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The Sunday Times Business - 17 December 2017

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BUSINESS
&MONEY
December 17, 2017 · thesundaytimes.co.uk/business
thesundaytimes.co.uk/money
WHY MY GLASS IS
ALWAYS HALF FULL
— HUGH JOHNSON
FAME & FORTUNE
MONEY, PAGE 20
CAROLYN MCCALL’S
ITV CHALLENGE
PAGE 5
The Nigerian government is
suing JP Morgan for $875m
(£660m), alleging the Wall
Street banking giant acted as
the middleman in an illegal
oil deal and made payments
to a convicted money
launderer.
Papers filed with the High
Court in London claim that in
2011 the bank transferred
money to a company
controlled by Dan Etete, a
former oil minister in the
Nigerian government. He had
previously been convicted of
money laundering by French
courts and is being pursued
by Nigerian authorities.
JP Morgan was “grossly
negligent” in handing over
more than $800m “without
proper application or regard
to its obligations”, the court
documents allege.
Etete served under the
military dictator Sani Abacha
in the 1990s.
The Nigerian authorities
maintain JP Morgan “failed in
its duty of care” and “could
and should” have done more
to spot that the deal involved
“misappropriation” of money
from the state.
At the centre of the dispute
is a payment to Malabu, an oil
company controlled by Etete
which was awarded an
exploration licence while he
was minister. It covers what is
thought to be Africa’s biggest
source of untapped reserves.
An agreement was struck
under which Malabu would
be paid to give up the licence,
Poundland
showdown
with key
creditors
Suppliers on edge after
scandal engulfs retailer’s
South African owner
Sabah Meddings
The scandal-hit parent company of high
street discount chain Poundland will this
week face key creditors and insurers at a
meeting that could determine the future
of its British retail operations.
Poundland is already under intense
pressure after Atradius — one of the credit
insurers on which suppliers rely to
ensure they get paid — reduced its cover
for the group. Reliable industry sources
say another credit insurer, Euler Hermes,
is also considering cutting cover.
Suppliers usually require credit insurance when making deliveries, and withdrawal of the cover can be a sign of acute
problems at a retailer. In 2008, it was the
decision by Euler Hermes to stop coverChristo Wiese:
stood down
amid questions
over auditing
ing the Woolworths supply chain that
prompted its demise, and recently it
emerged that a number of suppliers had
stopped delivering to Toys R Us because
of problems in securing insurance. The
chain later said it was closing a third of its
UK stores, with the loss of 800 jobs.
Poundland’s situation is starkly different. The chain is said to be trading well,
yet some suppliers are said to have been
unnerved by developments at its parent
company. It emerged two weeks ago that
Steinhoff, the South African group that
owns Poundland, is embroiled in an
investigation over accounting irregularities. Shares in the group, whose British
investments also include Bensons for
Beds and Harveys Furniture, have plummeted by more than 80%.
Poundland, which has 763 stores
across the UK and employs 18,000 people in the UK, Ireland, France and Spain,
has been quick to try to quell doubts
about its financial position and fears that
shelves will be left empty.
“Poundland is a profitable, cashgenerating business that’s currently trading more strongly than it has in years,”
the company said this weekend.
It added that it could not predict what
will happen to Steinhoff after it emerged
that the South African group is having to
restate its 2016 figures. However, the UK
chain said “any action by credit insurers
to make life difficult for Poundland suppliers is irrational”.
Credit insurers are among those who
have been invited to a crucial meeting
between Steinhoff and its lenders in London on Tuesday. A routine meeting with
lenders had been planned for last Monday but was rearranged after news of the
accounting probe broke.
Steinhoff ’s chief executive, Markus
Jooste, resigned, with 76-year-old tycoon
Christo Wiese taking the reins. However,
last week Wiese also quit. South Africa’s
accounting watchdog has launched an
investigation into the work done by
Deloitte, which has audited Steinhoff’s
accounts for the past 18 years.
Steinhoff will attempt to reassure suppliers to its businesses at this week’s
meeting, although one Poundland supplier has already said it won’t make any
further deliveries until full credit insurance is restored. However, a Poundland
insider said: “Our headquarters is next to
one of our three main distribution centres and I can assure you that delivery lorries are queuing up.”
which would then be sold to
Shell and the Italian oil
company Eni. JP Morgan was
to handle all transactions.
The Nigerian government
claims the agreement was
“merely a device” by officials
in the government of former
president Goodluck Jonathan
“to perpetuate the sham” that
Malabu had been awarded
the licence legally.
Multiple attempts to make
payments to accounts in
Switzerland and Lebanon
were blocked, and the failure
SILICON VALLEY’S
ATTACK OF GUILT
PAGE 10
APPOINTMENTS
PAGE 6
PUZZLES
PAGE 18
Fast broadband
vowed for 1m
rural homes
12
14
JP Morgan ‘sent $800m to Nigerian fraudster’
Liam Kelly
TECH
of these transactions should
have raised red flags, claims
the Nigerian government.
However, in August 2011,
JP Morgan agreed to send
$801.5m to Malabu accounts
in Nigeria “without any real
inquiry . . . without further or
enhanced due diligence”, say
the court papers.
JP Morgan said: “We
consider the allegations
made in the claim to be
unsubstantiated and
without merit.”
The Nigerian government
has brought money
laundering charges against
Etete and Nigeria’s former
attorney-general,
Mohammed Adoke.
“The case against Adoke
and Etete, who are at large, is
still pending,” say the High
Court documents.
Separately, the deal
involving Shell and Eni
is under investigation by
Italian prosecutors. A judge
in Milan will decide on
Wednesday whether the
case should go to trial.
TOM STOCKILL
CASH UNDER THE MATTRESS
Simon Duke
Ministers will outline plans
this week to boost the
download speeds of 1m rural
homes and businesses to a
level fast enough to stream
music and films.
The aim is to ensure that
“forgotten” premises in
remote areas receive an
adequate broadband service
by 2022 at the latest.
At present, 1.1m properties
are unable to access
download speeds of at least
10 megabits per second
(Mbps), the minimum
needed to “meet the typical
needs of a family”, according
to the industry watchdog
Ofcom.
Nationwide fast broadband
access is considered vital to
help boost low productivity
and rebalance the economy.
This week’s announcement
follows months of wrangling
between BT and the
Department for Digital,
Culture, Media & Sport.
The Digital Economy Act
2017 sets out a universal
service obligation (USO),
giving every household the
right to demand broadband
of at least 10Mbps by 2020.
However, this has not
yet come into force and
ministers have been
considering an alternative
proposal from BT.
The telecoms giant has
pledged to “proactively”
improve its network, making
a universal 10Mbps service
available by 2022, rather than
leaving the upgrade to be
completed piecemeal by
Continued on page 2 →
Diamond eyes bank
return with Tandem
Simon Duke
Bob Diamond is in talks to
buy a stake in a Londonbased financial technology
start-up — heralding an
unlikely return to the world
of British retail banking.
The former Barclays boss is
in talks over a potential
investment of more than
£10m in Tandem, a digitalonly upstart in the process
of buying Harrods Bank.
The deal, first reported
by Sky News, would mark
Diamond’s second highprofile move in Britain since
he was forced out of Barclays
in the wake of the Libor
scandal five years ago.
In March, his Atlas
Merchant Capital fund
bought a 57% stake in stock
broker Panmure Gordon for
about £9m. Diamond has also
been linked to possible deals
in Greece and Italy.
Earlier this year, Tandem
lost its banking licence in
Britain after an investment
from the Chinese owner of
House of Fraser fell through.
However, in August, it
agreed a takeover of Harrods
Bank, which would allow it to
begin taking consumer
deposits. The deal, yet to be
approved by the City
watchdog, would boost
Tandem’s capital base
by £80m. The four-year-old
start-up app is in the midst
of raising funds. Existing
investors include the
Omidyar Network, a fund
set up by French-born eBay
founder Pierre Omidyar.
Uber used ex-CIA agents
to spy on rivals, court told
Simba Sleep co-founders James Cox, front, with Andrew McClements, left, and his son Harry
A fast-growing mattress
maker has raised a further
£40m from a star-studded
group of investors to bankroll
expansion in China and
America, writes Peter Evans.
The funding round in
start-up Simba Sleep was led
by venture capital firm Atami
Capital and included existing
backers such as Nigel Wray,
chairman of Saracens rugby
union club, and Swiss private
bank Lombard Odier.
It takes the total amount
raised by the company to
£58.5m. Investors in previous
rounds have included
advertising supremo Sir John
Hegarty and Innocent Drinks
co-founder Richard Reed.
Rival British start-up Eve
Sleep was valued at £140m
when it listed its shares in
London earlier this year.
Simba, based in central
London, delivers its products
direct in a compact box and
sells through its own website
and via retailers including
John Lewis and Furniture
Village.
It sells mattresses for up to
£899 and has operations in 14
countries including France,
Spain and Germany — as well
as Britain, where it generates
60% of its sales.
The business, founded in
2015 by chief executive James
Cox and business partner
Steve Reid, has 80 staff and
has sold 100,000 mattresses
since it was launched.
The company said it
expected to make sales of
£41m this year and has
forecast £167m next year.
Simba would not comment
on its valuation after the latest
fundraising.
Danny Fortson
San Francisco
Uber employed a global
network of CIA-trained spies,
used illegal wiretaps and
hacked a rival’s database to
steal trade secrets and lure
away drivers, according to an
explosive letter unsealed by
a California court on Friday.
The 37-page letter from a
disgruntled former
intelligence executive was
made public as part of a suit
brought by Waymo, Google’s
sister company, which alleges
Uber stole parts of its selfdriving car technology.
Richard Jacobs, who joined
Uber’s “ThreatOps” division
in 2016, claimed he was
sidelined and forced to resign
in April after objecting to
what he called “illegal
intelligence-gathering on a
global scale”. Uber paid him a
$7.5m (£5.63m) settlement.
The letter details the
lengths to which the ridehailing giant went under
previous chief executive
Travis Kalanick to expand
and see off rivals and
regulators.
Uber said it had not
substantiated all the claims
but added “our new
leadership has made clear
that we will compete honestly
and fairly, on the strength of
our ideas and technology”.
Kalanick stepped down in
Continued on page 2 →
2
The Sunday Times December 17, 2017
BUSINESS
ECB move threatens pound
DIGEST
£8.5M HELP FOR End to eurozone QE
BAKERY CHAIN will stem flood of
SUMO HITS
THE MARKET
A Sheffield-based games
developer is to lay out plans
for a £145m stock market
float tomorrow.
The listing of Sumo
Digital — which developed
the popular Sonic & Sega
All-Stars Racing game —
will crystallise large paper
fortunes for its founders.
Carl Cavers and Paul
Porter set up Sumo in 2003.
Last year they sold a
majority stake in the
company to private equity
firm Perwyn.
Shareholders are
expected to sell about
£40m in the offering, with
the company selling a
similar amount to fund
expansion.
PLAIN SAILING
FOR CARNIVAL
Carnival
£55
50
45
40
D J F M AM J J A S ON
Source: Thomson Reuters
Cruise ship company
Carnival will report on
trading this week amid
buoyant demand. Tuesday’s
update covers the period
from September to the end
of November. Carnival has
been boosted by busier
ships and higher prices.
Britain’s third-biggest
bakery chain has received
£8.5m from the Business
Growth Fund (BGF) to fuel
expansion.
Coopland & Son was
founded in 1885 and runs
140 shops, 11 cafes and 28
sandwich vans across
Yorkshire, Lincolnshire and
the northeast. It remains in
family hands four
generations later.
Cooplands plans to use
the BGF money to open 30
shops in the next three
years, explore acquisitions
and improve its production
bases in Scarborough,
Durham and Hull.
cash into UK debt
Tommy Stubbington
A “tsunami” of cash flowing from the
eurozone into Britain is set to dry up as
the European Central Bank winds down
its quantitative easing (QE) programme —
potentially placing the pound under
greater pressure.
According to Oxford Economics,
about €50bn (£44bn) a year has been
pouring into UK debt for the past few
years as a response to the ECB’s bond-
Council workers have taken a
stake in Anglian Water,
delivering a sizeable payday
for the company’s privateequity-backed owners.
Under a deal agreed late on
Friday, investors led by 3i
Infrastructure will sell their
15% holding for £580m.
Anglian is one of Britain’s
biggest water suppliers,
serving 6m homes and
businesses.
ROAST BOAST
Simon Duke
The year-on-year rise in
retail sales in November, as
a bumper Black Friday
helped the high street
rebound from a decline the
previous month. Sales of
electrical household goods
made the biggest
contribution, the Office for
National Statistics said.
CHINA PILES
INTO US BONDS
China is raising its holdings
of US treasuries as the
world’s biggest economy
rebuilds its currency
reserves.
Beijing’s holdings of
US bonds, notes and bills
increased by $8.4bn
(£6.3bn) to $1.19 trillion in
October, according to the
US Treasury Department.
China is the biggest
foreign holder of US
treasuries, ahead of Japan.
It has added nearly $131bn
in treasuries since the
beginning of the year.
The valuation placed on
the business by the sale is
about 80% higher than the
price paid to take it off the
stock market in 2006.
The stake was snapped up
by the infrastructure investor
Dalmore Capital and a group
of council pension funds from
Manchester, London,
Lancashire, West Yorkshire
and Merseyside, which form
GLIL Infrastructure.
The Sunday Times
revealed in August that the
Buyout firm 3i is plotting the
sale of a ferry company that
links Denmark with Sweden
and Germany.
The FTSE 100 private
equity firm has hired the
investment bank Rothschild
to sell Scandlines, which it
bought a decade ago and
could now be worth more
than £600m. Scandlines
carries about 15m passengers,
3.2m cars, 64,000 buses and
millions of tons of freight
every year on 12 ferries.
The sale will be
complicated by plans for a
new tunnel that will link
Denmark and Germany,
duplicating one of the
company’s main routes.
Both Stena Line and
sterling since the EU referendum, has
helped close the gap slightly, but not by as
much as many economists were expecting earlier in the year.
Funding the deficit requires a constant
stream of foreign cash flowing into UK
assets. Bank of England governor Mark
Carney has previously warned that this
leaves Britain dangerously reliant on the
“kindness of strangers”.
If the eurozone cash dries up, British
assets may need to get a bit cheaper
before other foreign investors step in,
according to Tolosa. That could put pressure on the pound and on the price of UK
government and corporate bonds.
“It’s likely there will have to be an
inducement for investors from elsewhere,” he said.
Bankers plead
for focus on City
in trade talks
1.6%
A former contestant on
The Apprentice hopes to
make Lord Sugar regret
telling him “You’re fired”
this Christmas, as sales
of his multi-bird roasts
look set to soar, writes
LIam Kelly.
Oliver Nohl-Oser, 35,
council funds were a leading
contender to buy the stake.
Dalmore, which deploys
cash from UK pension funds
and other investors, has
stakes in the £4.2bn Thames
Tideway super-sewer and
National Grid’s gas network.
The investment comes at a
fraught time for the water
industry: Labour has pledged
to renationalise suppliers and
last week the regulator,
Ofwat, said it would cut bills,
crimping investors’ returns.
£600m price tag on Danish ferry
John Collingridge
Debt warning:
Mark Carney
stop pumping cash into overseas markets
altogether, he said. That process could be
more disruptive to financial markets than
the US Federal Reserve’s own exit from
QE, according to Tolosa.
The shift could be felt acutely in Britain. Figures due this week are set to show
the UK is on course to run up a current
account deficit of £90bn this year, down
from last year’s all-time high of £115bn.
The deficit means that Britain earns less
from exports and income from overseas
investments than it pays for imports and
dividend payments to foreign investors.
Last year’s widening was partly a
result of the fall in oil prices, which meant
UK oil companies earned less from their
operations worldwide. A rebound in oil
prices, along with the fall in the value of
PHIL YEOMANS
3i cashes in with
Anglian Water sale
John Collingridge
buying programme, which has pushed
up asset prices across Europe, making
British debt more attractive for continental investors. The consultancy’s analysis
predicts that the volume of cash will
halve next year.
The ECB’s huge programme of asset
purchases has crowded out private investors in eurozone bond markets, causing
them to look overseas to countries,
including Britain, for better returns,
according to the Oxford Economics
research by Guillermo Tolosa, a former
senior economist at the IMF.
With the Frankfurt-based central bank
set to halve its monthly bond buying to
€30bn from next month, Tolosa expects
that flow of cash to slow. Once the ECB
stops buying, eurozone investors will
Scandlines have challenged
EU support for the
Fehmarnbelt fixed link, an
11-mile tunnel.
The sale is expected to lure
interest from infrastructure
funds, which have been
snapping up transport assets
perceived to have stable,
long-term assets that match
the liabilities of pension and
insurance fund investors.
above, who was eliminated
in the third week of last
year’s TV competition, set
up The Cumbrian Sausage
Company after graduating
from university. He
expanded into poultry in
2011 and, inspired by the
“turducken” roasts popular
in America, went on to
create joints made up of
three, four or five birds,
incorporating turkey,
pheasant, chicken, duck
and wood pigeon.
Sales of the roasts are
expected to treble to more
than 1,000 this Christmas,
Shareholders warn
Shire over selling
ADHD business
Sabah Meddings
Investors in the
pharmaceuticals giant Shire
have urged the board not to
sell or spin-off its blockbuster
neuroscience division
without good reason.
The drug maker
announced in August that it
was considering spinning off
the division, which has
developed ADHD medicines
including Adderall, Vyvanse
and Mydayis. A decision is
expected in the next few
weeks on whether to proceed
with the split.
Flemming Ornskov, the
chief executive, had said at
the time that he wanted to
focus the business on its rare
diseases division, which has
been boosted since its $32bn
takeover last year of Baxalta.
He added that Shire would
“complete a formal
evaluation of the full range of
strategic options for the
neuroscience franchise,
including the potential for its
independent public listing”.
Ornskov: spin-off considered
However, some investors
are wary that Shire will use
any proceeds from a sale to
fund another big takeover
deal. And others say the
company should sell or list
the division only if it can
secure the right price.
“Unless they can sell it for
a premium, which clearly
would have some value, then
there’s no value creation,”
said Joe Walters, senior fund
manager at Royal London
Asset Management, which
holds 0.72% of Shire, worth
about £240m.
with prices ranging from
£49-£75. Showing Lord
Sugar what he missed out
on is “in the back of my
mind”, he said.
The bird roasts are
available on his food
website, James Alexander
Fine Foods.
Theresa May must put the City
at the heart of EU trade talks
to prevent a “substantial”
blow to the economy, Britain’s
top financial lobby group
warns today.
UK Finance said the
government will need to
strike a deeper agreement
with the EU than the bloc’s
deal with Canada if the sector
is to prosper after Brexit.
“The UK must be
ambitious in seeking mutual
cross-border access to
markets, well beyond
the scope of any existing
trade agreements,” said
UK Finance in an open letter
published today.
The Canadian deal —
signed in October 2016 after
seven years of negotiations —
is “an interesting template”,
the lobby group said, but
argued that the government
should strive for an
arrangement embracing
trade in services, not just
goods. “We must avoid an
unnecessary substantial loss
of GDP to citizens of the UK
and the EU 27,” it said.
The warning comes just
days after the EU gave the
green light to starting talks on
Britain’s future trading
relationships with the EU.
The intervention by UK
Finance will carry weight in
the Treasury and No 10. The
financial sector is Britain’s
largest single source of tax
income, bringing in more
than £70bn a year.
Wall Street banks
operating in Britain have
already begun moving small
numbers of staff to other
European capitals before
Britain leaves the EU in
March 2019.
According to UK Finance,
the government will need to
hammer out transitional
arrangements quickly to
forestall further costly
“contingency planning”.
“Firms and customers
[need] sufficient, reliable
legal certainty to avoid
unnecessary and
economically wasteful
preparation against a
‘cliff-edge’ risk,” it said.
The chancellor Philip
Hammond, currently visiting
Beijing, said yesterday that
the transition deal would
“effectively replicate the
status quo” and that future
trade arrangements should
“draw on the strength of our
existing relationship”.
Uber rocked by bombshell
courtroom ‘spying’ letter
→Continued from page 1
June after a string of scandals.
His successor, Dara
Khosrowshahi, is attempting
to rehabilitate the company
but has been hamstrung by
revelations of bad behaviour
during the previous regime.
Jacobs’s letter alleges that
teams of security operatives
hired by Uber “infiltrated
private events spaces at hotel
and conference facilities”
used by a rival’s executives.
The letter claims Uber’s
security agents were able to
“record and observe [their]
conversations”.
It also alleges Uber bugged
a meeting with transport
regulators and employed
“CIA-trained case officers” to
impersonate other people
to gain access to “closed
social media groups” and
“keep tabs on competitors”.
The company produced
the letter in court only after
the justice department —
which confirmed last week it
had opened its own criminal
investigation into Uber’s
conduct — informed the judge
of its existence.
Jacobs, a veteran of the
Defense Intelligence Agency,
spent time in Colombia as
part of America’s war on
drugs before two tours in Iraq
with special forces.
Last month Uber admitted
it had paid hackers $100,000
to cover up a hack of data of
57m customers and drivers.
Khosrowshahi is fighting to
overturn a decision not to
renew Uber’s operating
licence in London.
BT awaits broadband decision
→Continued from page 1
individual broadband
suppliers. The £600m cost
would be recouped from all
users of the network,
including Sky and TalkTalk
broadband customers.
It was unclear last night
which option the culture
secretary, Karen Bradley,
will choose. Going down
the BT route could cause
uproar within the industry;
some rivals have argued
that siding with the former
monopoly could breach rules
on state aid.
However, BT’s supporters
argue that the USO option
could be tricky to administer
and could leave some
communities waiting years
for faster broadband.
The government has
placed the digital economy at
the heart of its industrial
strategy to fire up growth
after Britain leaves the EU.
Openreach, BT’s
independent infrastructure
arm, is this week expected
to publish further details
of its plan to roll out fibreoptic cable to 10m homes
by 2025 at a cost of as much
as £6bn.
3
The Sunday Times December 17, 2017
BUSINESS
Netflix uses
robo-trailers
to woo viewers
Don’t be surprised if you soon
start to find the films and
programmes on Netflix much
more alluring, writes Danny
Fortson in San Francisco.
The streaming giant is
understood to be
experimenting with using
artificial intelligence that will
personalise the content of
film and TV trailers for
individual viewers.
The software-edited
adverts would open a new
front in the company’s assault
on Hollywood. Netflix is set
to spend as much as $8bn
(£6bn) on original content
next year and is expected
to release 80 original films.
The $80bn company
harvests vast amounts of
data on what its 100m-plus
subscribers watch, how they
watch it and when. By using
machine learning, the
software may be able to pluck
scenes from a given film that
are more likely to appeal to
a person interested in, say,
action or romance. The goal
would be to increase the time
people spend on Netflix —
and cut the time they spend
elsewhere.
Disney’s $66bn swoop last
week on 21st Century Fox is
a reaction to the rise of the
TOM STOCKILL
ALL THE VIRTUAL WORLD’S A STAGE
Silicon Valley company and
other rivals.
Before the Fox deal, Disney
had already announced plans
for two new streaming
services. The addition of Fox,
with its large stable of films
and back catalogue of
television shows, could make
for a formidable competitor.
This year Amazon has
spent $4bn on its own
content, which members of
its Prime membership
programme can stream.
Hollywood has begun to back
away from licensing films and
television shows to tech
companies because they have
become direct competitors.
Facebook and YouTube,
a division of Google’s parent
Alphabet, are also set to
splash out billions on their
own shows.
Amazon and Netflix are
able to spend more freely
because they bring in
predictable income streams
from their subscriber bases.
Studios and production
companies are hit-driven,
so must be more discerning
about the projects they back.
Netflix did not return calls
seeking comment.
Trading terminals
to list new digital
‘currencies’
Danny Fortson
San Francisco
Bloomberg has added the prices of three
cryptocurrencies to the 325,000 trading
terminals it leases to banks, hedge funds
and investment firms around the world.
The decision to list ripple, ether and
litecoin is the latest sign of the frenzy over
digital currencies.
Bulls claim the move is evidence of the
rapid legitimisation of cryptocurrencies,
which could replace paper money and
upend the financial markets. The CME,
the world’s largest futures exchange, will
launch its first bitcoin futures contract
tonight. Its Chicago rival, Cboe, began
trading the futures last week.
Bears argue that we are nearing the
peak of cryptomania and the boom in
value will soon come to an end. Robert
Shiller, the economist who won a Nobel
prize for his work on speculative hyste-
ITV in battle royal, page 5
John Collingridge
co-founder Sir James Martin.
The family is ranked 176th in
The Sunday Times rich list
with a fortune of £730m.
Profits fell 20% to £39.4m
while revenues dipped 3%
to £216m, which it blamed on
“problems. . . shipping
certain items”.
The company faces a court
case next month over the
death in 2011 of a Red Arrows
pilot who was ejected from a
Hawk trainer jet on the
ground. It is pleading not
guilty to breaching health and
safety law in the case, which
has been brought by the
Health and Safety Executive.
Co-founders Jon Scott and Andrew McGuinness with Connie Harrison, creative director of Ellipsis
Peter Evans
A start-up that promises a new
type of theatre experience
has raised £3m from
investors, including the
founders of online estate
agency Purplebricks,
writes Peter Evans.
Ellipsis Entertainment is
developing a method of
“fusing augmented reality
with the sets and actors of
traditional theatre”, said cofounder Andrew McGuinness,
an advertising executive.
The investors in the funding
An insurance start-up that
claims it can reduce
premiums for millennials
will launch a £15m initial
coin offering (ICO) next
month in another sign of
the growing frenzy over
digital currencies.
InsurePal will use the
funds raised from the ICO
— a form of crowdfunding
using cryptocurrencies
such as bitcoin and
ethereum — to target the
motor insurance market.
The business, which uses
blockchain technology to
round include Lord Alli,
former chairman of the online
retailer Asos; Sam Weihagen,
former boss of Thomas Cook;
and Michael and Kenny Bruce,
who set up Purplebricks.
Lord (David) Puttnam, the
Oscar-winning film producer
who used to run Columbia
Pictures, is a board adviser
and shareholder.
Demand for experiences
such as those promised by
Ellipsis is being driven by
younger consumers, who
Owners drive Aston Martin
to the stock market
John Collingridge
Aston Martin’s Italian and
Kuwaiti owners have hired
the investment bank Lazard
as they consider floating
James Bond’s car maker.
The Italian private equity
firm Investindustrial and a
group of Kuwaiti
shareholders have bold plans
for the Warwickshire sports
car company, and hope to
emulate the success of
Ferrari’s blockbuster stock
market listing two years ago.
Aston Martin is being
revived by the former Nissan
executive Andy Palmer, who
has returned it to profit and is
churning out new models
including the Vantage and its
core DB11.
Lazard will draw up a plan
under which the company
could be floated in late 2018 —
or sold to a rival car maker or
investor. That could value the
luxury marque at £2bn-£3bn.
However, its owners could
also opt to keep Aston Martin.
Investindustrial, run by the
Italian tycoon Andrea
Bonomi, bought 37.5% of
British slice
of Pizza
Hut close
to sale
Ben Harrington
The British wing of Pizza Hut
is on the verge of being sold
by its private equity backers
for about £100m.
City sources said the sale of
the pizza chain’s UK franchise
could be announced in the
next few weeks, though there
are still hurdles to overcome
before the proposed takeover
is completed.
Rutland Partners, a UKbased private equity firm, is
understood to be in advanced
talks to sell the business to
Pricoa, a debt investor owned
ria, said bitcoin is “the best example right
now” of a bubble.
Bloomberg terminals are perhaps the
single most important tool for traders
because they provide live prices on
everything from stocks and bonds to oil.
The company added bitcoin in 2013, but
the price began to rocket only this year.
As The Sunday Times went to press, one
bitcoin was worth about $18,905
(£14,190) — 23 times its price a year ago.
The three cryptocurrencies added to
the terminals have seen even sharper
jumps. Ripple has gone from less than
one cent last year to about 79 cents, giving its total circulation a value of $30bn.
Litecoin has surged from $3.60 to about
$303 and ether from $7.60 to $695.
There is no clear reason to explain why
several digital currencies have jumped
almost in unison. There are more than
1,000 in total, with a combined value in
excess of $550bn. About $440bn of that
figure stems from the top five: bitcoin,
ether, bitcoin cash, ripple and litecoin.
Who profits from the mania?, page 10
Latest bitcoin price, page 12
If you really want to take a punt on
bitcoin, here’s how, Money, page 15
Crowdfunding bid to cut
car cover for millennials
Ejection seat family
reaps £32m dividend
The family behind the world’s
best-known ejection seat
maker has reaped £32m
of dividends.
Martin-Baker, based near
Uxbridge, west London,
makes seats for fighter jets
including the F-35 stealth
plane and the Eurofighter
Typhoon. Dividends paid to
its founding family dipped
from £40m a year earlier,
accounts for the year to the
end of March showed.
Martin-Baker is run by
75-year-old twins John and
James Martin, the sons of
Bloomberg
catches
crypto fever
Models such as Vantage could race on to the stock market
Aston Martin for €190m in
2012. It joined two Kuwaiti
shareholders, with Daimler
later taking a 5% stake in
exchange for granting Aston
Martin access to advanced
electronics.
Under the stewardship of
Palmer and Investindustrial’s
ownership, the 104-year-old
company has been trying to
shake off its reputation for
financial fragility. Palmer’s
“second century” plan
involves a regimented roll-out
of new core models, pricy
one-offs such as its $3m
Valkyrie hypercar and
reinvesting profits for
expansion.
Turnover has been
boosted by its new DB11:
3,330 were sold in the first
nine months of the year —
up 65% on a year earlier
— to record sales of £567m.
by the American insurer
Prudential Financial.
The takeover would mark
a bumper return for Rutland
Partners, which in 2012 paid
just £1 to rescue Pizza Hut
from the brink of collapse
under its previous owner,
Yum! Brands.
Since then, Rutland has
spent £60m refurbishing the
British franchise of the pizza
chain. The UK operation was
first put up for sale early last
year.
