Carillion crisis: UK banks offer help to small firms, as task force launched – as it happened

Lloyds, HSBC and RBS all promise to help small businesses, as the government sets up a Carillion task force

Time for a quick recap of the main points.

Related: Carillion taskforce to discuss how to prevent domino effect on UK economy

Related: Corbyn on Carillion: we’ll end outsourcing ‘racket’ in rule change

That Carillion support so far:-

Lloyds: We’ll make £50m available.
RBS: Make it £75m from us.
HSBC: We’ll do £100m.
Santander: We’re in but won’t say how much.
Barclays: We’ll “look at” helping on a “case by case basis”.

This is turning into a bidding war! HSBC have just told us they are going to provide up to £100m of support for its customers.

Now HSBC is doing £100m of support for businesses hit by Carillion, outgunning RBS (£75m) and Lloyds £50m). This is great. Over to you, Barclays.

Just in! Royal Bank of Scotland is creating a £75m fund to help its business customers who have been caught up in the Carillion collapse.

Hours after being criticised by MPs over its treatment of small firms in the past, RBS says it will do what it can to help in the current crisis.

We have over £75m available to support impacted small businesses and will make more finance available if required to top up this fund. We will also support our Commercial customers on a case-by-case basis with their individual requirements.

We have a proactive, principles-based approach that allows us to assist our customers when there are unexpected external circumstances. This support is available to customers banking with NatWest, Royal Bank of Scotland and Ulster Bank in Northern Ireland.

Opposition MPs are also pushing the UK government to explain how Carillion’s pension deficit was allowed to swell in the run-up to its collapse.

The FT’s Josephine Cumbo has the details:

The UK government is being pressed to explain why a funding shortfall at Carillion’s pension scheme was allowed to widen before the construction group’s collapse.

Opposition politicians have written to the government and to the UK Pensions Regulator asking a series of questions about the shortfall, which nearly doubled from £317m in 2015 to £587m at the end of 2016.

SCOOP: Opposition presses for urgent answers on Carillion #pension funding hole https://t.co/onHHAMTN4y via @financialtimes

Accountancy firm Blick Rothenberg say the UK tax authorities could help small businesses hurt by Carillion’s collapse.

The UK tax rules allow companies to claim VAT relief on unpaid bills — but only six months after the money was due. Carillion made some suppliers wait 120 days for payment, so in a worst-case scenario a supplier might face a 10 month wait before they can reclaim VAT from the government.

“In this instance, perhaps HMRC should also look at reducing the wait time for obtaining a VAT refund, especially as the government is trying to get large corporations to deal more fairly with small and medium sized businesses when it comes to the payment of bills.

Labour MP Pat McFadden is trying to get to the bottom of how Carillion lurched into liquidation on Monday morning.

He’s asked business secretary Greg Clark to answer 10 questions — including how much the crisis will cost the taxpayer, and what discussions went on behind the scenes in recent weeks as Carillion tried to stay afloat.

“We know that Carillion sought financial help from Government as it sought to put together a rescue package in recent weeks.

It is essential that we know what exactly the company was asking for and how the cost of that compares to the potential costs facing the taxpayer from liquidation.

Jeremy Corbyn’s response to the Carillion crisis goes beyond a mere task force.

The Labour leader has vowed to rip up current procurement rules for outsourcing services, so that they would be run by the public sector by default.

“We will rewrite the rules to give the public back control of their services.”

Corbyn on Carillion: we’ll end outsourcing ‘racket’ in rule change https://t.co/GfoGfuJPNf

Setting up a task force is the easy bit.

Now the government, along with union leaders and business chiefs, must protect Carillion’s workers, maintain public services outsourced to the group, and provide a helping hand to small firms who are suffering losses.

NEWSFLASH: The Government is setting up a task force to help firms and workers hurt by the collapse of Carillion.

The national task force will involve businesses, unions and the government, the Business Department has announced.

“Time is of the essence in dealing with this crisis. We need urgent action to protect jobs, pay and pensions. This cannot be a talking shop.”

Government setting up task force involving business and unions to support firms and workers affected by the collapse of Carillion – @beisgovuk

Getting back to Carillion….and business secretary Greg Clark has applauded Lloyds for setting up a £50m emergency fund to help small firms.

He might even be trying to take some credit….

.@GregClarkMP: “I welcome this positive move from @LBGNews following my meeting with banks yesterday in which we discussed support for SMEs affected by Carillion’s insolvency.” #Carillion https://t.co/TH3Ws37pCo https://t.co/mGcG8lXYXo

Another Labour MP, Kate Green, attacks RBS’s failure to properly compensate customers who suffered from its GRG division.

She says the bank has failed to provide proper information to claimants or the courts, making it harder for them to obtain redress.

Tonia Antoniazzi, Labour MP, says she also has constituents whose businesses have been destroyed by UK banks.

They have lost their homes, had their families torn apart, lost their health and their future

They have been living a hand-to-mouth existence, just so some banker can receive their obscene bonus.

