Labour worked hard to woo business, but now comes the real test
The Tory party manifesto, undeliverable and shaky though it was on the numbers, did have something going for it. The gradual abolition of national insurance to be replaced with a single income tax; more housebuilding; cutting the time it takes to get spades in the ground on major infrastructure projects. If you take it at face value and (perhaps more challenging) believe this current iteration of the oldest political party in the world is capable of delivering it, there wasn’t necessarily much to quibble with on the economic front.
It is Labour’s test today, and it is fair to say that the stakes are higher. The party has spent five years wooing the business community and has done a professional job of it. Keir Starmer and Rachel Reeves both admit privately that Labour has to work harder than the Tories to prove it has business’ interests at heart. Certainly, the rhetoric of wealth creation we will hear is welcome. Starmer is, we believe, genuinely aware that public spending – fixing things – requires growth. There is, however, one constantly repeated rumour that is setting off all sorts of alarm bells.
It is true that our tax system is broken. Property taxes are way out of date, business rates are designed for a pre-online world, a code that should be a 1000 pages at most runs to more than 20,000. Capital gains tax is not perfect, either. But to hike it – and one has to assume that a failure to rule that out when compared with the spending plans and state of the finances – would be a tax on entrepreneurship, a tax on risk, at the worst possible time.
The City will need to hear Rachel Reeves spell out her plans for CGT over the coming weeks. If she doesn’t, it is fair to say investors will assume the worst.
‘Nothing equates to a British pub’: TV hardman and ex-Eastenders star Ross Kemp on the perfect pint
TV’s favourite hardman, Ross Kemp, has been everywhere from Albert Square to Afghanistan but admitted, “nothing equates to a British pub.”
The 59-year-old, best known for his performance in Eastenders as Grant Mitchell, the son of longtime landlord of the Queen Vic, Peggy, and warring brother to Phil, told City A.M. he would “never say never” to the prospect of one day making a venture into the world of hospitality.
“My favourite line is, you never say never to anything in life…if there is an opportunity, and I think it could be profitable, why not give it a shot…I’d never rule it out,” he said.
“I think hospitality is the cornerstone in most communities…the pub is a central hub for many people in this country..not only with the cost of living crisis, but because it’s been such a hard time with Covid 19,” the former soap star added.
Ross Kemp on pubs
Television journalist made the comments as he embarked on a quest with brewing giant Heineken to uncover what makes a perfect pint.
The documentary maker has launched a mini-series with the brewery company to help landlords pour the best beverage for their customers with its new Smartdispense technology. The tech helps keep beer chilled from the keg to the tap.
Ross Kemp, a regular pub goer, told City A.M. it wasn’t very difficult to get on board and support Heineken with its venture.
“I don’t generally get involved in things and endorse them unless I think they’re absolutely 100 per cent doing what they say on the side of the can,” he said.
The technology also helps minimise environmental impact by reducing up to 85 per cent of the beer, cider, water, chemicals and CO2 usually wasted during line cleans.
Lawson Mountstevens, managing director of Star Pubs, Heineken UK’s pub business added: “Heineken Smartdispense has many benefits to help the everyday publican as well as their punters – who want to be able to spend their hard-earned cash on quality products.”
“Our research found that almost 60 per cent of Brits left an establishment after the first pint because the quality wasn’t up to scratch. In order to continue running a successful pub, you need to be able to rely on the quality of your pints to retain those important customers.”
Publicans aren’t the only ones who’ve been feeling the heat. The price of pints across the country has skyrocketed in recent years, and it could rise further when a new law comes into force in October.
Mounstevens added: “The hospitality industry is worth tens of billions to the UK economy – with pubs and brewing in particular making up over £20bn employing almost 1m people.
“The success of our industry is not only down to hard-working publicans up and down the country but also down to consumers who work just as hard and more than ever are wanting bang for their buck. As we all know, that hard-earned cash isn’t stretching as far as it could a few years ago.”