Rutland came under fire in
April over its former
ownership of the poultry
farmer Bernard Matthews.
The farmer’s £75m pension
scheme was passed to the
Pension Protection Fund
after Rutland sold it in a
controversial pre-pack
administration deal.
Rutland Partners declined
to comment.
City news
service in
investment
scoop
Ben Harrington
The owner of the City’s main
company announcement
service is preparing to sell a
multimillion-pound stake in
the business.
City sources said FE, which
owns Investegate, has hired
advisers from Portico Capital
to work on a sale of a
shareholding. The disposal
process is expected to kick-off
early next year.
Investegate.co.uk is one of
the few announcement
services approved by City
regulators. It is used to
Pre-tax profits in the first nine
months hit £22m, reversing
losses of £124m for the same
period a year earlier.
Aston Martin also plans to
break new ground with its
first “crossover” vehicle — a
combination of an offroader
and a sports car.
The DBX car will be built in
a factory at a former RAF
station in St Athan, south
Wales, and will propel the
company into the fastestgrowing segment of the
motor industry when it is
launched in 2019.
Aston Martin’s owners
have been trying to diversify
with a big push into luxury
goods — watches,
powerboats, even an Astonbranded apartment block in
Miami. They hope to launch
the company onto the stock
market as a luxury brand
rather than a car maker, vying
with the likes of Hermès and
Prada, rather than General
Motors or Ford, to earn a
much higher valuation.
Ferrari’s market value has
almost doubled since its float
to about $20bn (£15bn).
distribute company results,
news of share sales and
boardroom shake-ups, and
official confirmations or
denials of takeover
approaches.
FE was set up by
entrepreneurs Michael
Holland, a former Citibank
executive, and Craig Wilson
in 1996 after they bought the
fund-information business
Prestel from BT. Since then,
the business has grown
rapidly by selling data on
funds and investment trusts
via its website trustnet.com.
Company house filings
showed FE generated almost
£1.9m of operating profit
from almost £26m in
revenues in 2016.
Neil Bradford, former chief
executive of Argus Media,
joined FE in September as its
new chief executive.
FE declined to comment.
appear to prioritise one-off
events over owning assets
such as cars and houses.
Ellipsis will open its first
experience in London in
March next year, before
moving on to other cities.
McGuinness co-founded
the advertising agency
Beattie McGuinness Bungay
and PR firm Seven Dials.
Ellipsis’s other founder, Jon
Scott, was previously finance
chief of the private members’
club Quintessentially.
make payments, was
founded in Liechtenstein
two years ago.
In the first nine months
of 2017, 225 companies
conducted ICOs, raising
more than $2bn (£1.5bn),
according to data analyst
CB Insights. However,
the fundraisings have
been criticised by
watchdogs, which say
investors are not fully
aware of the risks.
Last week the Financial
Conduct Authority (FCA)
said it would conduct a
thorough investigation
into the market. The FCA
has previously called ICOs
“very high-risk,
speculative investments”.
China has banned them.
InsurancePal (IPL)
gives discounts to
premiums based on
“social proof”
endorsements, when a
friend vouches for a
driver they say is safe and
provides credit card
details as a guarantee.
The guarantor is
rewarded in IPL tokens, a
digital currency based on
ethereum, which can be
used for insurance, sold
or kept as an investment.
4
The Sunday Times December 17, 2017
BUSINESS
The Mouse needed Fox for its Valley battle
Iain Dey Agenda
I
t can be difficult to comprehend the
scale of change being precipitated
upon the world by Big Tech.
Sometimes the statistics that bring
light to the subject seem too wild to
be true. On one evening last week,
one-third of Britain’s internet
capacity was being consumed by
just three users: Netflix, YouTube and
Amazon. Just those three companies.
The $66bn (£50bn) deal that saw
Disney acquire most of 21st Century Fox
last week can be viewed through
multiple lenses.
It is not, as Labour MP Tom Watson
appears to believe, evidence that British
parliamentarians scared off Fox from
taking over Sky — forcing Rupert
Murdoch into a submissive retreat.
Though clearly the Disney takeover
does neuter that slightly bizarre
parliamentary sideshow — which
prompted Sky’s shares to pop higher.
Neither is it quite as simple as the
“Rupert Murdoch is dismantling his
empire” trope being popularised by
Britain’s true media monopoly, the BBC.
What this is really about is squaring
up to the tough realities of a corporate
world that we have all allowed to
become dominated by a handful of
colossal companies: Google, Facebook,
Amazon and Netflix.
Let me remind you that Rupert
Murdoch is also chairman of News
Corporation, ultimate owner of The
Sunday Times. It, as a business, has
made it clear on countless occasions
that it has issues with Silicon Valley’s
increasing dominance of media.
In this new environment, both Fox
and Disney — two of the most feared
media businesses on the planet — have
recognised they are too small to
compete. There is a bifurcation taking
place in the industry. Just as fashion has
evolved into a marketplace where the
only brands that thrive are either ultraluxury or cheap as chips, something
similar is happening to TV and movies.
At one end sits mass consumption
scripted content, such as TV box sets
and films. Netflix has changed the game
in that market, not just by spending
10 times as much as traditional
broadcasters on its slick productions,
but also by hoovering up a vast back
catalogue of sought-after content.
If you want to play in that game, you
need to get bigger. That’s why Disney is
taking Mickey Mouse and Bart Simpson
into the same stable.
Bob Iger, the Disney boss, explained
back in August that he intends to pull its
movies from Netflix. Want to watch
Star Wars? The upcoming Frozen sequel
from Pixar? Then you will need to buy
direct. Now that package is beefed up
with properties such as the X-Men
franchise.
It is worth noting, in this context, that
the new Disney is also doubling its stake
to 60% in Hulu, one of the streaming
services that poses a credible threat to
Netflix. Fox was too small to fight the
tech boys on its own. Now Murdoch’s
shareholders have a 25% stake in a beast
that’s big enough to challenge in the
realm of scripted content.
At the opposite end of this new media
spectrum lies more specialised, hard-toreplace stuff, such as news coverage and
live sports. That is what is being retained
in the new Fox business. The slimmed-
Sky
£10.5
10
9.5
9
D J F M A M J J A S O N
Source: Thomson Reuters
Fox and Disney
have recognised
they are too
small to compete
down operation will have cash to spend
if there are any acquisitions to be made.
If Donald Trump’s tax reforms go
through, it could have even more.
Finding things to buy is tricky,
however. Digital media assets — news
sites such as BuzzFeed — were once seen
as a competitive threat to TV news. That
notion seems to have been exposed as
misguided. When the future becomes
clearer, however, new Fox will be better
equipped to make a move.
“We always overestimate the change
that will occur in the next two years and
underestimate the change that will occur
in the next 10,” Microsoft co-founder
Bill Gates wrote in his 1995 book The
Road Ahead. “Don’t let yourself be
lulled into inaction.”
The Finnish of big banking?
Last Sunday, I mentioned fleetingly how
every product line in retail banking is
quietly being eaten by the emergence of
new technologies. A striking example
emerged last week.
Ferratum, a Finnish operation run by
charismatic 37-year-old Jorma Jokela,
has teamed up with Thomas Cook to sell
holidaymakers an app that allows them
seamlessly to withdraw cash in seven
currencies — without penurious charges
— all from one contactless debit card.
The card works out where you are
when you use it, and then deals in the
appropriate local currency. If a group of
friends are splitting a restaurant bill, it
lets them send and receive money via
text message. And if you overspend, you
can apply for an overdraft instantly.
Right now, it’s available only in
Sweden. Yet the app — branded Sumo —
will come to Britain next year.
Ferratum is not the typical tech
company: it’s been profitable since the
day it was set up 12 years ago. This is
what the future of banking looks like.
Service and functionality comes ahead
of customer gouging. And Ferratum
proves that can be done profitably.
For now, fintech is one area where
start-ups appear to be making progress
despite the dominance of Big Tech. Over
time, everyone will pick away at the
margins of the big banks.
iain.dey@sunday-times.co.uk
Fall in jobs casts a cloud
over consumer spending
Will Trump drive
off Trumpchi?
David Smith Economic Outlook
Irwin Stelzer American Account
O
ne drop in the number of
people in work looks like a
blip; two in succession and you
might start to detect a trend.
The fall in employment
announced by the Office for
National Statistics (ONS) —
56,000 in the August-October
period compared with the previous
three months — is, seen in the context of
more than 32m people in work, a drop in
the ocean. But it is worth watching. It
may signal the start of a significantly
weaker trend after what has been an
employment recovery in Britain since
the financial crisis of 2007-9 that verges
on the miraculous.
Even after this fall, it should be
remembered that the number of people
in work is 3m higher than it was in mid2009, the low point of the crisis. In the
context of that miracle, a fall in
employment is unusual. The job market
is ending the year on a weaker note.
Part of that employment miracle has
been that private sector job creation has
comfortably outstripped the loss of
public sector jobs, when many feared it
would not. The ratio of private sector
jobs created to public sector jobs lost as
a result of spending restraint has been
roughly seven to one.
That has changed in recent months.
ONS figures show there was a rise of
19,000 in public sector employment
between June and September, alongside
a fall of 75,000 in private sector jobs.
Public sector jobs are on the rise again, if
only modestly, though further increases
are in prospect. The private sector jobs
machine has, however, sputtered and is
even rolling backwards.
Why should that private sector
miracle not continue? Growth and
employment are intimately related. The
puzzle has been that Britain’s growth
slowdown was not, until now, reflected
in the jobs figures. Now, with the usual
lag between growth and employment
that explains the puzzle, that slowdown
effect is starting to come through.
Slower growth in the economy means a
fall in employment, or at least a levelling
off, is to be expected.
Related to this — though it is not
always a foolproof method — is that
when any economic variable is at record
levels, it is sensible not to expect it to
keep breaking records indefinitely. We
can debate the quality of employment in
Britain but the numbers have been clear.
Whichever way you look at it,
whether divided by UK-born, UK
nationals or the workforce as a whole,
Britain’s employment rate has broken
new ground. The 16-64 employment rate
peaked at a record 75.3% in the spring
and early summer before slipping back
to its current 75.1%.
You may ask why it is not possible to
get the employment rate much higher
than 75% or so. There are 8.9m people of
working age, defined as 16-64, who are
officially recorded as economically
inactive, and that number rose by
115,000 in the latest three months.
There are a number of reasons for
inactivity: 2.4m of the economically
inactive are students; 2.1m are looking
after family or home; 2.2m are either
temporarily or long-term sick; and 1.2m
are retired.
Of the 8.9m economically inactive,
most say they do not want a job, though
2m say they do. Matching that to the jobs
available is the challenge, and always has
been. The number of the economically
inactive who say they want a job has
ranged between 2m and 2.5m, in good
times and bad, for the past 25 years.
Underlying retail
sales growth has
slowed from 6%
a year ago to 1%
There is another component to the
employment picture. Every survey
suggests that many firms are
experiencing recruitment difficulties.
There are, in many cases, not the people
to fill the jobs available. Though
recruitment advertising is cheaper these
days because of the rise of the internet,
which may distort the figures on the high
side, there are nearly 800,000 unfilled
vacancies in the economy, spread across
organisations of all sizes.
The supply of labour, meanwhile, is
more constrained. Employment among
non-UK nationals, up 88,000 over the
past year, has slowed to a third of its rate
in the previous 12 months. One of the
reasons why employment growth is
fading is demand, but another is the
supply of suitable workers. For
employment to continue to grow, you
need the people to do the jobs.
There is, it should be said, a more
positive spin that can be put on all this,
which is that, as the penny drops on
slower growth, we are finally seeing the
beginnings of the long-delayed rise in
productivity. The latest three months
saw not just a drop in employment but a
rather larger drop in hours worked, both
because of fewer people in work and a
decline in the average work-week, itself
evidence of slower growth. So even a
modest rise in output translates into a
decent increase in productivity — output
per hour. As it was, the ONS’s “flash”
estimate of productivity showed a strong
rise of 0.9% in the third quarter.
If that upturn can be sustained, it is
good news that will eventually translate
into rising real wages and will help the
public finances. The latest official figures
showed a small strengthening of pay
growth but a continued fall in real — in
other words, after inflation — wages.
The question for now is whether the
pattern is changing. For several years we
have seen strong employment growth
against weak productivity. If that is now
reversing it has immediate implications
for any consumer-facing business. While
retail sales rose last month on the back
of Black Friday deals, the trend towards
EMPLOYMENT HAS SLIPPED FROM ITS PEAKS...
UK employment rate (aged 16-64), seasonally adjusted
75%
74
73
72
71
2012
2013
2014
2015
2016
2017
Sources: Labour Force Survey, ONS
...THOUGH UNEMPLOYMENT REMAINS VERY LOW
UK unemployment
Men
Women
People
9% of all economically active
8
7
6
5
4
2012
2013
Sources: Labour Force Survey, ONS
2014
2015
2016
2017
slower growth in spending is
unmistakable, and stores are likely to
discover that what kept the tills ringing
in November will have stolen some
business from this month and January.
Meanwhile, underlying annual growth in
retail sales volumes has slowed from 6%
a year ago to 1% now.
Strong employment growth kept the
consumer pot bubbling during the
earlier period of falling real wages. This
time the prospect is for weak or falling
employment, alongside falling real
wages, at least until that improved
productivity kicks in.
So times will be tougher for consumer
businesses. More people in work has
kept them going. Looking ahead for
coming months, it is less likely that there
will be many more people in work.
PS
As somebody who hails from the West
Midlands, my ears naturally pricked up
when I heard of the proposal, in a report
for John McDonnell, the shadow
chancellor, that recommended moving
the Bank of England to Birmingham.
Could this be the beginning of a new
era for Britain’s second city (get back in
your box, Manchester), recalling its
Enlightenment days of the late 18th and
early 19th centuries, when the Lunar
Society brought together the great
industrialists, scientists, philosophers
and intellectuals of the Midlands?
Though the comparison with those
eminences may be a little too flattering,
there is talk, too, of Channel 4 moving to
Birmingham.
Actually, the recommendation for
Labour — in a report entitled Financing
Investment: Interim Report, by GFC
Economics and Clearpoint Corporation
Management — does not recommend
moving the whole Bank to Birmingham,
but some of its functions, along with the
establishment of regional offices in
Glasgow, Cardiff, Belfast, Newcastle and
Plymouth. In Birmingham, these
relocated functions would operate
alongside Labour’s proposed National
Investment Bank, which the report says
should also be located in the city.
Birmingham, which is enjoying a
revival anyway, appears to be the place
to be.
The Bank, of course, is located in
London for a reason: proximity to the
seat of government and the financial
markets. This is why this proposal only
makes any sense in the context of a big
change in the Bank’s role. So its financial
policy committee would be charged not
with ensuring the risks to the financial
system are contained, but that the banks
are pushed towards prioritising
productive investment. That, the
authors argue, is the only sure route to
financial stability. That is a matter for
debate; not all “productive” investment
turns out to be safe.
Anyway, given that Labour is still
roughly neck and neck with the Tories in
the polls, this is the kind of thing we may
have to debate, and indeed scrutinise
more closely than we did in the run-up
to June’s general election.
For Bank officials concerned about
relocation in the event of a Labour
government, meanwhile, it could have
been worse. When Graham Turner
co-founded GFC Economics in 1999, he
gave it its name because of a love for
Gillingham Football Club. Why not shift
some of the Bank there?
Without wanting to make any enemies
in the Medway, Birmingham has much
more to offer.
david.smith@sunday-times.co.uk
D
onald Trump believes the
world trading system is rigged
against America, and wants to
bring it down. He has found
the man who will help him do
just that. Robert Lighthizer,
the US trade representative,
comes from an Ohio steel town
ravaged by a flood of imports. He agrees
with the president that the hollowing out
of America’s manufacturing sector has
nothing to do with free trade as
described in Trump’s dog-eared copy of
The Wealth of Nations. It has to do with
China’s unfair trade practices, which the
World Trade Organisation (WTO) has
done nothing to rein in.
China was admitted to the WTO only
after promising to become a free-trading
market economy, a promise it has not
kept. Instead, President Xi Jinping plans
to make China great again by selecting
the products of the future to subsidise,
protect and lead to world dominance.
If American firms want to do business
in the People’s Republic, they must find
a Chinese partner and turn over to it
their technological know-how and any
intellectual property China has been
unable to steal. So Lighthizer has joined
Japan and the European Union in asking
the WTO to deny China the benefits that
the organisation accords market
economies, and allow them to do what
Adam Smith recommends in these
circumstances — retaliate. If that plea is
refused, America will bolt from the WTO
and strike bilateral deals with each of its
trading partners. RIP, the post-Second
World War multilateral trading system.
Trump’s plan to raise tariffs on steel,
solar panels and aluminium are mere
skirmishes in a war that will intensify
next month when China makes clear that
it intends to do to America’s car industry
what it has already done to swathes of
the manufacturing sector while running
up a $347bn-and-rising trade surplus
with the United States.
At the Detroit auto show next month,
China will unveil a range that it hopes
will grab a large share of the market from
the domestic and foreign companies that
make, or at least assemble, vehicles in
America. The name is Trumpchi. You
read it right: Trumpchi, a brand sold in
China long before the managers of its
economy ever heard of the Donald or
dined at Mar-a-Lago.
China is already the largest car maker
in the world, producing more vehicles
than Japan and America combined. It
has been selling a small number here for
a while. Volvo is now owned by the
Chinese giant Geely, and markets its
made-in-China S60 Inscription here.
Some Detroit-based brands are also
made in and imported from China, and
Ford plans to move production of the
Focus from Michigan to China. But now
the onslaught of Chinese-branded
vehicles is about to start in earnest,
using the advantages of what Trump
characterises as a rigged trading system.
We levy only 2.5% duty on each
imported vehicle, while the Chinese
charge 25% on vehicles from abroad,
the highest trade barrier erected by any
car producer. That more or less reserves
the massive Chinese market for the
home-town team, giving manufacturers
there the opportunity to obtain the
economies of scale needed to crack and
eventually dominate the international
vehicle market.
The combination of exclusive access
to a domestic market and expropriation
of superior American technology is hard
for any competitor to beat. Lenin once
claimed that the capitalists would sell
him the rope with which to hang them.
Our corporations are turning over their
intellectual property to Chinese
companies that will use it to outsell them
in global markets.
Michael Dunne, formerly a
General Motors executive, says
that other foreign car makers “are
consistently taken aback by GM’s
apparently generous technology sharing
with Baojun”, China’s fastest-growing
auto manufacturer (the company name
means “precious steed”).
China plans to sell both gasolinepowered and electric vehicles in
America. The electric models will be
eligible for any tax credit that US-made
cars receive — currently $7,500 (£5,630)
a vehicle on the first 200,000 sold by
each manufacturer. Since our
companies have just about hit that
The onslaught of
Chinese-branded
vehicles is about
to start in earnest
ceiling, and the Chinese companies have
not, China will have a $7,500 per car
edge when motorists compare the price
of its vehicles with those made here.
China, however, does not believe that
turnabout is fair play. Every electric car
sold in China receives a subsidy of
$10,000. Well, not every electric car.
The subsidy is not available to imported
electric cars; only those made in China.
Assume that both an American
company and a Chinese competitor
market a $50,000 electric car in Beijing.
The consumer will face a cost of
$62,500, tariff included, for the US
vehicle, and a net cost of only $40,000
for the made-in-China car after receiving
the $10,000 rebate from the Beijing
government. That makes our electric
cars uncompetitive in China, while
theirs will benefit from the $7,500 paid
to US buyers by Washington DC long
after American companies have used up
their access to the credit. Little wonder
that President Xi favours continuation
of the current trading system.
GAC, manufacturer of the Trumpchi,
is building a $6.5bn industrial park in
Guangzhou to, among other things,
“carry out the government’s policy”.
The company will soon announce
whether the Trumpchi name will be
retained when the models go on display
at the Detroit show. It sounds strange to
the American ear, but in the past so did
names such as Toyota, Hyundai, Kia
and Mitsubishi. One difference.
Trump just might intervene to prevent
Trumpchi becoming a household
name here in America.
irwin@irwinstelzer.com
Irwin Stelzer is a business adviser
5
The Sunday Times December 17, 2017
BUSINESS
The new queen of ITV and the
dramas she will face off screen
Netflix, Amazon, and now Disney — there are plenty of challenges for Carolyn McCall, reports Simon Duke
T
he new boss of ITV knows
only too well how fickle the
winds of the media industry
can be. In the mid-2000s,
when Dame Carolyn McCall
ran Guardian Media Group
(GMG), she splashed out £80m
on new printing presses.
The shift from broadsheet
to a continental-style Berliner
format was aimed at shoring up The
Guardian’s declining print audience, but
the migration of readers to the internet
proved much more rapid, and financially
destructive, than predicted. From next
month, GMG will publish the paper as a
tabloid in an attempt to slash millions
from costs. The Berliner presses will be
sold, probably for scrap.
McCall returns to the media fray next
month after overseeing a 250% surge in
the share price of easyJet, which she has
run since 2010.
Her arrival comes at a time of turbulence in the world of broadcasting. Last
week, Walt Disney agreed to swallow up
the bulk of rival 21st Century Fox in a deal
that is set to reconfigure the global entertainment business.
So far, Hollywood has not been shaken
as violently by the internet as other corners of medialand, but storm clouds are
gathering. The traditional power brokers
are strengthening their defences against
an onslaught from internet streaming
giants: Netflix and Amazon Prime
between them have amassed an estimated 10m subscribers in the UK.
For domestic broadcasters, such as
ITV and the BBC, the future is shrouded
in uncertainty.
Megadeals are already coming thick
and fast, but Disney’s deal upped the
ante. The Magic Kingdom is splashing out
$66.1bn (£50bn), including debt, to
acquire a welter of TV and movie production businesses from Fox, including its
39% stake in pay-TV giant Sky. The takeover will create a vast content factory
spanning Mickey Mouse and Star Wars to
the X-Men and Captain America.
The logic behind that deal provides a
vivid illustration of McCall’s problem in
working out what to do with ITV.
Disney is scrambling to fatten its
already formidable film and TV stockpile.
In 2019, it will launch a streaming service
to consumers in direct competition with
Netflix. The interloper from Silicon Valley has significantly ramped up spending
on its own productions, with its budget
set to swell to $8bn next year. Like a
musclebound superhero, Disney boss
Bob Iger is bulking up to compete.
Fox, whose co-chairman Rupert Murdoch also chairs The Sunday Times
owner News Corporation, will keep hold
of its news, sports and broadcast businesses. The 86-year-old media magnate
said he was “pivoting back to news and
sport”, which were the “only thing people will watch in real time”.
Murdoch’s move to focus on news and
Hits such as Victoria, starring Jenna Coleman, will be one of Carolyn McCall’s weapons against streaming services
Carolyn is very
well networked in
advertising, which
is vital to ITV
sport strikes to the heart of the conundrum McCall will have to solve to secure a
vibrant independent future for ITV. If
viewers were to stop watching its channels at the scheduled times, how would
ITV protect the advertising income that
has sustained it for the past half-century?
Britain’s biggest free-to-air broadcaster is in danger of being caught in a
pincer move. On one side are the subscription streaming services, such as Netflix, whose burgeoning libraries of glossy
dramas could lure viewers away. On the
other stand YouTube and Facebook,
whose grip on Britain’s £10bn online
advertising market tightens day by day.
Marketing chiefs still splash out more
than £5bn a year on TV ads in the UK. The
risk is that, over time, this cash will leach
away to ITV’s new online foes.
Meanwhile, Big Tech is mustering
ever-greater financial firepower. Netflix
spends as much as £7.5m on each episode
of high-end shows such as The Crown.
The budget for a typical British drama,
such as ITV’s Victoria, would be about
£1.5m an episode, sources said.
Yet stiff competition is not McCall’s
only issue. Over the past two years, the
TV advertising market has slowed markedly, with consumer companies pulling
in their horns. The chaotic Brexit process
offers them little incentive to start spending freely again.
Their penny-pinching has crimped
ITV’s commercial engine. In the first nine
months of the year, ad revenues slumped
7% to £1.1bn. However, this fall was offset
by a jump for its studios division, the producer of popular hit shows such as Coronation Street and The X Factor.
Nowadays, ITV is far less reliant on the
vagaries of marketing spending. McCall’s
predecessor, Adam Crozier, acquired
several smaller production houses,
STREAMERS THAT
TARGET OUR TVs
Netflix started life as a DVD rental
website two decades ago. Since
launching its TV and film streaming
service in 2007, it has become a
media powerhouse with more than
100m subscribers worldwide.
Although Netflix’s production
budget is among the largest in the
entertainment industry, its profits are
relatively meagre. In the first nine
months of the year, it delivered
$373m (£280m) of earnings. By
contrast, Disney generated a $9bn
surplus in the 12 months to the end
of September.
Amazon does not break out user
figures for its streaming service, but
it has been estimated that more than
half of American households are
subscribers to Prime, its $99-a-year
shopping delivery service that
includes free TV and film streaming.
Subscribers in Britain pay £79 a year.
Wake up and smell the strategy
Whitbread boss Alison Brittain is
facing pressure to extract more value
from key assets such as Costa Coffee
and Premier Inn, reports Ben Laurance
For years, the Brewery on
Chiswell Street in the City of
London has served as an
impressive entertaining
venue, hosting conferences,
dinners and corporate
away-days.
Earlier this month, its
original occupant moved
back in for the night.
Whitbread, the erstwhile
brewing giant, was
celebrating its 275th
anniversary with a
star-studded gala dinner —
featuring entertainment from
impressionist Alistair
McGowan.
Just a few days later,
however, new questions were
raised about the company’s
future when an activist
investor took a 3.4% stake.
Whitbread has been the
subject of eternal speculation
about its future shape. Here is
a company with two big
businesses — Premier Inn and
Costa Coffee. Does it make
sense to keep them under the
same umbrella? Or could the
parts be worth more if they
were separated?
Will Whitbread change its
shape once more? And will it
do so of its own volition, or
because its newly arrived
investor will force the issue?
Sachem Head Capital
Management, the American
fund that has taken the
£240m bet on Whitbread
through contracts for
difference, resolutely refuses
to discuss its intentions.
And although the investment
firm’s chief, Scott Ferguson,
learnt his trade at the knee of
Bill Ackman — an archetypal
aggressive activist — Sachem
Head’s record over the five
years since being set up
suggests that no one should
necessarily assume that some
huge upheaval is in the offing.
Sachem Head’s funds —
currently reckoned to be
$4.4bn (£3.3bn) — have done
well. According to Activist
Insight, which monitors the
performance of funds,
Sachem Head has achieved
an average return of almost
22% a year. But on the whole,
the fund — publicly at least —
has been a relatively passive
investor. Of the 50 companies
where it has held or holds
stakes, it has called for
change at only five — by
seeking a boardroom seat,
pushing for the company to
be sold, urging it to sell assets
or calling for a business to be
spun off.
Whitbread is no stranger to
corporate reinvention. It
shed the breweries that were
its core in 2001. At various
stages over the past three
decades it has been a maker
of Beefeater gin and Britvic
soft drinks, and it has run
Pizza Hut, David Lloyd fitness
clubs, Threshers off-licences
and Marriott hotels. None is
now in the Whitbread stable.
The first Travel Inn was
opened in 1987. Costa Coffee
was bought in 1995. Now the
company’s fortunes rest
principally on two operations
— Premier Inn and Costa
Coffee. It also has more than
140 Beefeater pubrestaurants and 160-plus
Brewers Fayre outlets.
So no one can accuse
Whitbread of refusing to
change. The key question is
whether it will choose to
change further, be forced to
change or simply press ahead
with its strategy of expanding
Costa and Premier Inn.
Premier Inn has 70,000
rooms in 770 hotels and aims
to hit 85,000 rooms by 2020.
Costa has 3,660 outlets
worldwide including
franchises. Two-thirds are in
the UK.
The emergence of Sachem
Head’s holding lifted
Whitbread shares 7.6%, but at
£38.64, the price is still well
below the level seen in spring
2015, when it rose above £54.
For chief executive
Alison Brittain, this is
uncomfortable. She was
named to take the top job in
May 2015, when the share
price was still above £52.
By the time she took the reins
in the autumn of that year,
the price was about £44 —
a level not seen again
since then.
Half-year figures,
announced two months ago,
didn’t help. Investors were
disappointed by Costa: likefor-like sales were up by a
meagre 0.6% compared with
the year-earlier period.
With the share price
groggy, the question of the
group’s structure has become
increasingly pertinent. And
Brittain candidly admits that
the merits of a demerger are
regularly weighed up by the
Whitbread board. She insists
Dream role: Sir Lenny Henry fronts TV ads for Premier Inn
that now is not the time to
do it.
But splitting Whitbread —
perhaps by spinning off Costa
— is not the only idea floated
by those seeking a way to
enrich shareholders.
Analysts Tim Ramskill and
Julia Pennington at Credit
Suisse have identified a
number of possibilities.
One simple strategy
would be to shed the pubrestaurants, freeing up
money that could yield better
returns if used to finance
expansion of Premier Inn.
A second idea is the muchtouted suggestion that Costa
should be spun off. Brittain
insists that there are
synergies between it and
Premier Inn that would be
lost if the two operations
were separated. However,
Credit Suisse estimates that
Costa could reasonably be
worth £2.5bn.
A third suggestion is that
Whitbread should sell and
lease back some of the
properties it owns. Credit
Suisse reckons the company’s
properties are worth at least
£5.4bn.
Whitbread says that across
the Premier Inn estate, it
wants to keep at least 50% of
its properties as freeholds. At
present, the figure is 64%.
Bringing that down to the
50% mark could fetch more
than £900m. And even after
taking account of extra rents,
Credit Suisse estimates that
2019 pre-tax profits would
be lifted by 6%.
Will any of these ideas be
adopted? Whitbread is not
saying — yet. But the
speculation about the
company’s future will
continue.
including Talpa Media, which makes talent show The Voice. His spree allowed
ITV to tap more deeply into international
markets by selling shows and formats
overseas. Nevertheless, the pullback in
ad spending remains investors’ biggest
concern. Over two years, the company’s
market value has slumped 40% to £6.7bn.