Fresh questions were raised about Royal Bank of Scotland’s conduct yesterday, when an internal memo showed how staff at its Global Restructuring Group had been encouraged to put customers under pressure.

Called “Just Hit Budget!”, the memo described struggling firms as “basket cases” and urged staff to give customers enough rope to “hang themselves”.

Related: Parliament to debate RBS ‘hang themselves’ comment

Frankly, a junior bank manager would not have written this kind of document without understanding that it conformed to the culture of the business that they were operating in.

I”m afraid that the chief executive is condemned by his own justification, which frankly does not wash.

Liberal Democrat leader Sir Vince Cable has told parliament that he is disgusted that the full report into Royal Bank of Scotland’s Global Restructuring Group has not been published.

“Does the honourable gentleman share my disgust that four-and-a-half years after, as Secretary of State, I referred many of these cases [through] the Tomlinson report, to the FCA we still only have an interim report?

Is he aware that the BBC have actually seen a copy of the final report, which contains the following incriminating phrase: “management knew, or should have known, that this was an intended and co-ordinated strategy and that the mistreatment of business customers was a result of that” and that the head of GRG responsible for that policy, Mr Nathan Bostock, is now chief executive of Santander [UK]?”

Related: Vince Cable ‘disgusted’ with FCA over RBS mistreatment of small firms

Another Conservative MP, Alister Jack, tells the House of Commons that he had experienced Royal Bank of Scotland’s “disgraceful and unscrupulous” tactics for himself.

After the financial crisis, he says,an RBS manager tried to force Jack’s self-storage firm onto a new, more expensive loan – charging 6% over base rate, not the 1% he had been enjoying.

They were livid….and after that they made things impossible for us.

Over in parliament, MPs are debating how Royal Bank of Scotland treated small businesses who got into financial difficulties.

Labour MP Clive Lewis says he didn’t initially believe the stories told by constituents who said they had suffered from RBS’s treatment.

This was organised fraudulent asset-striping on a massive scale, leading to the forced liquidation of many, many businesses, which people have poured massive effort into and were their livelihoods.

Newsflash: Lloyds Banking Group has set up a £50m ‘emergency fund’ to help small businesses who have suffered losses from Carillion’s collapse.

The money is meant to help SMEs avoid being driven to the wall because they are owed money by Carillion, or were expecting to carry out work for the company.

“Small businesses don’t normally have the cash reserves that larger businesses do, so any interruption to their cashflow can have a significant impact on their ability to survive.

By supporting our small business customers during this difficult time, we hope we can help as many businesses as possible to get back on an even keel as quickly as possible.”

Lloyds Banking Group has announced a £50m package of support to its small business customers within Carillion’s supply chain which are now in financial difficulty, as a result of Carillion’s liquidation. Read more at https://t.co/XP6DAfJALG #Carillion #SME

Carillion’s collapse is a big blow to hundreds of apprentices employed by the firm, or by companies it contracted to help on construction projects.

Work has been suspended at several building sites, such as the Lincoln Eastern Bypass, creating, leaving workers in the lurch.

“Our industry, which has consistently reported skill shortages and difficulties in attracting apprentices, now needs to step up and support these young people who have so much to offer. There is certainly no shortage of work in construction, with housebuilding and infrastructure particularly strong, so these young people can have great careers despite this setback.

Nationwide’s decision means that most of the Carillion staff employed on private sector have some certainty over their future.

That’s because, as of yesterday, nine in ten of the private companies who employed Carillion to provide services had pledged to keep paying the Official Receiver – at least in the short term while the liquidation is carried out.

“It is welcome that 90% of Carillion’s private sector contractors have suggested that they will continue to pay staff. However, this is just for the interim period and due to the Government’s failure to think long-term, the future is still not certain for most workers.

“This concession has not been the result of any real Government intervention. Apart from meeting a few banks to find a quick fix to a long-term problem, the Government has failed to stop small businesses from going under.

The Green Party’s former leader, Natalie Bennett, says Nationwide’s decision shows that Carillion wasn’t actually providing much value.

So what was #Carillion actually contributing? Best answer would seem to be squeezing down pay and conditions of workers so it could take out profits for shareholders and #fatcat bosses. #productivity problem? https://t.co/fIaa41orsu

Here’s some early reaction to the news that Nationwide is taking on Carillion staff:

Statement from Nationwide just confirmed 250 Carillion employees will become Nationwide employees from Jan 22, saving their jobs. Nationwide also bringing a further 1000 outsourced jobs provided by Carillion, in house. Good news for jobs & well done Nationwide.

Makes you wonder what value Carillon was adding in the first place. https://t.co/1iRZtEpeIb

Nationwide to bring 250 Carillion staff in house, saving their jobs. A further 1500 subcontractors will now be contracted directly, via their employer, to Nationwide. Good news for jobs.

In a dramatic reversal of decades of outsourcing, Nationwide Building Society is going to in-source all the Carillion employees who were working for Nationwide.

