Category: Business News

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The number of job losses in the UK oil and gas sector was worse than expected last year, a major report has said.

Trade body Oil & Gas UK’s annual report said 60,000 direct and indirect jobs were lost across the industry in 2016, more than the 40,000 it had predicted.

The report said the sector could lose another 13,000 jobs in 2017.

However, it suggests that while some companies are still reducing headcount “the largest reductions may now be behind us”.

The oil and gas industry still supports more than 300,000 jobs across the UK but that is 150,000 less than the peak in 2014, the report said.

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According to the trade body report: “There are tentative signs that investor confidence is starting to return to the sector.

It highlights the fact that almost £6bn was invested in UK continental shelf assets and acquisitions in the first half of 2017.

“More needs to be done to drive any upturn and secure long-term employment,” the report says.

“Up to £40bn worth of potential investment opportunities currently sit in company business plans.”

Figures in the report break down employment in UK offshore oil and gas into three types:.

• Direct employment – provided by companies involved in the extraction of crude oil and natural gas and supply chain companies who directly support this activity
• Indirect employment across the extensive supply chain which also exports goods and services overseas
• Induced jobs created by the sector’s spending in the wider economy, such as in hotels, catering and taxis

It said there were 28,300 people employed in direct oil and gas activities, down from 41,300 in 2014.

Indirect jobs fell from 206,100 to 141,900, the report said, and induced employment dropped from 216,500 in 2014 to 132,000 this year.

According to the report, the current low level of exploration activity “remains a serious concern” as it is vital to replenish production with new development opportunities.

Elsewhere in the report, Oil & Gas UK modelled scenarios for the impact of Brexit on tariffs for the oil and gas industry.

The report said Brexit could cost the industry £1.1bn a year if the UK was unable to negotiate new trade deals and reverted to WTO rules.

It said this would be an “unhelpful” additional cost.

Oil & Gas UK chief executive Deirdre Michie said: “There are still serious issues facing our industry which has suffered heavy job losses since the oil price slump. But we are hopeful that the tide is turning and expect employment levels to stabilise if activity picks up.”

She added: “Despite our difficulties, we’ve got more reasons to be positive and some great stories to tell that demonstrate the real progress that we are now making.”

Ms Michie said the sector was successfully re-positioning itself through efficiency and cost improvements.

“Although we are getting to a much better place, we still need further investment to generate new activity and sustain hundreds of thousands of UK jobs,” she said.

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Banking giant HSBC has become the latest high profile company to sever ties with troubled public relations business Bell Pottinger.

The PR firm has seen a loss of clients since being expelled from the industry trade body for a campaign stirring racial divisions in South Africa.

On Tuesday a major Bell Pottinger investor walked away from the firm and scrapped a plan to sell its 27% stake.

Chime, which counts WPP as a big investor, wrote off the stake’s value.

HSBC said it had used Bell Pottinger for specific projects but would no longer do so.

Clydesdale Bank, the construction company Carillion, and TalkTalk are among a string of big names reportedly to have cut ties with the PR firm.

Luxury goods firm Richemont, whose chairman Johann Rupert is South African, stopped dealing with Bell Pottinger earlier this year, as did the Investec investment bank.

The future of Bell Pottinger is in question after the scandal, with even its founder, Lord Tim Bell, saying its days a probably numbered.

The Financial Times has reported that Bell Pottinger has hired the accountancy firm BDO to advise on a potential sale.

However, a BDO spokesman declined to comment.

‘Near the end’

The firm’s work on the campaign for Oakbay Capital, a South African company owned by the wealthy Gupta family, was accused of inciting racial hatred.

Lord Bell, who founded Bell Pottinger in the 1990s, resigned last year, partly due to his unease with the company’s deal with the Guptas.

When asked on BBC2’s Newsnight if he thought the PR company would survive the scandal, he replied: “I think it is probably getting near the end.”

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Industry insiders say the outlook for the firm is cloudy.

“If you are employed to manage a reputation and your reputation is shot, then it is not a good day,” said Mark Borkowski, founder of Borkowski PR.

Danny Rogers, editor of PR Week, said: “The Bell Pottinger name is now tarnished, almost to the point of destruction.”

He said the company had many prominent clients and rival PR firms will see the scandal as an opportunity to win that business.

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Analysis: Matthew Davies, BBC Africa Business Report editor

“White monopoly capital” is the perception that South Africa’s whites remain in control of much of the economy 23 years after the end of apartheid.

Bell Pottinger did not coin the term, but it is accused of using in a cynical way to stir up racial tension and divert attention from allegations that the government was unduly influenced by the Gupta brothers.