McCall’s main mission will be to persuade advertisers that ITV remains a
prime destination to market their wares
to young people. It is a task for which the
56-year-old McCall has spent most of her
career preparing.
Born in Bangalore, she grew up in
India and Singapore. After studying history and politics at Kent and London universities and a short stint as a trainee
teacher, she joined GMG in 1986. She rose
through the advertising and commercial
departments, becoming chief executive
in 2000. After moving to easyJet in 2010,
she swiftly piloted it into the FTSE 100.
Sources say McCall considers former
Standard Chartered boss Lord (Mervyn)
Davies a key mentor: they were non-executive directors together at Tesco.
“Carolyn has been in marketing and
advertising all her life, and has run one of
Britain’s biggest brands for seven years,”
said a media source. “She is very well networked in the advertising market, which
is extremely important to ITV.”
Her task in shoring up ITV’s advertising base will be helped by the furore over
extremist content on YouTube and Facebook. Many large companies are looking
for safe havens after seeing their ads
appear alongside terrorist recruitment
videos and Holocaust deniers.
McCall has two strong cards to
play. First, ITV is the only British
commercial broadcaster regularly drawing in 5m-plus viewers
for hit shows. Such audiences
are valuable to companies
launching new products or services. Second, she will argue
that ITV continues to produce
programmes that appeal to the
young viewers beloved of large
advertisers. Love Island drew
more than 2m viewers on air and
a similar number online. That
gives ITV a fighting chance of
carving out a chunk of the video
advertising market dominated by
YouTube and Facebook.
“Advertisers had no problem paying up when The Great British Bake
Off moved to Channel 4, or for Love
Island, which attracts a younger demographic,” said Claire Enders, founder of
Enders Analysis. The unexpected success of the baking show suggests ITV has
the weapons to repel Silicon Valley.
Smart TVs threaten the edge that
public service broadcasters enjoy
through their prominent positions
on electronic programme guides.
Still, most viewers want more than
endless long-form drama. That, at
least, is what McCall is hoping.
6
The Sunday Times December 17, 2017
BUSINESS
TOM STOCKILL
My peak
is still
a long
way off
Mark Neale is doubling the size of his
Mountain Warehouse chain, and starting
a new venture, gifts retailer Neon Sheep
SABAH
MEDDINGS
M
ark Neale reckons he
knows his customers, and
they do not, as a rule, like
shopping centres. “Our
customers like going out,”
says the boss of Mountain
Warehouse. “We have
nice, middle-class people
who take their kids walking at the weekend.
They’ve got a dog. They go to Skipton or
Barnstaple or Cromer, have a cup of tea
and a scone and a poke around in a couple of antique shops. Then they come
into Mountain Warehouse and buy a new
pair of walking boots.
“What they don’t do,” he insists, “is go
to Meadowhall [shopping centre in Sheffield] for the day. They’re outdoorsy people who stumble across our shop because
we’ve put it somewhere they happen to
be for that day.”
Neale is the former strategy consultant
who founded the UK’s biggest outdoor
APPOINTMENTS
clothing brand 20 years ago. Families
flock to his shops across the country to
pick up everything from fleeces and rucksacks to ski wear. And he has expanded
into seven other countries, with two
more on the horizon.
The 49-year-old is defying the gloom
on the high street by opening shops just
as other retailers have scaled back.
Mountain Warehouse has 285 sites, with
plans to more than double this number.
When we meet, on the top floor of his
cluttered headquarters in London’s Victoria, Neale is buzzing over his latest venture: an entirely unrelated chain of gift
shops, called Neon Sheep.
He pulls out a selection of its products:
a pink flamingo desk light, a pink plastic
snakeskin rucksack, and a glittery padded note pad — available for £8. “The
shop’s aimed at my daughter, who is 13,
or my wife, who is 50, and everyone in
between,” he says, before looking me in
the eye: “You would fit in quite well.”
His selection of fashion accessories,
homeware and stationery echoes that
found in Smiggle, Flying Tiger and Oliver
Bonas — a niche that appears to be navigating a successful path through the thick
fog settling on the rest of the high street.
However, Neale has not “bet the house
on it”, initially opening just three Neon
Sheep shops — in Ealing, west London,
Sill climbing: Mark Neale plans to
double the number of stores
Festival Place in Basingstoke and Lakeside shopping centre in Essex. “If it goes
well then we’ll open more, and if it
doesn’t go well, then we won’t and we
won’t lose sleep over it.”
If Neon Sheep — his daughter, Emma,
came up with the name — doesn’t work, it
won’t be Neale’s first flop. The Welshman
tried three different high street concepts
— roller blades, toys and greetings cards —
before finding a winner.
He launched Mountain Warehouse
from a single shop in Swindon after being
introduced to a slick Italian private equity
tycoon, Andrea Bonomi, who owns a
stake in Aston Martin. Bonomi had
bought Karrimor, the outdoors brand
now owned by Sports Direct, and needed
some shops to sell it in. Neale was dusting
himself off and was ready to try something new after his latest disappointment.
“People always ask me if I was a big
mountaineer and was that why I started
this,” he says. “But it wasn’t like that.”
Even now, he’s not much like his outdoorsy, active customers — despite trying
to lose weight ahead of his 50th birthday
this month. Last week, he celebrated
Mountain Warehouse’s 20th anniversary
with a party at the Roof Gardens, an
ostentatious west London nightspot.
An education at Monmouth School
and Oxford has given him a cut-glass
accent, though he was born in Ebbw
Vale, south Wales. His father was sales
director for a furniture company and his
mother an admin assistant.
Neale holds an 85% stake in the company and is worth £170m, according to
The Sunday Times Rich List. His success
has been shared with private equity
investors, the last of which he bought out
in 2013 in an £85m deal backed by RBS.
Bonomi received £2.2m when he
exited in 2002, according to Neale, while
NBGI, part of the National Bank of
Greece, invested £1.6m and left with
£10m in 2007, when Icelandic investors
came on board.
“That was an interesting period,” he
says. “The business was doing brilliantly
but the shareholders went bust.” LDC,
the private equity arm of Lloyds Bank,
helped Neale buy out the Icelanders
before he took full control of the business.
Neale flirted with the idea of a stock
market float last year, but decided against
it after the EU referendum. That has not
stopped advisers quizzing him over his
exit plans. “I tell them I’m going to hand it
down to my daughter, then they see all
the fees disappear,” he says wryly.
Would he not rather take it easier, with
a few non-executive positions and long
holidays in the Bahamas? “I couldn’t
really see myself as a non-exec. I’m either
in or out.” As for the holidays, he says: “I
can have those if I want already.”
Private ownership means that Neale is
not a slave to the quarterly treadmill of
financial results, he says. He can set his
own targets, visit every shop and take a
long-term view. He is prepared to wait to
get what he wants: Mountain Warehouse’s site in Oxford took eight years to
secure, while he waited for Cath Kidston
to move to a shopping centre.
“Lots of these towns we’re looking at
are very vibrant,” he says. “ I have built up
this business over 20 years, shop by shop.
I like to say a shop is for life, not just for
Christmas.”
Neale is bullish about the state of the
high street, despite evidence to the contrary. Recent figures from the Local Data
Company and PwC revealed that shops
were still closing at a rate of 14 a day in the
first six months of the year.
“The death of the high street is only
true up to a point,” he says. “We don’t
have a shop in St Andrews, Scotland, and
we’ve been looking for years.” The last
shop he viewed there had 11 offers, and
eventually went to Paperchase. “There
are other towns where there is a similar
story,” he adds.
You will not find a Mountain Warehouse in Great Yarmouth or Birmingham, though one did open this month in
Southwold — the upmarket seaside town
in Suffolk where beach huts can fetch
more than £100,000. Now he’s looking
for a spot in nearby Aldeburgh.
Shopping centres, however, are out of
the question. “We did try some of those
big malls a long time ago but they were
disappointing and expensive.”
Neon Sheep is different, although it’s
more of a pop-up so far with leases of one
year or less. Industry experts see it as a
shrewd business move.
“It’s just the kind of innovation we
need from a successful retailer who
understands the industry,” said one senior retail property adviser.
Neale does not necessarily believe in
drifting too far from the herd, however.
He has embraced the fashion for Black
Friday sales — Mountain Warehouse took
Our site in Oxford
took eight years to
secure. A shop is
for life, not just
for Christmas
£2m in one day for the first time this year.
“All these people being a bit holier
than thou about how they don’t like Black
Friday are complaining about a FirstWorld problem: too many people wanting to come into your shop and buy
things,” he says energetically.
He has been watching the weather
closely. Last week’s cold snap has sent
sales of snow boots and gloves “flying”.
Neale whips out his iPhone and pulls
up an app displaying the sales at all his
stores. His best-performing shop is Guildford in Surrey, up 138% on last year.
Across Europe, poor weather has driven
up sales 77% compared with last year. In
the six months to August 27, sales rose
19.3% to £91.6m. Pre-tax profits climbed
from £4m to £4.7m.
Despite benefiting from the vagaries of
climate, Neale has sought to widen the
appeal of Mountain Warehouse — partly
to avoid arguments at home. His wife is
Michelle Feeney, former boss of the fake
tan brand St Tropez, whom he met on a
plane while they were travelling to the
same wedding in Florida.
While Neale hoped for rain and snow —
to drive sales of coats and boots —
Feeney’s business depended on warm
weather to encourage Brits to slap on fake
tan underneath their summer dresses.
“I was fed up with being miserable if it
was sunny and my wife being unhappy
about the rain,” he says with a grin. That
led to the addition of shorts and T-shirts
to the range, plus more recently an
“activewear” brand called Zakti, which
encouraged more harmony at home.
He was also prompted to introduce a
pricier clothing range, spurred, in part,
by hearing parents at his daughter’s
school talk about buying their children’s
skiwear from him. Neale wanted the
mums and dads to buy their own gear
from him as well. He reckons it is working: “We’re slowly getting the parents to
leave their North Face jacket requirement at home and buy from us instead.”
Like all retailers, Neale has had to
adapt to structural changes. Rumblings
in the commercial property market, over
dependence on discounting and online
retailers have made life harder for traditional players.
Nowhere is the distress more evident
than in America, which has seen more
than 9,000 store closures this year,
according to Fung Global Retail & Technology. However, Neale is not discouraged. He has already opened 41 outlets in
America and Canada, and has even broken his policy of avoiding shopping centres. His philosophy: you get what you
pay for.
“I did a trip to Seattle and saw everything from malls that were clearly not
going to be there in five years, to the most
exciting, modern malls you could imagine,” he explains.
“If you want a rubbish mall you can
probably go in and pay no rent, but is that
where you want to be?”
Landlords are keen to attract established retailers, such as Mountain Warehouse, to help prop up struggling shopping centres. Yet the chief executive is
being smart. “If we are offered a deal,
we’ll look at it and try to understand what
we’re missing. If it looks too good to be
true, it probably is.”
The fallout from the Brexit vote has
also piled pressure on margins. Placing
bigger orders, altering some products
and sourcing more from Bangladesh has
helped, says Neale. It is hard to charge
more when customers expect a certain
price, he adds. “If you’ve got a jacket you
sell for £29.99, where do you go? You
can’t start selling it for £31.50.”
Opening more shops overseas provides some hedging. Neale is aiming for
300 international outposts, including
debuts in Holland and the Czech Republic, on top of the same number in Britain.
A recent scouting mission to Australia
and New Zealand suggested room for further bricks-and-mortar expansion.
However, he is quick to say that he
doesn’t feel under pressure. And if Neon
Sheep isn’t going to work, the signs will
soon be clear. “I always say, fail at some
things, but fail quickly, and don’t fail in a
spectacular way.”
THE LIFE OF MARK NEALE
Ursula Andress in Dr No
VITAL STATISTICS
Born: December 27, 1967
Status: married, with
a daughter and a stepson
School: Monmouth
University: read physics
at Balliol, Oxford
First job: labourer at
Llanwern steel works in the
summer before university
Pay: Worth £170m,
according to the Rich List
Homes: St John’s Wood,
northwest London, and
Hagley, Worcestershire
Cars: Tesla and old
Land Rover Defender
Favourite book: Animal
Farm, by George Orwell
Film: Dr No
Music: Fleetwood Mac
Gadget: iPhone
Last holiday: Ecuador and
the Galapagos Islands
Charity: Sreepur Village, in
Bangladesh, which helps to
educate children
WORKING DAY
Mark Neale is up at 7am to
take his teenage daughter
to school, and reaches the
London HQ of Mountain
Warehouse by 9am. Staff
drop in through the day to
discuss products and new
shops. He travels abroad for
work about six weeks of the
year, and generally shuns
evening engagements.
DOWNTIME
Neale and his family visit
their Worcestershire home
when they can. He may pop
into a couple of Mountain
Warehouse stores or Floral
Street, the perfume shop in
Covent Garden opened by
his wife, Michelle Feeney.
He is learning the piano
and likes walking the family
dog, a goldendoodle called
Jackson.
8
The Sunday Times December 17, 2017
BUSINESS
Freelancers in tax crossfire
HMRC’s crackdown on public sector contractors has the private sector in its sights, says Tommy Stubbington
S
teven Hepworth was not
planning to take four months
off. In April, the 39-year-old
consultant was midway
through a juicy public sector
contract when the county
council where he was working abruptly shifted the terms
of his employment.
Hepworth — who had been
taken on to assess the council’s entire
property estate and decide which buildings to sell — was told he was now an
employee instead of a freelancer. He had
no choice but to leave: he would be on a
lower rate of pay and would be putting
his coveted self-employed status at risk in
future public sector work. It was the end
of the summer before he found a new
project — he says he lost about £40,000 in
earnings.
“It did cause a strain financially,” he
said. “We had to borrow money from the
family by the end.”
Hepworth is part of a legion of selfemployed contractors caught up in a
government crackdown on “disguised
employment” in the public sector, which
has caused outrage among Britain’s IT
consultants, project managers and other
freelancers. The Treasury is targeting
contractors who set themselves up in
business through “personal service companies” and sell their services to the
public sector.
HM Revenue & Customs says many of
these freelancers should be considered
employees and on the payroll of the
councils and NHS trusts where they
work. Crucially, that means they (and
their “employers”) would pay more tax
for every pound they earn.
Previously, it was up to the contractors
themselves to declare whether or not
they were self-employed. Since April, the
burden has shifted onto the public sector
bodies to identify who their contracted
staff really work for.
HMRC says this change has added
90,000 people to the public payroll, raising an extra £265m in tax this year. But
individuals such as Hepworth claim they
are being incorrectly reclassified as
employees. The Association of Independent Professionals and the Self-Employed
argues that thousands of legitimate freelancers are being driven on to the public
sector payroll.
MICHAEL POWELL
office for a specific number of hours. Currently, he pays himself using dividends
from his personal service company,
which are taxed at a lower rate than a regular income. But the tax advantages are
not the main financial attraction — freelance work simply offers much higher
rates of pay. Hepworth estimates that
going on the payroll would cut about 30%
from his annual after-tax income of
The tax and national insurance paid
roughly £50,000.
on an employee’s £40,000 income
The legal definition of self-employment
is not straightforward, relying on case
law rather than statute. High-profile
tribunals involving firms such as Deliveroo and Pimlico Plumbers have recently
sought to determine whether staff are
self-employed contractors or employees.
In practice, not everyone can go to an
employment tribunal. When the new
The tax and national insurance paid
rules came in, some councils — such as
by an owner-manager on £40,000
the one where Hepworth was working —
simply said they were moving all their
external contractors on to the payroll.
Others have relied on an HMRC online
test. Candidates are asked 16 questions,
such as whether they must provide their
services in person or can send a substitute, and whether they enjoy holiday pay.
The questionnaire then spits out an
The amount of tax the Treasury will lose answer: you are self-employed, you are
by 2022 if freelance trends continue
an employee, or we are not sure.
A freedom of information request subThe issue is set to get much bigger: last mitted to HMRC by Dave Chaplin, who
contractorcalculator.co.uk,
a
month’s budget announced a consulta- runs
tion on extending the reforms to contrac- resource for freelancers, found the
tors in the private sector. If Philip Ham- online questionnaire is being used more
mond tries to fast-track the changes than 40,000 times a month.
Mark Groom, a tax expert at Deloitte,
across the economy as a whole, he could
face an even bigger backlash than he did said he had tested the online system by
after his abortive national insurance raid submitting examples of individuals who
would be determined by a tribunal to be
on the self-employed in March.
According to critics, Treasury bean self-employed, only to find them
counters run the risk of choking off a key declared employees. “The system is
source of flexibility in Britain’s labour clearly not working,” Groom said. “If an
market. After all, professional white- individual is running a consulting busicollar contractors are the fastest- ness and happens to land a nice project
growing part of Britain’s 4.8m-strong self- for a year, it doesn’t make him an
employed workforce. But the issue also employee.”
The result of the changes has been an
highlights how the tax system is struggling to get to grips with the rapidly exodus of contractors from the public sector, according to Ann Swain, chief execuchanging nature of work.
To the untrained eye, Hepworth cer- tive of recruitment trade body the Associtainly appears to be self-employed. He is ation of Professional Staffing Companies.
In October, Transport for London
commissioned to deliver specific projects
with a fee agreed up front, and has blamed a delay to upgrade work on the
worked for many different public sector Bakerloo Tube line on a shortage of
bodies. He does not have to turn up at the agency workers. The British Medical
SELF-EMPLOYED TAX
IN NUMBERS
£12,146
£7,358
£16bn
Freelancer Steven Hepworth walked out after being told he was employee
Association has labelled the tax changes
an “administrative disaster” for the
health service. Chaplin said that extending the rule changes into the private sector as soon as next year would result in
“an utter car crash”.
“You can’t tell firms the system is
changing and give them only a few
months notice,” he said.
The reforms may be controversial, but
the problem they are trying to address is
real. Because the self-employed pay lower
national insurance contributions, and the
“employer” pays none, their growing
numbers have left the Treasury facing a
black hole. Taxing self-employment at a
lower rate is set to cost the Treasury £16bn
by 2022, said Helen Miller of the Institute
for Fiscal Studies (IFS).
An employee earning £40,000 a year
will generate a total of £12,146 in income
tax and national insurance, according to
the IFS, while a company owner-manager
will generate only £7,358 — nearly £5,000
less. Looking at those figures, it is not surprising that HMRC wants to stop employers disguising their workers as contractors. The problem is, some genuine
contractors appear to be getting caught
in the crossfire.
“As with all anti-avoidance rules, this
reform is a blunt instrument,” Miller said.
“They can end up extending too far.”
To avoid an almighty row, she added,
Hammond should tackle the underlying
problem — the advantages the tax system
offers to self-employment. That way,
companies could pay a premium for freelancers where they genuinely value the
skills and flexibility they bring.
“In an ideal world, a pound of income
would be taxed the same whether it’s
earned by an employee or a selfemployed person. If there are types of
work that are only able to pay because of
tax breaks, the people in those jobs
should probably do something else,”
Miller said.
Eventually, Hepworth found a new
contract in the public sector that allowed
him to work for himself. Although he
enjoyed spending more time with his
wife and four young children, he was
relieved to start earning again.
“I spent most of my time building Lego
and dressing up as Batman,” he said. “It
was good fun, but financially it was very
stressful.”
9
The Sunday Times December 17, 2017
BUSINESS
S
enior managers at Airbus
were given an unusual task
during the summer. Bosses,
such as chief executive Tom
Enders and chief operating
officer Fabrice Brégier, were
asked by the board to take
part in a management assessment programme, run by
blue-chip headhunter Spen-
cer Stuart.
The purpose was to judge how each
individual would react to different scenarios, and test decision-making and
leadership qualities through a series of
probing interviews.
It was the latest sign that all is not well
at the top of the European aerospace
giant. For months, the company had
been rocked by accusations of middlemen being paid to win export deals, raising tensions on its board. The warts-andall assessment was intended to ascertain
whether senior managers played any role
in creating risks.
Last week, that tension spilled into the
open with a boardroom clean-out that
threatens to alter the course of the plane
maker, which employs 15,000 people in
Britain. The board, led by chairman
Denis Ranque, rejected a bid by Brégier
to replace Enders. Instead the Frenchman, once seen as the natural successor
to Enders, was shown the door. Brégier
will leave in February with a two-year
payoff. Enders, a 58-year-old German
ex-paratrooper, leaves in April 2019.
The sweeping changes throw open the
door to a new generation of managers,
and raise the spectre of the pan-European company becoming, once again, a
political football. Yet sources said the
clear-out also indicates the board’s determination to tackles the challenges Airbus
faces — and avoid politics.
“The board is all over the issue. This
addresses the political balance,” said a
source close to the board.
Airbus’s problems are legion. It has
been trailing arch-rival Boeing this year
in the race to win orders from airlines.
Meanwhile, its A400M heavy-lift military
aircraft has been dogged with problems.
Production of the A380 superjumbo, the
world’s biggest passenger plane, has
slowed to a trickle amid a dearth of
orders, and many think it is a question of
when, not if, the project is killed off.
Meanwhile, Brexit threatens its trading links with Britain — including the status of its Broughton wing factory in north
Wales. Then there is the issue of European defence co-operation, with Airbus
trying to lead a consortium to build a
next-generation fighter jet, but battling
the ambitions of Dassault of France.
Now it must manage a deep management overhaul as well. Airbus is losing its
“legendary” aircraft salesman, John
Leahy, at the end of next month. After 33
years and more than 16,000 plane sales,
Leahy will be replaced by Eric Schulz,
head of civil aerospace at Rolls-Royce.
Airbus’s pilots
crash and burn
A shake-out at the top of the plane maker is just the
start of tackling its troubles, writes John Collingridge
Brégier as head of commercial aircraft,
and could also be an option for the top
job. Or the company may go outside, and
attempt to prise Philippe Petitcolin away
from French engine maker Safran.
Still, observers reckon chairman Ranque deserves credit for how he has handled a complex and sensitive situation.
“The board is managing this much better
than they would have done a decade
ago,” an analyst said. “They did not
accept Brégier’s fait accompli.
“The big challenge will be when the
French government put forward their
favoured candidate. This is going to test
the board in a way they have not been
tested for some considerable time.”
Ever since its creation in 1969 as a
Franco-German consortium to take on
15,000
The number of
people Airbus
employs in Britain
£1.9bn
The amount that
BAE was paid in
2006 for its 20%
stake in Airbus
The future of the
A380 hangs in
the balance
Corruption investigations by the Serious Fraud Office and France’s Parquet
National Financier centre on allegations
of fraud, bribery and corruption in Airbus’s main passenger aircraft division
through its use of middlemen to win
orders. The SFO launched an investigation last year after the company admitted
it failed to notify export credit authorities
about its use of agents or middlemen on
some deals. A deferred prosecution
agreement with the SFO — similar to the
deal struck by Rolls-Royce in January —
could cost Airbus hundreds of millions of
pounds in fines.
Enders — the former head of Airbus’s
defence division — has also been dragged
into an investigation by Austrian prosecutors over a €2bn (£1.76bn) purchase of
Eurofighter jets in 2003. The company
has insisted that the Austrian allegations
are “completely unsubstantiated”.
There is also a separate SFO investigation over a contract won by a subsidiary
in Saudi Arabia.
The management changes threaten
more disruption at a crucial moment and
could give Boeing an edge in the dogfight
for orders. Airbus is busy ramping up
production of its A320 single-aisle jet and
A350 twin-aisle airliner.
A power struggle between its two big
beasts had been increasingly evident at
Airbus in recent months. Enders’ suggestion earlier this year that he would seek a
third three-year term as chief executive
had collided with Brégier’s ambition to
replace him. During the summer, Enders
then took direct responsibility for aircraft
sales, cutting out Brégier.
Sources said Enders’ appointment in
2015 of a general counsel, John Harrison,
has also been a key factor in the frayed
relationships. The Briton, a former Clifford Chance lawyer, has taken to his role
of cleaning up the company with gusto —
drawing criticism in the French media
and clashing with Airbus executives.
In a statement on Friday, Brégier, 56,
said the “time is right to pursue other
opportunities outside”. Enders said he
understood the decision: “Frankly, I
would not have done differently.”
The race is on to find a replacement for
Enders. Schulz is seen as a possible a contender. Guillaume Faury, the boss of Airbus’s helicopters division, will replace
The
board is
managing
this much
better
than they
would
have done
a decade
ago
the might of the American aerospace
giants Boeing, McDonnell Douglas and
Lockheed, Airbus has wrestled with politics. Britain refused to take part in the
initial consortium, scarred by the
ballooning cost of the Anglo-French Concorde project, which cost the UK taxpayer at least £1bn for only 14 sales.
Yet while the original consortium went
ahead without Britain, it needed Britain’s
expertise in wings. Hawker Siddeley, the
renowned plane maker, was brought in to
build them for Airbus’s first design, the
A300, at its Broughton site and has since
supplied wings for almost every plane
built by the Toulouse giant. Britain eventually bought into Airbus in 1979 when
British Aerospace (now BAE Systems),
Hawker Siddeley’s successor, took a 20%
stake. BAE sold the stake in 2006 for
an it was expecting
£1.9bn — much less than
nfluence.
— reducing Britain’s influence.
us has taken big striAfter Enders. Airbus
des to reduce politicall interfernce.
The French and German governold 11.1% of Airbus,
ments, which each hold
last week insisted at a joint press conference there would be no return to governwever, French presment board seats. However,
cron said it would
ident Emmanuel Macron
remain “very vigilant”” over the manageeries analyst
ment change. Jefferies
Sandy Morris said: “The worst
en at Airthing that could happen
g 12-24
bus in the coming
nce of
months is for evidence
ions
political considerations
coming to the fore.”
Baling out:
Airbus chief
executive
Tom Enders
TOM STOCKILL
10
The Sunday Times December 17, 2017
BUSINESS
Silicon Valley suffers
an attack of conscience
Their riches safe, the digital elite are worried, says Danny Fortson in San Francisco
A
t a retreat set amid towering
redwoods near Santa Cruz,
California, a gaggle of techies
are searching for their souls.
The event, a “mindfulness
weekend for the tech
immersed”, has been organised by 1440 Multiversity, a
new resort cum self-help refuge co-founded by Scott
Kriens, chairman of the $11bn (£8.2bn)
networking giant Juniper.
Ninety miles down this ruggedly beautiful stretch of the Pacific coast, others
are today beginning to explore the “energetics of consciousness” through a week
of “lectures, attunements and energy
activations”. The venue is the Esalen
Institute in Big Sur, which began as a
hippy hideaway in the 1960s. It has been
overhauled by new director Ben Tauber,
a former Google product manager, to
help techies get in touch with a “dawning
consciousness” about the frighteningly
powerful tools they have helped to build.
Esalen and 1440, which gets its name
from the number of minutes in a day, are
the softer side of a pang of conscience rippling through Silicon Valley. The awakening is being led by some of the principal
architects of the internet as we know it
today. Last week Chamath Palihapitiya,
an early Facebook executive who made
millions from stock options before he
exited in 2011, became the latest to sound
the alarm. He told an audience at Stanford Business School that Facebook was
“ripping apart” society and that his children “are not allowed to use that shit”. He
added: “I feel tremendous guilt.”
Palihapitiya’s comments, which soon
spread around the world, came hot on
the heels of a bashing from Sean Parker,
who was Facebook’s first president. The
billionaire decried the platform as a tool
designed to “exploit a vulnerability in
human psychology”, adding: “God knows
what it’s doing to our children’s brains.”
The self-flagellation of those who
minted vast fortunes has been met with a
jaundiced eye from some. Om Malik, a
blogger and investor, wrote after Parker
turned on his own creation: “Like the
robber barons, remorse comes to Silicon
Valley after making fabulous fortunes.”
There is reason for scepticism. This
may indeed go down as the year that the
tide of public sentiment began to turn
against Big Tech. From Russia’s weaponisation of Facebook and Twitter to spread
fake news, to Google selling ads alongside
extremist content, to revelations of the
industry’s blasé attitude towards sexual
harassment, Silicon Valley has lost its
progressive “don’t be evil” sheen.
It is unclear, however, whether tech’s
leading lights are genuine in their misgivings, or simply preaching to a suddenly
angry choir. The outpouring has coincided with a public backlash, typified by
moves at Westminster to introduce a
code of practice for websites to ensure
age-appropriate design for children. In
America, Facebook, Google and Twitter
were hauled before Congress to explain
why they had allowed Russia to meddle in
elections in the West.
What is clear is that little perceptible
action from the industry has accompanied the harsh words. There is no grand
plan to fund an anti-Facebook.
Palihapitiya, for example, runs Social
Capital, a firm that aims to “advance
humanity by solving the world’s hardest
problems”. It has invested in businesses
such as Sprig, a now defunct meal delivery app, and Glooko, which has developed software to help diabetics control
the condition. Some of its 50-plus portfolio companies have laudable goals, but
none threatens to upend the social media
landscape. The Parker Foundation,
which the Facebook co-founder and his
wife Alexandra set up with a $600m
donation in 2015, focuses on cancer,
allergies and other medical issues.
That is not to say nothing is changing.
Esalen and 1440 are part of a broader, if
still small, movement of techies who are
trying to atone. Tauber told The New York
Times: “The chief executives, inside
they’re hurting. They can’t sleep at night.”
Tristan Harris, a former Google design
ethicist, left the search behemoth last
year to devote himself to Time Well
Spent, which he created to raise awareness of the “attention-extraction” platforms — Snapchat, YouTube and so on —
that he claims are “hijacking society”.
He is not convinced there is a genuine
desire to overhaul how the giants of the
internet operate, as doing so would
undermine some of the world’s most
powerful business models. Google and
Facebook together capture more than
95% of incremental ad revenue online.
Harris, who advocates “humane”
design of technology, said: “Facebook’s
core business model is addiction. If Facebook were really serious about not optimising for addiction, they wouldn’t send
dozens of ‘come back’ emails, as they do
any time you don’t use their service.”