“As an industry we’re not immune to the impact of increasing costs such as food, energy and raw materials. Whilst we’ve tried to absorb everything we can, unfortunately, we have had to pass some costs on.”
“Equal to everyone”
With the sector under pressure, Ross Kemp described pubs as “equal to everyone” and admitted it’s where he would go to unwind after returning from filmmaking across several war-torn countries.
“When I was doing extreme world, the first thing I would do after saying hello to my family is wander down to my local pub, and buy a pint.
Ross Kemp
“[And] I would sit there on my own drinking, particularly if I was in Ukraine or if I’ve been to Afghanistan or Syria or Iraq or somewhere where the place is hostile. I would go down and have a silent pint on my own or two, and then I’d join in with everybody else,” Ross Kemp said.
“It wasn’t because I needed the drink. It was because I just wanted to sit in a place where I felt safe, and I felt that was my happy space.”
“There is nothing that I think equates to a great British pub. It’s part of what makes Great Britain great and it’s something that we should protect,” he added.
Safestore: Share price dips after ‘robust’ trading
Shares in Safestore Holdings dipped in early trades, despite the self-storage provider reporting “solid” trading conditions in the UK market.
On Wednesday, its share price fell by over three per cent as the listed firm unveiled a 0.8 per cent fall in revenue over the six months to April.
Underlying earnings before interest, taxes, depreciation, and amortisation was also down 3.7 per cent to £67m.
Meanwhile, satutory profit before income tax came in at £173.7m up from £103.4m in the first half of 2023.
After the slight fall in earnings, chief Frederic Vecchioli described the performance as “robust”.
He said: “Our track record has delivered market leading returns with revenue growing 49.3 per cent since pre-pandemic as we grew occupied space by 31.8 per cent and increased rental rates by 14.7 per cent and ancillary revenue by 33.3 per cent across all of our markets.
“During the period our central pricing approach has meant that we have been able to adapt our approach across our different markets to enable optimisation of revenue.”
He added: “In the UK, despite a challenging economic backdrop, we have seen solid like-for-like revenue performance with broadly flat average storage rates and a small occupancy decline.
“We have delivered strong like-for-like revenue growth in our other markets demonstrating the value of our diversified approach led by our Benelux markets with 13.5 per cent like-for-like revenue increases.”
Meanwhile, the dividend was increased by one per cent to 30.1p which it said was in line with its payout policy.
Shares in the firm are down by around eight per cent in the year to date.
Analysts at Peel Hunt rated the stock at ‘Hold’.
“A tougher trading period is reflected in a small pullback in revenue, and a 10.5 per cent decline in EPS. The dividend has been upped by one per cent, and the shares sit on c.19x based on a five per cent cut to our 2024E forecast. Hold, TP 830p.”
GPE’s rights issue brings in the money for property group
Great Portland Estates (GPE) has raised gross proceeds of £350m to capitalise on its pipeline of new opportunities in central London.
Back in May, the London landlord launched a fully underwritten three-for-five rights issue to raise gross proceeds of approximately £350m – £336m net of expenses – through the issue of 152m new Shares at a price of 230 pence each.
This morning, GPE confirmed it had received acceptances from existing shareholders in respect of 96.8 per cent of the new shares.
The deal’s underwriters will place the remainder of the issue. The final figures will be published at a later date.
“The combination of the Capital’s disrupted investment market and the increasingly evident supply drought of high quality spaces in our core market of the West End, means we are optimistic about the returns we can generate from both our £1.4bn pipeline of potential acquisitions and across our existing HQ and Flex offerings.”
He added: “I want to reiterate our thanks to all our shareholders and we look forward to providing an update on our progress in due course.”
The fundraising comes as demand for the group’s office spaces across London has continued to return to pre-pandemic levels.
After the pandemic, tenants have become increasingly picky and tend to favour best-in-class buildings with less space due to work-from-home practices.
GPE intends to use £168m of the proceeds from the Rights Issue to commit to capex for its Soho Square Estate and a new development, The Courtyard.
