38 Thursday February 3 2022 | the times
Business
Fewer than a third of people expect to
benefit from inheritances, research by a
think tank has found.
The total value of inheritances is set
to double over the next 20 years, but
only 32 per cent of the population will
benefit, according to a survey of 8,740
adults by the Resolution Foundation.
The rich are set to become even
richer, with the top 20 per cent of
earners twice as likely to receive signifi-
cant transfers of money from wealthy
family members than the 20 per cent on
the lowest incomes. About 50 per cent
of those on the highest incomes expect
to receive an inheritance, compared
with 25 per cent on the lowest incomes.
The survey, which was conducted by
YouGov and was funded by the Family
perately inadequate” efforts to stop
taxpayers’ money from being stolen.
Harra said that he had warned MPs
in April 2020 that between 5 per cent
and 10 per cent of funds awarded
through the furlough scheme would be
for fraudulent claims. “We had to build
in as many controls as we could to pre-
vent error and fraud,” he said. “We
could not do so to an extent that would
then have prevented the scheme from... getting help to people to protect jobs
and businesses ... as fast as we possibly
could.”
Harra said of the £4.3 billion lost, he
expected to claim back about £2 billion
in the next two years. Of the remaining
£2.3 billion, “it would not be realistic to
say we expect to collect all of that”.
Revenue chief: billions lost
to Covid fraud ‘inevitable’
Louisa Clarence-SmithLess than third expect an inheritance
Building Society, found that 33 per cent
of the inheritance money went to help
family members to buy a house. About
6 per cent of homeowners, or 1.6 million
households, bought a home that they
would not have been able to afford if
they had not been gifted the money.
The increasing difficulty of saving to
buy a house makes it more likely that
family wealth transfers will determine
living standards and will put more
pressure on older generations to pass
on wealth, researchers said. Only 8 per
cent of adults aged 25 to 34 who do not
own a house have enough savings to
afford a 10 per cent deposit for the
average first-time buyer home in their
region.
A significant proportion of older
groups who want to transfer money to
younger generations of their family
change their spending behaviour to doso. Sixteen per cent save more, while
10 per cent have moved to a smaller
house or plan to do so in future.
Uncertainty about living costs in re-
tirement has meant that older relatives
pass on their wealth too late to assist
young people. About 45 per cent of
over-65s who plan to pass on money to
younger generations said they were
concerned about the cost of social care.
Jack Leslie, senior economist at the
foundation, said inheritance gifts
would not resolve the problem of low
rates of home ownership among young
people. “With many givers also chang-
ing their behaviour in order to facilitate
those transfers, the impacts of transfer-
ring wealth are far-reaching,” he said.
“A greater role for inheritances, and
wealth in general, will be a central
feature of 21st-century Britain, shaping
the lives of generations young and old.”Arthi Nachiappan
Economics Correspondent
The chief executive of HM Revenue &
Customs has told MPs that billions of
pounds of fraudulent claims for gov-
ernment Covid support schemes had
been “inevitable” and it was “unrealis-
tic” to expect all of it to be recovered.
Jim Harra was responding to ques-
tions from the Treasury select commit-
tee after figures showed that £4.3 billion
stolen from the schemes, which cost a
total of £81.2 billion, was expected to be
lost. Furlough, the self-employed
income support programme and Eat
Out to Help Out had all been targeted.
It prompted the resignation last week
of Lord Agnew, a Treasury minister,
who accused the government of “des-Vodafone is in talks with “multiple
parties on multiple markets” over
potential deals in Europe as it seeks to
drive greater shareholder returns amid
pressure from an activist investor.
Nick Read, its chief executive, speak-
ing at Vodafone’s third-quarter trading
update yesterday — and for the first
time since Cevian Capital emerged
with an undisclosed stake in the
FTSE 100 telecoms group — said that it
was “active on a number of fronts” and
that there had been “good engage-
ment” from potential targets.
Possible deals to have emerged in
recent months have included: combin-
ing Vodafone’s business in Italy with
Iliad, a smaller telecoms operator in the
country; the exploration of an acquisi-
tion of Three UK from CK Hutchison,
of Hong Kong; and discussions over a
possible merger with Orange to create
Europe’s biggest telecoms operator.
Read signalled a step-up in Vodafone’s
dealmaking plans alongside its half-
year results in November.
It emerged this week that Cevian,
Europe’s largest activist fund, has been
engaging with Vodafone since before
those interims. Cevian’s wishes are
understood to be broadly aligned with
the strategy Vodafone outlined then,
although it is thought to believe that
Vodafone lacks sufficient telecoms
industry experience on its board. The
group is planning to appoint new
members of the board to address the
issue.