Scott Kriens has had a front seat to the
unfolding dynamic. He was chief executive of Juniper Networks for 12 years
before becoming chairman of the board.
Three years ago, he and his wife Joanie
bought 75 acres in the mountains to set
up 1440 Multiversity. It has walking trails
and organic food as well as workshops
with titles such as Disconnect to Connect.
Kriens said they created the “immersive learning centre” after beginning to
ponder deeper questions. “We’ve got the
most powerful communications technology in history. We now need the same
kind of power brought to the human connection as we have to the online connections around us,” he said.
TIMOTHY ARCHIBALD
‘I feel tremendous guilt’: Chamath Palihapitiya, who helped Facebook to conquer the world
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Business For Sale
Who profits
from mania
for bitcoin?
Some investors are
cashing in on the
cryptocurrency’s
meteoric rise
without actually
buying the stuff
In a gold rush, the surest way
to a fortune is to sell shovels.
And so it is with the
cryptocurrency craze, writes
Danny Fortson.
Companies ranging from
online exchanges that
facilitate the trade of bitcoin
and other currencies, to the
makers of “digital wallet” USB
drives, are raking in
extraordinary sums amid the
mania set off by bitcoin’s
18-fold rise this year.
Consider Coinbase. The
exchange, which raised more
than $200m (£150m) from
venture capital firms such as
Andreessen Horowitz and
Draper Fisher Jurvetson,
revealed this month that peak
trading volumes have spiked
40-fold. This is significant.
Coinbase claims to have more
than 10m customers and
every transaction they make
incurs a fee: 1.5% for standard
buy and sell orders, 4% if you
use a credit card. The startup’s app topped Apple’s most
downloaded charts this
month.
Cameron and Tyler
Winklevoss, the twins who
famously sued Mark
Zuckerberg over the founding
of Facebook, are thought to
be among the world’s largest
individual holders of the
currency. They also founded
Gemini, the exchange
underlying the first bitcoin
futures contracts, launched
last week by Chicago’s Cboe.
Futures trading has so far
been tepid since trading went
live last Sunday. Bitcoin bulls
predict, however, that the
launch will lead to a flood of
cash from institutional
investors who previously
stayed away because they are
restricted to regulated
securities.
For every investor who has
labelled the digital currency a
fraud or a bubble, there is
another who claims it has
barely scratched the surface.
Chamath Palihapitiya, an
early Facebook executive and
now boss of venture firm
Social Capital, predicted last
week that the value of one
bitcoin would hit $1m in 20
years. The Winklevoss twins
refer to it as “gold 2.0”.
At the time of writing, one
bitcoin was worth $17,787, up
from $780 this time last year,
while ethereum, the second
biggest cryptocurrency, has
exploded to $697, up from $8
last December.
As values soar, the
business of securing the
digital loot has taken off. The
safest approach is to move
your digital wallet, a
password-protected address
where cryptocurrency
resides, off the web and onto
a mobile wallet — out of reach
of hackers. These are, in
effect, secure thumb drives.
This approach is
increasingly popular amid
almost weekly reports of
multimillion-pound hacks.
This month saw one of the
largest, as criminals stole
about $64m from NiceHash, a
bitcoin mining company.
The most prominent
maker of hardware wallets is
Trezor, based in Prague. The
device, which retails for
about £130 on Amazon, holds
cryptocurrency on a
Pin-protected device. It then
generates a random chain of
24 words that will allow
access if it is destroyed or the
owner forgets the Pin. Enter a
wrong Pin and the wait time
for another login attempt
doubles. Get it wrong a
couple of dozen times and
you will be waiting decades.
Ledger, a Paris-based
developer, raised $7m in
March to produce a rival
wallet. Among its backers is
Digital Currency Group
(DCG), the holding company
of Barry Silbert, a key player
in the crypto world. In
addition to Ledger, DCG owns
Coindesk, the online trade
magazine, and Grayscale,
creator of ethereum and
bitcoin investment trusts.
If you really want to take a
punt on bitcoin, here’s how,
Money, page 15
PODCAST
TIME TO
REVISIT
DANNY’S
CRYPTOCURRENCY
SPECIAL
THESUNDAYTIMES.CO.UK/
DANNYINTHEVALLEY
11
The Sunday Times December 17, 2017
ENTERPRISE
Not in front of the children: why
I put success before a family
Luke Johnson Animal Spirits
T
here is no more sombre enemy
of good art than the pram in the
hall, wrote critic Cyril Connolly.
But does the same
uncomfortable aphorism apply
to entrepreneurs? Will having
children early undermine their
business progress?
I deliberately avoided marrying and
starting a family until I was in my 40s.
For the first two decades of my career
I was pretty selfishly immersed in my
work, and did not want the distractions
of being a husband and father. It meant
I could take significant risks, because I
did not have dependants. I spent all the
time I wanted in the pursuit of success,
never worrying that I was neglecting
loved ones.
That has now changed — I took the
view that after two decades of striving,
I could afford to settle down. I also
realised belatedly that business wasn’t
everything, and that a life spent
exclusively chasing material prizes was
a hollow one. But I still don’t regret
delaying fatherhood. I may not live to
see grandchildren, but I think if I had
married and started a family in my
twenties or even early thirties, then one
of two things would probably have
happened: I would have been a largely
absentee father, or I would have
divorced. Of course, I write from
personal experience as a man — female
entrepreneurs typically have more
difficult compromises to make.
It is undoubtedly true that society
expects dads to be much more involved
in the upbringing of their offspring than
used to be the case. Generally,
contemporaries of mine talk of their
father as a distant figure to them when
they were growing up. That level of
parental participation would be seen as
unacceptable now.
I seem to recall my father went to the
secondary school that I and my three
siblings attended just once — to deliver
a speech. I go to one of our three
children’s schools more every month
than he did over 20 years. I do not resent
my dad for that: he was incredibly
focused on being a productive worker —
and the culture was entirely different
then. Even so, I know I am less active
than many of the other dads who are
much more engaged in the everyday
lives of their children.
There is an argument that becoming
a parent makes a young adult more
responsible. Keeping a roof over your
family’s head is a pretty powerful
motivator for any entrepreneur.
I can recall the story of how a young
worker came to see the tycoon for whom
he worked one day and said that he was
leaving to start a business. The tycoon
asked if the would-be founder had a
large mortgage; the answer was yes.
“Good” said the tycoon. “You’ll be a big
success then.” The tycoon knew that the
pressure to meet that financial
obligation would act as a vital spur: the
would-be founder could simply not
afford to fail.
In truth, I would say a good
proportion of self-made captains of
industry take the path of marrying fairly
young — domestic stability and spousal
support can be wonderfully fortifying to
a demanding career.
I see the act of building a business as
an expression of deferred gratification.
Often founders earn less than they could
working for someone else in the early
years, but they are accumulating value
over the longer term, as they grow
capital with their ownership of an
enterprise.
Typically, start-ups cannot pay their
owners much salary initially — a fledgling
company needs all its retained profits to
invest if it is to grow. But sacrificing
income can be hard if you want the best
for your family.
I know plenty of bright employees
who have the talent and ambition to be
entrepreneurs, but feel stuck on the
treadmill of monthly outgoings such as
school fees and mortgage payments,
which must be paid, come what may. So
they are trapped, unable to take the
plunge and risk their family’s welfare to
chase the dream of being their own boss.
I am shocked at how much some
founders expect to be paid from the very
beginning. They feel an overriding need
to maintain their lifestyle, and unable to
compromise on their pay expectations,
despite their salary contributing to a big
initial overhead. I have rather a tough
perspective on this conundrum — to me
it is almost a moral imperative. Start-up
entrepreneurs should generally adopt a
frugal attitude and watch costs like
hawks, since most early stage firms make
losses. Trade-offs are part of the
package.
I want to back very hungry founders,
obsessed about developing their
business and growing shareholder
wealth through capital gains. Big salaries
are for corporate fat cats: entrepreneurs
get freedom, independence and
ownership.
Luke Johnson is chairman of Risk Capital
Partners and the Institute of Cancer
Research. luke@riskcapitalpartners.co.uk
@LukeJohnsonRCP
VICKI COUCHMAN
This is the
age of silver
start-ups
With millions freed from pension pots, the
over-55s can be a generation of founders
PETER
EVANS
F
@peterevans10
or the past two years, anyone in
late middle-age with a decent
retirement plan has been able
to buy a Ferrari. However, the
pension freedoms — which
allow over-55s to withdraw
their pension pot as a cash
lump sum — have not, as some
feared, produced an ageing
generation of supercar owners.
Instead, people nearing the twilight of
their working lives are doing something
different with their pensions, although it
is potentially just as risky as splurging it
all on a mode of transport: thousands of
them are starting their own businesses.
A 2015 study by insurer Axa revealed
that more than 500,000 over-55s were
considering taking advantage of pension
freedoms to launch a business. That
potential has turned into reality: Clifton
Asset Management, a financial adviser,
estimates that of the £11bn of pension
funds withdrawn since April 2015, £1bn
has been used for business funding.
Most of those who take the drawdown
option to start a company are below 65
and have a decade or more of working life
ahead of them. The reasons range from
necessity — workers who lose corporate
jobs in middle age can find it hard to bag
another at a similar level — to keeping
boredom at bay. Working on a business is
more exciting than daytime TV.
These silver start-ups are undoubtedly
good news, bringing wisdom and
patience to a world not renowned for
either. Yet there are risks, especially if
founders think they will be able to relax
in semi-retirement and expect to run a
successful business.
Rob Shreeve founded private members’ club One Alfred Place in central
London 11 years ago, when he was 56. He
left behind him a corporate career,
including a decade as managing director
of the publishing arm of Virgin Media, to
start raising cash for the venture. “Of
course it’s a risk,” said Shreeve. “Nobody
ever knows for certain if a business is
going to be a success.”
TEACH YOURSELF TO . . .
WRITE AN EFFECTIVE
VALUES STATEMENT
Defining what a company
does and what it stands for is
a crucial phase in the life of
a start-up — but it can prove
a philosophical challenge
for entrepreneurs.
Businesses with a defined
purpose outperform the
market and are three times
more likely to attract and
retain staff than those that
do not, according to a 2013
report by the consultancy
Energy Project.
“I often talk to
Next year, Shreeve will launch an
online platform for over-55s looking to
start their own businesses. It will provide
information on how to change careers,
acquire new skills and allow them to connect with other experienced people.
“One of the features of older entrepreneurs is that you’ve got networks and
contacts,” he said. “You also have the
confidence to realise that you’re not a
fool just because you don’t know something.”
Many of his potential customers will
have access to previously unavailable
cash to invest in their start-ups if they
choose to exercise their pension freedoms. Doing so has clear benefits: an
immediate injection of funds, 25% of
which is tax free.
Yet there can be drawbacks. Going
over the 25% limit incurs standard rates
of income tax. That could mean a levy of
up to 40%, in effect turning the pension
drawdown into a highly expensive business loan. That has not stopped many
older entrepreneurs from taking the cash
to start a business, providing an unexpected windfall for the government.
The pension freedoms have raised five
times more tax for the Treasury than was
initially forecast, according to official figures. In the first full year, withdrawals
pulled in £1.5bn, dropping to an estimated £1.1bn last year.
There are ways to avoid a hefty tax bill.
Instead of using a drawdown to fund a
start-up, it is possible to borrow against a
pension. So-called pension-led funding
invests the personal pension of a business owner into the business via a vehicle
called a small self-administered scheme.
In effect, it transfers the pension into
another scheme and then makes a loan,
meaning there is no tax to pay. The catch
is that if the business fails, there will be a
shortfall in the pension pot.
Adam Tavener, chairman of Clifton
Asset Management, said aspiring start-up
founders over the age of 55 were being
poorly advised on their options. Pension
Wise, the government’s free advice service, does not currently distinguish
between business owners and standard
employees when taking calls. It means
that those looking to use their pension to
fund a business are not made aware of
more tax-efficient alternatives to drawing
down their entire pots.
“There is a danger that this lack of
understanding has the potential to turn
into a financial scandal,” said Taverner.
entrepreneurs pitching their
own businesses,” said Luke
Lang, co-founder of
crowdfunding website
Crowdcube. “I find the way
in which they speak about
the values that guide their
business is an indicator of
their future successes.”
However, articulating a
vision can take time. It can
take a degree of success so
that you know what it is that
your business does well.
“Values are rarely set in
stone from the moment a
company is founded,” said
Lang, “but very quickly, as
you start growing a business
beyond your initial
founders, you need to have a
Begin with
70 shades
of nails
strong core of values to
orient around newcomers
and keep everyone on the
same page.”
While leadership is key,
managers should not just
dictate values from above,
but consider the views of
employees, investors and
customers. “When it comes
to nailing down the
principles that guide you as
a business, you need to be in
conversation with your
entire team,” Lang said.
It is also important for
entrepreneurs to think
carefully about drawing up a
mission statement, and stick
to it. “Once your values are
set, you can’t just change
them every quarter or year,”
said Lang. “You need to have
a set of values that will guide
the business through the
next five years at least.”
A values statement needs
to be concise. “The last thing
you want is a long-winded
set of values that are difficult
to remember,” Lang said. “It
shouldn’t be a riddle.”
Values must be alive and
present to employees and
management. At
Crowdcube’s Exeter offices
there are murals with
captions such as “disrupt
and conquer” and “be
entrepreneurial, you’ll
enjoy it”.
Liam Kelly
HOW I MADE IT
THEA GREEN
FOUNDER OF NAILS INC
Thea Green’s first foray into
the world of beauty products
came when, at just 7, she
crushed dry rose petals in
water and added a dash of
her mother’s bath products.
“I added a bit of actual
perfume because I knew
mine didn’t smell quite good
enough,” said the 41-year-old.
Green’s mother allowed
her to sell her goods from
their Merseyside home.
“From a very young age I
liked the idea of being able to
earn my own money.”
That early experience
eventually led to the launch
of Nails Inc when she was 23.
The business, which makes
nail polish and offers
manicures and pedicures,
made a pre-tax profit of
£181,500 last year on sales of
£15.6m. It employs more than
300 people and operates in
about 60 stores.
After opening her first
shop on South Molton Street,
central London, Nails Inc
concessions are now in
Selfridges, Harvey Nichols
and Fenwick stores across the
country. The polishes can
also be bought in Boots and
from Cult Beauty.
ANGEL Q&A
SUSAN SIMNETT
Every week we talk to a
business angel, one of the
early-stage investors who
collectively inject £1.5bn
a year into British start-up
companies
Green moved into nails
after she became bored with
the shops stocking a “sea of
classical nude” shades, and
the expensive French
manicures that dominated
the high street.
“There was nobody
doing fun, fashionable
colours in a quality way that
combined service and
product,” she said.
Inspiration came from a
trip to New York, where she
was surprised by the number
of nail bars. She decided to
import the idea to London
and combine selling
fashionable polishes with
affordable treatments.
To get the company off the
ground in 1999, Green
teamed up with a friend,
MT Carney, who worked in
advertising. They raised
£250,000 from private
backers, who remain
shareholders today. Carney
left the business in 2001 to
move to America.
Green’s goal was to create
a “sweet shop of colour”, in
contrast to traditional nail
polishes. The initial range
had 70 shades. She named
the vibrant colours after
places in London, with a
reflective silver King’s Cross,
a bright red West End and a
baby blue Portobello Terrace.
She knew she was on the
right track when her first
Nails Inc concession opened
Susan Simnett worked in
advertising and for a vintage
car auctioneer before
establishing a film
production company.
The 56-year-old started
investing two years ago and
has backed companies such
as The Dots, a jobs site for
the creative industries, and
Lexoo, a legal tendering
platform for small
businesses. She normally
invests £10,000 to £20,000.
Eyes on the prize
I look for visionary leaders.
The founders I invest in
must have a clear view of
what they want to achieve
and how they want to
Thea Green’s first foray,
into nail care, has been
followed with a range of
make-up products
From a
young age I
liked the idea
of being able
to earn my
own money
achieve it. They must also be
able to listen.
Hands-on investing
I started trading on the stock
market in my spare time, but
I wanted to get involved at
the early stage of companies.
It beats just looking at a
computer screen and
trading figures.
Lessons learnt
Curb your enthusiasm. I’ve
invested in seven companies
and haven’t got to an exit
yet. These things take time.
Wish list
I’d like to see someone take
blockchain technology and
next to Chanel in Fenwick on
Bond Street. But she knew
she would have to learn from
more established rivals to
make it successful.
“I was beyond excited but
realised these people knew
how to do something we
didn’t,” she said.
Green hopes to repeat with
make-up what she has done
with nails. Last month Nails
Inc launched a sister brand,
Inc.redible, which makes a
range of face masks, lipsticks
and highlighters.
Green was born in
Hoylake, Merseyside, and
studied at Birkenhead High
School and the London
College of Fashion. She went
to work as a fashion editor at
Tatler magazine after
graduating, and juggled the
day job with running Nails Inc
for the first six months of
business.
She lives in Chelsea, west
London, with her husband,
Nick, who runs an online
printing company, and their
children Charlie, 13, Harry, 11,
and Allegra, 8.
Entrepreneurs should not
get hung up on being
revolutionary, advised Green.
“It’s not about reinventing
the wheel — I didn’t invent
nail polish or manicures.
“It’s just about finding that
little space where it could be
done better.”
Liam Kelly
apply it to the creative
industries. It could simplify
the payment system and
compensation for creatives
who work as freelancers.
They can get lost in the
corporate world. Blockchain
is so disruptive, but it will
come through in other
industries before it hits the
creative world.
Wish I saw more . . .
Ideas that feel different,
rather than ones that will
make life a little bit easier
until something else comes
along. There are too many
consumer aggregator sites,
for example.
Peter Evans
12
The Sunday Times December 17, 2017
BUSINESS
Andrew Lynch
Who’s Who overtaken by events
After appearing on the
honours list, having an entry
in Who’s Who is the next best
seal of approval. So it’s a
shame for former Rio Tinto
finance chief Guy Elliott that
he has finally made the grade
at such a difficult time.
In October, the Old
Harrovian and his former
boss, Tom Albanese, were
accused by the US Securities
and Exchange Commission
of ignoring accounting
standards and misleading
investors. The claims
concern the value of coal
deposits in Mozambique that
JUST SAYING . . .
We are living
in an age of
enormous
disruption
Rio Tinto bought for $3.7bn
and later sold for $50m.
Elliott, 61, and Albanese, 60,
deny any wrongdoing.
Unfortunately, Elliott’s
Who’s Who debut shows him
as a non-executive director at
Royal Dutch Shell and a
member of the Takeover
Panel. He has left both posts.
The latest edition’s other
newbies from the business
world include: Enterprise
Nation founder Emma Jones,
45; BuildPath chief executive
Alex Depledge, 36; and Alice
Bentinck, 31, co-founder of
Entrepreneur First.
Heather McGregor, 55,
the headhunter who
moonlighted as columnist
Mrs Moneypenny, is
included having gone legit as
executive dean of Edinburgh
Business School at
Heriot-Watt University.
Newly knighted Sir John
Timpson, 74, of the
ubiquitous keycutters and
shoe-fixers, makes the cut —
seven years after his ex-MP
son Edward, 43. Ian Taylor,
61, who runs Vitol, and Pret
A Manger boss Clive Schlee,
58, are in too.
charity Room to Read.
There’s Grandma Sally’s
sweet and sour meatballs
from Jonathan Sorrell, the
hedge fund’s president, and
Mamma’s new year honey
cake from chairman Lord
(Ian) Livingston.
It’s hard to ignore chief
investment officer PierreHenri Flamand’s fried egg,
though. What does it tell us
about the man’s style?
Big Jim, you got
me on my knees
Jim Ratcliffe is not one to be
fazed by a cracked pipe.
In spite of a little local
difficulty with the Forties oil
pipeline from the North Sea,
the Ineos boss pushed the
boat out at his Knightsbridge
headquarters last week to
FUNNY BUSINESS
I am grateful to my colleague
David Smith for revealing on
page 4 the story behind the
name of economics
consultancy GFC, which has
advised Labour to move the
Bank of England to
Birmingham. The inspiration
was Gillingham Football
Club. And there was me
worrying that it stood for
Global Financial Crisis.
andrew.lynch@
sunday-times.co.uk
Time to be charitable. Man
Group has produced a global
recipe book, Man Cooker,
written by its staff to help the
DATABANK
briefly touched 700p. At the
end of last week, you could
pick them up for less than
180p. But no sensible investor
(or motorist) navigates by
looking in the rear-view
mirror. The question now is
this: have the shares become
temptingly cheap, or is the
current price merely a staging
point on a continuing
downward spiral?
One has to feel some
sympathy for Walsh and his
colleagues. When he took the
chief executive’s job in 2014,
he inherited a business with
too many tired and tatty
stores. Sprucing them up and
ensuring that maximum use
is made of space takes time,
costs money and brings
disruption.
Also, Carpetright’s figures
for the six months to the end
of October showed the
impact of clearing out beds
You could call it sensible
realism. Less kindly, you
could say it was stating the
obvious. But when Wilf
Walsh, Carpetright’s chief
executive, delivered
lacklustre interim results last
week, he declared: “When
wage inflation fails to keep
pace with RPI, there has, at
some stage, to be a tipping
point when customers
tighten their belts.”
Furthermore, with
uncertainty surrounding
Britain’s relationship with the
EU — not to mention our
economy and, indeed, the
government — “the consumer
market has remained volatile
and unpredictable”.
All that is indisputably
true. What is also
indisputably true is that
Carpetright’s shares have
performed abysmally over
the past few years.
In September 2013, they
SIGNALS
AND NOISE . . .
Send your letters, including
full name and address,
to: The Sunday Times,
1 London Bridge Street,
London SE1 9GF. Or email
letters@sunday-times.co.uk
Letters may be edited
Tech Nation will spread its
wings to keep Britain ahead
I wish to correct a few errors
in your article “Why techies
don’t want to be told what to
do by London”, last week.
You wrote that Tech City
UK has yet to “prove its
worth”. An independent
evaluation last month shows
that the organisation has
produced £6 of benefit for
every £1 invested, creating
more than £11m gross value
added in two years just from
its business programmes, and
that “over three-fifths of
Digital Business Academy
survey respondents have
progressed with a business or
business idea, progressed in
their digital career, or started
their digital career”.
You also state that Tech
North is a “sister project” that
would be “subsumed” by
Tech Nation. Tech North has
always been a regional arm of
Tech City UK, never a
separate legal or operating
entity, and it is inaccurate to
portray it as such.
From April 2015 to March
2018, Tech North has had
dedicated funding of £2m a
year, administered via Tech
City UK, to focus on growth in
tech hubs across the north.
Under the new Tech Nation
banner, the activity of the
Forty-five years ago, Idi Amin
expelled the Asians from
Uganda — and they became
Britain’s great immigration
success story. Now, Yasmin
Alibhai-Brown looks back
to 1972 and ask whether
the Ugandan Asians were
also to blame.
MAGAZINE, PAGE 30
TWITTER POLL
Yes
No
18% 82%
Is the Bank of England
right to lose its Old Lady
of Threadneedle Street
moniker and go
genderless?
@ST_Business
northern team will continue,
but they will expand their
remit to scale programmes
across the country.
Digital entrepreneurs are
not hemmed in by borders.
Tech Nation is about creating
a national network of highgrowth digital businesses no
matter where they are, so we
can retain the UK’s crown as
Europe’s tech leader.
MB Christie, chief operating
officer, Tech City
Carpetright
600p
500
400
300
200
100
2014 2015 2016 2017
Source: Thomson Reuters
no one was keen to buy. They
are being replaced by a new
range that, Carpetright
hopes, will be more attractive
and available in stores for the
big selling season after
Christmas. Most damagingly,
Carpetright’s stores on the
Continent faced intense
competition from rivals,
which clobbered margins. Its
European operation was in
the red in the half-year.
The good news is that the
British part of the business —
about four-fifths of the total —
has seen like-for-like sales
inching up. In the six weeks
to last weekend, they
accelerated to 1.4% — still
significantly below the rate of
inflation, but on the right side
of zero, at least.
But where from now? On
many measures, the shares
look dirt cheap. Depending
on which analysts’ numbers
you believe, they are on a
meagre price-to-earnings
ratio of anything between
10.8 and 13.3 for the current
year, and may even drop
below 10 for the 2018-19
financial year.
Cheap? Yes, but there are
just too many headwinds and
— as Walsh concedes —
uncertainties ahead to make
Carpetright attractive. Avoid.
FTSE 100
7,490.57
20,048.61
96.61
1.31%
H:7,599.0
L:6,925.9
FTSE 250
56.07
0.28%
H:20,491.4
L:17,620.8
DOW JONES
24,651.74
322.58
1.33%
THE ECONOMY
NASDAQ
6,936.58
96.50
1.41%
H:6,945.8
L:5,371.9
7,400
H:2,679.6
L:2,233.6
12-month high: $1.37
low: $1.20
7,200
EURO
EUR > GBP
7,000
6,800
D
J
F
M
A M
J
J
A
S
O N
Source: Thomson Reuters
RISERS
Lonmin: 83.8p, U 43.2% on takeover
deal Interserve: 83.5p, U 32% on
lending agreement Games Workshop:
£25, U 19.7% on soaring profits
Zotefoams: 469.5p, U 12.4% on Nike
tie-up Vedanta Resources: 723p,
U 13.2% on sentiment
FALLERS
Luceco: 128p, V 43.9% on accounting
blunder SDL: 348p, V 26% on profit
warning HSS Hire: 25.5p,V 20.9% on
strategic review Cambian Group: 160p,
V 17.6% on care home allegations
Capita: 404.4p, V 16.8% on fewer
contracts
FTSE EUROFIRST
1,528.26
3.11
0.20%
H:30,199.7
L:21,488.8
H:1,564.8
L:1,407.4
SHANGHAI
3,266.14
SENSEX
33,462.97
CAC 40
5,349.30
ALL ORDS
6,087.10
49.79
0.92%
DAX
13,103.56
H:23,382.2
L:18,224.7
Consumer prices index
current rate
CPI including housing
V 0.01
23.86
0.73%
NIKKEI
22,553.22
257.86
1.13%
$1.33
208.26
0.73%
S&P 500
2,675.81
24.31
0.92%
DOLLAR
USD > GBP
FTSE 100
7,600
HANG SENG
28,848.11
H:24,688.6
L:19,677.9
Bitcoin may be first, but it’s
not guaranteed to last
Cryptocurrencies entered the
public domain with a bang
after bitcoin’s price gains.
Much comment has drawn
parallels with the dotcom
bubble of 1999-2000 (Danny
Fortson, Niall Ferguson, The
Sunday Times, last week).
Few commentators push
the parallel to its logical
conclusion. In 1999, the
internet’s subsequent
extraordinary growth could
scarcely be imagined, nor the
profits and valuations of
today’s giants. Yet anyone
who invested at the time was
practically guaranteed to lose
a lot of money.
The leading platforms,
AOL and Yahoo, worth a total
$300bn in 1999, were
eventually bought by Verizon
for less than $9bn (the pair).
Ecommerce start-ups went
public to great fanfare and
quickly vanished. Cisco was
the world’s most valuable
company in early 2000 but
lost almost 90% of its value by
2002. The list goes on.
Amazon is the exception, but
it took Jeff Bezos a decade of
good choices and
implementation for the stock
to recover its 1999 highs.
Some cryptocurrencies
may well become a payment
standard, but history says you
can’t pick them, if they even
exist yet, and you shouldn’t
overpay through fear of
missing out.
Julian Jacobson, head of risk,
WRM Capital Asset
Management, Luxembourg
Tech Nation has much
momentum to gain if it is to
drive the digital economy.
Dynamo is a network of
tech firms in northeast
England that employ 42,000
and have 4,000 vacancies to
fill. We have initiated £47m in
programmes as part of our
mission to grow the local
economy, including helping
secure £30m for Newcastle
University’s National
Innovation Centre for Data.
Every region must focus on
strengths and differentiate
from competition across the
world. The northeast has
capability in emerging tech
niches such as building
information modelling,
govtech, cyber-security and
shared service centres. These
clusters are somewhat missed
by the national players.
Rather than reinventing
the wheel, central
government quangos must
complement existing local
initiatives.
Charlie Hoult, chairman,
Dynamo North East,
Newcastle upon Tyne
THE WEEK IN THE MARKETS
INSIDE THE CITY BEN LAURANCE
Carpetright
problems
continue
to pile up
celebrate a bumper year for
the chemicals giant.
It was a rather hush-hush
event but Prufrock can
mention a few highlights,
such as the world-beating
smirk on Ratcliffe’s face
when he mentioned buying
the Swiss football club
Lausanne Sport: “But as a
private company we don’t
have to explain why.”
Prufrock tried to catch up
with the lanky 65-year-old
Mancunian but was beaten
back. “Sorry, my mum needs
a glass of red wine!” And off
dashed Ratcliffe mère et fils.
The highlight of the
evening was Chris Stainton, a
pianist who has backed Eric
Clapton, playing the coda
from Layla, so poignant it
would have melted a heart of
stone. Indeed, a few bankers
had to be mopped up after.
Perhaps next year Ratcliffe
will hire Clapton too.
