by Eoin Dolly | May 1, 2019 | Press Release
An astonishing row is now emerging at the heart of government. Robert
Watt, Department of Public Expenditure and Reform’s secretary general has
explicitly told Taoiseach Leo Varadkar and Pascal Donohue, the Minister for
Finance, that they should forthwith abandon plans to install high-speed
broadband to every home in the country and in the urban centres.
Robert Watt is one of the senior-most civil servants and has
categorically warned cabinet ministers that the planned €3bn National Broadband
Plan does not represent value for taxpayers’ money.
Reports indicate that Mr. Watt, who is in the running for the next
governor of the Central bank, was vehemently opposed to the proposed plan. He
firmly believes the €3bn price cannot be justified. Following several closed-door
meetings, Mr. Watt is said to have told the Taoiseach and the Finance Minister
that spending that kind of money on rolling out fibre optic cables to every
home in the country would not pay off in the long run.
A government source said that Robert’s
job was to give the unpopular view and the kind of advice that the politicians mostly
did not want to hear. “Sometimes it makes him unpopular but it is his job to
give this advice,” said the government source.
From all indications, Mr Varadkar and Mr. Donohoe look set to completely
ignore this advice. They are hellbent on becoming the first government in the
world to roll out high-speed broadband across the country.
Mr. Donohoe said that he and his officials have already engaged
thoroughly on this plan for a couple of months. The Finance Minister has
refused to address some of the concerns raised by one of the most senior civil
servants in his own department, especially after the cost significantly shot up
from €500m to €3bn.
Ministers and Opposition TDs already have major concerns with the
project and Mr. Watt’s warning is likely to set off all kinds of alarms among
them. It is believed that Cabinet will likely discuss the National Broadband
plan next week. Ministers will be asked to sign off on the proposed plan for high-speed
online connectivity across the country and for areas not currently served by
commercial operators.
Once Cabinet reaches an agreement, a consortium led by American
businessman Frank McCourt will be commissioned with rolling out the
first-of-its-kind broadband project.
However, Cabinet ministers will likely raise concerns with Taoiseach,
the Minister for Finance, and the Minister for Communications Mr. Richard
Burton. In the aftermath of the National Children’s Hospital project
controversy, a number of ministers are already apprehensive about sinking
billions of euros into another state capital project.
Others raised concerns that the taxpayer is being asked to pay billions
of euros for a massive infrastructure project that the state will ultimately
not own. The Cabinet will focus on the value for money in bringing high-speed
broadband many rural parts of the country.
According to sources close to the plan, bringing the broadband to about
443,000 homes may be real effective but the costs would dramatically increase
for the other 100,000 remaining homes. Therefore, some of the more unreachable
homes would have to fitted with domestic broadband receivers which would then
connect to local transmitter outposts.
Meanwhile, Brendan Howlin, the former Public Expenditure and Reform
Minister, accused Fine Gael of “abandoning all spending controls” and
completely ignoring official advice. The Labour Party leader pointed out that
the Government’s ambitious plan to bring high speed broadband to 543,000 homes
and businesses would place a €5,500 burden on every property.
“The Government needs to publish far more information to clarify the
numbers involved, and to confirm its assumptions about the average cost to
connect homes to the broadband network,” Mr Howlin said.
Howlin further commented that Taoiseach was “weighing the short-term
political benefit of winning seats at the local election over the long-term
financial stability of our country.” He implored voters not to be fooled by
Fine Gael and that it was “outrageous” to compel taxpayers to pay for a big
project that the state would not eventually own.
Describing the Government’s handling of the proposed project, Fianna
Fail’s communication spokesperson said it was “a monumental failure of the
procurement process” that the state was pumping billions of euros into the plan
yet it will not even own the infrastructure once it is in place.
The terms of the current contract stipulate that Mr. McCourt’s
consortium will build, operate, service and manage the nation’s biggest
broadband network for a period of 25 years, after which the state will have the
option to purchase the infrastructure.
Former Minister for Communications Denis Naughten was forced to resign
after his alleged contacts with Mr. McCourt. He had attacked Taoiseach at the
time, and said that the decision to sack him had more to do with “opinion polls
rather than telecom poles,” and “more about optics than fibre optics.”
