News in Brief: Call for reforms, RBS, Tesco scandal, property investment, hiring

News in Brief

Midmarket leaders call for reform on EU membership

Nine out of 10 business leaders from medium-sized firms demand reform in the UK’s relationship with Europe, according to a survey.

In a poll of 125 business leaders from midmarket firms, more than 80% called for serious reform to the rules and regulations coming out of Brussels, or criticised the amount of red tape issued by the 28-nation bloc, reported the Telegraph.

Research by financial adviser Grant Thornton also found nearly three-quarters of the bosses surveyed said that a repatriation of powers by UK Parliament was “needed”.

Migration was also highlighted as an issue, with 60% calling for further restrictions on those moving within the EU.

The debate over Britain’s membership of the EU has intensified over the past year (2015), with prominent business leaders joining both “in” and “out” factions in the lead-up to the EU referendum, which is to be held by the end of 2017.

RBS earmarks £2.5bn for 'clean-up'

Royal Bank of Scotland (RBS) has set aside an extra £2.5bn to ‘clean-up’ past mistakes, which will push the bank into a loss for 2015.

In a statement, the taxpayer-backed bank said it was setting aside another £500m to pay for payment protection insurance (PPI) and £1.5bn for bad housing debts in the US.

In addition, RBS will write down £498m from its private bank Coutts, reported the BBC.

Chief executive Ross McEwan said: "I am determined to put the issues of the past behind us and make sure RBS is a stronger, safer bank."

McEwan added: "We will now continue to move further and faster in 2016 to clean up the bank and improve our core businesses."

The bank is also speeding up a plan to make payments into its pension fund to help deal with the deficit.

Tesco delayed payments to suppliers to boost profits

Tesco deliberately and repeatedly withheld money owed to suppliers to boost its sales performance artificially, the sector’s watchdog has found.

The Groceries Code Adjudicator (GCA) also said that the supermarket would encourage suppliers to give extra cash in return for more control over where products appeared on shelves or to avoid losing out to rivals.

In the weeks leading up to Tesco’s results presentations to the City and investors, buyers were also encouraged to push suppliers even harder to accept payment delays in order to flatter the sales figures, according to the findings.

The matter of misreporting to the stock market is now being investigated by the Serious Fraud Office (SFO), reported The Independent.

Christine Tacon, the head of the GCA, demanded that Tesco improve relations with suppliers, cease taking money from them without permission and speed up the correction of the many errors that would occur on its payment systems.

Tacon also stated that all finance and buying teams must be trained in the findings of the investigation.

Property is favoured investment for 70% of businesses

Owner Managed Businesses (OMB) still favour property as the best investment option in 2016, according to the latest ‘OMB Barometer’.

Bank of Cyprus UK found 70% of OMBs believe that land allocated for residential property development will deliver the greatest return on investment in 2016.

When asked about their own personal investment preferences, more than half (52%) of the respondents considered residential property to be the most attractive option, when compared to other asset types.

The barometer findings revealed that just 13% of OMBs believe land used for retail will deliver the greatest return in 2016.

Similarly, stocks and shares, cash, pensions and commercial property all ranked far lower than residential property as investment choices for OMBs, despite the chancellor’s changes to the buy-to-let market.

From April 2016, buy- to-let investors in England and Wales will have to pay a 3% surcharge on each stamp duty band, in addition to the personal rate of tax relief for landlords being cut from 40% to 20% in April 2017.

Lakis Kasapis of Bank of Cyprus UK said: “It remains to be seen whether we experience a rush to buy from potential investors in the first quarter of 2016. Instead, we may see investors waiting in the wings as they assess the potential fall-out resulting from the recently announced tax changes."

Financial hiring set to soar

A rise in job vacancies in London is expected during the first half of 2016, but executives are concerned over how to find the right calibre of finance staff to fill the positions, according to a survey.

According to research by specialist recruiter Robert Half, 63% of finance executives in the capital and the south east foresee new positions being added to their team during the first half of 2016, compared to just 58% on average across the UK, reported City A.M.

However, almost all (99%) of the senior financial services executives surveyed felt that finding the right quality of finance professionals was a challenge, while 85% said they were either somewhat or very concerned that their top performers may leave for another job opportunity this year.

"As demand for employees increases the available talent pipeline will continue to shrink," said Matt Weston, director at Robert Half UK.

Weston added: "The best way to remain competitive in the hiring process is to ensure salaries are benchmarked and your existing employees are looked after, either by offering additional perks such as flexible working, or by hiring temporary resources to help ease the pressure of workloads."