What crisis ? It’s
all about football
Man chief goes to
work on an egg
Rupert Murdoch after the
break-up and sale of his
Fox film and broadcasting
business to Disney in a
£50bn deal
LETTERS
50.14
0.38%
212.67
0.64%
H:3,450.5
L:3,016.5
S&P TSX
16,041.98
54.09
0.34%
H:13,525.6
L:11,267.0
€1.13
Average weekly earnings
W 0.00
12 month high: €1.20
low: €1.07
Unemployment
YEN
YEN > USD
Manufacturing output
¥112.57
12-month high: ¥118.66
low: ¥107.31
OIL
DOLLARS/BARREL
$63.23
V 0.17
12-month high: $65.83
low: $44.35
GOLD
DOLLARS/TROY OZ
$1,254.69
£510
H:16,187.9
L:14,915.8
$18,905.20
U 3,727
12-month high: $18,905.20
low: $777.76
Price as of 5pm Saturday
prev. month
2.8%
2.8%
current rate
prev. month
3.9%
4.0%
U
0.2%
U
current rate
1.43m
4.3%
on the year
on last month
3.9%
U
on the year
U
UK trade
balance (£bn)
Gross domestic
product
Budget deficit
(PSNB) in £bn
2.4%
prev. month
4.3%
U
Retail sales
0.1%
on last month
1.6%
U
1.1%
latest 3 mths
prev. 3 mths
latest 12 mths
-5.0
-8.2
-31.8
latest quarter prev. quarter
U
0.4%
U
0.3%
annual change
U
1.5%
latest month
prev. month
year to date
8.0
5.0
38.5
10-YEAR BOND YIELDS %
12-month high: $1,347.38
low: $1,126.52
BITCOIN
DOLLARS
3.0%
current rate
on prev. month on last year
V 0.91
U 6.63
H:6,125.3
L:5,568.9
9.70
0.16%
H:5,536.4
L:4,733.82
H:33,866.0
L:25,753.7
Retail prices index
prev. month
3.1%
variation
1.15
UK
12 months
high
low
V 0.12
1.55
0.72
US
2.35
V 0.03
2.64
2.02
JAPAN
0.05
V 0.01
0.16
-0.01
GERMANY
0.30
W 0.00
0.59
-0.19
TOP 200 COMPANIES
Market cap ranking
V
52
182
89
188
161
29
49
154
47
26
8
126
198
28
122
30
189
17
72
120
163
103
86
20
110
106
3
4
65
180
23
144
66
61
168
155
44
60
177
142
54
24
109
27
79
143
71
194
125
6
95
3i Group
3i Infrastructure
Admiral
Aggreko
Alliance Trust
Anglo American
Antofagasta
Ashmore
Ashtead
Associated British Foods
Astra Zeneca
Auto Trader
Aveva
Aviva
Babcock International
BAE Systems
Balfour Beatty
Barclays
Barratt Developments
BBA Aviation
Beazley
Bellway
Berkeley
BHP Billiton
B&M European
Booker
BP
British American Tobacco
British Land
Britvic
BT
BTG
Bunzl
Burberry
Capital & Counties Properties
Capita
Carnival
Centrica
Close Brothers
Cobham
Coca Cola HBC
Compass
Convatec
CRH
Croda
CYBG
DCC
Dechra Pharmaceuticals
Derwent London
Diageo
Direct Line Insurance
Price Change
on week
891.5
202.9
1907.0
758.0
741.5
1410.0
930.5
392.5
1894.0
2843.0
4881.0
347.0
2718.0
502.5
684.5
563.0
279.0
202.2
626.5
340.3
483.0
3515.0
4160.0
1419.5
400.7
226.6
505.2
4967.0
671.0
789.5
277.5
746.5
2016.0
1723.0
278.2
404.4
4830.0
138.0
1430.0
121.2
2325.0
1534.0
205.8
2532.0
4331.0
327.8
7230.0
1985.0
3037.0
2655.0
365.8
+23.0
+5.3
+58.0
–46.5
+5.5
+46.0
+37.0
+10.6
–125.0
–40.0
+97.0
+4.4
+12.0
–7.5
+23.0
+6.0
+7.7
+5.8
–3.5
+2.4
–0.5
–85.0
+47.0
+78.0
+5.3
+1.7
+12.4
+28.0
+16.0
–10.5
+9.6
+15.5
–69.0
–13.0
+9.2
–81.7
–98.0
–6.1
+18.0
–0.8
+6.0
+43.0
–4.4
–96.0
+78.0
+0.3
+280.0
–70.0
+143.0
+19.5
+6.7
52-week
Yield
high
low
969.5
208.5
2178.0
1064.0
747.0
1508.0
1061.0
394.5
2060.0
3371.0
5508.0
435.9
2721.0
544.0
969.5
677.0
298.4
239.2
700.0
342.9
525.0
3792.0
4160.0
1486.0
412.4
226.7
524.7
5643.0
674.0
820.0
396.9
779.0
2465.0
1985.0
324.8
705.5
5380.0
235.8
1715.0
174.6
2671.0
1757.6
344.0
2920.0
4367.0
333.0
7540.0
2249.0
3037.0
2655.0
411.3
680.0
185.3
1732.0
758.0
613.5
959.4
661.5
280.6
1534.0
2361.0
4194.0
319.0
1818.0
470.6
654.5
535.5
253.5
178.9
457.0
273.3
380.1
2412.0
2787.0
1117.0
266.1
168.0
439.8
4506.5
579.0
550.0
243.8
534.5
2016.0
1450.0
253.1
404.4
4023.0
138.0
1316.0
110.7
1659.0
1447.7
182.0
2530.0
3141.0
260.0
5860.0
1316.0
2451.0
2055.0
333.8
3.0
3.9
2.7
3.6
1.9
1.5
4.2
1.2
1.3
4.2
1.5
1.5
4.3
4.1
3.8
1.0
1.5
2.9
2.9
2.1
3.2
4.4
3.0
1.5
2.1
5.9
3.1
4.4
3.1
5.2
2.1
2.3
0.5
7.8
2.4
8.7
4.1
1.5
1.6
2.2
2.2
1.7
1.5
0.9
1.7
2.3
4.0
P/E
Mkt Cap
(£m)
23.9
16.1
14.2
37.0
16.5
17.8
18.8
23.5
20.8
82.4
33.3
10.7
16.9
84.6
17.0
11.1
23.4
13.2
9.5
9.2
16.7
26.2
26.4
34.5
19.9
11.5
18.5
17.2
39.3
23.5
24.6
95.9
518.5
16.9
13.8
11.2
24.5
21.9
18.2
29.5
31.9
134.0
31.8
24.6
15.8
8639.1
2072.6
5430.8
1941.4
2559.6
19804.9
9173.5
2776.4
9455.3
22507.3
61781.1
3375.4
1739.5
20326.4
3460.8
17925.8
1924.4
34453.8
6308.8
3511.1
2539.2
4316.3
5633.3
29979.8
4007.0
4039.4
99964.1
92607.2
6910.0
2081.5
27645.5
2879.6
6773.7
7553.3
2358.5
2698.5
10306.7
7580.1
2169.4
2897.9
8470.9
25228.0
4016.1
21174.7
5852.2
2893.9
6440.0
1849.5
3384.8
66838.2
5029.8
Market cap ranking
V
176
87
156
99
36
37
123
46
112
93
7
10
195
174
151
98
104
58
183
162
152
160
108
169
150
1
157
124
22
133
147
77
184
51
136
56
38
181
128
132
68
196
138
134
78
146
91
121
62
130
59
34
Dixons Carphone
EasyJet
Electrocomponents
Evraz
Experian
Ferguson
Foreign & Colonial
Fresnillo
G4S
GKN
Glaxo Smith Kline
Glencore
Grafton Group Units
Great Portland Estates
GVC Holdings
Halma
Hammerson
Hargreaves Lansdown
Hastings
Hays
HICL Infrastructure
Hikma Pharmaceuticals
Hiscox
Homeserve
Howden Joinery
HSBC
IG Group
IMI
Imperial Brands
Inchcape
Indivior
Informa
Inmarsat
Intercontinental Hotels
Intermediate Capital
Intertek
International Airlines Group
International Public Partnerships
Intu Properties
Investec
ITV
IWG
Jardine Lloyd Thompson
JD Sports
Johnson Matthey
Jupiter Fund Management
Just Eat
Kaz Minerals
Kingfisher
Ladbrokes Coral
Land Securities
Legal & General
Price Change
on week
189.6
1417.0
610.0
320.4
1601.0
5270.0
641.0
1336.0
252.0
298.0
1295.0
362.8
768.0
677.0
928.0
1252.0
534.0
1705.0
315.2
177.3
156.0
1074.0
1411.0
757.0
444.1
751.5
733.0
1267.0
3085.0
770.0
393.0
740.0
443.3
4581.0
1106.0
5045.0
633.5
153.9
245.5
484.1
165.7
196.1
1362.0
326.9
3039.0
620.5
772.0
778.5
331.7
171.4
984.0
268.2
+21.5
–39.0
–11.0
+17.9
+28.0
–75.0
+6.5
+30.0
+0.3
–0.7
+7.5
+17.2
+4.0
+16.5
–33.0
–8.0
+7.5
+105.0
+3.8
–0.2
+1.3
+54.0
+48.0
–18.5
–9.9
+18.3
+71.5
+19.0
+1.5
+11.0
+27.0
+6.0
–42.5
+135.0
+49.0
–5.0
–3.0
+2.9
+9.5
+22.7
+2.0
+0.6
+29.0
–2.2
+27.0
+12.0
–27.0
+47.0
–4.5
–7.2
+25.5
+4.4
52-week
Yield
high
low
357.0
1456.0
709.0
335.2
1705.0
5480.0
641.0
1725.0
341.1
376.5
1722.0
385.2
841.0
739.0
961.0
1322.0
609.5
1709.0
325.0
194.4
174.6
2297.0
1470.0
867.0
475.7
769.6
733.0
1319.0
3933.5
880.5
419.5
761.0
850.5
4581.0
1106.0
5425.0
670.0
166.6
294.0
627.5
219.6
365.2
1370.0
456.0
3503.0
620.5
824.0
875.5
368.1
178.6
1000.0
276.0
149.1
914.5
467.0
173.2
1446.0
4460.0
532.5
1091.0
229.2
294.3
1275.5
268.4
527.0
587.5
594.0
886.5
501.5
1206.0
220.4
147.2
153.3
949.5
982.0
523.0
371.4
620.8
484.8
1009.0
3027.0
639.5
267.6
629.5
443.3
3658.7
681.0
3318.0
440.9
150.3
194.7
461.4
146.9
190.9
968.5
303.3
2727.0
393.4
496.0
355.2
288.0
111.3
64.1
232.8
3.8
2.0
1.9
2.0
1.6
1.7
3.7
3.0
6.2
0.7
1.8
1.5
1.1
4.5
1.4
3.1
1.7
5.0
2.1
2.0
2.0
2.3
5.0
4.3
3.0
5.0
3.1
2.5
2.6
9.6
1.7
2.3
1.2
3.2
4.3
5.6
4.8
3.9
2.6
2.4
0.5
2.5
2.4
3.1
1.8
4.3
5.3
P/E
Mkt Cap
(£m)
8.9 2186.6
18.5 5628.4
25.4 2693.5
- 4588.3
26.0 14775.8
15.0 13337.2
- 3460.3
22.5 9844.9
13.7 3910.0
10.2 5117.9
27.4 63686.2
31.4 52216.9
17.7 1819.9
- 2212.0
- 2790.2
34.1 4747.4
9.5 4235.8
41.2 8087.1
22.2 2071.6
18.6 2558.4
- 2782.6
20.1 2583.5
17.3 4031.8
32.5 2352.1
15.1 2795.2
36.0 150676.8
15.9 2690.0
22.8 3445.9
29.0 29422.8
16.0 3211.4
21.0 2833.5
29.6 6097.6
12.6 2021.6
26.4 8703.5
14.9 3102.8
29.8 8142.1
7.6 13289.8
9.0 2077.3
21.9 3326.6
10.0 3227.2
14.9 6670.1
13.6 1793.1
25.2 2983.3
17.8 3181.5
15.5 5881.5
20.0 2840.0
62.8 5244.2
15.6 3477.7
12.7 7292.5
- 3281.7
42.7 7781.0
10.4 15972.3
Market cap ranking
V
14
40
127
96
100
117
113
199
116
153
43
191
67
193
94
190
21
171
74
82
178
45
145
80
129
165
57
140
159
115
63
13
70
15
170
16
118
85
107
12
137
35
172
19
2
5
101
119
75
55
92
Lloyds Banking Group
London Stock Exchange
Man
Marks & Spencer
Mediclinic International
Meggitt
Melrose
Mercantile Investment Trust
Merlin Entertainments
Metro Bank
Micro Focus International
Millennium & Copthorne Hotels
Mondi
Moneysupermarket
Morrison Supermarkets
National Express
National Grid
Nex Group
Next
NMC Health
Ocado
Old Mutual
Paysafe
Pearson
Pennon
Pershing Square
Persimmon
Phoenix Group Holdings
Playtech
Polymetal International
Paddy Power Betfair
Prudential
Randgold Resources
Reckitt Benckiser
Redrow
Relx
Renishaw
Rentokil Initial
Rightmove
Rio Tinto
RIT Capital Partners
Rolls-Royce
Rotork
Royal Bank Of Scotland
Royal Dutch Shell A
Royal Dutch Shell B
Royal Mail
RPC
RSA Insurance
Sage
Sainsbury, J
Price Change
on week
66.4
3780.0
202.2
303.8
609.0
471.6
198.8
2102.0
361.0
3460.0
2518.0
581.5
1818.0
345.1
215.5
373.3
868.6
594.5
4246.0
2800.0
337.0
203.4
589.5
725.0
791.5
1048.0
2626.0
750.0
841.0
864.0
8585.0
1847.5
6955.0
6731.0
622.5
1729.0
4975.0
309.4
4414.0
3624.5
1947.0
831.0
258.9
276.3
2428.5
2452.5
444.3
860.0
607.5
781.5
236.1
–0.4
–10.0
+3.5
–15.2
+14.0
–20.0
nc
–3.0
+1.9
+58.0
+93.0
–32.0
+124.0
+5.3
–6.4
+3.3
–9.2
+16.5
–237.0
–102.0
–18.9
+4.7
nc
–15.5
+28.5
nc
–45.0
–3.5
+6.5
+15.0
+15.0
+12.5
+85.0
+15.0
–18.5
+17.0
–60.0
–3.4
+159.0
+156.0
+8.0
–7.5
+0.8
–4.7
+71.0
+67.5
+5.9
–26.0
+7.0
+13.5
–8.6
52-week
Yield
high
low
73.1
3983.0
203.8
395.5
887.0
526.0
261.2
2143.0
537.0
3834.0
2739.0
625.5
2130.0
361.3
252.9
380.0
1157.5
848.8
5320.0
3199.0
363.5
229.1
595.0
827.5
944.0
1250.0
2890.0
798.5
1016.0
1095.0
8900.0
1915.0
8190.0
8108.0
664.0
1782.0
5555.0
335.8
4414.0
3773.5
1979.0
981.0
272.3
285.8
2459.5
2490.0
463.7
1079.0
666.5
810.5
281.7
62.2
2789.0
118.3
297.8
507.5
410.6
186.5
1665.0
351.9
2925.0
2020.0
410.2
1560.0
283.7
207.0
334.7
861.8
464.5
3617.0
1449.0
238.5
188.0
328.6
566.5
761.5
959.0
1706.0
713.5
768.0
774.5
6665.0
1532.0
5575.0
6355.0
420.9
1391.0
2474.0
219.1
3719.0
2910.0
1815.0
639.5
223.5
214.9
1992.5
2052.5
369.9
720.5
562.5
599.0
224.8
P/E
Mkt Cap
(£m)
4.1 15.4 47655.8
1.1 44.6 13108.4
3.5
- 3328.1
6.2 26.6 4935.9
1.3 65.5 4488.4
3.2 12.6 3658.4
1.1
- 3859.1
2.4
- 1727.9
1.8 17.4 3667.1
- 596.5 2781.6
2.6 45.4 10955.3
1.3 17.0 1888.4
2.8 16.0 6676.4
2.8 24.8 1869.8
2.5 14.3 5033.4
3.3 16.2 1910.3
5.3 17.5 29786.5
6.5 32.3 2257.5
3.7 9.9 6244.0
0.4 45.5 5720.0
- 188.3 2123.4
3.0 12.9 10027.6
- 25.5 2858.7
7.2
- 5843.3
4.5 18.1 3296.2
- 2516.6
5.1 11.8 8104.5
6.2
- 2946.4
3.4 13.5 2668.9
2.0 11.5 3716.2
1.8 52.8 7230.8
2.3 17.3 47773.1
1.1 31.5 6537.4
2.3 22.6 47315.2
1.6 9.9 2302.0
1.9 31.0 35820.2
1.0 35.2 3621.2
1.1 8.4 5684.7
1.0 32.4 4033.0
3.6 13.7 49936.0
- 3016.6
0.6
- 15291.6
2.0 29.8 2252.8
- 32813.6
6.0 32.2 108716.5
5.9 32.5 91858.1
5.2 12.4 4443.0
2.8 16.9 3546.9
2.6 54.2 6212.3
1.9 32.9 8447.1
4.3 24.6 5169.8
Market cap ranking
V
48 Schroders
76 Scottish Mortgage
81 Segro
97 Severn Trent
149 Shaftesbury
18 Shire
32 Sky
90 Smith (DS)
42 Smith & Nephew
83 Smiths
167 Smith WH
84 Smurfit Kappa
166 Sophos
141 Spectris
111 Spirax-Sarco
186 Sports Direct International
39 SSE
135 SSP
25 Standard Chartered
73 St James’s Place Capital
41 Standard Life Aberdeen
131 Tate & Lyle
69 Taylor Wimpey
179 Templeton Emerging Markets
33 Tesco
197 Thomas Cook
148 TP Icap
114 Travis Perkins
53 Tui
164 Tullow Oil
139 UBM
175 UDG Healthcare
11 Unilever
200 Unite Group
88 United Utilities
185 Vedanta Resources
173 Victrex
9 Vodafone
102 Weir
64 Whitbread
158 William Hill
192 Witan Investment Trust
187 Wizz Air Holdings
105 Wood
50 Worldpay
31 WPP
Price Change
on week
3472.0
437.0
574.5
2090.0
1002.0
3762.5
1018.0
502.0
1282.0
1444.0
2211.0
2406.0
533.0
2469.0
5440.0
368.9
1315.0
668.0
757.1
1184.0
418.0
696.5
201.9
772.0
207.3
115.0
510.0
1517.0
1462.0
182.0
754.0
885.0
4196.0
767.0
816.0
723.0
2588.0
230.0
2019.0
3864.0
312.0
1060.0
3460.0
620.5
435.4
1389.0
+47.0
–7.9
+13.5
+7.0
+2.0
+114.5
+25.0
–20.0
–42.0
–30.0
–7.0
+31.0
–13.5
+44.0
–125.0
–20.8
–9.0
+6.5
–2.6
+27.0
–0.4
+13.5
–1.0
+13.5
+2.8
–3.1
+7.0
–82.0
+67.0
–0.7
+15.5
+26.5
+14.5
+10.5
–1.0
+84.5
+43.0
+0.6
–11.0
–130.0
+0.9
+3.0
–6.0
–61.5
+10.7
+48.0
52-week
Yield
high
low
3531.0
467.5
574.5
2553.0
1016.0
5036.0
1018.0
558.5
1431.0
1684.0
2218.0
2419.0
646.0
2834.0
5920.0
419.5
1563.0
668.0
846.7
1238.0
446.3
795.0
207.4
807.0
213.0
126.9
544.5
1696.0
1462.0
333.6
764.5
959.0
4548.5
767.0
1056.0
1102.0
2608.0
232.4
2115.0
4307.0
315.0
1075.0
3563.0
894.5
435.4
1921.0
2901.0
313.1
439.5
2046.0
873.0
3499.0
900.0
403.0
1170.0
1404.0
1480.0
1864.0
253.2
2229.0
4125.0
268.3
1309.0
377.0
651.8
987.5
405.0
625.5
153.0
572.5
166.5
84.1
413.5
1408.0
1068.0
145.6
645.0
635.0
3152.0
571.0
778.5
575.0
1832.0
192.4
1727.0
3512.0
240.0
877.0
1560.0
560.0
263.9
1253.0
P/E
Mkt Cap
(£m)
2.5 19.9
0.7
2.8 8.2
3.9 16.9
1.5 23.1
0.6 27.3
2.1 25.5
3.0 24.7
1.9 17.0
2.9 10.1
2.0 21.3
3.0 16.3
0.6
2.1 265.5
1.4 30.8
- 9.6
6.9 9.8
0.8 42.0
- 1638.7
2.5 55.6
4.7 19.1
4.0 13.1
0.9 11.3
1.1
- 37.0
0.4 143.8
3.3 32.3
3.0 505.7
3.8 18.2
2.9 33.7
1.1 37.0
2.8 23.5
2.0 8.1
4.8 13.0
5.7
1.8 26.5
5.7
2.2 67.8
2.5 15.0
4.0 16.7
1.8
- 17.7
4.1
0.5 51.8
4.1 10.2
9233.0
6111.7
5735.8
4933.6
2795.6
34153.8
17499.6
5357.4
11217.1
5710.6
2435.6
5697.9
2456.5
2943.4
4000.6
2000.4
13260.5
3174.5
24916.2
6258.5
12445.4
3236.5
6606.0
2108.8
16973.1
1766.2
2826.1
3808.8
8582.5
2517.2
2970.1
2197.7
51803.0
1721.4
5564.2
2003.4
2220.7
61349.8
4406.5
7086.4
2676.3
1888.1
1988.7
4205.1
8708.0
17702.3
Price/earnings ratios are based on historic data, with yield and p/e values
calculated from the most recent reported dividends and earnings per share,
using trailing 12-month figures. 52-week highs and lows are end of day.
nc = no change Data provided by Morningstar. Any enquiries please contact:
dataquestions.uk@morningstar.com
MONEY
13
The Sunday Times December 17, 2017
BUSINESS
SEND YOUR FUTURE
SELF A PRESENT
IAN COWIE
PAGE 15
14
WHY MY GLASS IS
ALWAYS HALF FULL
FAME & FORTUNE
PAGE 20
WOULD YOU PAY
TO SEE A GP?
PAGE 14
Follow us on Twitter @ST_Money
12
PUZZLES
CROSSWORDS,
SUDOKU & MORE
PAGES 18-19
Half a million reasons to write to Jill
MARK BOURDILLON
Our consumer
champion Jill Insley
has won Money
readers £500,000 in
compensation and
refunds this year
I
t may be Christmas but Question of
Money has not stopped helping
Sunday Times readers. In the past
few days it has persuaded HSBC to
unfreeze £104,000 in funding
belonging to a Norfolk based charity, enabling it to pay vital fuel
grants to vulnerable people so they
can heat their homes over the festive season.
Our success in getting the bank to
release the funds, which had been frozen
due to suspected fraud, means the column has helped readers achieve refunds,
savings and compensation of more than
£500,000 during 2017.
In the past 12 months, I have dealt with
hundreds of readers’ complaints, ranging from leaky walking boots and broken saucepan lids to miscalculated pensions and arguments over wills. Readers
often blame themselves when things go
wrong and they are forced to ask me for
help. Well, I think it’s time to stop being
so hard on yourselves.
Some people do make avoidable mistakes, but the fact that retailers, service
providers and financial institutions have
paid compensation totalling £45,060,
agreed to refunds of £121,591, generated
savings of £197,716 and rescued about
£200,000 from limbo when transfers
between financial institutions have gone
wrong proves that many readers are not
responsible for the problems they have
encountered. They have usually fallen
victim to poor customer service, shoddy
products, out-of-date computer systems,
under-trained staff, badly written documentation, poorly explained processes
and, increasingly, to fraudsters.
While fewer complaints about utilities
have reached my mailbag this year (hurrah!), other businesses have risen to the
occasion in order to keep me gainfully
employed. These include Virgin Trains,
HSBC, Barclays, Viagogo, Europcar, Go
Spend It and the telecoms companies
Met-Plus, Vodafone and, of course, BT.
After I described trying to get a fault
repaired on my BT line (four visits by
engineers, an incorrect £125 charge and
weeks of poor or nonexistent broadband
and phone service), I was deluged with
Financial elf check: Jill has persuaded firms to pay compensation of £45,000
emails from readers about the problems
they too had suffered, ranging from ultraslow broadband speeds and invisible
engineers to months of harassment for
refusing to pay incorrect bills.
BT told Money it has recruited more
than 1,500 people — mostly engineers —
this year to enable faster repairs, bringing to 5,000 the total number it has taken
on in the past few years.
“All our engineers are trained to the
highest standards before they work on
our network,” it said. “What’s more, we
are increasing the number of people
working on proactive network maintenance, so we can continue to bring down
our fault rate and deliver better service.”
Many readers have yet to be convinced
of any improvement. One, who had
finally managed to switch away from the
HOW TO AVOID
NEEDING
MY HELP
Many readers suffer weeks if
not months of aggravation
before getting in touch,
writes Jill Insley. The
following tips should help
you avoid some of the most
common problems I dealt
with this year.
Dodgy online shopping
experiences
It’s natural to seek the lowest
prices online, but the easiest
way to avoid heartache is to
stick to well-known British
retailers and service
providers. While goods
bought from overseas
websites may be cheaper,
paying for delivery, customs
and VAT can wipe out any
saving. Readers also tend to
struggle when seeking
refunds.
Before you hand over any
cash, examine the
company’s website to see
whether it provides a
physical address (PO boxes
are not a good sign), an
email address for customer
services and a telephone
number — call it to make
sure it’s real. Read customer
reviews on websites such as
Trustpilot and look at the
company’s terms and
conditions.
Finally, always use a debit
card if you are buying
Before I place an order, where are you
based and do you have a website?
something for £100 or less,
or a credit card if you are
spending £100 to £30,000.
This will enable you to seek a
refund if the website turns
out to be fake or the goods
substandard.
Beware any company that
tells you that your card
transaction has failed and
asks you to make a direct
payment from your bank
account. Your bank will not
refund you if the recipient
turns out to be a fraudster.
Financial scams
A distressing number of
readers have been caught
out this year. An elderly
reader who wrote to me last
week was cheated out of
£22,540 after someone
purporting to be a “licensed
computer authority” called
him and gained access to
his computer.
The fraudster kept our
reader, who is in his eighties,
on the phone for six hours,
and during that time made
46 payments from his bank
account to that of an
unknown recipient. Our
reader did not realise what
had happened until two
days later when checking
his account.
Conmen can be
incredibly convincing, but
you can protect yourself by
being aware of their latest
techniques. Both the
Financial Services
Compensation Scheme and
Barclays have created a list
of some of the most
common scams in the UK
and ways to avoid being
conned, at bit.ly/fivescams
and bit.ly/barclays-scams.
If you suspect you have
been scammed, contact
your bank immediately so it
can ask the bank receiving
your money to freeze that
account. The fraudster will
be waiting for your money to
arrive so it can be moved on,
out of reach — so be quick.
Always report the scam to
Action Fraud
(actionfraud.police.uk). The
more information the police
have about current scams,
the better their chances of
catching those responsible.
Pensions
Although I have received
letters about situations in
which pension companies
have clearly made mistakes,
most readers need help in
translating the
incomprehensible
information they have been
sent. Pensions — both state
and private — have been
subject to constant
tinkering by successive
governments since I started
writing about personal
finance 30 years ago, so it is
no wonder investors
struggle to keep up.
Some readers balk at the
idea of paying for
independent financial
advice, but it really is worth
its weight in gold. Other
trustworthy sources of
Continued on page 14 →
company, said: “Never again, BT. If the
next house we want to buy has no [possible] telephone service except from BT,
we shall not buy the house.”
Letters about the secondary ticketing
website Viagogo make me despair. After
everything that has been written about
this site, I simply do not understand why
people use it. Rather than disclosing
all information about ticket costs
upfront, Viagogo dribbles details onto
the customer’s computer screen as they
progress closer to purchase.
Many customers only realise the full
cost after their payment has gone
through and feel they have been tricked
into paying far more than expected.
One reader who believed she had
bought five tickets for a Paul Weller concert for £540 was horrified to discover
the total charged was £894. She said: “I
contacted my credit card company on
the day of the purchase but I am struggling to prove that I was ever offered the
tickets for £540.”
Viagogo told The Sunday Times: “This
was an extremely rare case whereby the
[ticket] seller was editing his listing at the
same time that your reader was trying to
purchase.”
If customers manage to make contact
with the Swiss-based company to complain, they are usually advised to resell
the exorbitantly priced tickets on —
you’ve guessed it — Viagogo.
The complaint that has saddened and
angered me the most this year involved
the French bank Société Générale. In January, a reader asked me for help in recovering about £30,000 that his first wife
had invested in a fixed-term bond with
the bank. She had died 10 years previ-
ously and her husband believed all her
accounts with Société Générale were
closed — until the bank contacted him to
say her bond had matured.
The reader needed to provide documents required under French law, otherwise the money would be paid to the
Caisse des Dépôts et Consignations, a
French government body.
Although I repeatedly explained to the
bank that the reader was very ill and
often in hospital, it took weeks to reply to
his communications — always in French.
It seemed to ask for different documents every time and refused to deal
directly with me or even, for a while, with
the reader’s solicitors. Sadly the reader
died in November, having spent more
than £2,000 trying unsuccessfully to
retrieve the money. The British banking
system may have plenty of flaws, but I
appreciate it far more now.
A big vote of thanks is due to all those
who have provided advice and helped
resolve readers’ problems, including
Readers blame
themselves when
things go wrong.
Stop being so hard
on yourselves
Andrew Kidd of solicitor Clintons, Danny
Cox of Hargreaves Lansdown, Jane Frapwell at Vodafone, Yusuf King at BT, Alan
White at Barclays and the ever-patient
Nick Bamford of the independent financial adviser Informed Choice.
The biggest heroes of all are those
readers who have written in on behalf of
others, including children, elderly relatives and neighbours.
One mum has become a regular correspondent, using Question of Money to
resolve online shopping problems for her
daughter, who is a doctor in Australia.
A dad spent six months trying to get his
daughter’s bank to unfreeze her account
as she travelled around South America.
Eventually, after Question of Money
intervened, NatWest agreed to courier a
debit card to her on a ranch in Argentina.
Another reader asked Question of
Money to advise his daughter on how to
deal with an unpaid £31,000 debt taken
out in her name by her abusive former
partner. As a result of his approach, the
lender — Paragon — took his daughter’s
name off the loan and removed all trace
of it from her credit record.
Please keep writing. Regardless of how
minor your complaint may seem, how
small the amount of money involved, I
want to hear from you.