Mr. Naughten said that the introduction of high-speed broadband ought to
be treated with the same importance as the rural electrification program almost
100 years ago.
by Eoin Dolly | May 1, 2019 | Press Release
A
quick glance at the nine-strong Monetary Policy Committee, the body that guides
the UK’s economy, and you can already begin to see the problem.
This
is the body that influences important aspects of the economy, such as the
interest rates, through their monthly votes, yet they look nothing like many of
the people they represent and whose lives they greatly influence.
Current
governor Mark Carney is the 120th governor in what has been a
continuous line of white men who have led the Bank. While women easily make up
half of the UK’s population, they are grossly under-represented. They make up a
paltry one ninth of the Monetary Policy Committee. There’s also not a single
black, Asian or minority ethnic group (BAME) member in the committee.
Therefore,
it is quite clear that the Bank seems to have a diversity issue. The Public
Accounts Committee (PAC) said last month that the Bank was still a long way way
off its diversity targets for the coming year and that there was “little
evidence the gap was closing quickly enough.”
In
January, the Bank appointed two women to its financial policy committee,
Banking Standards Board Chair Dame Colette Bowe and Virgin Money boss Dame
Jayne-Anne Gadhia. The Bank’s search for a new governor kicked off earlier this
week and many hope that it could herald the start of a new era with a woman at its
helm for the first time in history.
Joanna
Place, the Bank’s chief operating officer, spoke of the Bank’s efforts in
diversity. “In terms of diversity and inclusion, we have done a lot more than
just gender and ethnicity. We have a number of staff networks. We have
inclusive events. We have a wellbeing policy. We have done a cognitive
diversity survey. We have started to look at social mobility,” she said.
Labour
MP Rachel Reeves, who also chairs the business select committee and who was an
economist at the Bank before turning to politics, also commented on the issue
and said that it was time the Bank took action. “We’ve had two women prime
ministers and yet have had no women chancellors or Bank governors,” she said.
The former economist also added that the Bank needed to do more to train and
promote talented women within the organization.
“The
sad truth is that the Bank has not done enough to recruit, train and promote
talented women. More needs to be done to bring forward a generation of women
economists who can be considered for the top job,” she further added.
Self-Reproduction
However,
others do not share the view that the problem ultimately lies with the Bank.
Wendy Carlin, a professor of economics at the University College London, points
out that the real issue is with the economics profession itself and not the
Bank of England.
“If
you google economists,” she says, “you’ll get a great number of pictures of
economists in suits holding up a financial chart. Those impressions are
self-reproducing. If people only see men in suits then they don’t think it’s
for them.” She further made the point that women make up just over a third of
the total undergraduate economics students in the UK.
According
to the professor, these statistics repeat themselves in other parts of the
world like the US and Australia. She is currently leading an international
project dubbed the CORE project which seeks to change the way economics is
taught and thereby, broaden its appeal.
Prof
Carlin added that “We’re being much clearer that economics is about addressing
the problems we face. Yes, it’s about financial stability but it’s also about inequality,
the environmental future and work,” But she also cautions that work at this
academic level will take quite some time to filter through to the real world. She
said “It’s crucial to widen the pool [of job candidates] as far as possible,
but you’ve got to get people into the pool in the first place and that’s what
we’re working on,”
Dr.
Margaret Heffernan, an author and former chief executive of five different
businesses made the point recently that the lack of women in the sector has
become something of a self-fulfilling prophecy and that since the profession is
predominantly male, it tends to “promote and nurture male students.”
But
Dr. Hefferman also said “Economics can be very excluding of women, sometimes
unintentionally and sometimes intentionally. People with privilege don’t
happily give it up.”
A
recent survey conducted by the American Economic Association of more than 9,200
economists suggested that there are deep-rooted issues as well. Nearly a third
of female economists polled said that they had felt discriminated in one way or
the other as compared to 12% of their male counterparts. Women, the study
suggests, felt that they were treated especially unfairly.