This will take total capex on committed GPE schemes from £498m to £666m.
The group acquired the Courtyard via a property swap with the City of London Corporation. GPE swapped its interest in 95/96 New Bond Street while simultaneously acquiring the long leasehold interest at The Courtyard.
DFS Furniture: Sofa retailer issues second profit warning as Red Sea disruption takes toll
Sofa retailer DFS Furniture has issued its second profit warning this year in the face of tricky Red Sea disruptions and weak consumer spend.
Back in March, the popular upholstery store warned it would make around £20-£25m, due to a weak retail market but the figure has now been slashed to between £10-12m.
This morning, the board said the cut to its profit was driven by a lower level of delivered customer orders, with £12-14m of delayed deliveries from the Red Sea disruption.
Those deliveries are now expected to move into the next financial year. The financial year of 2024’s revenue is now expected to be in a range of £995m-£1,000m. It said there was an “additional profit risk of up to £4m if Red Sea shipping delays continued through to our year end date.”
The brand, which has around 128 sites across the UK and wider Europe, said it was also dealing with the impact of higher shipping costs as “a result of freight rates increasing above previous expectations in our fourth quarter”.
DFS board members told the market that consumer demand in the upholstery sector has declined 10 per cent in volume terms year on year from a weak starting point bringing overall market demand levels to record lows.
The group has continued to operate through the period with market share of over 38.5 per cent.
The board said: “We have been encouraged by an improving trend in our group order intake, which is up over nine per cent in our fourth quarter to date, in line with our expectations.”
“The recent improvement comes as we annualise weaker prior year comparatives and also following successful initiatives to strengthen the product ranging and pricing in Sofology and reintroducing four year interest free credit at select times to maximise revenue and profit in this difficult trading environment.
They added: “Whilst the economic outlook remains hard to predict we expect the widely predicted lower inflation and interest rate environment to have a positive impact on upholstery market demand levels with the declines experienced across the last three years starting to reverse and the market slowly recovering in our FY25 period.
“We are well placed to capitalise on any market recovery given our market leadership position, the operational leverage in the business and the progress we are making on our cost base.”
Shares in the firm fell by over four per cent in early trade.
Analysts at Jefferies rated the stock a ‘Buy’.
They said: “DFS has updated ahead of plan to highlight a weak market, delayed deliveries, and higher shipping costs. As a result, FY24 PBT is guided to £10-12m (from £20-25m). Supported by an improved early Q4 trend, we continue to anticipate a recovery in FY25, and see upside when the market recovers.”
Tory manifesto? More drive to survive than revved up ambition
Those strategists who cooked up the idea of launching the Conservative manifesto at a Formula One venue no doubt had visions of Rishi Sunak putting some forward momentum in his campaign. Unfortunately for him, the whole event begged one question: has the Prime Minister got the drive to survive?
The manifesto itself is a hodge podge of sensible ideas (the abolition of national insurance, a smart little tax break for landlords to sell homes to tenants without getting hit by capital gains) and ‘popular’ policies that do not bear up particularly well to scrutiny of even the most rudimentary nature. The party’s crime and punishment policy (loosely translated: lock ‘em up and throw away the key) does not necessarily tally with the wider British public’s current understanding of Conservative crime and punishment policy.
The party’s housing aspirations sound awfully similar to those announced last time, and remain just as hollow. At no point in yesterday’s manifesto launch was it obvious to anybody watching what the bold plan actually was: the coherent vision under which the great British public might be able to march. It’s clearly not competent leadership (see: the past five years) and it’s not liberal economics (see: highest tax burden in seventy years). Frankly, it feels a little like going in circles. Perhaps that’s why they launched it at Silverstone.
For all that, the jury remains out on what Labour will slide into their manifesto. It is highly likely some in the party will feel emboldened by a 20-point lead and attempt to make the document more radical: perhaps with a hint here and there of a more aggressive capital gains regime. Such a move would be a mistake.