It is your input that makes this column
successful, so please keep sending your
emails and letters, and remember to
include a phone number and/or an email
address so I can contact you quickly.
CAN WE HELP YOU?
Email your questions to Jill Insley at
questionofmoney@sunday-times.co.uk
14
The Sunday Times December 17, 2017
MONEY
BRIEFING
TAX SHAKEUP NORTH
OF THE BORDER
WEEKLY WAGES RISE
BUT INFLATION BITES
MOVE TO STOP SPREAD
OF ‘ATM DESERTS’
If you would like to receive the
free weekly Money email bulletin,
visit thesundaytimes.co.uk/
moneybulletin. The bulletin is
exclusive to digital subscribers.
Scotland will have five
income tax bands from April,
rather than three like the rest
of the UK. The Edinburgh
government announced the
addition of a 19% “starter”
rate for those earning £11,851
to £13,850, and a 21% rate for
those earning £24,001 to
£44,273. The higher rate, on
earnings between £44,274
and £150,000, will rise from
40% to 41%, while the
additional rate, levied on
income of £150,000 and
above, will rise from 45% to
46%. The tax-free personal
allowance will continue.
Average weekly wages rose
2.3% in the three months to
October, said the Office for
National Statistics. However,
inflation at 3.1% meant a
drop in real earnings.
A change in the way cash
machines are funded will not
apply to those in more
remote areas, in an attempt
to prevent more “ATM
deserts” emerging. Machine
operators are paid 25p by
your bank whenever you use
them to draw cash. Link, the
industry body, is planning to
lower this to 20p, which will
lead to fewer cash machines.
Last week, Link said
machines located a
kilometre or more from the
nearest free-to-use cash
dispenser will now be
excluded from the change.
Contact us Money,
The Sunday Times,
1 London Bridge Street
London SE1 9GF
Email money@sundaytimes.co.uk
Advertising If you would like to
buy an advertisement in Money,
email Paul Douglass at
paul.douglass@news.co.uk
or call him on 07917 598 422
BANK RATE LEFT
UNCHANGED AT 0.5%
The Bank of England’s
monetary policy committee
voted unanimously on
Thursday to keep Bank rate
at 0.5%, six weeks after it was
raised from 0.25%.
‘POSTCODE LOTTERY’ HOW THE FOOTSIE
OF CARE HOME COSTS HAS PERFORMED
Working
people will
be worse off
this Christmas
than a
decade ago
Frances
O’Grady,
general
secretary
of the TUC
An investigation has
highlighted the postcode
lottery of care home
funding. Freedom of
information requests by the
insurer Royal London show a
“huge variation” both in how
much councils will pay
towards home costs and the
extent to which people have
to “haggle” for a good deal.
“Local authorities must be
very careful to ensure they
do not take advantage of the
poor bargaining power of
vulnerable elderly people,”
said Sir Steve Webb, the
company’s director of policy.
The FTSE 100 rose 97 points to end the week at 7,491, as a
breakthrough in Brexit negotiations on Friday paved the way
for the next stage of talks, lifting shares
+7%
over a year
(up 10.6% with dividends)
three years
+21.2% over
(up 35.3% with dividends)
five years
+26.5% over
(up 51.6% with dividends)
+17.1%
over ten years
(up 70% with dividends)
Inflation: in November, CPI was 3.1% and RPI was 3.9%
Doctor App will see you . . . immediately
Patients who don’t
want to queue for
their GP can pay for
an appointment — or
a video consultation,
writes Ali Hussain
S
imon Banfield wanted to see
a doctor about a small lump
on his chin. However, the
busy structural engineer
from Streatham, south London, did not want to take
time off work or wait two
weeks for an appointment
with his local GP. Instead,
Banfield used an online service called Doctap that allowed him to
see a GP within hours and close to where
he works in Waterloo. “I was able to register, book an appointment and see a doctor all in about four hours,” he said. “The
lump turned out to be just a small infection. I was sent on my way with some antibiotics.”
His 15-minute lunchtime visit gave him
peace of mind for just £44, the cost of a
same-day appointment; it would have
been £29 if he had booked two days in
advance. He was happy to pay the fee
though it would have cost him nothing to
see his NHS doctor.
Banfield, 34, is just one of a growing
number of young professionals willing to
pay to see a GP at a time and place that is
convenient for them. “Not only did it save
me having to wait weeks to see my GP, I
also didn’t have to take time off work to
see someone,” he said.
While many of us like the familiarity of
using a family doctor, others simply want
a professional to take a look at something
that is worrying them.
Laura Poots, 33, a barrister working in
central London, also uses Doctap. She
lives in Battersea and has been with her
local GP for about five years. “I would still
use my local GP if I thought there was
something serious, or if I wanted something seen regularly, but this is a convenient service for one-off checks.”
Doctap has rapidly grown since opening its first clinic in April last year. It now
has eight drop-in clinics in London, with
more in the pipeline for next year, and
says the number of patients using the service has increased from 500 a month to
about 1,000 since the end of September.
The company is tapping into growing
demand not only from patients but also
from GPs looking to do some part-time
private work. About 26 GPs offer services
via Doctap on a regular basis, it said.
On average it takes about two weeks to
see an NHS doctor, according to a survey
by Pulse, the GPs’ newsletter. This is up
from 10 days in 2015. About 40% of
patients have to wait longer than 14 days,
Pulse said.
The downside to these ad hoc services
is that the GPs will not have all your medical records to hand. They also tend to be
concentrated in London, though there
are exceptions.
Private medical insurer Bupa says it
has experienced a 19% increase over a
year in the number of people dropping in
to see a GP at one of its 50 centres around
the country. These customers pay £70 for
a 15-minute appointment rather than a
monthly insurance premium.
Dorset Private GP (dorsetprivategp.co.uk) offers both NHS and private
GP services. The Bournemouth surgery
charges £145 for a 40-minute appointment, or you can have a 10-minute phone
consultation for £40.
Many GPs work as locums for the NHS,
meaning they are not full-time GPs at one
surgery. They can offer both private and
NHS services, but they must keep the two
as separate as possible. They may treat
their private patients in a separate room
within an NHS surgery, for example.
Family doctors are not allowed to offer
private services to their own NHS
patients, as this would create a conflict of
interest. However, they can offer private
services to non-NHS patients or charge
their NHS patients for services not available via the state.
Dr Michael Hefferon, 39, from Dollis
Hill, in London, has been a GP for about
three years and joined Doctap about
three months ago. He now works about
three days a week for the NHS and the
rest of the time for Doctap.
Although he can earn more per hour
with the NHS, he prefers the private work
as he is able to spend more time with his
patients. “It’s amazing the difference a
15-minute appointment makes,” he said.
“With the NHS I would have about 10 minutes for each patient.”
Car rental rip-offs
The car insurance included in
the price of renting a car
often comes with a huge
excess of up to £2,000. You
can avoid this by buying an
excess waiver policy from an
independent source. Resist
attempts to make you buy the
car hire firm’s own policy,
which could cost five times
more for the same cover,
according to the website
travelsupermarket.com.
If you don’t want to pay
over the odds for fuel, choose
a hire company that allows
you to pick up and return the
car with a full tank. And try to
take your own extras, such as
a sat nav or a baby car seat.
Even when you have
returned the car and believe
Another benefit is that many of those
using Doctap tend to be young and
healthier. “You don’t get people who
want a full medical review,” he said.
“They tend to be young professionals
with no chronic conditions.” About 78%
of Doctap’s patients are under 40.
You can get access to an NHS doctor on
an ad hoc basis via a new smartphone service, GP at hand (gpathand.nhs.uk). It is
free for patients whose NHS GP has registered with the service.
After downloading an app called
Babylon you can chat to a doctor via
video link, meaning no waiting around at
a surgery. You can discuss your symptoms and show them a skin rash, for
example, using your camera phone.
You can typically arrange to see a GP
via the app within two hours, the GP at
hand website claims, although a face to
face meeting can also be arranged. Again,
though, the service is only available in
London.
Another service, called Doctaly (doctaly.com), is looking to raise £500,000 to
develop an Uber-style app, bringing GPs
and patients together. In return, it is
offering a total 7.69% share in the company. The money is being raised via the
crowdfunding website Crowdcube. Since
launching its appeal on November 13, it
has raised £446,900 from 365 investors.
The minimum investment is £10. A
£100 investment gives you one free Doctaly appointment, which typically costs
£39.99 for 15 minutes. You get five free
appointments for a £1,000 investment.
While some argue that a growing number of GPs offering private services is a
positive change, others, such as Jon Ashworth, Labour’s shadow health secretary, worry about a “two-tier” service.
He is concerned the private sector
could “cherry-pick patients” leaving the
the health service to respond to the rest.
This would amount to “the unacceptable
downgrading and devaluing of the universal public NHS”, he added.
Baroness Jolly, the Liberal Democrat
health spokeswoman, said it was “the
thin end of the wedge” and pointed out
that some GPs already offer “really flexible ways of working, from Skype consultations to email, to late evenings or Saturdays”.
The British Medical Association said
that the majority of GPs work exclusively
for the NHS and are “committed to ensuring all patients get access to the best possible care”. It added: “The government
must concentrate on funding GP services
adequately so they can meet the needs of
the public.”
Not only did it
save me having to
wait weeks to see
my GP, I also
didn’t have to take
time off work
Jill’s top tips for
staying out of
financial trouble
→ Continued from page 13
information include Pension
Wise (pensionwise.gov.uk),
Pension Advisory Service
(pensionsadvisoryservice.org
.uk), Money Advice Service
(moneyadviceservice.org.uk)
and the government’s own
website (www.gov.uk/planretirement-income), as well
as our own Ruth Emery, who
regularly writes about
pension issues.
AKIRA SUEMORI
everything is settled, extra
charges can be sneaked in.
This year, several Sunday
Times readers had hundreds
of pounds deducted from
their credit cards for damage
the rental companies claim
occurred while the car was in
their possession.
Give the car a thorough
inspection and take timedated photos that show its
condition at collection and
drop-off. Car hire firms often
do not bother to repair small
dents and if pre-existing
damage is not recorded at the
outset you could end up
paying for it.
One reader was dismayed
to discover he was being held
responsible for speeding fines
incurred in France. Luckily
he was able to prove he was
neither in the country nor the
car at the time.
Another reader accused of
speeding advised: “Keep all
your paperwork for at least
three months, log the mileage
when you return the car and
keep a list of your long
journeys so you know how
your mileage was made up.
Don’t rely on the company to
show compassion or real
customer care.”
YOUR STORY
Barrister Laura Poots would still use her local GP for something serious but says Doctap is great for ‘one-off checks’
Should you be able to pay to jump
the queue to see a GP?
Email money@sundaytimes.co.uk
Giving cash this Christmas? Make
sure the taxman doesn’t take a cut
If you’re being
generous with
the readies,
follow these
tips, says Anna
Mikhailova
If your eyes glaze over at the
sight of a Christmas gift
catalogue then cash may be
the best present for a young
relative — to put towards a car
or first home, for example.
With the taxman looking over
your shoulder, however, you
need to be aware of the rules.
When you make a “small
gift” of money — up to £250 —
neither you nor the recipient
has to pay any tax, regardless
of whether they’re related to
you or not. You can give as
many of these small gifts as
you want to different people
in any year.
For larger amounts,
everyone has an “annual
exemption” of £3,000 — the
amount they can give away
each tax year without it being
considered part of the value
of their estate when they die,
for inheritance tax purposes.
You cannot use the annual
exemption and the £250
small gifts allowance if you’re
giving to the same person.
Any unused allowance can
be carried forward to the
following tax year, meaning
the exemption can be up to
£6,000 per person. This
means a couple giving to a
child for the first time could
pass on as much as £12,000
tax-free in one year.
On top of that, you can also
give up to £1,000 per person
for “special occasions” such
as a wedding or civil
ceremony, rising to £5,000 if
the recipient is your child and
to £2,500 for a grandchild or
great-grandchild.
If you’re feeling even more
generous, you can gift larger
sums without paying tax,
provided you live for seven
years afterwards. If not,
inheritance tax will be
calculated on a sliding scale.
For example, it would be
40% if you died within three
years of gifting the cash,
provided your total estate
was worth more than the
inheritance tax threshold,
now £325,000. That rate
Disney’s Scrooge McDuck saved tax on cash gifts — by refusing to give in the first place
would drop if you lived longer
— to 8% between years six
and seven.
“You can give away most
assets, including cash and
shares,” said Patrick Connolly
of the adviser Chase de Vere.
“However, it has to be an
outright gift from which you
can no longer benefit. This
means you cannot give away
your home and continue to
live there unless you pay a
market rent.”
If you do not want your
children to have access to the
money straight away,
consider setting up a trust.
These hold assets on behalf of
named beneficiaries, often
children, and will not be
counted as part of your estate
if you live for seven years.
There may still be inheritance
tax liabilities if your assets are
worth more than £325,000,
however.
Trusts are a way to pass on
assets to someone without
the beneficiary having full
control of them. For example,
you can stipulate at what age
your child can benefit from
the trust.
Opening a junior Isa for
your children is not likely to
bring the same amount of joy
as a PlayStation, but it could
give them valuable financial
security in years to come.
You can pay up to £4,128
tax-free into a child’s Isa per
financial year. A parent,
grandparent, aunt, uncle,
godparent or friend can pay
into a junior Isa without
affecting their own annual Isa
allowance of £20,000.
You can also gift premium
bonds to children — up to
£50,000 per child, though a
parent or nominated
guardian will need to look
after the bonds until they
turn 16. Issued by the
government-backed National
Savings & Investments,
premium bonds pay no
interest but are entered into
NS&I’s monthly draw — with
prizes ranging from £25 to
£1m. No tax is payable on the
winnings.
While your child may not
thank you on Christmas Day,
they might be more grateful a
few years down the line.
15
The Sunday Times December 17, 2017
MONEY
Invest in shares or a pension and
the money returns to sender — you
Dividend income rises over time, and even the smallest retirement savings accrue, so what you squirrel away will deliver in the future
other political risks, history shows how
British funds can deliver the goods. For
example, when BlackRock took over the
management of its UK Smaller Companies investment trust in 2005, the initial
yield — its dividend expressed as a percentage of the share price — was just 1.2%.
Since then, this £620m fund has
increased its income distributions
through what it calls a “progressive dividends policy”, so that for every £1,000
invested in 2005, investors now receive
just over £100 in income. That’s an
annual yield of more than 10% on their
ed up finding Christmas original capital. Over the dozen years
presents for others? How about Mike Prentis has run this fund for Blackthis for an alternative idea: Rock, the total return on £1,000 invested
why not write as big a cheque as is £6,136, including £557 income. Fidelyou can afford and “post” it to ity, Janus Henderson and Rathbone are
yourself — to arrive in 10, 20 or among other fund managers that can tell
30 years’ time?
similar tales of growing income streams
That might sound daft but it after modest initial yields.
is also one of the most positive
This is the sort of thing that looks easy
ways to think about pension until you try to do it with your own
funding. Savers today are sending them- money. High yields can be a warning of
selves money to enjoy in the future.
trouble ahead, and investors who are too
I know from personal experience how greedy for income today may suffer capidifficult it is for a teenager or someone in tal erosion tomorrow.
their twenties to imagine how they will
Identifying shares that can compound
feel in their sixth decade. Believe me, returns — while avoiding those that look
though, the older “you” will be even less cheap but prove to be bad value — is a key
keen on things that bore you, and, having objective, explains Indriatti van Hien, a
escaped the daily grind, will have more UK equity income manager at Hendertime for things you both enjoy. The ques- son. She told me: “An example of a comtion is: will you have the income to do so? pounder would be the kitchen maker
The best reason to think about money Howdens Joinery, which has managed to
is that it should mean you don’t need to grow its dividends, while a value trap
worry about it. Yes, I know you have would be something like the car parts
more entertaining things to do right now, chain Halfords, which has an eye-catchbut do try to remember that the sooner ing yield but has struggled to progress
you tackle this task, the easier it will be to earnings or the share price.”
accumulate sufficient capital to
Even seasoned stock-pickers can
make the most of your final
get their fingers burnt when trydecades.
ing to tell the difference,
The good news is that
admits Carl Stick, who manages Rathbone Income.
low interest rates have
He recently sold his stake
cut mortgage costs and
Titles
are
tinsel,
power
a
made it easier for the
in Provident Financial
corrupter, glory a bubble,
young and middle-aged
after the doorstep lenand excessive wealth a
to save — ignoring for a
der’s share price collibel on its possessor
lapsed. Stick said: “Our
moment the intergeneraPercy Bysshe
current tactics reflect a safetional scandals of student
Shelley
debt and buy-to-let serfdom.
ty-first view of the world. Our
principal aim is to preserve capiThe bad news is they have also
tal, then grow distributions.”
made it harder for anyone to generate
income from savings and investments.
Helpfully, the Association of InvestNever mind nugatory returns from ment Companies’ website shows the
bank or building society deposits, which annual dividend growth rate for each
do not even keep pace with the rising rate fund over the past five years. So, for
at which inflation is eroding the purchas- example, while the average annual diviing power of money: several friends say dend yield across the industry is curthe dividend income from shares and rently 3.1% — which happens to be exactly
share-based funds looks far too meagre to the same as the inflation rate announced
pay for much fun in retirement.
last week — the average fund has raised its
Now new research by the world’s big- dividend by 4.2% a year over the past five
gest fund manager, BlackRock, shows years. If that rate of growth were to be
how equity income has risen in the past, sustained, the annual income received by
and is likely to be higher in future than investors would double in a little more
initial yield figures suggest today. The than 17 years — or rather less than the
explanation is that dividends — the average time spent in retirement.
income paid to shareholders — tend to go
Of course, the past is not necessarily a
up over time as a result of inventions and guide to the future and no one can go
improvements in efficiency.
back to buy at yesterday’s prices. Here
Companies that issue shares may also and now, though, everyone who can
be able to increase the price or profitabil- afford to set something aside to save or
ity of the goods and services they sell, and invest can send themselves a financial
to pass this income back to the sharehold- present to enjoy in the future.
ers who own these businesses. By con- ian.cowie@sunday-times.co.uk or
trast, depositors and bondholders — who @iancowie
buy a guarantee rather than a stake in
ownership — usually have no such protec- ST DIGITAL
Read a breakdown of Ian Cowie’s
tion against inflation.
Better still for patriotic investors, ‘forever’ fund
despite some fears about Brexit and thesundaytimes.co.uk/cowieholdings
PERSONAL
ACCOUNT
IAN COWIE
F
Red letter day: while it’s hard for the young to think about retirement savings, their older selves will be grateful they did when that ‘cheque’ arrives from the past
3.1%
4.2%
Average dividend yield of investment
trusts over the past five years
Average annual increase in dividend
payments over the past five years
LOOKING FOR
RISING INCOME?
CALL ON THE
DIVIDEND HEROES
they pay every year for the
past two decades or more.
That’s a remarkable
achievement because this
period spans the bursting of
the dotcom bubble, the
global credit crisis and
interest rates being cut to
historic lows before their
recent partial recovery.
Tobacco giant BAT, health
and safety specialist Halma,
energy supplier SSE and
investment trust Scottish
Mortgage are the only other
constituents of the FTSE 100
index that have managed to
raise income payouts for at
What have outsourcing
group Bunzl, metals
company Johnson Matthey,
and software outfit Sage got
in common? The clue is that
these companies are
members of an exclusive
group among Britain’s
biggest businesses: they
have all raised the dividends
least two decades. The latter
prompts painful memories
for this investor because I
was impressed by its
manager, James Anderson,
when I met him several years
ago but felt his preference
for Chinese technology
companies was just too
wacky for me. Doh!
Self-invested personal
pension specialist AJ Bell
has trawled through the
dividend records to identify
the most consistent sources
of rising income for
investors who favour direct
shareholdings on the stock
market over other pooled
funds. That’s clever of the
company, because pension
freedoms mean we don’t
have to retire as investors
when we finish working as
butchers, bakers or
candlestick makers.
Unfortunately, pension
freedoms also raise the risk
that some people’s savings
will expire before they do.
American investors are
familiar with shares that are
often described as ”dividend
heroes” but the concept has
yet to catch on here. My
guess is that it soon will.
If you really want to take a punt on bitcoin, here’s how
The digital
currency is
booming. Anna
Mikhailova
gives tips on
investing
With the price of bitcoin
having passed $18,000
(£13,500) — 23 times its value
a year ago — even the most
sceptical investors have
become curious about the
cryptocurrency.
Some have called it one of
the biggest speculative
bubbles in history, up there
with tulips in the 17th century
and the South Sea Company
in the 18th. Others insist it is
the future of finance.
It has certainly become a
talking point: “How to buy
bitcoin” was the UK’s second
most popular “how to” query
on Google this year. Last
week, bitcoin became one of
the top 10 most viewed
products on the UK’s biggest
investment platform,
Hargreaves Lansdown.
Here is Money’s guide to
the cryptocurrency of the
moment.
What is bitcoin?
It was launched in 2009 as a
payment method that allows
users to bypass middlemen
such as banks. There are no
actual coins; the currency is
simply a computer code
held in a “digital wallet”.
You need one of these
wallets before buying or
selling; you can do that free
via websites such as
blockchain.com.
Although bitcoin is
described as a currency, only
a tiny number of retailers
accept it. It might be better
considered a financial asset,
like gold.
“Bitcoin is a commodity, in
my view. It’s not a currency,”
said Andrew Bailey, head of
the Financial Conduct
Authority (FCA), the City
watchdog.
What has been happening
to the price?
Over the past few weeks,
bitcoin’s rise has been
stratospheric. When first
traded in 2010, the value was
less than 1 cent. The
cryptocurrency achieved
parity with the dollar in 2011,
was valued at $1,000 at the
start of this year, just under
$5,000 in September and at
more than $18,000 last week.
There have been
considerable downs as well as
Rise in the value of bitcoin over the year
Bitcoin
$20,000
$15,000
10,000
5,000
0
Dec
S
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
C i d k
ups, however. Between
November 2013 and April
2014, the price more than
halved, from $979 to $422. It
took nearly three years to
recover from the fall.
Would I be a fool to put
money into bitcoin now?
In 2014, the renowned
investor Warren Buffett called
bitcoin a “joke”. Since then,
the price has risen about 40
times.
Other big names in
business and finance have
been similarly scathing.
Could the joke be on them, or
will the price crash down
again? No one can be certain.
“People are rushing in as
the fashion fad grows, and
as the credibility also grows
— and nobody wants to miss
out on a quick win,” said
Justin Urquhart Stewart of
Seven Investment
Management. “But this
year’s fashion is next year’s
tank top.”
Is bitcoin regulated?
No, and the FCA says it has no
plans to introduce any rules
governing it. This means any
money you put into it will not
be protected by the Financial
Services Compensation
Scheme, which protects
£50,000 of investments held
with each firm.
How can I buy safely?
You can buy directly through
bitcoin exchanges, such as
coincorner.com, which is
based on the Isle of Man and
accepts deposits of as little as
£10. Customers can pay by
debit and credit card as well
as by bank transfer. The
minimum deposit for
coinfloor.co.uk, which
accepts only bank transfers,
is £2,500.
There have been problems
with digital wallet providers.
For example, hivewallet.com
closed down last year, leaving
customers unable to log into
their accounts. Recovering
their bitcoin proved to be
complicated.
The City of London police
confirmed to Money that it
had seen cases of fraud
related to the sale of bitcoin.
“People can buy through a
company and then later find
out the company didn’t
exist,” the force said.
There are also fears that
conmen could exploit the
cryptocurrency craze by
setting up fraudulent sites to
steal customer’s credit card
details.
A safer way to gain
exposure to bitcoin is
through an exchange traded
fund run by a mainstream
financial company with a
track record. Before
investing, check whether
the fund holds bitcoin
directly or buys “derivatives”
— products based on an
asset’s value.
Hargreaves Lansdown, for
example, offers two bitcoin
ETFs as well as a bitcoin
investment trust.
What about other
cryptocurrencies?
Bitcoin is the best known of
what are also called digital
currencies, but more than
1,000 others have already
been created.
The four most popular
after bitcoin are ethereum,
bitcoin cash, ripple and
litecoin. These have also
posted substantial gains in
recent weeks.
Where can I find out
more details?
There is wealth of
information online, so check
as many sources as you can.
Coindesk.com is a good
starting point to find out
about this strange new
financial world.
ST DIGITAL
Everything you ever
wanted to know about
bitcoin (but were too
afraid to ask)
bit.ly/STbitcoin
16
The Sunday Times December 17, 2017
MONEY
Who’ll deliver my pension now?
The collapse of a leading wholesale company has left former workers in the lurch. Ali Hussain asks where they can go from here
S
teve Sanday faces a huge cut
to the pension he built up diligently over 26 years following the collapse last month of
the company he worked for.
Sanday was an employee
of the wholesaler Palmer &
Harvey (P&H), which went
into administration with an
£80m black hole in its pension fund. Bosses of the loss-making company took lucrative dividends while the
pension deficit deepened.
Its demise means Sanday and many
other staff, past and present, may get far
less in retirement than they had hoped.
“Why should I and others like me have to
suffer while the directors get away with
millions in payments?” said Sanday, 56,
who has a £130,000 pension pot.
Sanday, who trains delivery drivers,
left the company last year, but much of
his retirement savings is tied up in the
P&H scheme. “We are constantly told to
save for our retirement but the risks are
never highlighted,” he said.
Unless some other company or investor steps in to rescue P&H and plug the
deficit, its pension fund will be transferred to the Pension Protection Fund
(PPF), the state lifeboat for defined benefit retirement schemes.
The PPF guarantees to pay only 90% of
the pension to those who have not yet
reached the retirement age for their
scheme, but 100% to those who have
reached that age. More significantly, their
income will rise by far less each year,
meaning a loss of tens of thousands of
pounds over the course of their retirement.
However, there is some hope after the
intervention of Frank Field, chairman of
the Commons work and pensions committee. He has written to the trustees of
the P&H scheme, asking them to explain
how they ran up such a large deficit.
The black hole more than doubled
after a management buyout in 2008,
when shareholders and some directors
took about £70m in dividends from the
grocery and cigarettes wholesaler.
Field told Money he is considering proposing legislation that would allow funds
to be clawed back from “those who benefit so well by shoehorning wealth out of
companies”, and asked “whether they
shouldn’t pay money back to cover a pension scheme deficit”.
The MP added: “We need to find out
when the [P&H] pensions deficit
emerged, how quickly and under what
regime. Also, what were the consequences of the changeover of the most senior
people [following the 2008 management
buyout]?”
A petition calling for P&H’s finances to
End of the road: 2,500 people were made redundant when Palmer & Harvey went into administration last month. It has an £80m deficit in its pension scheme
FIRST STEPS TO
RETIREMENT
YOUNG SAVERS
TO JOIN SCHEME
Automatic enrolment will be
extended to those aged 18-21
The government has
announced radical changes
to our pensions system,
including extending
auto-enrolment to those
aged 18 to 21 and effectively
raising contributions by
employees and employers.
What is planned?
Since 2012, employers,
starting with the largest,
have gradually been
required automatically to
enrol workers aged 22 and
over into pension schemes.
From the mid-2020s, the
minimum age will fall to 18,
extending the scheme to
another 900,000 people.
In future, the amount of
money both employees and
employers contribute will
be determined by total
earnings rather than by
earnings above the
“qualifying threshold”, which
is presently £5,876. This
means both sides will pay in
more, unless the employee
opts out. The system will
continue to apply only to
those who earn at least
£10,000 a year, subject to
annual reviews.
The changes are expected
to add £3.8bn to pension
contributions — an extra
£1.4bn from employers,
£1.8bn from employees and
£600m from tax relief.
Why are these changes
being made?
Despite auto-enrolment
having been in place for
five years, the government
estimates that 12m people —
38% of the working
population — are still not
saving enough for their
retirement.
What will be the effect?
Starting to save into a
pension at age 18 rather than
22 could boost your pension
pot by £67,000 (taking all
your earnings into account)
over the course of a typical
working life, according to
wealth manager Hargreaves
Lansdown. This is based on
a starting salary of £28,000,
rising in line with inflation,
and an investment return of
5% a year.
What else is changing?
The minimum amount that
must be contributed will be
reviewed after 2019. The
total contribution is
presently 2% of your
earnings (0.8% from you, 1%
from your employer and
0.2% as tax relief). It was
already due to rise to 8% in
April 2019 (4% from you, 3%
from your employer and 1%
as tax relief).
The government will also
test ways to encourage
retirement saving by the UK’s
4.8m self-employed people,
who do not benefit from
auto-enrolment.
Is it enough?
The pace of change has
been condemned as
“shockingly lethargic” by
Sir Steve Webb, the former
pensions secretary, who is
now director of policy at
Royal London.
He says the government is
not doing enough to help a
“lost generation” of people
in their late forties and
fifties who never had a
chance to join a final salary
scheme and have only
recently come into pensions
via automatic enrolment.
be investigated has already received
more than 11,500 signatures. More
details at bit.ly/PH-sign.
Field has a track record of obtaining
redress for pension savers. He was one of
the leaders of a parliamentary investigation into the collapse of BHS. Sir Philip
Green, the department store chain’s
former owner, subsequently paid £360m
to help plug a £571m deficit in its fund.
A pattern is emerging, said Field,
where owners and directors of businesses “take out very large sums and then
the companies collapse”, often with pension deficits.
The MP said he would be raising further questions about the BHS rescue,
having obtained documents that suggest
perhaps more could have been done to
plug the shortfall in its fund.
Defined benefit pensions are increasingly rare because they can be costly to
maintain. As the name suggests, they
guarantee a certain income in retirement
regardless of how well a scheme’s underlying investments perform.
The PPF is funded by a levy on all
workplace pension schemes, which may
rise if more defined benefit funds come
under its wing. Field said the present system “means we tax the righteous who
have done well to cover up the misbehaviour of people who take huge sums out of
their companies”.
While the PPF “is a good backstop”, it
will leave savers short when they retire,
according to Nathan Long, a pensions
expert at the wealth manager Hargreaves
Lansdown.
