38 Monday June 13 2022 | the times
Business
A think-tank behind calculations
suggesting that Rishi Sunak wasted
£11 billion on debt interest payments
is being criticised by other experts.
Last week the National Institute of
Economic and Social Research said
that the chancellor had failed to take
out insurance against interest rate
rises on almost £900 billion created
by quantitative easing measures a
year ago.
The institute had recommended
last year, when the interest rate was at
0.1 per cent, that the government
should insure the cost of servicingEconomists jump to Sunak’s defence
this debt against the risk of rising
interest rates. Sunak has often
warned about the risks of rising infla-
tion and rates.
However, critics said that it would
have undermined the Bank’s inde-
pendence. Julian Jessop, a former
Treasury official, said that the
institute’s calculations were “tech-
nically correct but completely un-
realistic”.
He added: “This has been des-
cribed as insurance, but unlike forms
of insurance it could have actually
lost the government a lot of money if
it had got the timing wrong.”
Simon French, chief economist atPanmure Gordon, said that the
£11 billion “cost” should be set against
the £120 billion “benefit” that the
quantitative easing process yielded
for the exchequer.
Rupert Harrison, a former adviser
to George Osborne, tweeted: “Why
on earth should the government be
seeking insurance from the private
sector when the government is so
much better placed to wear the risk?
The Treasury isn’t a hedge fund.”
The institute’s research featured
prominently in the Financial Times
last week in a story that has since
been questioned by some of the
paper’s readers.Business ReporterI
nvestors who
backed the flurry
of companies that
rode the pandemic
sales boom to float
on the stock market
last year are already
nursing losses of almost
£10 billion (Ashley
Armstrong writes).
Analysis by The
Times of ten consumer
flotations that came to
market in 2021 reveals
that collectively they
have lost £9.7 billion in
value, with their share
prices in most cases
two thirds below their
debut level.
Deliveroo has been
the biggest disaster for
backers, as the online
takeaway company is
now worth only
£1 billion compared
with its £7 billion listing
valuation. In addition,
Made.com, music
Magpie, InTheStyle,Victorian Plumbing,
Moonpig, Dr Martens,
ProCook, Parsley Box
and Revolution Beauty
have all lost
significantly, erasing a
total of £2.6 billion
from their collective
worth. Shares in
ProCook fell by more
than a third on Friday
after the kitchenware
business cut its profit
forecasts in half on the
back of a sharp
slowdown in sales.
London stock market
listings soared last year
as companies cashed in
on pandemic tailwinds.
Online businesses
benefited from their
bricks-and-mortar
rivals being shut and
the forced switch to
internet shopping. In
2021 London raised
more equity capital for
newly listed businesses
than at any time since- Government
figures showed 126
companies raised
£16.9 billion through
IPOs in London, up
from £9.4 billion in 43
floats in 2020.
Yet despite online
businesses thinking
that consumer trends
would be long-lasting,
many have been
hammered recently by
rising costs, subdued
consumer demand as
household budgets are
squeezed and growing
wariness on the stock
market about the
sustainability of their
business models.
London listings have
had their slowest start
this year since the
credit crunch 13 years
ago, with a companies
including Mischon de
Reya, the law firm, and
Olam, the commodities
trader, postponing float
plans.
Boom turns to bust
on float bandwagon
Made.com, the furniture
and homewares group,
was a pandemic winner
as lockdowns drove salesSafe Hands’ adviser was
under FCA investigation
An investment manager for cus-
tomers’ money of Safe Hands Plans,
the collapsed pre-paid funeral com-
pany, was under investigation by the
City regulator years before its failure,
raising questions over whether offi-
cials could have intervened sooner.
The TJM Partnership was one of
two advisers to a trust holding the
pre-paid funeral plans of more than
46,000 customers of Safe Hands,
which entered administration in
March.
Formerly called Neovision Global
Capital, TJM appointed liquidators at
Moorfields Advisory in January. The
Financial Conduct Authority had
been reviewing TJM since 2016, com-
pany accounts reveal.
The collapse of Safe Hands, shortly
before the FCA begins to regulate the
pre-paid industry from late July, has
left customers with underfunded
funeral plans and has raised the
prospect of other similar companies
entering administration.
Customers of Safe Hands, owed an
estimated £71.1 million, are likely tosalvage no more than a fifth of their
money after investments in offshore
illiquid assets led to a large deficit.
Industry sources said there had
been suspicions over the manage-
ment of the fund for several years,
with one alleging “they were per-
ceived as a dodgy organisation”.
James Daley, head of Fairer
Finance, a research firm that wants
the funeral plans market to be regu-
lated, produced a report in 2017,
commissioned by Dignity, one of the
funeral sector’s market leaders,
which included concerns about Safe
Hands. In meetings with the FCA and
the Treasury in 2017 and 2018, he and
Dignity “called them out as a major
risk”. He added that “there’s clearly a
case for the FCA to answer to here”.
City sources said the FCA was
taking enforcement action with TJM
on an issue unrelated to Safe Hands
and that it lacked powers to oversee
and investigate Safe Hands until late
next month. The most recent annual
accounts for TJM, filed last July, stat-
ed it was subject to an FCA investi-
gation, which had not been finalised.
The Treasury launched a review ofthe pre-paid funerals market in June
2018, before deciding a year later to
introduce statutory regulation over-
seen by the FCA. Last month the
regulator “strongly advised” con-
sumers not to buy plans from two
providers, Unique Funeral Plans and
Empathy Funeral Plans.
Under Safe Hands’ terms and
conditions, funds paid by customers
were ring-fenced from Safe Hands’
trading funds and were put into a
trust, which was administered by
Sterling Trust Corporation, based in
Somerset.
Dignity has committed to support
Safe Hands’ customers for the next
six months. Any customers who pass
away in that time will receive a
funeral at no extra cost.
Richard Wells, 35, owner and
director of SHP Capital Holdings,
Safe Hands’ parent company, said he
“strongly refuted” the suggestion he
had been involved in misappropriat-
ing or mishandling customer funds or
that a fraud had taken place.
Moorfields did not respond to a
request for comment. The FCA
declined to comment.Alex Ralph