Recruitment
firm Saphire Partners is carrying out the search for the new governor. The fact
that it is run by five female partners and has described itself as “advocates
for women in business” does bring a glimmer of hope that the next governor of
the Bank of England could be a woman.
by Eoin Dolly | May 1, 2019 | Press Release
Passengers
in Cork and Shannon are now likely to be deprived of their direct Norwegian
Airlines routes to the US for nearly the entire summer season because of the recent
grounding of the Boeing MAX 8 aircraft fleet.
Ryanair,
which had placed an order of 135 next-generation Boeing aircraft in its MAX 200
version, said that it may now be unable to introduce the planes into its fleet
before late August.
The Irish airline
had scheduled to bring in five 737-MAX 200s, which are the modified versions of
the MAX 8, by around June. A further 50 planes were scheduled for delivery
before the beginning of the 2020 season.
However,
Ryanair insists that its schedules will be largely unaffected by this recent
grounding and that it has a network that is fully catered for by its fleet of
400 Boeing 737-800 series planes.
Deirdre
Clune, Ireland South MEP, pointed out that while all the requisite safety
measures had to be implemented for the passengers’ well-being, airlines such as
Norwegian ought to do everything in their power to restore their crucial US
routes from Shannon and Cork.
Thanks to a
replacement aircraft, Norwegian has maintained its direct US flights from
Dublin. However, passengers booked fly to the US from Cork and Shannon have
been offered a bus service to Dublin for their onward flights or the option of
a full refund.
Ms Clune
said that she was supportive of the measures taken by the airline which were
necessary to ensure the safety of passengers. “However, passengers
travelling on transatlantic flights from Cork and Shannon airports must be
taken care of while the flights are not in operation from these airports,”
she said. “I think that these flights are very important for Cork airport
in particular and I hope to see them back to their regular schedule once all
the safety checks have been completed,” Ms. Clune concluded.
The Cork
Airport is one of the fastest expanding European airports at the moment and is
well on course for a growth of more than 8% in 2019 alone. Passenger numbers
went up by 10% in February alone.
The entire
fleet of the Boeing 737 MAX was ground all over the world following a fatal
crash in Ethiopia in which all 157 people on board died. The plane crashed just
10 minutes after take-off. Michael Ryan, a father of two and an Irish national
also died in the tragedy. He was 39 years old and an engineer with the UN food
programme.
The tragedy
was the second fatal accident in five months involving the brand new jet.
Another Boeing 737 MAX 8 had crashed into the sea off the Indonesian coast just
before Christmas. After it emerged that an anti-stall system may have been
linked with both the tragedies, the global fleet was grounded for safety
concerns.
Boeing has
since developed a software upgrade for the aircraft’s anti-stall system that
was involved. However, a regulatory briefing note has indicated that the
aircraft will likely not be cleared to resume services worldwide until August.
An international
committee, the Joint Authorities Technical Review Committee, will commence a
joint examination of the Boeing 737 MAX update by 29th April, 2019. The
committee, which includes the European EASA and the American FAA, will also
include aviation authorities from Canada, Brazil, China, United Arab Emirates,
Japan, Singapore and NASA.
As it has
now emerged, the evaluation of the Boeing 737 MAX 8 software upgrades may take
up to 90 days which means that even if everything goes according to plans, the
aircraft may not be cleared for resumption of services until August at the
earliest.
The
grounding of the 737 MAX fleet has already cost the American manufacturer an
estimated $1 billion. Norwegian has also bore the brunt of the grounding as one
of the most affected airlines in the world. 18 of its planes were taken out of
service.
In a letter
to Ms. Clune, Bjorrn Kjos, Norwegian boss, said that the airline had made every
effort to minimize the disruption involved. “This development at no notice
has resulted in the need for an urgent, major overhaul of planned aircraft
deployment,” he said.
He further
indicated that the airline had taken measures to minimize disruptions,
including the substitution of the larger Boeing 787 Dreamliner on some
services, wet-leasing of alternative aircraft, and securing extended-range
ETOPS approval for alternative aircraft. All these, he said, would maintain services
and coach transportation to and from where the airline’s alternative flights
operate from.