Typically, defined benefit pension
payments rise each year in line with
the retail prices index (RPI) level of inflation — 3.9% at present — up to a maximum
of 5%.
Under the PPF, any pension built up
before April 6, 1997 will not increase,
while the income from later contributions will rise in line with the consumer
prices index of inflation — generally lower
than RPI, and 3.1% at present — capped
at 2.5%.
“It means the value lost could be far
greater than the 10% reduction when a
fund enters the PPF,” said Long.
Sanday, from Kenilworth in Warwickshire, hopes he will not lose out. “I have
done nothing wrong. I am just an ordinary worker,” he said.
PwC, the administrator of P&H,
declined to comment on individual
cases.
It has set up a web page with information for members of the defined benefit
scheme and other retirement savers at
the company, where more than 2,500
people have been made redundant — see
bit.ly/PwC-PH.
The landlord’s dropped his guard,
now get him to drop the rent
This was the year
that I...
Camilla Thurlow, Victoria Derbyshire, Sathnam Sanghera
and more on what made 2017 momentous.
Pick up your copy of The Times tomorrow.
If you love DIY
and hate house
parties, this is
the time to ask
for a reduction
Anna Mikhailova and
Fiona McFarlane
The five-bedroom brick
house on a quiet suburban
street seemed like the perfect
home to Rosco Faulkes and
his friends when they came
across it on Rightmove, the
property website.
Faulkes had been looking
for a place to rent with three
housemates in Worthing,
West Sussex. The only
problem was that, at £1,250 a
month, plus bills, the rent
was more than they could
afford.
So the friends made the
landlord an offer: they would
refurbish his house, which
hadn’t been redecorated in a
while, if he would knock £150
off the rent.
The landlord agreed and
the housemates moved in and
got to work.
“When we first had a look
around the house, we saw the
wallpaper was half falling
off,” said Faulkes, 28, who
works in social media.
“We told him he would
have a hard time renting it in
that state and offered to
decorate it for a discount on
the rent. We painted the
entire place, did woodwork
and gardening — the saving
was a lot of money for us.”
Such initiative can really
pay off for tenants, especially
at this time of year. Last year,
tenants looking to negotiate a
lower rent had most success
in December, according to
Arla, the industry body for
letting agents.
Rents across the UK,
meanwhile, are continuing to
rise, albeit more slowly than
they have done. In the year to
December, they were up
0.53%, according to research
by Landbay, a buy-to-let
mortgage lender. This
compared with 1.22%
growth in 2016 and 2.3%
in 2015.
Nevertheless, rent takes a
significant bite out of people’s
budgets. Someone renting a
property outside London
from the age of 21 will
typically spend £110,800 on
rent by the time they come to
buy a house, according to
Landbay. The figure is more
than twice as high in the
capital.
Melisa Greenfield, 27,
managed to prevent a rent
rise on her three-bedroom
flat in Fulham, southwest
London. When her letting
agent told her the £1,595 rent
would be going up by £75 a
month, Greenfield and her
housemate said they would
rather move out than pay
more.
Having spoken to
neighbours, the tenants knew
the landlord had previously
found it difficult to let out the
flat. They hoped he would
prefer to keep the rent the
same for another year, rather
than risk sitting on an empty
property.
“The neighbours told us
the property had been empty
for years before we moved
in,” said Greenfield, who
works as a copywriter. The
gamble paid off and the
housemates signed a contract
for another year at the same
rate.
How to haggle
You don’t have to wait until
your landlord hikes the rent
to negotiate down your
monthly payments.
Once you have proven that
you are a good and reliable
tenant, you should not shy
away from making a lower
offer.
“Don’t be afraid to ask,”
said Tahir Farooqui, the
founder of Canopy, a website
that brings together tenants,
landlords and agents. “Most
tenants don’t even think to
ask if there is room for
negotiation on rent.”
Think what you can do for
the landlord. For those who
are not as handy with DIY,
you could suggest extending
your termination period,
which will give the landlord
more time to find a new
tenant when you eventually
decide to move on. If the
property comes with a
parking space, giving that up
could also help.
Before you ask for a rent
cut, however, research the
local market and see what is
happening in terms of
comparable properties.
Rents might have fallen since
you moved in, for example. If
you think your rent is now
too high, however, use
examples to back up your
argument.
It helps to present a case
for why you are worth the
discount. Whether you are
Last year,
tenants
looking to
negotiate had
most success
in December
trying to avoid a hike, like
Greenfield, or lower your
existing payments, your past
record in the property is what
counts.
“The key is to make it
obvious that you are a good
tenant,” said David
Lawrenson, author of the
Tenants’ Guide to Successful
Renting. “If you have been
little trouble to the landlord
then you stand a better
chance of negotiating the
rent down.
“For example, if you save
your landlord money on
repairs, that may help get a
lower rent. There are a lot of
small, fiddly jobs in a house
that you could probably
safely do yourself. If you’ve
been calling the landlord to
get a plug changed, don’t
expect a rent reduction.
“Landlords are more likely
to negotiate rents with the
sort of tenants who don’t
upset neighbours with noisy
parties and who treat the
local area with respect.
Dumping old sofas outside
the house and having a rowdy
party every night will not get
you a rent cut.”
Getting your deposit back
Keeping the rental bill down
is not the only challenge
facing tenants — getting your
deposit back in full once your
contract ends can also be an
issue. One in three renters
think they unfairly lost
money on their deposit,
according to a survey of 1,000
tenants by Canopy.
You can maximise your
chances of getting your
deposit back by taking photos
or videos of all the rooms
when you move in, to
document existing wear and
tear. Repeat this when your
contract ends.
Make sure you spring clean
the property during your
time there, about twice a
year, and check your
contract to see whether
the landlord has specified
any conditions when you
leave, such as cleaning the
windows. If you can do this
yourself, you can prevent it
being deducted from the
deposit.
It can also help to ask
your landlord to come round
and inspect the property
a few weeks before you
leave, so they can let you
know what they think needs
fixing or cleaning. This
will give you time to have
the property ready and
ensure you don’t lose money
on your deposit.
YOUR STORY
Have you succeeded in
getting your landlord to
lower the rent?
money@sundaytimes.co.uk
17
The Sunday Times December 17, 2017
MONEY
Best Buys
CURRENT ACCOUNTS
FOREIGN
CURRENCY
CREDIT INTEREST
Provider
Account name
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Interest rate 1
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TSB
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They are not indicative
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£10 a month 5 15.9%
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Yes
0808 540 5060
SWITZERLAND
GBP>CHF
BALANCE TRANSFERS
Provider
Card type
Introductory purchase Transfer fee 2
APR
Contact
Barclaycard
Platinum 38 Month Visa
0% for 38 months
1.4%
19.9%
0800 731 0200
MBNA
Platinum 37 Month Visa
0% for 37 months
1.89%
19.9%
03456 062 062
Sainsbury's Bank
37 Month For Nectar
0% for 37 months
1.98% 3
18.9%
08085 40 50 60
AUSTRALIA
GBP>AUD
3 £3 minimum.
CASHBACK CARDS
Provider
Card type
APR 1
Cashback
28.2%
1%-1.25%. Intro 5% for 3 months (up to £125) 0800 917 8047
American Express Platinum Cashback Everyday 22.9%
0.5%-1%. Intro 5% for 3 months (up to £100) 0800 917 8047
American Express Platinum Cashback
Select Visa
Nationwide
15.9%
Contact
0.5%
0800 055 6611
1 APR = annual percentage rate, dependent on credit rating. 2 Fee charged on the amount of each balance transfer during the introductory period.
Source: Moneyfacts.co.uk
Source: timescurrencyservices.co.uk
020 7294 7970
MORTGAGES
MONEY
MADE EASY
LOWER WATER
BILLS
2-YEAR FIXED RATES
Lender
Rate
Scheme
Deposit
Fee
Notes
Contact
Sainsbury’s
1.19%
Fixed to 31.3.20
40%
£745
LV
0345 111 8010
Nationwide
1.34%
Fixed for 2 years
25%
£999
GV
0800 302 010
HSBC
1.94%
Fixed to 28.2.20
10%
£999
LV
0800 494 999
Lender
Rate
Scheme
Deposit
Fee
Notes
Contact
Nationwide
1.59%
Fixed for 3 years
40%
£999
GV
0800 302 010
HSBC
1.64%
Fixed to 28.2.21
25%
£999
LV
0800 494 999
Barclays
2.19%
Fixed to 31.1.21
10%
£999
LV
0333 202 7580
Household water bills in
England and Wales will
fall, the regulator Ofwat
has pledged, but you will
have to wait until 2020 to
see the benefits.
3-YEAR FIXED RATES
LONG-TERM FIXED RATES
Lender
Rate
Scheme
Deposit
Fee
Notes
Contact
Coventry
1.75%
Fixed to 31.3.23
35%
£999
LV
0800 121 8899
HSBC
1.99%
Fixed to 28.2.23
20%
£999
LV
0800 494 999
Barclays
2.49%
Fixed to 31.1.23
10%
£999
LV
0333 202 7580
First Direct
2.69%
Fixed for 10 years
25%
£0
LV
0800 482 448
Deposit
Contact
Why will bills fall?
Ofwat has been criticised
in the past for allowing
years of above-inflation
price increases. Since the
industry was privatised in
1989, water bills have
risen at a pace 40% faster
than the cost of living.
This has raised questions
about whether
privatisation is working.
Last week the regulator,
which sets how much
water companies may
charge customers, said
that from 2020 those
suppliers should expect
their “cost of capital” to be
no more than 2.4%, down
from 3.7% in 2014.
TRACKERS */ DISCOUNTS
Lender
Rate
Scheme
Fee
Notes
HSBC
1.24%
Tracker +0.74% for 2 years 40%
£999
ELV
0800 494 999
Leek United
2.02%
SVR -3.42% for 2 years
£199
EV
0845 219 0250
Nationwide
1.94%
Tracker +1.44% for 5 years 25%
£999
EGV
0800 302 010
Hanley Economic
1.75%
SVR -3.44% for term
25%
£950
LV
01782 255 000
10%
FIRST-TIME BUYER / LOW DEPOSIT
Lender
Rate
Scheme
Deposit
Fee
Notes
Contact
Yorkshire BS
3.39%
Fixed to 29.2.20
5%
£995
PD
0345 166 9510
Hanley Economic
3.1%
SVR -2.09% for 2 years
5%
£250
PV
01782 255 000
Barclays
2.69%
Fixed to 31.1.21
10%
£0
FP
0333 202 7580
BUY TO LET
Lender
Rate
Scheme
Deposit
Fee
Notes
Contact
Virgin Money
1.79%
Tracker +1.29% to 1.4.20
40%
£995
D
0345 605 0500
Barclays
1.84%
Fixed to 31.1.20
25%
£1,950
R
0333 202 7580
Leeds
2.19%
Fixed to 31.3.23
40%
£1,999
LV
0345 045 4049
How much will this save?
Not a life-changing
sum: the regulator
estimates average savings
of £15-£25 a year per
customer over a
five-year period. The
average annual water
and sewerage bill is
about £395.
Early repayment charge applies unless otherwise stated. * Most deals track Bank of England base rate. Notes: SVR = Standard variable rate;
D = £500 cashback; E = No early repayment charge; F = Family Springboard, 10% deposit must be in a Barclays Helpful Start account; G = £500
cashback for first-time buyers and remortgages; G = £500 cashback for first time buyers and remortgages; L = Free legal work for remortgages;
P = Purchases only; R = Free valuation and legal work for remortgages; V = Free valuation.
Source: landc.co.uk — 0800 373 300
SAVINGS ACCOUNTS
Are there ways to save
more money?
Yes. One option is to
install a water meter:
keeping tabs on water
consumption means
households use about 30
litres less per person each
day than those without a
meter, according to Water
UK, the industry’s trade
association.
Water companies in
England and Wales must
fit meters for free on
request unless it is
justifiably impractical to
do so, such as in flats with
shared pipes.
As a rule, you will pay
more with a meter if more
people live in your house
than there are bedrooms
— and vice versa.
INSTANT ACCESS
Provider
Account name
Min deposit
Interest rate
Contact
Post Office 1
Online Saver Issue 28
£1
1.3%
postoffice.co.uk
Freedom Account
£100
1.3%
rcibank.co.uk
Double Take E-Saver Issue 3
£1
1.26%
uk.virginmoney.com
RCI Bank*
Virgin Money
2
1 Rate includes 1.05% bonus for first 12 months. 2 Maximum of two easy access withdrawals a year. Account not available to anyone who has held it in the past 6 months.
NOTICE ACCOUNTS
CASH ISAS
INSTANT ACCESS
Provider
Account name
Shawbrook Bank
Easy Access Issue 1
Min deposit Interest Transfers in Contact
£1,000
1.1%
Yes
shawbrook.co.uk
Post Office 1
Online Issue 11
£100
1.07%
Yes
postoffice.co.uk
Provider
Account name
Notice period
Min deposit
Interest rate
Contact
FIXED RATE
Secure Trust Bank 1
180-day
180 days
£1,000
1.65%
securetrustbank.com
Provider
Account name
Term
Min deposit Rate
Secure Trust Bank
120-day
120 days
£1,000
1.55%
securetrustbank.com
Virgin Money
Cash E-Isa Issue 295
1 year
£1
1.41% Yes
uk.virginmoney.com
90-day
90 days
£1,000
1.45%
bankandclients.com
West Brom BS
Fixed Rate Isa
2 years
£1,000
1.65% Yes
westbrom.co.uk
1
Bank and Clients
1 Maximum four interest withdrawals and three capital withdrawals a year.
Transfers in Contact
Source: Savingschampion.co.uk — 0808 178 5354
FIXED-RATE BONDS
Provider
Account name
Term
Min deposit
Interest rate
Contact
United Trust Bank
Year Bond
1 year
£500
1.87%
utbank.co.uk
Secure Trust Bank
Fixed Rate Bond (23.12.19)
2 years
£1,000
2.06%
securetrustbank.com
Access Bank UK
Fixed Rate Bond
3 years
£5,000
2.25%
sensiblesavings.co.uk
DEALS ARE LISTED ONLY IF THEY ARE COVERED BY THE UK FINANCIAL SERVICES COMPENSATION SCHEME (FSCS) OR A EUROPEAN EQUIVALENT
Source: Savingschampion.co.uk — 0808 178 5354
CHILDREN’S ACCOUNTS
Provider
Account name
Account type
Min deposit
Interest rate
Contact
Halifax
Kids’ Regular Saver
Regular Saver
£10-£100
4.5%
halifax.co.uk
Santander 1
123 Mini Current Account
Current Account
£300
1%-2.96%
santander.co.uk
Cambridge
3-year Fixed Rate Bond (Issue 1) Fixed Rate Bond
£1,000
2%
cambridgebs.co.uk
1 Interest rates are tiered: 1% on balances of £100-£199; 1.98% on £200-£299; 2.96% on £300-£2,000.
ENERGY DEALS
Table shows the cheapest tariff from the 3 cheapest
suppliers.Excludes
suppliers.
Excludesfixed
fixedtariffs
tariffsof
ofless
lessthan
than12
12
months’ duration. Excludes tariffs that do not have
national coverage. Excludes tariffs where payments
are taken in advance of the customer coming on
supply. F=Fixed rates V=Variable rates
HAVE
YOUR SAY
EDITED BY
FLORA
McFARLANE
To fight fraud,
follow the money
Anyone who has ever tried to
report a scam will know that
it feels like the complaint falls
on deaf ears (“Bank let
fraudster use my account”,
last week). The police, too,
appear only to want to record
the crime rather than follow
the trail and try to recover
the money.
In this case, the money
moved to a Barclays account.
I think in such cases the
victim should have a right to
be told the trail of the funds
from bank to bank, and to
receive a report about it
from the police and a reason
why they have failed to
recover the money.
I suspect not all scammed
money is taken out in cash
and that, with some effort, it
could be identified within the
banking system.
MJ, via sunday-times.co.uk
A similar attempt was made
on my HSBC account last
week. A man phoned to
say there had been a
fraudulent transaction of
£998.90, asked for answers to
the online security questions
and then requested the code
that was going to be sent to
my mobile.
Fortunately I realised this
wasn’t normal, so I put down
Average annual bill
Rate
Contact
Provider
Account name
Min deposit
Interest rate
Rate
Contact
Together Energy
£832
F
0333 150 1699
Coventry
Junior Cash Isa
£1
3.5%
V
coventrybuildingsociety.co.uk
Tonik
£842
F
0333 344 2686
Nationwide
Smart Junior Isa
£1
3.25%
V
nationwide.co.uk
Bulb
£855
V
0300 303 0635
Tesco Bank
Junior Cash Isa
£1
3.15%
V
tescobank.com
Source: TheEnergyShop.com — 01259 220 270
the phone and called the
bank. There was no
fraudulent activity, but I then
realised the HSBC Premier
banking telephone number
was exactly the same as
the one the scammer was
ringing on.
I was so lucky not to have
given away the information —
I almost did. Be aware!
BL, via sunday-times.co.uk
Barclays must know the
holder of the account to
which the money was sent. If
not, are they liable for money
laundering?
CJ, by email
Barclays responds:
“Unfortunately, as with many
of these crimes, the funds are
moved very quickly, often
before the victim is aware of
what has happened. In this
account if we discover it to be
used inappropriately.”
HSBC won’t let
me go offshore
Ali Hussain writes that most
high street banks offer their
customers an offshore
account (“Is it time to
Corbyn-proof your
finances?”, last week).
I have been a customer of
HSBC for 50 years, with an
impeccable financial history.
I also have a Premier account.
When I tried to open an
offshore account I was told I
was not eligible. The bank
said that for the past 10
months it has been bringing
its offshore accounts back to
Britain and that decisions [on
who gets one] were made on
an individual basis. It would
not give me a reason, though.
My husband, who has a
similarly unimpeachable
financial record, tried to do
the same with Lloyds bank
and was also refused.
AM, Manchester
Stop closing
branches
A fraudster took out a loan
in Ben Bowman’s name
instance the funds had been
fully utilised prior to Barclays
being alerted to this scam.
“Barclays has a robust ID
and verification process,
which was followed when the
account was opened, which
was a number of years ago. As
soon as we are informed about
suspicious activity on an
account, we will act swiftly to
investigate and to close the
Peter Conradi’s column last
week (“My local branch is
closing — it’s just too
popular”) resonated with me.
NatWest closed its branch
here in Frodsham, Cheshire,
in October. While not being
privy to the business
conducted at the branch, I
often banked for a local
business before my
retirement, and then for a
local charity shop, and there
were always queues.
NatWest started
“downgrading” the branch by
closing it on Thursdays,
which is market day, the
busiest day of the week, when
people from surrounding
villages came to do their
business and their banking.
V = variable rate. Source: Savingschampion.co.uk — 0808 178 5354
The closure of this branch
followed the closure of HSBC
and will be followed by
Barclays, leaving just TSB
and Nationwide. Nationwide
has no cash machine and
TSB’s machine is inside the
branch, as it is a listed
building.
Online banking is useful
but does not help local
businesses banking their
takings or people wanting
human contact when
discussing their finances.
Frodsham has an older
population, with more than
26% being over 60. I do not
think local conditions are
ever taken into consideration
by the big banks.
GH, Frodsham, Cheshire
He is getting plenty of dosh
for peddling his tongue-incheek comedy.
TL, Bury, Lancashire
I regularly see readers’ letters
about the closure of branches
and customers being
“pushed” into online
banking. I have read that
about 90% of bank customers
have an average bank balance
of much less than £25,000
and that the bulk of the
money the banks utilise to
fund borrowing is provided
by 10% of customers — the
very wealthy.
If this is true, common
sense would suggest that the
average customer is an
expensive liability and can
be dispensed with. How can
the banks justify this? Find a
reason to make life awkward!
Santander seems to be
opening branches where
others are closing them.
CS, Sherburn in Elmet,
North Yorkshire
I note that Hunter received a
winter heating allowance of
£300 last month — how come
I got only £200?
AD, Marlow, Buckinghamshire
Laughing all the
way to the bank
Hunter Davies’s articles
are always good for a laugh,
but we should not take this
old geezer at face value
(“Listen, kids, I’m paying
through the nose for my
golden years”, last week).
For me, the ultimate low
cost of the high life is the
free ski lift pass for seniors
(age varies by resort), which
I’ll be using again this year. I
will be 81 in January. It saves
about £200.
JP, London W4
How many hours is Hunter’s
cleaner working if it costs him
only £25 a week? Or is the
cleaner attending every
couple of weeks and this is
the average sum? The going
rate here is £12-£15 an hour.
JO, Cheltenham
The payment is £200 for those
born between September 24,
1937 and August 5, 1953,
but rises to £300 for those,
such as Hunter, who were
born before this period.
The eligibility dates change
annually.
We love to receive your
feedback on stories and
your views on any issues
you would like us to
investigate. Always
include your name and
address when contacting
us. Letters may be edited.
WRITE TO
Money, The Sunday Times
1 London Bridge Street
London SE1 9GF
EMAIL
money@sundaytimes.co.uk
TWITTER
@ST_Money
ICONS BY JAMIE JONES
JUNIOR ISAS
Supplier
Top tip
In England and Wales,
companies provide watersaving devices — usually
free — that customers can
install or use themselves.
Visit your water supplier’s
website for more details.
Ali Hussain
18
The Sunday Times December 17, 2017
MONEY
Puzzles
FEEDBACK
Comments about our puzzles
can be sent to puzzle.feedback@
sunday-times.co.uk or Puzzles
Editor, The Sunday Times,
1 London Bridge Street,
London SE1 9GF
GENERAL KNOWLEDGE JUMBO CROSSWORD 88
1
2
3
4
5
6
7
13
Across
8
9
10
11
12
16
18
19
17
20
21
23
22
24
25
28
29
32
37
26
27
30
33
34
31
35
36
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
1 Oxford University student from USA, Germany or the
British Commonwealth (6,7)
Assigned delivery periods (4,5)
2017 winner of The Great British Bake Off (6,5)
Regalia including 23,578 gemstones (5,6)
Tree-dwelling nocturnal Madagascan lemur with long thin
fingers (3-3) (pictured)
16 A method by which a gambler hopes to gain an advantage
over the house (6)
17 A player of this instrument may press buttons or keys like
those of a piano (9)
18 ____ lynx is another name for a caracal (6)
19 Ms Ciccone whose Like a Prayer album was released in
1989 (7)
20 Female runner who had a 100% winning record until she
was defeated by Hippomenes (8)
23 Inhabitants of Timisoara, Ploiesti or Iasi, for example (9)
25 D H Lawrence’s closely autobiographical novel about the
Morel family (4,3,6)
28 The heavens streaked with long parallel white masses of
cloud (8,3)
30 Famously armless statue of Aphrodite in the Louvre (5,2,4)
32 The Thames Tunnel, now used by the East London line,
connects ____ and Wapping (11)
35 Redraw electoral boundaries so as to give one party an
unfair advantage (11)
37 ____ recorded Elgar’s Violin Concerto when aged 16 in 1932 (6,7)
39 Temporary places to sleep, colloquially (5,4)
40 Traitors were hurled from the ____ rock on Rome’s
Capitoline Hill (8)
42 British silver coins withdrawn from circulation in 1993 (7)
43 Capital of Dominica (6)
46 Top of the Lake star, ___ Moss (9)
47 A deed held by a third party, which takes effect when a
specified condition is fulfilled (6)
48 ____ Husain, Radio 4 Today
presenter since 2013 (6)
50 Where movies are edited (7,4)
51 Common British butterflies —
or Soviet officers? (3,8)
52 Wartime farm workers (4,5)
53 Tail-ender sent in to bat when
a wicket falls close to the end
of a day’s play (13)
8
13
14
15
14
15
NEWS QUIZ
53
1
Solution to 87
Across: 1 Tuba, 3 Maupassant, 9 Hashtag, 14 Subscriber trunk dialling, 15 Dalai Lama,17 Envy, 18 Cerebral, 20 Lenient, 22 Hell Drivers, 23 Yak, 25 Katie Boyle, 27 Clarionets,
30 Patella, 31 Stylobate, 32 Envoi, 33 Idiot, 35 Anita Loos, 36 Air blue, 38 Hesperides, 39 Wheatstone, 42 Sov, 43 The Naked Gun, 45 Enclose, 47 Fury Road, 48 Argo,
49 Rosenthal, 52 Tweedledum and Tweedledee, 54 Yonkers, 55 Perfect Day, 56 Yard
Down: 1 Tess Daly, 2 Babylon, 4 Aviva, 5 Poe, 6 Sitwell, 7 Ayurveda, 8 Tiki, 9 Haile Gebrselassie, 10 Silverstone, 11 Thierry Neuville, 12 Gogol, 13 Occidental, 16 A Shropshire
Lad, 19 William Shatner, 21 The Paradise Papers, 24 Kishinev, 25 Katniss Everdeen, 26 Layman, 28 Uprights, 29 Moloch, 34 Trent Bridge, 37 Root canals, 40 Lehrjahr,
41 Well-read, 44 Geordie, 46 Ophidia, 47 Fatty, 50 Siena, 51 Sump, 53 Wit
CONCISE CROSSWORD 1552
1
2
3
4
5
Across
6
7
8
9
10
12
11
13
14
16
15
17
Down
1 Wintry weather (4)
4 Gift (8)
8 Jewish New Year
festival (4,8)
9 Unavoidably (8)
11 Crack in a cracker (4)
12 Rhododendron relative (6)
14 Mooring cable (6)
16 Umbrella (4)
17 Bosom (8)
19 Help (12)
21 Came up (8)
22 Journo (4)
2
3
4
5
6
7
9
10
13
15
18
20
Bottle (5)
Optimistic (7)
Silly me! (3)
Corrugated iron
shelter (6,3)
Of fire (7)
An extreme extent (3,6)
Fool around (4,5)
Faithful (9)
Hospital social worker (7)
Spineless (7)
Pick-me-up (5)
Count (3)
18
19
Solution to 1551
Across: 1 Defiant, 5 Udon, 7 Penny-pincher, 8 Holy, 9 Symbolic, 11 Caress,
13 Heeded, 15 Piquancy, 18 Arty, 19 Verification, 20 Stir, 21 Lenient
Down: 1 Diploma, 2 Funny peculiar, 3 Abyss, 4 Triumph, 5 Uncooperative, 6 Obeli,
10 Cad, 11 Cop, 12 Sundial, 14 Extinct, 16 Inert, 17 Yearn
20
21
22
EASY
48
+ 22 x 3
MEDIUM
59
x 3 + 25 – 4
HARDER
32 SQUARE
IT
- 3/8
OF IT
DOUBLE
IT
CELL BLOCKS
÷5
HALF OF
IT
÷6
–2
x 7 + 22
+ 2/3
÷ 15
x4
–1
+ 1/3
- 1/3
+ 4 + 25 - 3/5
OF IT
- 30% DOUBLE
IT
OF IT
–2
OF IT
OF IT
x6
OF IT
ANSWER ANSWER ANSWER
BRAIN TRAINER
Just follow the instructions from left to right, starting with the
number given to reach an answer at the end
Down
8
4
4
6
6
9
2
3
4
Divide the grid into blocks.
Each block must be square or
rectangular and must contain
the number of cells indicated
by the number inside it.
3
1 Dingwall was its county town
(4,3,8)
2 Offenbach’s “Underworld” hero (7)
3 Ellis Bell (5,6)
4 “I wanted your ____ verges / But you gave me the hard
shoulder” (Adrian Maurice Henri) (4)
5 Phil Redmond’s soap-opera set in Chester (9)
6 Russian revolutionary, born Lev Davidovich Bronstein in
1879 (4,7) (pictured)
7 Composer of Rhapsody on a Theme of Paganini (11)
8 Rev W Awdry’s tank engine (6)
9 Rumpy or stumpy (4,3)
10 African republic which underwent civil war from 1992 to
2002 (6,5)
11 “What we call ‘morals’ is simply blind ____ to words of
command” (Havelock Ellis) (9)
12 ____ Reid, co-presenter of Good Morning Britain since 2014 (7)
21 East London location of a Ford factory since 1931 (8)
22 The composer with the most pages in Nicholas Slonimsky’s
Lexicon of Musical Invective (6)
24 ____politik, German power politics (5)
26 Sports presenter who succeeded Richard Whiteley as host
of Countdown in 2005 (3,5)
27 Compiler of the Younger 49D (6,9)
29 Monetary unit of Thailand, one hundredth of a baht (6)
31 Its states include Haryana, Manipur and Tripura
33 BBC rugby league commentator remembered for his “early
bath” and “up and under” catchphrases (5,6)
34 US musical and comedy star associated with the song
There’s No Business Like Show Business (5,6)
35 Paracetamol, eg, in plain packaging with no branding (7,4)
36 Food which supposedly arouses one’s sexual appetite (11)
38 Weir of ____ , Robert Louis Stevenson novel set in southern
Scotland (9)
39 Pact between the Vatican and
a secular government (9)
40 A male hawk (7)
41 Steed, Cathy Gale, Emma
Peel or Tara King (7)
44 Joseph’s younger son who
received the principal blessing
of his grandfather Jacob (7)
45 Poultry in Australia (6)
49 Either of two medieval
Icelandic anthologies (4)
4
A Greenland shark,
pictured, is the oldest
vertebrate alive. How old?
5
Who lost his run for the
US Senate in Alabama
amid a sex scandal?
Which British city said it
was all over for Uber?
2
What did stand-up Peter
Kay decide to sit out?
3
Cyclist Chris Froome,
who failed a doping test,
took too much of a drug
for which condition?
6
7
MARK MY
WORDS 86
Send your entries to: puzzle.entries@
sunday-times.co.uk by no later than
Tuesday. Entries should include a postal
address and the email subject line must
be ‘Mark My Words 86’. The best entry as
judged by The Sunday Times will win The
Chambers Dictionary of Great Quotations.
Each number in the main grid
can be formed by adding or
multiplying a pair of numbers
in the strip below the grid.