The Tory party may appear to be out of ideas; that does not mean the business community nor the City is desperate for bad ones.
London Tech Week day two: How can tech help solve the climate crisis?
As London Tech Week kicks off, Russ Shaw, founder of Tech London Advocates & Global Tech Advocates, gives us the inside scoop on the industry with his daily diary
A central question in the tech ecosystem is what can tech do to solve the climate crisis.
Technology is rightly considered a powerful asset when approaching the target of net-zero, providing the innovative solutions required, backed by investor confidence.
Recent L&P research found that London-based Climate Tech startups raised $3.5bn, ranking second globally in terms of investment in the sector. More broadly, the sector has a current turnover of £344.6bn and is growing at 11.1 per cent per year.
To put things in perspective, the UK cleantech sector is three times the size it was in 2017.
These numbers speak volumes , and a clear demonstration of the economic incentive that is coupled with the moral case for urgently finding solutions to the climate crisis, recognising tech as fundamental to the UK’s path to net-zero.
London (Clean)tech Week
It comes as no surprise that at London Tech Week this year, there is a commitment to sustainability, with the event working to achieve carbon net-zero and zero waste.
As tech experts from over 100 countries gather in London this week, they will engage with themes addressing today’s most pressing issues, showcasing how technology can positively impact society.
The focus on a sustainable future at the UK’s biggest tech event aims to inspire attendees by providing a platform for decision-makers, industry leaders, and entrepreneurs to implement change.
Today, attendees at Olympia heard from ClimateTech founders and CEOs, from companies including ENSO and Materials Nexus, as part of a green-focused speaker line-up with the message of providing a better future for our planet through technology.
In the festival’s fringe events I attended today with Tech in Ghana, Tech Malaysia Advocates and Tech China Advocates, sustainability was a theme across the board. Each group spoke about the importance of net-zero, how we can look after the planet and underlined how tech for net-zero is something that we must work together on to achieve global sustainability goals.
Furthermore, the ClimateTech Summit returns to London Tech Week once again this year, with speakers from the SOSV, National Grid and Katapult all set to offer their insights.
These convening moments all restate the commitment of the tech sector to putting the planet at the forefront of tech decision-making.
How tech can lead the green-way
The incentive to position London tech at the heart of our fight against climate change goes beyond the moral argument – though that of course plays a major role too.
London is respected, and renowned around the world, for its approach to climate tech – the fact that investment in climate tech in the UK was only second globally is clear testament to that fact. This tech vertical is a significant asset that brings in billions in investment yearly and has the potential to create thousands of jobs around the country.
Addressing climate change requires innovative solutions – an area in which tech clearly shines. Just today, high-level representatives from IBM, AVEVA and Cognizant discussed potential usage of AI in reaching a ‘sustainable future’.
These are conversations that demonstrate the very best uses of transformational technologies that stand at the frontier of innovation, and it is great to see London Tech Week acting as a crucial facilitator of such insight sharing.
No time to waste
Ultimately, we are behind in the climate fight.
The time for tech in the path to net-zero is now, as it was when hydroelectricity – the first renewable energy source – was created, when wind turbines were manufactured in the late 1800s, or when solar panels were first used in the 1950s.
This is tech’s moment, and we have an opportunity to push ahead with the climate fight by doubling down on climate tech and the benefits it can deliver.
We need to use moments like this week, with 45,000 tech leaders all gathering in London, to galvanise progress and plan how we can accelerate the tech innovation that will shape a sustainable, green future.
Moments like London Tech Week have the power to inspire solutions and drive forward the urgent action needed to combat climate change.
Russ Shaw CBE is the founder of Tech London Advocates & Global Tech Advocates
John Lewis appeals on plan for Waitrose and 428 homes
John Lewis will appeal plans after a local London council failed to agree on plans to build 428 homes and a Waitrose in West Ealing, a move which has come under attack by campaign groups.