With its fleet
of new Boeing 737 MAX 8 aircraft, the Scandinavian airline had managed to offer
cut-price transatlantic services from Dublin, Shannon and Cork to Boston and
New York.
At the
moment, Dublin’s airport services to US destinations such as Boston and New York
are being facilitated by a new Boeing 787 Dreamliner.
by Eoin Dolly | Apr 23, 2019 | Press Release
Potential
buyers, including Fosun, a Chinese conglomerate, are circling Britain’s oldest
package holiday operator. The company could be split up in a move that could
lead to its high street stores and package deals being taken over by one of its
main shareholders.
Thomas
Cook has been struggling with a dip in demand for package holidays and
cut-throat online competition. Potential bidders are now gearing up for either
a partial or full takeover of the struggling company which has already
announced that it is closing 21 high street stores and many more to come.
Expressions
of interest in its Tours business began when it was first reported on Sky News
that it was seeking to offload its airline business. But it has since announced
a string of profit warnings, including an 80% drop in its share value. Fosun, a
Chinese company which is also the largest Thomas Cook shareholder, is among a
number of investors that have expressed interest in its business.
Thomas
Cook has said that it is seeking to focus more into increasing investments in
directly-owned hotels which are now more profitable. It will also evaluate all
the options and consider all the bids. A source close to the company said that
it is unsurprising that even rivals are making speculative approaches for other
parts of the company’s business.
Fosun
has a 17% stake in Thomas Cook and already runs a joint venture with the
178-year old firm back in China. Mr. Guo Guangchang, Fosun’s chairman, rose
from rural poverty and is now one of China’s richest men.
While
a bid from such a private investor with deep pockets could prove quite
attractive for Thomas Cook after a troubled year, EU rules banning majority
foreign ownership could get in the way of a lucrative deal. The rules could
prevent Fosun from running the airline arm of the tour operator.
In
May 2018, Thomas Cook’s shares traded above £1.40. But they have since dropped
to 25.4p before the bank holiday which left its market value at £376m as
compared to a net debt of £1.6bn. The tour operator is trying to tackle its
huge debt pile and has taken up restricting specialists, Alix Partners, to work
on its balance sheet and its cost reduction plans. The company was recently
compelled to call for a meeting of its shareholders to support an extension of
its debt limits which had been “inadvertently broken.”
However,
analysts have already warned that the tour operator may have to ask its
investors for more cash even though it has surpassed the period in which cash
reserves are at their lowest for many of the highly seasonal tour operators.
And
things are not looking too good for the entire holiday sector which is in the
midst of a fierce price war. Thomas Cook’s biggest rival in Europe, Tui, has
already issued profit warnings. Budget airline Easyjet has also issued a
significantly downbeat outlook.
The
online marketplace is also proving to be brutal for Thomas Cook. More
holidaymakers are now opting for the internet rather than visiting high street
branches. While 64% of Thomas Cook’s sales are through its website, this rising
preference has mostly benefited online travel agencies.
The
company announced the closure of 21 stores last month, including the loss of
321 jobs. As the company adjusts itself to the online spending revolution,
analysts believe there will be many more closures across its 566-store network.
Thomas
Cook is named after its founder who was a cabinet maker and who operated day
trips from Leicester to Loughborough. The company has recently issued two
profit warnings in two months towards the end of last year. In its most recent
profit warning, the company blamed the “disappointing year” on the prolonged
heatwave in the summer across Europe for killing consumers’ appetite for
travel.
Some
budget airlines have gone belly up in recent months. These include the British
regional carrier Flybmi which collapsed in February, Iceland’s Wow Air which
folded last month, and Indian Jet Airways which grounded all its flights this
past week.
However,
spinning off its airline arm could be an attractive source of cash for Thomas
Cook. This is not the first time the tour operator has faced concerns about its
survival. Similar doubts were raised back in 2012 when it was forced to dispose
of hotels and part of its airline business. The company even carried out a
rights issue in 2013 in what seemed like a desperate attempt to shore up its
balances sheet.
by Eoin Dolly | Apr 23, 2019 | Press Release
Figures released by business information company CRIF
Vision-Net show that the entrepreneurship spirit continues to flourish in
Ireland despite Brexit uncertainty.