And like all good disinformation campaigns, it has an element of truth in it. South Africa is still a deeply divided society, both in terms of income and race.

A large section of South Africa’s black majority feel they are no better off economically than they were 23 years ago. Earlier this year, government data found that whites still earn five times more than blacks.

Most South Africans know there is an inequality problem combined with an underlying racial tension. But to have a foreign PR company use these problems to detract from serious political issues for its own financial benefit has stuck in many citizens’ craws.

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Bell Pottinger and its founder, Lord Bell, have a reputation in the PR industry for taking risks.

The firm represented the South African Olympic athlete Oscar Pistorious after he was charged with murder.

Belarusian dictator Alexander Lukashenko has used the firm’s services as well as Syria’s first lady Asma al-Assad.

In the late 1990s the PR firm worked on a campaign to release the former Chilean dictator, General Pinochet, who had been arrested in London on a warrant from Spain requesting his extradition on murder charges.

Industry insiders said that the willingness to represent controversial individual reflected the views of Lord Bell.

“When he ran it, he had the view that everyone was entitled to PR a bit like being entitled to being represented by a law firm,” said Jason Nisse, who runs his own PR firm Nisse.

“He managed to push the envelope of what is allowable in public relations, but he stayed inside the envelope.”

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Wall Street closed down, with banks falling sharply as renewed worries about North Korea pushed investors away from equities and towards bonds and other safer investments.

The Dow Jones fell 1.1% to close the first session after the holiday weekend at 21,753.3 points.

The broad-based S&P 500 shed 0.8% to end at 2,457.8, while the tech-rich Nasdaq dropped 0.9% to 6,375.5.

Large banks were hammered as investors fled into US Treasury bonds.

Bank of America lost 3.3%, Goldman Sachs shed 3.6%, and JPMorgan Chase was 2.4% lower.

At the weekend, North Korea carried out its sixth nuclear test.

US markets were closed on Monday for the annual Labor Day holiday, but when trading restarted on Tuesday the three main indexes started falling immediately.

Hurricane Irma, days away from the US coast, hit shares in insurers were exposure to Florida.

But home-improvement retailers Lowe’s and Home Depot both climbed more than 1%. The chains typically see a jump in sales as a result of storms.

Aircraft parts supplier Rockwell Collins rose 0.3% following the announcement it had agreed to be bought by conglomerate United Technologies for $30bn.

But Dow member United Technologies fell 5.7%, with declines accelerating after Boeing, a customer of both companies, suggested it could try to prod regulators to block the deal. Boeing fell 1.4%.

Toy companies Hasbro and Mattel lost 2.9% and 1.6%, respectively, after Danish toy giant Lego announced it would slash 8% of its global workforce after a drop in sales in the US and Europe.

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Caribbean travel plans have been thrown into chaos as flights are disrupted by Hurricane Irma sweeping across the region towards the US coast.

Irma, coming days after the US was hit by Hurricane Harvey, has been upgraded to a category five, the highest.

Puerto Rico, a major flight transfer hub for the region, has declared a state of emergency.

British Airways cancelled a flight from the UK on Tuesday and, with Virgin Atlantic, changed return schedules.

On Tuesday, British Airways cancelled its flight to Antigua, which was then due to continue to Tobago.

BA has sent an empty aircraft to Antigua to bring travellers home early. The full flight of 326 passengers was due to leave the island early evening on Tuesday, UK time.

Antigua’s airport will be closed on Wednesday.

“The safety of our customers and crew is always our priority,” BA said in statement. “We have offered all customers due to travel to the region in the coming days a range of re-booking options and are keeping our flights to the entire region under review.”

Virgin has brought forward its flight from Antigua to the UK by five hours. A spokesman said the airline was monitoring the strength and direction of Irma before changing more schedules. “We may need to make some changes or cancellations,” he said, and urged customers to check with the airline before travelling.

Flights between many of the islands, which include the Dominican Republic, Guadeloupe, and the British Virgin Islands, have been cancelled.

On Tuesday, American Airlines cancelled its schedules to the islands of St Kitts and St Maarten,

Hurricane Irma ‘extremely dangerous’

Texas recovery from Harvey ‘could cost $180bn’

For Wednesday, Puerto Rico’s San Juan airport has cancelled 85 flights, about 40% of services. The island’s governor Ricardo Rossello described the hurricane as “something without precedent”.

The National Hurricane Center (NHC) said on Tuesday that Irma was “potentially catastrophic”. It said the hurricane was currently on track to hit the northern Leeward Islands early on Wednesday, and possibly the Florida Keys by the weekend. Florida has also declared an emergency.

