exploited. Mr Sunak said mild depression or anxiety were not barriers to work, explaining that the number claiming for these conditions had tripled in the past decade. He said: “This is about making sure that the welfare system doesn’t over-medicalise what are the everyday challenges and anxieties of life.” He rejected the argument that his approach amounted to not being caring enough to people with mental health concerns, explaining: “This is about recognising how central and important work is to people’s lives. It gives you purpose. It gives you hope. It gives you belonging and identity.”
WORKFORCE
Consulting firms step up efforts to push out their low performers
There has been a slump in voluntary departures at professional services firms such as McKinsey and Deloitte, and bosses have been desperate to increase what they call “attrition.”
CORPORATE
EY warns UK partners that profits could fall this year
Big Four auditor EY has told its 1,700 UK partners that profits could fall by 15% this year amid a wider slowdown in the professional services sector. This is according to a presentation given last week by Stuart Gregory, a senior figure in EY's finance and transformation team, Sky News reports. Last year, EY recorded average distributable profit per partner of £761,000 - down from a record £803,000 the year before. A fall of 15% would mean average partner profit in the year to the end of June 2024 falling below £650,000. Sky News also reports that sources told them that EY's Italian business had received a letter from CVC Capital Partners in recent weeks indicating an interest in acquiring its strategy and consulting arm in the country.
REGULATION
Global financial firms fall behind on monitoring and archiving personal messaging apps, survey shows
Global financial companies are not adequately monitoring and archiving business-related communications on personal messaging apps, according to a survey by SteelEye. The survey found that 63% of compliance executives in the US, Europe, and Asia Pacific were not monitoring staff usage of WhatsApp for compliance purposes. Only 27% said they were investing in communications surveillance capabilities. The failure to monitor personal messaging apps could lead to regulatory breaches and fines. The US Securities and Exchange Commission has already cracked down on business-related text messages over personal messaging platforms. Financial penalties linked to record-keeping missteps across personal messaging tools have exceeded $2bn.
Bosses of overseas finance firms should spend time in UK, FCA says
Financial firms that offer services to customers in Britain directly from overseas without a base in the country must have executives that spend an "appropriate" amount of time on UK soil, the Financial Conduct Authority (FCA) has said. The FCA's "overseas persons exclusion" allows financial firms based outside the country to offer wholesale market services to customers in the UK without authorisation. The FCA aims to ensure that foreign firms operating in UK markets meet the required standards.
LEGAL
Old IR35 wounds may be reopened
The Sunday Times reports on HMRC’s ongoing IR35 litigation in light of the decision last week by the Upper Tribunal to support the tax office in its appeal of a 2019 ruling in favour of IT contractor Richard Alcock. HMRC contested the ruling by claiming that the tribunal judges had made “errors in law” and now others who won their cases fear they’ll be dragged back to court. John Williams from Moore Kingston Smith said: “The Alcock case will provide no comfort for others who have won their IR35 case. There is still time for HMRC to appeal against decisions made in the taxpayers’ favour, hitting them financially and emotionally during the process.” TV presenter Kaye Adams, who recently won a ten-year battle over a £124,000 tax bill, commented: “If IR35 legislation is so complicated that tribunal judges can’t work it out, it’s time it was withdrawn.” But Seb Maley from the IR35 consultancy Qdos said the case will be reheard because the way the judges reached their conclusions wasn’t deemed to be accurate by the higher court - not necessarily the verdict itself.
DIVERSITY, EQUITY & INCLUSION
BP management shake-up leaves top team evenly split
The first major shake-up of BP management under new CEO Murray Auchincloss has resulted in the departure of two senior female executives. Leigh-Ann Russell, chief technology officer, is moving elsewhere after 18 years with the company, while Anja-Isabel Dotzenrath will retire after just two years heading up BP’s gas and low carbon division. A reduction in the size of the management team and the fact that they are both being replaced by men will mean BP’s top team will be evenly split with five men and five women. In 2022, BP was praised for becoming the first oil major to have more women than men in its top team.
WORKPLACE
Google staff ordered to leave politics at home
The Telegraph reports on an apparent shift in attitude at Google after 28 staff were fired for staging a protest against the company’s work for the Israeli government. Google sells cloud computing and artificial intelligence services to a project run by the Israeli military, prompting pro-Palestinian staffers to occupy the office of Thomas Kurian, the head of its cloud computing division. Nine workers were arrested before Google ended up sacking 28 staffers. Addressing the protest, Google’s chief executive Sundar Pichai said that the office was not a place “to fight over disruptive issues or debate politics” before going on to remind workers that Google was a business and its goal “to organise the world’s information . . . supersedes everything else.” The paper’s James Titcombe suggests Pichai’s edict marks a clear shift for company that once told employees to “bring whole selves to work.”