An average of 71 companies were set up every day
within the first three months of 2019 against an average insolvency rate of two
per day.
Within the first quarter of 2019, a total of 6,413
companies were formed in Ireland. These are the best figures of Q1 in the last
13 years and a 14% increase on the previous record-breaking Q1 of 2018.
The biggest contributors to these figures were
professional firms, which accounted for 1,448 new start-ups in the first three
months of the year, a 22% increase from the same period last year. Social and
professional services recorded an impressive 50% growth (949 new firms) over
the same period in 2018.
However, the financial sector, which is the third
largest sector, decreased by 1% to record 708 new start-ups as compared to 715
in Q1 of 2018 while the construction industry showed a modest 1% growth.
Releasing the figures, Christine Cullen, Managing
Director of CRIF Vision-Net, said that “the buoyant entrepreneurial spirit in
Ireland continues to weather the continued uncertainty across the water.”
Cullen further commented that “the first quarter of 2019 has been the best in
13 years for start-ups in Ireland,” and that “industries including professional
services and social and personal services saw significant growth.” Meanwhile,
much-discussed sectors such as construction and finance have again shown strong
growth numbers.
Ms. Cullen also observed that, other than the concerns
over a slowdown in the global economy, Brexit remains the greatest challenge of
2019. It now sits at the top of all business agendas, in both big and small
companies. And the concern is particularly acute for many of the companies that
are susceptible to supply chain disruptions, costly tariffs and border checks
on the horizon.
Therefore, it seems businesses are doing everything
they need to do to prepare themselves for the unknown and the potentially messy
post-Brexit period. Cullen pointed out that, “in the meantime, it is critical
that the Irish Government continue to provide assistance to safeguard the
economy from the worst effects of a No-Deal Brexit.”
Twelve counties made double-digit growth rates in the
total number of start-ups in Quarter One, with Dublin recording the highest
number of start-ups among all the counties. There were 3,089 start-ups
established in the capital within the first quarter of the new year, which is
close to half of all the start-ups in the entire country within the period.
Cork recorded the second highest number of start-ups
with 690 new businesses being established in Q1 of 2019 – a 13% increase over
the same period in 2018. Galway came in a distant third with 236 new start-ups
– a 1.2% drop while Limerick was fourth with 210 new start-ups which was a 7.7%
improvement on Q1 of 2018.
It is also worth noting that this growth in start-ups
wasn’t confined to the counties with the highest urban populations. Louth
recorded a 21% increase while Donegal had a 16.5% increase in the number of
companies formed. Kerry was up by 7%, Wicklow was up by 14%, and Wexford saw a
38% increase in new company start-ups.
However, data from business and credit risk analyst
CRIF Vision-net also shows that the rate of insolvencies in 2019 has remained
relatively low as compared to the previous year. There was an almost 26%
year-on-year drop in insolvencies in 2018 versus 2017. Quarter One of 2019
recorded 192 insolvencies as compared to 186 in the same period for 2018.
The wholesale and retail sectors were the most
insolvent, with a total of 31 recorded insolvencies, which is a 34.8% increase
on the Q1 figures for 2018. The professional services sector also had the same
figures, 31 insolvencies, which was a 10.7% increase in the while the
construction sector recorded 25 insolvencies – a 13.8% reduction.
Dublin was, unsurprisingly, the most insolvent county
followed by Galway and Cork. Clare, Waterford, Carlow Mayo, Westmeath,
Tipperary, Laois, and Kilkenny all recorded less than five insolvencies each in
Q1 of 2019 as compared to Q1 of 2018.
Sara Constatini, CRIF’s Regional Director for the UK
and Ireland, pointed out that the continued growth in the number of Irish
start-ups in Q1 is very encouraging. She indicated that international data
shows that Ireland is on course to outperform even some of Europe’s biggest
economies, such as Germany, in 2019.