The Center said Irma’s winds may reach 180 miles (280 kilometers) per hour. “These rainfall amounts may cause life-threatening flash floods and mudslides,” the NHC warned.

The UK’s Foreign and Commonwealth Office has urged travellers, tour operators and hotel owners to “follow the advice of the local authorities”.

Residents in two US states, Texas and Louisiana, are still recovering from the effects of Harvey, which struck as a category four storm, causing heavy rain and destroying thousands of homes.

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The 1% cap on public sector pay rises in Scotland will be scrapped next year, Nicola Sturgeon has confirmed.

The Scottish government has largely stuck to a UK-wide 1% limit on pay rises that was introduced in 2013 after a two-year freeze.

But as she outlined her government’s plans for the next year, the first minister said future pay rises would be based on the cost of living.

There have been reports that the UK government is drawing up similar plans.

The pay cap has led to complaints that the public sector workers have seen dramatic real-terms drops in their earnings in recent years.

Ms Sturgeon told the Scottish Parliament that “nurses, teachers, police officers and firefighters deserve a fairer deal for the future.”

She said: “We will, therefore, aim to secure pay rises from next year that are affordable, but which also reflect the real-life circumstances our public servants face and the contribution our public services make to the overall prosperity of our country.”

• Follow the debate on Holyrood Live
• What’s in the programme for government?

The first minister was speaking as she told MSPs that it was time for the Scottish government to “refocus our efforts and refresh our agenda” after a decade in power.

She said that the country would phase out petrol and diesel vehicles by 2032 – eight years ahead of the UK government’s target.

This would see a “massive” expansion in electric charging points, Ms Sturgeon said, with pilot projects set up to encourage uptake of electric vehicles and to make the A9 Scotland’s first fully electric-enabled road.

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Ms Sturgeon again pledged to make improving the country’s education system, and in particular closing the attainment gap between the country’s wealthiest and poorest pupils, her number one priority.

To this end, Ms Sturgeon said an Education Bill would be the centrepiece of the legislative programme for the year ahead.

The bill will “reform the way teachers are recruited and educated throughout their careers”, the first minister said, with: “New routes into teaching to attract the highest-quality graduates into priority areas and subjects.”

Tax powers

The first minister also unveiled plans for a Scottish National Investment Bank, to deliver long term financial support for innovative industries.

And she said the time was also right to “open a discussion about how responsible and progressive use” of Holyrood’s new tax powers could “help build the kind of country we want to be”.

The first minister also announced that free personal care would be extended to those under the age of 65 who have dementia and other degenerative conditions – the so-called Frank’s Law.

Among the other proposals in the 16 pieces of legislation outlined by Ms Sturgeon were:

• A new law to ensure anyone convicted of homosexual offences in the past will now receive an automatic pardon
• The introduction of a deposit return scheme for bottles and cans
• Support for Scottish Green MSP John Finnie’s bill to ban smacking
• Plans to raise the age of criminal responsibility from eight to 12 “in line with international norms”
• A presumption against short prison sentences of less than 12 months
• A “comprehensive review” of local governance in advance of a Local Democracy Bill later in the parliament
• A new Climate Change Bill to set out “even more ambitious” targets for reducing greenhouse gas emissions

The first minister told MSPs: “The programme that I have set out today and the legislation is fresh, bold and ambitious, and because of that aspects of it will undoubtedly be controversial.

“That is inevitable – indeed it is necessary. No-one has ever built a better country by always taking the easy option.”

She added: “This programme is about equipping Scotland not just for the next year, but for the next decade and beyond.

“At its heart is this ambition – to make our country the best place in the world to grow up and be educated, the best place to live, work, visit and do business, the best place to be cared for in times or sickness, need or vulnerability, and the best place to grow old.”

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Scottish Conservative leader Ruth Davidson said her party could support some of the policies set out by Ms Sturgeon, including the Frank’s Law proposals – which the Tories have campaigned for.

But Ms Davidson warned against any intention to raise taxes in Scotland, and told Ms Sturgeon that the Scottish people had put the SNP on “probation”.

Ms Davidson added: “If the Scottish government is to earn back the trust and respect of people in Scotland, which it has squandered in the last year, then it must change – and change fast.

“It must show it understands the difference between a genuine complaint and the politics of endless grievance. It must accept responsibility for all its record in Scotland – and fix the mistakes it has made.

“Given what we know of this Scottish government, we will wait to see whether today’s warm words are backed up by action before making a judgement.”