CYBERSECURITY
NCSC names Richard Horne new CEO
PwC’s chair of Cyber Security Practice, Richard Horne, has been announced as the new chief executive of the National Cyber Security Centre (NCSC). He will replace Lindy Cameron in the autumn. Horne will lead the UK's cyber resilience and help shape the country's security approach to future technologies such as artificial intelligence and quantum computing. Anne Keast-Butler, director of GCHQ, which oversees the NCSC, expressed her delight at Horne's appointment, highlighting his experience in working with major companies and organisations to manage cybersecurity. Prior to his role at PwC, Horne served as the managing director of cybersecurity for Barclays and played a key role in shaping the UK government's first cybersecurity strategy.
STRATEGY
UK's nuclear power strategy takes shape
Last month, British Prime Minister Rishi Sunak announced public and private investment to reinforce the UK's nuclear workforce and create 40,000 new jobs. The UK government's plan, 'Civil Nuclear: Roadmap to 2050', aims to secure investment decisions for additional nuclear capacity and install up to 24 GW of new nuclear by 2050. Great British Nuclear (GBN) is buying land for new nuclear development and has put out tenders for development contracts potentially worth billions of pounds. The government is prepared to underwrite the risk of early-stage projects, showing its commitment to nuclear. The UK's only independent small modular reactor development company, Community Nuclear Power (CNP), aims to deliver 1 GW of nuclear power by 2032. Private funding is being secured for the project, and investor confidence is increasing due to cross-party commitment.
SUSTAINABILITY
Unilever CEO scales back ESG pledges
Unilever chief executive Hein Schumacher is scaling back the company's commitments on plastics and diversity in response to growing investor unrest. Unilever, known for its environmental, social and governance (ESG) policies, plans to reduce its use of virgin plastics by one-third by 2026 instead of halving use by 2025. The company will also replace its commitment to pay all direct suppliers a living wage by 2030 with a promise covering half of its spending by 2026. Additionally, Unilever has dropped its pledge to spend €2bn with diverse businesses by 2025 and its commitment to have 5% of its workforce made up of people with disabilities. Mr Schumacher stated that the change in emphasis is driven by the need to address current global issues.
INTERNATIONAL
Female-led businesses provide economic lifeline for Afghan women under Taliban restrictions
A study by the United Nations Development Programme (UNDP) has found that female-led businesses are serving as an economic lifeline for Afghan women living under Taliban restrictions. However, these businesses face challenges in accessing capital and markets. The study revealed that 41% of surveyed Afghan female entrepreneurs had to take on debt, with only 5% able to gain credit through banks or micro-finance institutions. Additionally, over 70% reported restrictions on their operations, including the inability to travel to local markets without a male guardian. While the Taliban have not formally banned women from work, their restrictions have led to a decline in female formal employment. The study emphasizes the importance of international support for these businesses, as they play a crucial role in sustaining local economies. Challenges faced by female-led businesses include competition from cheap imports and a lack of credit access. The future of Afghanistan depends on the success of these businesses, according to the UNDP.
Samsung Group implements six-day workweek for executives
Samsung Group has implemented a six-day workweek for its executives in response to economic challenges and disappointing financial results. The new schedule aims to inject a sense of crisis amongst executives and encourage all-out efforts to overcome the company's challenges. Samsung Electronics executives will have the option to work on either Saturday or Sunday, while employees below the executive level will continue to work five days a week. Most of Samsung's technology divisions will follow the new schedule immediately. South Korea is known for its demanding work culture, and Samsung is not alone in asking its employees to come back to the office at weekends. SK Group, a South Korean conglomerate, has also reintroduced regular Saturday meetings for its chief executives.
Business travel for bankers in Hong Kong takes a hit
Business travel perks for bankers in Hong Kong are being cut back as firms tighten their belts amid a deal drought in the region. Some banks have reduced hotel allowances to below $100 a night, while other cutbacks include car pooling, taking the train instead of a taxi, and booking second-class tickets for high-speed rail. The austerity measures are a far cry from the days when bankers could book flights on a whim and travel in business class. The prolonged real estate crisis and concerns about China's economy have led to job cuts and warnings against financial elitism. Even at the likes of Goldman Sachs and UBS, austerity is being felt, with some bankers voluntarily booking premium economy seats instead of business class.
Dutch companies file 1,500 work permit requests for refugees
Dutch companies have filed over 1,500 requests for work permits for refugees this year, following a ruling that allows them to work more than 24 weeks. The ruling, made last year, states that asylum seekers should have access to the job market to become self-sufficient and better integrated into society. The annual report from the Dutch jobs agency UWV confirms that companies are embracing this change and seeking work permits for refugees.
 


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