However, while the domestic economy is thriving,
external challenges continue to cause several concerns. Other European
economies are also feeling the cloud of uncertainty and the next couple of
weeks will be crucial in determining the European market confidence in 2019 and
beyond.
by Eoin Dolly | Apr 23, 2019 | Press Release
Following several corporate collapses, including the
collapse of Carillion and BHS, the UK competition watchdog has made proposals
that could split up the big four accounting firms.
The proposals also include compelling the big
accountancy firms to work with their smaller rivals. While the CMA (Competition
and Markets Authority) resisted calls for a split of the big four,
PricewaterhouseCoopers, EY, Deloitte and KPMG, it has said it might be an
option five years down the line if there are no significant improvements in the
profession.
Following its fundamental review of what it termed
“serious competition problems in the sector,” CMA’s final report recommended
that the UK government pass new laws that will compel big accounting firms to
put some distance between their auditing operations and their more lucrative
consulting divisions. Such laws, it says, would prevent conflict of interest.
To stoke competition, the CMA also called for
corporations across the UK to be forced to hire smaller “challenger” auditing
firms to analyse their books along with the big four. However, it proposed that
the largest and most complex organizations be excluded from this requirement.
But accounting firms have raised concerns and even
severely criticized some elements of these proposals. Business lobby group,
Confederation of British Industry, indicated that this move could undermine the
confidence in corporate Britain.
Marcus Scott, the chief operating officer of
TheCityUK, which represents financial services and professional firms, also
criticized the proposals. He said that such recommendations may make for good
headlines but are poorly focused. He further stated that “there was no evidence
that they would lead to genuinely enhanced audits.”
The CMA still insists that its blueprint will improve
the profession. Andrew Tyrie, CMA chair and former Tory MP supported the
blueprint and said that “people’s livelihoods, savings, and pensions all depend
on the auditors’ job being done to a high standard.” He pointed out that “too
many fall short – more than a quarter of big company audits are considered
sub-standard by the regulator. “This,” he said, “cannot be allowed to
continue.”
Lord Torie also indicated that the government had also
received similar recommendations from three separate reports. This was a
reference to the recent Kingman review of audit regulation and the Brydon
review of audit quality and effectiveness, which, he said, “In large part, they
come to similar conclusions.” He further pointed out that “conflicts of interest
cannot be allowed to persist; nor can the UK afford to rely on only four firms
to audit Britain’s biggest companies any longer.”
According to the CMA, the fact that large accountancy
corporations are engaged to scrutinize companies’ book while at the same time,
earning huge fees for advising on corporate matters such as takeovers and tax
issues, has fueled several conflict of interest allegations.
To avoid conflict of interest, the CMA has proposed
that the auditing and consulting functions should be “operationally” separated,
with different leadership, management teams, accounts and even pay policies.
That means the two functions would no longer share profits or staff promotions.
Even bonuses would now have to be on audit quality.
The current accounting regulator, the Financial
Reporting Council, will perform a five-year progress review, even though the
Kingman review had recommended its replacement with a tougher successor.
According to the CMA, the option of a full, structural
split, which will compel accounting firms to split into two, entirely
independent outfits, should remain under discussions during this review period.
The CMA also said that any corporation that engages any of the big four
accountancy firms should also hire a “challenger” audit firm to spur
competition in the sector and help the smaller accounting firms grow.
The huge and most sophisticated corporations in the
UK, which would likely include banks such as Barclays and HSBC, would be exempt
from this requirement. However, EY, one of the big four firms has severely
criticized the proposals and said that they were a missed opportunity and
“risked the UK’s attractiveness for business.”
As far as EY is concerned, splitting up auditing and
accounting functions would undermine the quality of auditing since the firms
would then not be able to draw from critical skills, capabilities, and
investments in the company. It would effectively diminish the resilience of the
audit business.
Commenting on the proposals by CMA, EY said that, “at
a time when the FRC [Financial Reporting Council] is reviewing corporate
reporting, and the Brydon review may change the scope of audit, it appears
ill-timed for the CMA to restrict the skills needed to deliver high-quality
audit now and in the future.”
KPMG also criticized the proposals for joint audits
and said that “shareholders, audit committees and the regulator must have total
confidence in the ability of these firms to complete this work before the
market can move ahead with this recommendation.”