Each pair of numbers should
be used twice: once as part of
an addition and once as part
of a multiplication. For
example, a 10 and 24 in the
main grid may be solved by
the sums, 4 + 6 and 4 x 6,
respectively. Enter each sum
in the boxes below its answer.
Any blanks in the strip must
be deduced, bearing in mind
the numbers are listed in
ascending order.
Women are happier than
Terms and conditions:
Competition closes at
midnight on Tuesday.
Over 18, residents of
the UK and ROI only.
One entry per person.
The winner will be the
best entry as judged
by The Sunday Times.
No cash alternative
to prize in whole or
in part. Prize is
non-transferable. Your
information will only be
used for the purposes
of this competition.
Promoter is Times
Newspapers Ltd.
Not open to staff
of the Promoter
and promotional
partner or their
families.
Readers are invited to guess
what was said when Princes
William and Harry “met”
BB-8 — one of the droids from
Star Wars: The Last Jedi — at
the film’s European
premiere.
See below for how to enter.
TETONOR
MODERATE
Jared O’Mara’s GP has told
the MP not to do what?
men from what age?
8
Who quit cricket’s Ashes
over his wife’s ill health?
9
England has its first new
moat since the 19th
century. Where is it?
10 Which glasses are double
the spectacle they were in
the 1990s?
Last week’s winning entry,
for this photo of a swimmer
rubbing himself with snow
after a dip in a Siberian river,
was: “Yay — that’s my best
time yeti!”
It came from Ben King
of London.
126
34
23
189 POLYGON
22
156
25
120
32
28
132
96
35
192
28
196
6
8 9
12
14 14 14
24
From these letters, make
words of four or more letters,
always including the central
letter. Answers must be in the
Concise Oxford Dictionary,
excluding capitalised words,
plurals, conjugated verbs
(past tense etc), adverbs
ending in LY, comparatives
and superlatives.
How you rate
24 words, average; 33, good;
39, very good; 45, excellent.
EVENT
Cryptic crossword workshop
A n e xc l u s i ve o p p o r t u n i t y fo r s u b s c r i b e r s
Join us on Saturday, February 3 in York for a workshop with Tim Moorey, crossword
setter for The Times and The Sunday Times. Guests will learn insider tips for mastering
the Quick Cryptic Crossword and receive a copy of his book How to Crack Cryptic Crosswords.
Book tickets now at mytimesplus.co.uk
This Times+ event is open to UK subscribers only. For full terms and conditions, visit mytimesplus.co.uk
19
The Sunday Times December 17, 2017
MONEY
MEPHISTO 2990
4
5
6
7
10
8
1 Large canine ostracised
with regard to smell (5)
5 Real lead in fuel not
imaginary (7)
10 Tulips finished by end of
June showing leafy
appendage (7)
11 Ship slowly heading off (4)
12 One’s behind teacher
sharing mischievous
grounds for complaint (9)
13 Airline angry about
spaces quantified? The
opposite (8)
15 Native repelled by hotel
meals (4)
18 Refuse bed with Rector in
it (5)
20 Wreck conceals one in
command of rock (8)
22 Useless types spun silk
clumsily (8)
23 Fees opening around a
pound rejected (5)
25 Capital place once had to
be closed early (4)
26 Evasive about minor
league being short of
balls (8)
28 Elder twigs right mind for
elaborate composition (9)
29 Broadcast very weak on
term in prison (4)
30 Stylist regrets returning
after a day (7)
31 Tied King’s Head
mentioned - about time (7)
32 Special on beat turned
back old ladies (5)
9
11
12
13
14
15
16
19
17
18
20
21
22
23
24
25
26
27
28
29
30
31
NAME
32
...................................................................................
ADDRESS ...................................................................................
...................................................................................
Post your solution to The Sunday Times Mephisto 2990,
PO Box 29, Colchester, Essex CO2 8GZ, or email
puzzle.entries@sunday-times.co.uk
The first correct solution picked at random after next
Saturday wins Whitaker’s Concise, worth £45. Four
runners-up will each receive £20.
The Chambers Dictionary 13th edition is the primary
reference. Readers are invited to visit Tim Moorey’s
website at timmoorey.info
1 Rare pretentious shows
seen in huge temporary
accommodation (7)
2 Check family in Bow (4)
3 Small clues improved
becoming very small (9)
4 Contract to organise and
look after old defensive
armour (5)
5 Clowns on stage leading to
mad excitement (8, two
words)
6 Check on, for instance,
man's familiar name (4)
7 Monkey sitting on date
tree abroad (8)
8 Inability to recognise
familiar things again? So
unsettling (7)
9 Scottish lovers banking
nothing very much (5)
14 Reckless lad stepped into
Rhodes almost drunk (9)
16 Desperately determined
underworld criminal (8)
17 Indian occupying hospital
room in the back (8)
19 Drinking song cheers one
getting drunk (7)
21 Traders in petitions
caught for parking (7)
23 Fish near danger one’s
avoided (5)
24 Native type American in a
home? (5)
26 Review of Stir Crazy partly
written up (4)
27 Acclaim type of carriageway erected (4)
Solution to 2989
Across: 1 Dishabille, 10 Annona, 11 Laager, 13 Prodnose, 14 Rectoral, 15 Dram,
16 Asker, 20 Stapedes, 21 Barberry, 25 Frere, 26 Nous, 27 Long iron, 29 Exequial,
30 Simurg, 31 Relief, 32 Serradella
Down: 2 Ingest, 3 Snickers, 4 Holt, 5 Barratry, 6 Ladle, 7 Landseer, 8 Sesame,
9 Fremescent, 12 Crabbiness, 17 Embusque, 18 Marinara, 19 Edge rail, 22 Anoxia,
23 Propel, 24 Flurr, 28 Isle
SUDOKU
HARD — PRIZE 1192
7
2
6 1
5
In the grid, each number
represents a letter of the
alphabet — all 26 letters are
used. Use the initial clues in
the code table to work out the
rest of the code.
STUCK? To get four random
extra letter clues, call 0901
322 5309 (ROI 1514 415128) or
text STCLUE to 88010 (UK
only). Calls cost 75p (ROI 75c)
plus your telephone
company’s network access
charge. Texts cost £1 plus
your standard network
charge. SP: Spoke, 0333 202
3390 (Mon-Fri 9am-5.30pm).
6
3
2
2
8
2
21
14
17
7
4
9
4
8
14
21
3
12
1
8
7
12
13
8
26
21
20
12
2
20
4
18
18
20
26
10
12
14
4
L
20
3
18
10
21
19
11
9
8
2
2
9
10
10
3
3
2
12
7
3
9
8
9
20
3
8
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2
9
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9
7
13
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9
8763
14
2
15
3
16
4
19
20
15
23
22
24
25
26
27
NAME
...................................................................................
ADDRESS ...................................................................................
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Across
Down
1 Oddie’s last part after
Goodies I included in
paper (8)
5 Reject a mushroom in
Jersey etc — it’ll make you
retch (6)
9 Spooner’s wet bread —
firm and sticky dish (4,4)
10 Copper, like gold, is toxic
stuff (6)
12 Parasite left flower in
Yorkshire (5)
13 American soldier wraps a
kind of snack (9)
14 Green politicians stifle
expression of joy and take
on state (3,9)
18 Now’s the time for
presents on tree for staff
tips (9,3)
21 Plays international
without racket and it’s an
unfair match! (2,7)
23 Manage to go round small
European harbour (5)
24 Pub invested in strong
port (6)
25 Set on eating this? (2,6)
26 BBQ accessory cook
finally found in drain (6)
27 Small change found in
extremely pretty old
instrument (8)
Cornette-Bartholomew,
London Classic Open 2017.
What decisive blow did White
land in this position?
1 Grapple with gear (6)
2 Journalist wraps up neat
American book (6)
3 Touring Seattle by ship is
cheap (9)
4 Heavy tool required to
break emerald and hard
gems (12)
6 Dead plant gone
missing (5)
7 Have tea with modest man
of the cloth … (8)
8 … and another almost cut
bit of witty verse (8)
11 Sip rum nervously then
start to sample slithy things
heated on these? (6,6)
15 Wood flyer? No, a wader (9)
16 Chant USA when rallying
for Bush (8)
17 Venue for those that cue
Miller’s play (8)
19 Grovel with item of
jewellery in church (6)
20 Almost sending aristo into
a state (6)
22 New First Lady possesses
rare self-confidence (5)
W
L
17
5
18
6
19
KENKEN
7
20
8
21
9
22
10
23
11
24
12
/
.
v
,
13
25
26
B
K7
10 7
AKQJ743
10 5
West
North
East
1.
Pass
Pass
All Pass
Dble
4.
5.
2v
Pass
Pass
8
3
14
10
10
South
1v
3v
4NT
6v
12
23
5
3
7
14
18
3
15
7
10
16
18
12
6
20
13
23
11
15
14
8
3
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.
v
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None
None
87
J984
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None
A765
753
62
KJ7542
93
E
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v
,
J432
None
None
KQ
K7
None
3
10 5
Notice that East has one more
card than everyone else. If he
discards a spade declarer can
play the king of spades, spade
to the ace and ruff a spade,
establishing dummy’s eight
for his twelfth trick. If East
discards a club, declarer
/
.
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,
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A 10 9 8
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HO
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MAN T
P W
U I R I
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POR T
R
AGU E
A
T
UNCH
Z
O
L A S S
NEWS QUIZ
BRAIN TRAINER
POLYGON
KENKEN
28
18
Each row, column and 3x3 box must contain the digits 1 to 9.
The digits within each group of cells joined by dotted lines
must add up to the figure in the top-left-hand corner of each
group. Within each dotted-line group, a digit cannot be
repeated.
SPOT THE MOVE 1092
1 Qe5! exploits the pinned g7-bishop.
Checkmate is inevitable. For example:
1…Bxh6 2 Qxh8 mate.
TEASER 2881
March 22nd
168
3
136
20
81
2 10 8 x 17 2 x 10 9 x 9
26
22
120
4
31
12 14 7 15 5 x 24 11 20
29
195
25
220
5 24 13 x 15 8 17 11 x 20
SUDOKU
WARM-UP
KILLER SUDOKU
4
7
8
2
9
1
5
3
6
5
9
2
7
6
3
8
4
1
6
3
1
4
8
5
9
7
2
1
2
9
8
4
6
7
5
3
7
8
6
5
3
9
1
2
4
3
5
4
1
7
2
6
8
9
9
4
5
6
2
7
3
1
8
2
1
3
9
5
8
4
6
7
8
6
7
3
1
4
2
9
5
6
5
9
7
8
3
1
4
2
3
1
2
9
6
4
7
5
8
3
2
3
4 3
3
6
2 5 7 8 9 9 10 11 12 13 14 15 15 17 20 24
6
15
CELL BLOCKS
7 x 15 13 15 9 9 12 x 14
12
L
TODAY’S SOLUTIONS
Plan the play in three no-trumps
after the jack of hearts lead.
Win the lead and play the
queen of diamonds. If it holds,
switch your attention to clubs.
If the queen of diamonds loses
and both opponents follow
there is no problem. If it loses
and an opponent shows out,
win the next lead and duck a
diamond, enabling you to run
the suit later. If you start
diamonds by playing one to
the king, on the actual lay-out
you go down.
105
N
Winners Crossword 4774 A Edwards, Yeovil, Somerset, K Barnes, Holmfirth,
West Yorkshire, J Dunleavy, Middlesbrough, North Yorkshire, J Marlow,
Eskdale, Cumbria Mephisto 2987 M Allen, Bradford on Avon, Wiltshire, M Crapper,
Whitchurch, Hampshire, A Gillespie, Hove, East Sussex, JD Hart, Marlesford,
Suffolk, E Looby, Birmingham Teaser 2879 B Smith, Brighton, East Sussex,
M Warburton, Ettiley Heath, Cheshire Chess 1090 M Fletcher, Torquay, Devon
Sudoku November 26 Mrs Brown, Rickmansworth, Hertfordshire
TETONOR
CODEWORD
E
E
Winner 1684: Steve Randall, Reading
Head up: Arrested and tried after stashing drug in chair
For a full report, visit thesundaytimes.co.uk/cluewriting
AK
AKQ
Q63
Q J 10 8 4
E A S N C D T UWB Y I M
QRH Z O J KGX P V F L
10
ERUB
I
A
NDER
O
RMA F
A S
RGOO
I
A
M I SAP
A T
BR I E B
L R R
MOR I B U
W A S
F E L L AH
Readers are invited to compose a clue for the word above.
Clues must be original, cryptic, and similar to those in the
Sunday Times crossword. Send your entry by email to
puzzle.entries@sunday-times.co.uk. The best entry selected
after next Saturday wins £20.
Last week’s problem
/
.
v
,
CH
E
WA
V
PE
T
FO
CLUE WRITING CONTEST 1687: JARLSBERG
simply plays a club to the ace
and the ten of clubs is the
twelfth trick.
A classic trump squeeze.
A865
None
None
A
W
The first correct solution opened after
next Saturday wins a 10-carat rolled
gold Cross Century II fountain pen worth
£210. The next three win £120 10-carat
rolled gold Cross Century Classic ball
pens. All have lifetime guarantees. Post
solutions to The Sunday Times
Crossword 4777, PO Box 29, Colchester,
Essex CO2 8GZ, or email
puzzle.entries@sunday-times.co.uk
LAST WEEK’S SOLUTIONS
13
17
Maybe someone did a bit too
much bidding, as it looks as if
the slam is no-play, declarer
needing to lose a heart and a
club. But Tom Hanlon
managed to weave a little bit
of magic.
West led the king of hearts,
overtaken by East who
switched to a trump. Six
rounds of trumps later this
was the position:
J432
A8432
5
KQ9
KILLER SUDOKU EASY
23
All the digits 1 to 6 must appear in every row and column. In
each thick-line “block”, the target number in the top left-hand
corner is calculated from the digits in all the cells in the block,
using the operation indicated by the symbol.
E
S
/
.
v
,
Solution to 4776
To enter, complete the Hard or Very Hard puzzle and call 0901 292 5275 (ROI 1516
303 500), leaving your answer (the numbers in the three shaded squares) and
contact details. Or text SUNDAY1 (Hard), or SUNDAY2 (Very Hard), followed by a
space, then your answer (three numbers) and contact details — eg SUNDAY1 123
John Smith, etc — to 88010 (UK only). Calls cost £1.00 (ROI €1.50) plus your telephone
company’s network access charge. Texts cost £1 plus your standard network charge.
Winners will be picked at random from all correct answers received. Lines close at
midnight on Saturday. If you call or text after this time you will not be entered but
may be charged. When entering by phone or text, please provide your FULL name
and address details, as incomplete entries may be charged but not entered.
STUCK? Call our clue line to get four clues for either puzzle on 0901 322 5004 (ROI
1514 515 120). Calls cost 75p (ROI 76c) plus your telephone company’s network
access charge. For full terms and conditions, visit thesundaytimes.co.uk/ comprules.
SP: Spoke, 0333 202 3390 (Mon-Fri 9am-5.30pm)
/
.
v
,
A865
J
10 8 6 2
AJ42
N
A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
1
Sally Brock
Neither vulnerable,
Dealer South
2
23
Send your solution to: The Sunday
Times Teaser 2882, PO Box 29,
Colchester, Essex CO2 8GZ or email
puzzle.entries@sunday-times.co.uk.
The first two correct solutions opened
after next Saturday win £20.
A welcome addition to the
Irish bridge calendar is the
Irish Premier Pairs
(sponsored by Jim Cahill) with
a generous €11,000 in prize
money. This year’s event was
won by top Irish pair Tom
Hanlon and Hugh McGann. I
was lucky enough to be
watching on BBO when this
slam deal cropped up.
11
2
What (in increasing order)
were the three digits?
BRIDGE
9
9
4
18
13
12
6
13
4
9
16
21
7
14
2
24
18
6
23
26
7
18
22
18
12
9
18
2
9
9
2
9
25
9
2
7
number of sweets equally
amongst the seven of them as
far as possible and to give her
the remainder. On seeing the
remaining sweets she was
always able to work out the
order in which the three
digits had been drawn out.
5
9
B
8
17
21
1
8
23
12
13
7
18
3
7
18
6
13
16
3
helpers to draw out the three
in some order and to use
them in that order to make a
three-figure number. She
knew that this number would
be divisible by three but not
by seven. She asked the
helpers to share out that
20
5
10
12
VERY HARD — PRIZE 1193
TEASER 2882
12
4
2 7 5
5
1 9
15
3
11
5
6
2 1
2
9
6
9
2 7
8
8
3
CODEWORD
1
3
Hard
Snow White placed three
balls in a hat (“Oh yes she
did!”): written on each ball
was a different non-zero digit.
She asked one of her little
á D 4rDkD]
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ÁÂÃÄÅÆÇÈ
30…Qc3 The best form of
defence is often a counterattack. Black’s king is safe for
now. 31 Rg1 Rd2 32 Qf1 32
Rxg6+ does not work: 32…
hxg6 33 Qxg6+ Kf8 and there
is no follow up. 32…Rf8 Alas,
the simple 32…Qxc2 would
have immediately won me
the game. Following Luke’s
planned 33 Qf4, Black can
play the beautiful deflection
sacrifice 33…Rxe4! 34 Qxe4
Rxh2 mate. 33 Qf4! The
exclamation mark here is not
for the merit of this move, but
for the conviction with which
Luke pushed his queen
forward. 33…Qxc2?? Pure
panic, and the moment which
decided the tournament.
Black should still win after
33…Rf7. 34 Rxg6+! Suddenly
White forces checkmate. 34…
hxg6 35 Rxg6+ Kf7 36 Qxc7+
Ke8 37 Re6 mate
Spot the Move 1093:
White
to play.
________
Send your solution (first move only), to Sunday Times Spot the Move 1093,
The Sunday Times, PO Box 29, Colchester, Essex CO2 8GZ, or email to
puzzle.entries@sunday-times.co.uk. The first correct answer drawn after next
Saturday wins £20.
WARM-UP
Each row, column and 3x3
box must contain the digits 1
to 9. Winners will receive a
Collins English Dictionary &
Thesaurus.
Victor Bryant
Snow White
The 2017 London Chess
Classic was a feast for chess
fans around the world. Not
only were the top players in
action, culminating in a
thrilling play-off victory for
Fabiano Caruana, but there
were also several unique and
innovative events held each
day. One highlight was seeing
the enthusiasm of hundreds
of schoolchildren as they
were taught chess and
introduced to their idols.
On a personal level, I was
pleased to reach the Final of
two strong knockout
tournaments. However
nerves let me down, as I selfdestructed in both. The
diagram below shows the
painful turning point in my
match with Luke McShane.
Needing only one win from
the last three games, I had
the chance to end
proceedings early.
White: Luke McShane
Black: David Howell
British Knockout
Championship Final,
London
2017
________
Jeff Pearce
abscise, abseil, access, accessible, aisle, base, basic, basil, basis, bass, bias, blasé,
bless, bliss, case, cease, cess, class, classic, ease, easel, else, esse, isle, lase, lass,
lassi, lassie, lease, less, lias, sable, sail, sale, scab, scabies, scale, seal, seel, seise,
sice, sisal, slab, sleb, slice
3
CROSSWORD 4777
David Howell
Easy 57; Medium 696; Harder 250
2
CHESS
Down
1 York banned taxi-hailing service after complaints 2 His £60m tour, for
family reasons 3 Asthma 4 Up to 512 years, scientists said 5 Roy Moore,
amid sexual misconduct claims 6 Attend parliament. He is suspended
from Labour for allegedly misogynistic and homophobic comments 7 85,
survey found 8 Andrew Strauss. His wife has cancer 9 New US embassy,
London 10 Wine glasses are nearly twice as big
1
Across
Tim Moorey
4
8
7
1
2
5
3
9
6
1
3
4
8
9
6
5
2
7
7
2
8
5
3
1
4
6
9
PRIZE 1190
5
9
6
2
4
7
8
3
1
8
6
1
3
5
2
9
7
4
2
7
3
4
1
9
6
8
5
9
4
5
6
7
8
2
1
3
PRIZE 1191
2
4
8 4
20
The Sunday Times December 17, 2017
MONEY
FAME AND FORTUNE
HUGH JOHNSON
Life’s been
rosé since
I put wine
on the map
FRANCESCO GUIDICINI
Are you better off than your parents?
Yes. My father, Guy, was a lawyer in the
insurance world. He was chairman of
the air registration board that certified
air-worthiness. My mother, Enid, was
a housewife.
Do you invest in shares?
No. For a long time I have gone to a
wealth manager, Heartwood, part of
Handelsbanken.
What’s better for retirement —
property or pension?
Property. I bought Saling Hall, in Essex,
just as I was finishing The World Atlas of
Wine and we were there for 42 years. It
was a seven-bedroom, 17th-century
manor house, hugely atmospheric and
romantic, with 12 acres. It had a cellar
under each wing. We sold that for £2.5m
in 2013 and moved to London. We
bought it for £30,000.
We moved because all our children
and grandchildren live west of London.
Nobody needs the M25 between them
and their grandchildren.
The wine expert found wealth with his
bestselling ‘atlas’ but won’t turn his nose
up at a £10 bottle, he tells Andrew Lynch
H
ugh Johnson is the doyen
of wine writers. His
World Atlas of Wine
and annual Pocket
Wine Book have been
bestsellers for decades.
Born in London,
Johnson, 78, was educated
at Rugby School and
King’s College, Cambridge.
He joined Vogue magazine and
began writing about wine, which
led to a column in The Sunday Times,
writing under the “nom de verre”
John Congreve.
In 1963, he succeeded André Simon,
the French wine connoisseur and writer,
as general secretary of Simon’s Wine &
Food Society, persuading the cookery
writer Elizabeth David and the author
Evelyn Waugh to write for the society’s
quarterly magazine. His first book,
Wine, appeared in 1966. After a spell as
travel editor of The Sunday Times,
Johnson edited Queen magazine, leaving
to write The World Atlas of Wine, which
appeared in 1971. He has written a
column on gardening, Trad’s Diary, for
the past 42 years.
Johnson is founding president of The
Sunday Times Wine Club and lives in
Kensington, west London, with his wife,
Judy. They have three children: Lucy, a
psychotherapist; Redmond, an exporter
of British drinks such as gin; and Kitty,
the author of Wine: A Woman’s Guide.
being uncertain about being published
by another company. He gave me a
guarantee of a quarter of a million a
year for four years. It was unbelievable
for an author to get that.
That was the peak; there’s been
nothing like that since. One year in the
1970s I was paying 98% tax. Top whack!
How much money do you have in
your wallet?
£100.
Do you invest in wines?
Only by mistake — by buying too much,
then moving house and selling them.
The idea of following a wine index seems
almost obscene. Wine is too personal.
The wines I love are my friends.
What credit cards do you use?
A John Lewis one, but I mainly use a
debit card from Handelsbanken, a
brilliant Swedish bank that has a branch
just up the road.
How much would you spend on a
bottle of wine?
I am very excited by wines that cost only
a tenner, but I have found so many
seriously rich people who like telling me
how little they pay for a bottle of wine
that I want to spit! Wine has brought
prosperity and pleasure and friendship.
That’s a very important part of it.
Are you a saver or a spender?
I tend to be a saver. When I was younger
I was a spender but I think everybody
changes in the middle of life. You move
from being acquisitive to wanting to get
rid of everything.
Johnson’s World Atlas of Wine has sold more than 4m copies. He says: ‘I couldn’t calculate how much I have earned’
I only invest in
wine by mistake —
by buying too
much, then selling.
It’s too personal.
The wines I love
are my friends
How much did you earn last year?
Well, more than anyone else in my
family but less than is supposed by
people who think a bestseller is a route
to huge riches! It ain’t like that any more.
Amazon’s got a lot to do with it — it takes
our royalties. The idea that an author
gets 10% of the retail price is a fantasy. It
doesn’t come pouring in, though I will
admit it once did.
of The World Atlas of Wine on my own.
My great brainwave was to ask Jancis
Robinson to help; she does the heavy
lifting. We are working on the eighth
edition, which will come out in 2019.
All my life I have been lucky with
timing. I wrote my first wine book in
1966 and later discovered that wine
auctions started again in this country
in that year.
How successful have your books
been?
The Pocket Wine Book sells about
100,000 copies a year in six languages.
Going back 35 years, it would sell more
than 400,000 a year. I did four editions
Have you ever been really hard up?
Only as a student.
Do you own a property?
We own an early-Victorian terraced
house in Kensington and a forestry
estate in Snowdonia. Trees are a real
passion. I sold some book rights for a big
chunk of money about 15 years ago and
bought a forest in the most beautiful
place I know, which is in north Wales.
We don’t have a house there, just a
shelter. The estate occupies a lot of my
time and thought. I am converting
boring conifers to what I hope will be a
lovely landscape, making ponds and
having the time of my life.
dressed. It was hard luck and hard work
being in love with them all at once. I got
£12 a week; my rent was 4 guineas.
What’s been your most lucrative
work?
The World Atlas of Wine. That took off
like a rocket. The publisher Mitchell
Beazley started off with capital from
Philip’s, the atlas and map publisher.
[Its founder] James Mitchell asked: “Do
you think there’s any mileage in the idea
of a wine atlas.” Wow! That very night I
sketched the wine atlas. And when it
came out, it just sold and sold.
About 18 months later I got a
leather-bound copy with a gold disc on
the front. We had sold 500,000 in a year.
It was unheard of. Over 40 years we have
sold more than 4m copies.
I couldn’t calculate how much I have
earned, but when [the publisher] Paul
Hamlyn took over Mitchell Beazley in
the mid-1980s, I made noises about
How often do you drink wine?
Every day. My at-home routine means
there will always be one or two wines I
must be tasting — sometimes a lot more
than that. I have a glass of sherry at
lunch, which is the only time I drink
before the evening, unless I am out at a
tasting. How much do I drink in a day? I
suppose the answer is a bottle.
What was your first job?
I was a copywriter in the features
department of Vogue, which was pretty
amazing. All the other staff were girls
who had won the Vogue talent contest.
They were all beautiful, intelligent, well
What’s the most extravagant thing
you have ever bought?
Gardens and gardeners. I also have some
Domaine de la Romanée-Conti — the
price is just so silly — and some La Tâche.
It’s worth thousands of pounds a bottle.
It wasn’t when I bought it. I wouldn’t buy
it now.
What are you worried about?
The government. I voted for Brexit — I
rather wish I hadn’t. It’s all such a mess.
We don’t have any politicians in this
country that you could describe as
statesmen, who are up to the job. I do
believe that if we were to break loose
and get going on our own, we have the
talent to be a very successful country.
What’s your money weakness?
Not knowing how much I’ve got. I rely on
meetings with my accountant, who says:
“There, there, it’s quite all right.”
What aspect of the tax system would
you change?
We should tax property more than
income and make land taxable in some
ingenious way. We should certainly tax
people who don’t live in their premises.
Do you support any charities?
They have a big place in my will:
conservation; my college; churches here
and there; disaster relief. I suppose there
are about 15 charities I try to support.
What would you do if you won the
lottery?
Give most of it to those charities; I don’t
need it. My family would also benefit.
Rich wine: La Tâche vineyard in France
What’s the most important lesson you
have learnt about money?
Not to accumulate it for its own sake; you
have got to have a use for it.
Nudging young savers works
— provided they have money
PETER
CONRADI
I’m not sure about you, but when I was
18 almost the last thing on my mind was
my pension. Can we expect the current
generation to think any differently, not
least because, the way things are going,
it could be at least another 50 years
before they get to draw it?
The government is not taking any
chances, judging by plans due to be
announced this week to extend the
scope of auto-enrolment to bring in
those aged 18 to 21.
The thinking behind the system,
which began to be rolled out in 2012,
was simple: rather than ask people if
they want to take out a pension — and
be greeted with a resounding silence —
you sign them up automatically. They
are free to opt out but, human nature
being what it is, few actually do. A
powerful thing, inertia.
The policy has been identified with
Richard Thaler, the behavioural
economist, whose work won him this
year’s Nobel prize in economics.
Thaler’s “nudge” theory posits that
governments can steer people towards
doing what is best for themselves — and
for society — by framing the way
decisions are made.
The same thinking underpins plans
under discussion to change the rules on
organ donation in England so that
people have to opt out rather than in.
(Wales has already adopted “presumed
consent”, and Scotland and Northern
Ireland are considering following suit.)
There is a drawback, however:
“nudging” under-22s to pay into their
pensions will mean a further reduction
in their take-home pay, which is already
rising more slowly than inflation —
something that was not the case when
the policy was conceived, before the
2007-8 financial crash.
An even more potentially significant
change, also being announced this
week, will mean those aged 22 and over
will pay a greater proportion of their
income, too. Indeed the government
estimates that, of the extra £3.8bn a
year that will flow into pensions, £1.8bn
will come from personal contributions,
compared with £1.4bn from employers
and £0.6bn from tax relief.
Everything involving pensions takes
time, so the new rules will not come
into force until the mid-2020s. It can
only be hoped that, by then, living
standards will finally be going up again.
I’m well out of bitcoin
One of the favourite phrases I came
across this year was “bitcoin regret”
— a sentiment felt by those who failed to
invest when one unit of the
cryptocurrency cost just a few pennies
and are now kicking themselves as its
price soars towards $20,000 (£15,000).
There is even a handy online “bitcoin
regret calculator” that tells you how
much money you would have made if
you had bought a certain amount at a
set time. “You thought bitcoin was
Ponzi, a bubble. You didn’t buy. Now all
your friends are rich and you feel
stupid. Calculate how stupid you really
are!” the site offers.
My own fortnight-long flirtation with
bitcoin ended last Monday, when I sold
up for a handsome profit. My decision
appeared to be vindicated in the days
that followed as the price bumped
along, but then, blow me if on Friday it
didn’t start going up again.
So am I suffering from bitcoin regret?
Not in the least. Having become far too
obsessed with watching the wild swings
in its price — and wondering when the
whole thing would come crashing down
— I’m glad to be out of it and able to
concentrate on more important things,
like Christmas presents.
@peter_conradi
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