“Our contractors perform a vital and valued role for the society. During an unsettling time for Carillion employees we felt it was important to provide them with some reassurances.

“We are today announcing a proposal to bring all services provided directly by Carillion in-house, with Carillion employees becoming Nationwide employees from 22 January. This will provide clarity for those affected and ensure that services are maintained.”

“As part of the wider supply chain arrangements we will also now look to deal directly with third-party suppliers that currently support the Carillion contract.”

Nationwide says it plans to bring all services provided by Carillion in house from Monday, transferring all employees to its own payroll.

The household spending survey also shows that Britons spent more on recreation and culture last year, mainly due to increased spending on package holidays.

That’s despite the fact that wages didn’t rise in line with earnings.

It’s surprising to see how many of us are spending on non-essential things like eating out and holidays. Families are still splashing the cash on package holidays and travel despite the fall in the pound after the Brexit vote.

If you’re starting to feel the pinch, now is the time to take a serious look at where you’re spending your money. Make a budget and stick to it, when you look back at bank statements you may be surprised how much you’re actually spending on non-essential items. Getting a hold on your fun money is key.”

The ONS have also produced this chart, showing where households spent their money last year:

Newsflash: UK household spending has finally returned to its levels before the financial crisis.

The Office for National Statistics reports that the average household spent £554.20 per week in 2017. In real terms (ie, adjusted for inflation) this is a return to pre-economic downturn levels.

ONS says UK family spending returned to pre-crisis levels for the first time in financial year ending March 2017. Avg weekly spending hit £554.20 – the last time it was above this level was 2005/06, at £557.

Transport is the biggest component of family spending, and increased by about £5 per week on a year ago, to about £80 a week on average. Buying new and used cars, the latter on hire purchase, was one of the reasons for the jump higher.

Economist Rupert Seggins has also been analysing the RICS housing report:

Latest RICS survey points to little house price growth in next few months. Wales , Scotland & N. Ireland most optimistic. London expectations the weakest by some margin. Respondents also reporting no observable impact as yet from the changes to stamp duty for first time buyers. pic.twitter.com/1yNzixBW2J

Ouch! Britain’s largest estate agency has issued an unexpected profits warning, sending its shares slumping.

Countrywide, which owns a string of estate agents around the UK, reported that revenues and profits both fell sharply last year.

Total income in the sales and lettings business for the full year is expected to be circa £360m, down 14% on 2016, reflecting a disappointing fourth quarter performance.

Income in the UK business is expected to be circa £205m, down 17% year on year, and in London is expected to be circa £155m, down 10% year on year.

Today’s report from the Royal Institution of Chartered Surveyors (RICS) also shows that fewer people have been making inquiries about buying a house.

Here’s City economist Sam Tombs of Pantheon on the RICS housing report:

The Chancellor’s reforms to stamp duty for first-time buyers have failed to stimulate demand so far. New buyer enquiries still falling rapidly in December, according to RICS, placing downward pressure on house prices: pic.twitter.com/QY1DXF6ZRd

Surveyors based in London are more optimistic about the stamp duty change.

RICS says that 28% believe abolishing the tax will help first-time buyers (compared to just 12% nationally).

In London, more than double the number of surveyors felt that it would have a beneficial impact on the market than those of outside London. Of course, this is reflective of the value of property in the Capital, where those purchasing for the first time can expect to save up to £5,000 under the new scheme.

Oldman-based surveyor Richard Powell of Ryder & Dutton says there’s no sign that abolishing stamp duty for first-time buyers has helped:

The stamp duty changes didn’t seem to have an immediate effect so we will have to see what happens in the early part of 2018. Stock levels are very low.

Usual seasonal downturn in enquiry levels, instructions and sales. Very little impact as a result of stamp duty changes but too soon to tell due to time of year.

[The market was] seasonally quiet and snowy weather also had an impact.

Stamp duty change for FTB’s so far has had little impact.

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, business and the eurozone.

“The initial feedback from the market doesn’t suggest that the change in the Stamp Duty regime announced in the budget is going to have a material impact on activity.

Indeed, the risk was always that a good portion of the benefit would be capitalised in the price, therefore limiting the benefit for the first-time buyer.

Related: Stamp duty cut for first-time buyers will push up prices, warns OBR

Related: ‘Flimsy’ reassurances anger unions as creditors brace for Carillion fallout

Whitbread: Premier Inn like-for-like revs miss (0.5% vs 1.5% est) but Restaurants beat and Costa not as weak as expected; On track for FY but expect tough UK high street environment and inflation to continue to pose challenges

Royal Mail says we sent more parcels (+6%) and fewer letters (-5%) last year. Overall its revenues rose 2%. Also reports that we sent 149m parcels in December. @BBCBreakfast pic.twitter.com/7vbGyjjiMR

European Opening Calls:#FTSE 7720 -0.07%#DAX 13230 +0.35%#CAC 5510 +0.28%#MIB 23574 +0.25%#IBEX 10506 +0.30%

Related: Parliament to debate RBS ‘hang themselves’ comment

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