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Rishi Sunak warned public sector’s food supply at risk | Business

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The supply of food to care homes, schools, hospitals and prisons is at risk unless the government steps in to support struggling wholesalers, the UK chancellor, Rishi Sunak, has been warned.

Trade bodies representing major food companies said the loss of business from the hospitality sector, which has been rocked by the 10pm curfew and limits on household mixing, meant that firms which also serve the public sector could fail.

“Without the income from the commercial sector, the supply of food to institutions such as care homes, prisons, schools and hospitals is at immediate risk,” they told Sunak in a letter seen by the Guardian.

They highlighted items made especially for care homes and hospitals, such as easy-to-swallow foodstuffs for people who have difficulty eating.

“Wholesalers send specialist food to care homes and this cannot be replaced by deliveries from supermarkets,” said the Federation of Wholesale Distributors and the Food and Drink Federation.

“The same supply chain is also essential to the ongoing supply of food to primary and secondary schools for the provision of school meals.”

They urged Sunak to hand out discretionary grants and extend the furlough scheme to wholesalers in areas under tier 2 and 3 restrictions, to avoid supply warehouses closing.

They also want business rates relief to be extended to the wholesale sector.

“The above measures are essential to ensure continuity of critical public sector food and drink supply and the government must introduce them immediately,” they said.

Andrew Selley, chief executive of wholesaler Bidfood, said the industry had not been eligible for support offered to hospitality businesses affected by the government’s tiered system of Covid-19 restrictions.

“Our customers range from Michelin-starred chefs through to high street casual dining, cafes, restaurants, pubs, workplace, travel catering and all of those in areas that have been affected,” he said.

“But we also do schools, universities, care homes, hospices and prisons. That varies by wholesaler but it’s about 70% hospitality and 30% public sector. When 70% of your customer base is impacted, your income goes down significantly.

“Whilst we have some variable cost like the number of people picking and delivering, the public sector contracts require delivery to every postcode. There’s a limit to how much cost you can take out.

“Not all of the wholesalers will survive and that means disruption to supply. The thing that’s galling for us is that the wholesale sector and supply chains in general have had no sector-specific support.”

The Treasury is understood to believe that financial packages on offer for some struggling hospitality businesses is, by proxy, support for the supply chain.

The Treasury said: “We’ve put in place a comprehensive plan to protect, support and create jobs, with more than £200bn of support since March – with particular support for the hospitality sector and it’s [sic] wider supply chain.


“And our winter economy plan will ensure this continues in the difficult weeks and months to come – providing a toolkit of support for all situations.

“Our expanded job support scheme will protect jobs in businesses that are open or closed, we’ve increased grants for firms required to close and are providing additional funding for local authorities and devolved administrations.

“This is alongside existing support measures including extended VAT cuts, businesses rates holidays and our extended loan schemes.”


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HSBC plans further cost cuts despite forecast-beating results | Business

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HSBC is planning further cost cuts, despite a sharp fall in provisions to cover bad debts linked to the Covid crisis and better-than-expected third-quarter profits.

The lender also signalled that it could start charging for bank accounts in markets such as the UK, where the service is currently free.

HSBC’s pre-tax profits fell to $3.1bn (£2.4bn) in the three months to September, down 36% from $4.8bn during the same period last year. However, that easily beat analysts’ forecasts of $2.1bn.

The performance of Europe’s largest bank was helped by lower-than-expected provisions to cover a potential surge in defaults linked to the economic fallout of the pandemic. HSBC put aside $785m in the third quarter, less than half the $2bn forecast by analysts.

It brings the bank’s total impairment charge to $7.6bn for the year to date, after setting aside $3bn and $3.8bn in the first and second quarters, respectively.

HSBC said it expected loan loss charges for the whole of 2020 to be at the lower end of the $8bn to $13bn range it outlined earlier this year.

“This latest guidance, which continues to be subject to a high degree of uncertainty due to Covid-19 and geopolitical tensions, assumes that the likelihood of further significant deterioration in the current economic outlook is low,” HSBC said.


However, HSBC again signalled it would be taking cost cuts further than originally planned. “Given the significant changes in the operating environment, we intend to accelerate the transformation of the group. We expect to reduce the group’s 2022 annual cost base beyond our original $31bn target, while sustaining investment in our focus areas.”

It comes just months after the bank said it would increase cost-cutting that was estimated to involve 35,000 job losses across its global business.