Read, 57, yesterday rejected the sug-
gestion that Vodafone’s strategy had
been influenced by Cevian, saying that
the priorities had been in train for years.
Vodafone is under pressure to accel-
erate its plans as shares in the heavily
indebted company are down by about a
fifth since Read, its former chief finan-
cial officer, took charge in October
2018, while total returns have signifi-
cantly underperformed the FTSE 100.
The company, whose British business
is based in Newbury, Berkshire, oper-
ates fixed networks in 21 counties and
works with mobile networks in 48
more. It is valued at about £35 billion.
Read declined to comment on
specific possible mobile consolidation
deals, but said that Britain, Spain, Italy
and Portugal were European countries
where he saw “a very strong case for
consolidation without the need for
punitive remedies” from competition
regulators.
The UK market was a “very frag-
mented” and “crowded market place”,
he said, with four mobile network oper-
ators and several virtual operators,
such as Tesco, “which is why returns are
below market whack”, he said.
Read said that Vodafone was en-
gaged with “multiple parties on multi-
ple markets because obviously we want
to examine the best accretive value-
creation for our shareholders and that
therefore requires us to talk to more
than one party”.
The group is also seeking a potential
industrial merger of Vantage Towers,
its European infrastructure business,
which was spun off and listed on the
Frankfurt stock exchange last March.
Read said that Vodafone was looking
for a like-minded operator and was “ac-tively engaged” over a deal that could
allow it to further reduce its 82 per cent
holding in Vantage while retaining co-
control.
“Of course people talk about Orange,
they talk about Deutsche Telekom as
being similar-in-scale tower operators
with a similar view of how they would
like to run those towers. Bringing that
combination together would provide a
European champion in towers, provid-
ing an underpinning of infrastructure
for the digital decade that Europe wants
to achieve,” he said. “That is our ideal
option.”
Vodafone and the industry havestruggled to consolidate in Europe,
blaming policymakers for encouraging
fragmentation in the market in the
interests of competition but pushing
down returns and investor appetite.
Read noted that the pandemic had
“really opened the eyes of policy-
makers” to the critical role of connec-
tivity and that reforming taxation,
regulation and spectrum auction
costs were needed to help tackle the
problem.
Potential consolidation partners,
though, needed to be realistic and re-
quired a common view on valuations,
potential synergies and future strategyfor deals to be struck quickly. “The
more the counter-party is aligned with
us on those understandings, the quicker
the discussions take place,” he said
Vodafone said that it had enjoyed a
“solid quarter”, with a 2.7 per cent rise in
group organic service revenue, up from
2.4 per cent in the second quarter. It
reiterated its full-year guidance of
adjusted earnings of €15.2 billion to
€15.4 billion.
Analysts at Jefferies, the broker, said
that the update revealed service growth
ahead of City forecasts.
Shares in Vodafone rose by 4¼p, or
3.4 per cent, to 132¼p.Vodafone ‘has eye on ball for growth’
Alex Ralph
Behind the story
D
ays after the
emergence of
Europe’s largest
activist fund as an
investor in Vodafone,
Nick Read used yesterday’s
trading update to hit back at
recent speculation and defend
the telecoms group’s strategy
(Alex Ralph writes). Read, 57,
repeatedly argued that
Vodafone’s plans had been in
place for years, were moving “at
pace” and had broad support
from shareholders.
Although he declined to
comment directly on Cevian
Capital, the activist, as its stake is
below publicly disclosable levels,
Read said: “What it looks like to
me is everyone is confirming we
are doing the right things.”
Cevian, which also has
declined to comment, is believed
to want Vodafone to pursue
consolidation in key markets, to
dispose of some operations and
to refresh its non-executive
directors on the board.
At Vodafone’s half-year results
in November, Read emphasised
“in-market consolidation” in
Europe and a growth drive to lift
returns, prompting analysts at
Jefferies to notice a “visible
urgency” in its commentary.
Read said yesterday that he had
been “clear for a number of
years” about the importance of
in-market scale in its European
markets. It was Covid, rather
than Cevian, that had unleashed
potential to achieve this, he
suggested, as policymakers
appreciated the importance of
“next-generation connectivity to
global competitiveness”.ROBERT CIANFLONE/GETTY IMAGES
Vodafone, a
cricket sponsor,
is playing a
dead bat to an
activist investor