‘Closed to advice’

Scottish Labour’s interim leader Alex Rowley also welcomed some of the measures outlined in the programme, including the end of the public sector pay cap and the establishment of a national investment bank.

However he said that in other areas the government’s ears “are closed to advice, ideas and experience”.

“Carrying on with the poor education governance reforms which have been criticised by all in the sector is pure dogmatic politics,” Mr Rowley said.

The Scottish Greens said Ms Sturgeon’s programme “clearly shows the value of Green influence in parliament”.

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Unite, the union, has accused Sports Direct of breaking promises to offer store staff guaranteed hours rather than zero-hours contracts.

At its shareholders’ meeting last year, the retailer said it would offer staff who requested it a certain number of hours a week.

But 12 months later Unite said Sports Direct was still advertising for staff without a minimum number of hours.

Sports Direct has been approached for a comment.

Unite said the job adverts prove that the retailer is still using zero-hours contracts and not offering guaranteed hours, clearly stating: “This role has no guaranteed hours of work, hours of work can therefore vary from week to week and, as a result, there may be weeks when no hours of work are offered.”

Sports Direct holds its annual shareholders’ meeting at its Shirebrook headquarters in Derbyshire on Wednesday.

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Last month the controversial retailer said that revealed profits more than halved to £113.7m, partly because the weaker pound made its imported clothing more expensive.

On the agenda is the re-appointment of chairman Keith Hellawell.

A string of investment groups plan to vote against his re-election after expressing concern that not enough progress has been made on corporate governance and labour relations.

Unite assistant general secretary Steve Turner said: “This revelation shows it is ‘business as usual’ at Sports Direct and casts doubt on just how sincere it is about cleaning up its act.”

In recent months, Sports Direct has bought 26% stake in Game Digital, increased its stake in Debenhams, acquired lingerie firm Agent Provocateur and snapped up the US sports clothing and outdoor equipment chains Bob’s Stores and Eastern Mountain Sports.

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Sales of new cars in the UK fell for the fifth month in row during August, with demand for diesel cars plunging more than a fifth.

There were 76,433 new car registration last month, the Society of Motor Manufacturers and Traders (SMMT) said.

The figure was down 6.4% from August last year, while diesel sales – which have been hit by worries over air quality – fell by 21.3%.

Several carmakers have launched trade-in and scrappage deals for UK buyers.

Volkswagen, Toyota, Ford, Vauxhall and Renault are among a number of major carmakers that have launched schemes recently, which could boost sales during September.

• Carmakers pile into scrappage offers

The SMMT said about 1.64 million new cars had been sold in 2017 so far, down 2.4% from last year.

SMMT chief executive Mike Hawes said: “August is typically a quiet month for the new car market as consumers and businesses delay purchases until the arrival of the new number plate in September.

“With the new 67-plate now available and a range of new models in showrooms, we anticipate the continuation of what are historically high levels of demand.”

Sales to private buyers were down 9.9% in August from a year earlier, while fleet sales dropped 3.2%.

“August’s sharp fall in private registrations shows why dealers have suddenly launched scrappage schemes, ” said Samuel Tombs of Pantheon Microeconomics.

However, he was sceptical whether the schemes would have any long-term impact.

“In theory, these financial incentives could stem the downward trend in sales. But in many cases, the scrappage schemes replace discounts that were available to all buyers, and many owners of old cars might not be able to afford the monthly repayments for a new vehicle.

“Scrappage schemes might turbocharge sales for a few months, but low consumer confidence and deteriorating affordability due to the weak pound suggest that the mid-2010s boom in car sales has run out of mileage.”

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Industrial group United Technologies Corporation (UTC) has agreed to buy airline parts maker Rockwell for $23bn (£17.8bn).

The merger is one of the biggest deals in aviation history and is expected to be completed next year.

It has the potential to shake up the market for aerospace parts and could give UTC greater negotiating power over plane makers Boeing and Airbus.

Both firms have been pushing suppliers, including UTC, to lower their prices.

By making more aircraft components, analysts say, UTC will be in a better position to resist such pressures.

According to a joint statement, UTC chief executive Greg Hayes will remain as CEO of the combined company.

He said: “This acquisition adds tremendous capabilities to our aerospace businesses and strengthens our complementary offerings of technologically advanced aerospace systems.”

Rockwell chairman, president and CEO Kelly Ortberg will run a new business known as Collins Aerospace that will combine the parts businesses.

Before the deal can go ahead, it will have to gain regulatory and customer approval.

UTC makes Pratt & Whitney jet engines used by Airbus, Bombardier, Embraer and other plane makers, while Rockwell Collins is a major supplier to Boeing, Airbus among others.