Meanwhile, its chief finance director, Ewen Stevenson, warned the bank could begin to charge for some services including current accounts in countries such as the UK, where basic accounts are usually free.

“We will have to look at charging for basic banking services in some markets, because a large number of our customers in this environment will be losing us money,” Stevenson told Reuters.


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Most UK bosses would back tougher employment laws to protect workers | Law

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Business leaders would support tougher employment laws and a higher minimum wage to protect workers from exploitation and poverty during the second wave of Covid-19, according to a report.

The Centre for Progressive Policy (CPP) said urgent legal reforms were needed in the jobs market to prevent extreme levels of financial insecurity, in-work poverty and worker exploitation during the coronavirus emergency.

The thinktank said the end of the UK government’s furlough scheme later this week would dramatically increase the risk of widespread unemployment this winter, undermining the bargaining power of workers and leaving the door open to a rise in insecure work.


Calling for a shake-up of the law to halt a sharp increase in worker poverty, the thinktank said the government should ban zero-hours contracts and boost the minimum wage from its current level of £8.72 for over-25s. It also said a legal pay floor should be introduced for self-employed workers to protect them from exploitation.

The intervention comes as unemployment is expected to more than double by the end of the year to hit 1980s levels, from a rate of 4% before the pandemic struck to 12%.

Although free-market economists have argued that looser labour laws were among reasons Britain recorded a lower unemployment rate after the 2008 financial crisis compared with many other EU nations, the CPP said tighter restrictions were needed to safeguard workers’ rights. It said they could also be used by Boris Johnson to show the government was serious about his promise to “build back better” and “level-up” Britain’s lopsided economy.

The CPP, which is funded by Lord David Sainsbury, said as many as one in five workers in the health and social care sector work on zero-hours contracts, and that insecure contracts were most heavily used in the north-east.

In a sign of the appetite for change, it said business leaders had become more receptive to tougher labour market laws since the onset of the Covid emergency as companies require state support and as more households come under financial pressure.

According to a survey of 600 company bosses, 64% would back tightening existing labour market regulations, including an increase in the minimum wage. It said 40% of employers felt more responsibility to offer secure job contracts to staff in response to Covid-19, while a quarter would support further restrictions or a ban on the use of zero-hour contracts.

With the government under mounting pressure to fund free school meals and to tackle child poverty, the CPP said there was clear evidence that tougher labour market laws could also be used to protect families from falling below the breadline.

Research from the Joseph Rowntree Foundation shows in-work poverty has been increasingly driven by the impoverishment of working parents. According to figures from Eurostat, the UK also has one of the highest levels of workers at risk of poverty in Europe, with British workers more than twice as likely to fall into poverty as those in Ireland and Belgium.

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Figures from the Office for National Statistics earlier this summer, revealed a rise in zero-hours contracts to the highest level on record. The number of people on zero-hours contracts increased by 156,000 in the three months to July, or by 17.4%, to 1.05 million.

Rosie Stock Jones, senior research analyst at the CPP, said: “Maintaining a system that legitimises the exploitation of society’s most important workers and contributes to rising levels of in-work poverty can no longer be acceptable. If the government truly wants to level up the country and empower more people to contribute to and benefit from increasing prosperity, they must deliver proper protections and improved conditions for our lowest paid workers.”


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Covid-hit UK hotels unlikely to recover for four years, says PwC | Business

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The UK hotel industry could take four years to return to 2019 levels of business, even if an effective vaccine helps the sector to recover from the deep financial hit caused by Covid 19.

The daily revenue per hotel room – a key indicator for the sector – is not expected to revive to 2019 levels until 2024 in London, and 2023 across the rest of the UK, according to forecasts published on Tuesday by the accounting firm PricewaterhouseCoopers (PwC).

Renewed lockdowns, the decline in foreign tourist numbers and the near disappearance of business travel have left hotels struggling to attract customers, with a dramatic effect on their earnings.

The fall in corporate demand as well as the absence of big live sport or music events meant big city hotels were suffering the most, while missing out on the increase in Britons staying in the UK for their holidays.

Hotel rooms are expected to be occupied for an average of 45% of the time during 2021. While that would represent an improvement on the rate of between a third and two-fifths in 2020, PwC said the industry was still facing an unprecedentedly bleak outlook.

London hotels will be particularly badly hit. Daily revenues per room in the capital have slumped to only £29 in 2020, less than a quarter of the £129 achieved in 2019, PwC said – by far the biggest hit the industry has seen in comparable data dating to the 1970s.


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