Philip Hammond faces hot seat as bad news piles up

Philip Hammond faces the Treasury select committee on Wednesday in his first appearance since June’s general election. There will be plenty for the chancellor to talk about.

Reports suggest the Office for Budgetary Responsibility will downgrade its forecasts on Tuesday, making it harder for Hammond to hit his budget targets. The fiscal watchdog appears to have accepted that its estimates for productivity growth have been consistently over-optimistic. Productivity, or output per hour, stagnated in the three months to June, official figures showed on Friday.

The Treasury expects the OBR’s revisions to wipe out about two-thirds of the £26bn Hammond had set aside to spend if the economy slows due to Brexit. The timing of the decision couldn’t be worse because Hammond is under pressure to ease off on austerity. The budget on 22 November now looks like a painful exercise for Hammond, who has kept his job because Theresa May was too weak to sack him after losing her majority.

There could be further bad news before the session with MPs when the International Monetary Fund publishes its World Economic Outlook on Tuesday. The IMF cut its forecast for UK economic growth in July after a weak start to 2017. If anything, political and economic uncertainty have increased since then.

Asking gig economy to deliver

On Tuesday, MPs will question Uber and other companies in the gig economy. Uber and the delivery businesses Deliveroo and Hermes will face questions about their employment practices from the business, enterprise and industrial strategy committee.

All three companies have been in the spotlight over their treatment of workers who are classed as self-employed and paid for each ride or delivery. The committee, chaired by Labour’s Rachel Reeves, will ask the companies what they can do to provide high-quality work and employment rights.

Uber, the ride-hailing app, will send Andrew Byrne, its head of public policy. The company’s UK boss, Jo Bertram, quit last week as Uber sought to get its London licence reinstated. Uber said Bertram’s departure was not linked to Transport for London’s decision to revoke its licence.

TfL said Uber’s approach to reporting crimes and carrying out drivers’ background checks meant it was not a “fit and proper” private car-hire operator. Let’s hope the new faces on the committee make it a vigorous session to shed some light on the gig economy.

Trouble on the doorstep

Can things get any worse for Provident Financial? We will find out on Friday when the doorstep lender publishes a trading update. Provident lost more than two-thirds of its market value on a single day in August, when it announced an array of bad news. Debt collections had plunged because of a botched technology upgrade, the regulator was investigating its banking arm, the boss had left and the dividend was scrapped.

Provident’s debt collectors sought refuge by quitting, taking customers to rivals. It was hard to sympathise with a company that typically charges £43 interest on a £100 loan over three months to some of the poorest. That didn’t bother investors who sent the company into the FTSE 100 in 2015 as Provident expanded its lending where banks no longer wanted to tread.

Provident dropped out of the index of top companies at the end of August. Its share price, which reached £32 in April, ended last week at 850p. The first thing investors will look for on Friday is whether the company announces a rights issue to shore up its finances. Even if it leaves the begging bowl at home, the question may not go away until a new chief executive arrives. A stemming of staff departures and stabilisation of debt collections may be the best that can be hoped for.

Powered by article was written by Sean Farrell, for The Observer on Sunday 8th October 2017 07.00 Europe/London © Guardian News and Media Limited 2010


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