The retailer, which owns the supermarket chain and a string of eponymous department stores, said the development was still under review by Ealing Council. This is long past the statutory 13 weeks which such applications need to be resolved.
In a statement, John Lewis said its foray into the property sector would create “vital new housing and a community space” amid a challenging period for the UK’s housing market.
The struggling retailer, said the move would generate over £8m in council tax revenues and boost the local economy by an estimated £45m a year in extra spending.
However, campaign groups such as Stop the Towers have called for the build to be stopped on the grounds that the building will be too tall and not feature enough affordable housing.
John Lewis plans for over 80 of the homes on the scheme to be affordable.
Katherine Russell, Director of build-to-rent at JLP, said: “We have taken the decision to appeal for non-determination of our planning application to build new rental homes nearly one year on from first submitting it to Ealing Council.
“Our proposals will create hundreds of homes at a time when all political parties agree there’s a desperate need for more housing and local investment to spur economic growth, with a priority on brownfield land.
She added: “An appeal is not something we take lightly, however, we believe we have strong grounds to be successful given the opportunity to transform an under-used brownfield site close to the publicly-funded Crossrail station with new homes and investment that will benefit the wider community.”
The group aims to be on site in late 2025 and complete in 2029.
Walgreens shelves plans to take Boots public in another blow for London market
The American owner of Boots has parked plans to list the high street chemist on the London Stock Exchange, in another blow for the market.
According to a Bloomberg report, Walgreen Boots Alliance is no longer exploring a public offering for the retailer and will instead seek to sell the chain.
New York-listed Walgreens has struggled in the past year due to high debt following an acquisition spree. It reported operating losses of £13.2bn in the last year.
Two years ago, the firm tried to sell Boots but later pulled out, citing an “unexpected” change. At the time, the historic retailer had a slew of suitors, including the billionaire Issa Brothers.
The Nottingham-headquartered business is the UK’s biggest pharmacy chain with over 2,000 stores.
Accounts filed on Companies House showed Boots reported revenue of £7bn in the latest financial year, up from £6.5bn, while its pre-tax profit jumped from £4m to £60m.
The firm has been helped by shoppers continuing to spend on beauty amid the cost of living crisis.
Reports of the abandoned IPO plans come amid a challenging time for London’s public market, with a number of high profile firms leaving such as TUI.
Investors are still keeping a close eye on fast fashion giant Shein, who is rumoured to make its first public listing on the London market later this year.
City A.M. has contacted Walgreens for comment.
Olympia London: ‘Transformative’ glass canopy added to £1.3bn Hammersmith project
Olympia London, the £1.3bn regeneration scheme in Hammersmith, has unveiled its “transformative” glass canopy as construction work continues for the landmark development.
The project, which is currently Europe’s largest regeneration project currently under development by Yoo Capital and Deutsche Finance International, said the canopy is “a remarkable feat of engineering” and spans nearly 1,000 sq metres.
The design features five large curved structural steel arches, each with a span of 22 metres.
John Hitchcox, chairman at YOO Group: “Olympia’s transformation is more than a brick-and-mortar project; it’s about cultivating a thriving community.
“We are delighted to have had the opportunity to collaborate with the renowned Heatherwick Studio on this bold vision and excited to reveal the canopy – the crown jewel of the design.”
“This soaring structure will represent Olympia’s welcoming embrace, encouraging visitors to explore the vibrant tapestry of culture and entertainment woven into the heart of the new Olympia.”
Olympia London will open in 2025, and alongside commercial office space will include amenities such as the largest new permanent theatre and over 30 new restaurants.
Frank RoccoGrande, founding partner at DFl, added: “Steeped in 138 years of history, Olympia is a site with immense potential waiting to be unlocked. After years of redevelopment in the making, the visionary canopy by Heatherwick Studio will mark a significant milestone towards unveiling Olympia’s true potential.
“We are delighted to be part of this transformation of a landmark for cultural experiences, leisure, and business ventures – all in the heart of London. This is an investment opportunity unlike any other.”