WOKE financing rules must change, Rachel Reeves told The Sun last night, as British defence firms warned red tape was putting them at risk of collapse.
With global tensions running high, the Government has ramped up military budgets to 2.5 per cent of GDP by 2027.
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Both Chancellor Ms Reeves and the Defence Secretary have pledged to give more of the Ministry of Defence budget to smaller British firms.
However, firms have told this newspaper that they are still being shut out by restrictive ESG (environmental, social and governance) financing rules, making it difficult for them to get bank accounts, loans, insurance or working capital.
Separately, British firms are also grappling with lengthy delays for export licences, even when providing vital equipment to Ukraine.
One industry insider blamed it on “chronic underresourcing in the Cabinet Office’s Export Control Joint Unit (ECJU), causing millions in losses”.
Another said “businesses that will help defend this country are on the brink of extinction as a result”.
One manufacturer said they had been waiting three months for an approval to ship a software update.
Another said they waited six months “in the dark”, while another waited 13 months for an answer from the ECJU before being told no licence was needed.
A spokesman for the defence lobby group ADS said “the whole bureaucratic system is struggling to cope”, adding: “UK firms have been losing millions in acceptable and responsible business simply and purely due to licensing delays”.
Kevin Craven, chief executive of ADS, said finance bosses had accepted there was a vibe shift on ESG but this was yet to filter through to account managers, who were still vetoing firms’ financing requests.
Speaking exclusively to the Sun, Ms Reeves said: “The world has changed and so we must respond.
“Earlier this week we outlined a raft of measures to ensure more small businesses can benefit from the historic defence spending uplift.
“Private investment has a vital role to play too. If opaque ESG ratings are blocking investment, this has to change, because supporting our defence industry and Ukraine is ethical investing.
“We will use every lever to fire up our manufacturing base and harness the potential of innovative companies across the country to keep Britain safe.”
It is understood a meeting of four small defence firms and four financial institutions was organised yesterday to thrash out some issues.
SERVICES SUFFER
COMPANIES in the UK’s biggest sector slashed jobs for the fifth month in a row, according to a survey.
Staffing in pubs, restaurants and hotels fell rapidly, with the sharpest reduction since the pandemic in 2020.
The S&P services purchasing managers’ index survey said a third of respondents reported a rise in average costs last month while a quarter would reduce staff.
Tim Moore at S&P GLOBAL MARKET INTELLIGENCE said: “Indicators suggest a risk of stagflation on the horizon.”
BOOKIES’ SUPER ROLL
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A RECORD number of punts on the Super Bowl will help the owner of Betfair and Paddy Power grow core profits by over a third this year.
Parent firm Flutter Entertainment saw more wagers than ever placed on American football’s season finale.
Its FanDuel business saw 17.7million bets placed — worth almost half a billion dollars. And UK revenues grew by 20 per cent, helped by bookie-favourable results in the Premier League.
Flutter switched its listing from London to New York last year and hopes for a US boom — but had to warn on profits in January as punters won too much money on American football after a streak of favourites won games in late 2024.
A.I. PROBE ENDS
THE competition watchdog has dropped a review of Microsoft’s £10billion investment in ChatGPT firm OpenAI.
The Competition and Markets Authority says the deal does not qualify for an in-depth investigation — just weeks after the Government issued it with a pro-growth “strategic steer”.
The CMA decided there had not been a change handing Microsoft “de facto control over OpenAI”. The tech giant dropped its plans to have a board seat on the AI firm in the face of scrutiny last year.
FOXTONS TO ‘FIX ITS FAILINGS’
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THE boss of Foxtons says the estate agency chain has “more to do” to improve its culture in the wake of sexual and racial harassment allegations.
Guy Gittins, who started his career at Foxtons in 2002 and returned as CEO three years ago, said he was “focused on creating an environment which attracts, motivates and retains a diverse team of talent”.
His comment comes after a report by Bloomberg included allegations of groping, requests for sex, racist insults and drink-driving offences by staff.
Mr Gittins said the firm now had mandatory annual respect and inclusion training and diversity policies, but said “there remains more to do”.
He added that the number of female managers had risen by a quarter in the last two years.
Foxtons yesterday posted a 121 per cent jump in pre-tax profits to £17.5million while its revenues rose by 11 per cent to £163.9million.
RETAIL giant Marks & Spencer is handing its 50,000 shop workers a 5 per cent pay rise from April 1.
The chain says it will cost £95million for it to increase pay to £12.60 an hour, which is in line with the new living wage.
LAND RAP FOR CO-OP
THE CO-OP admits it has been blocking rivals from opening stores nearby — and has had to rewrite more than 100 unlawful land agreements.
Competition regulator the CMA says it is worried by the supermarket chain’s “very large number of breaches”.
Rules prevent large grocery chains stopping rivals opening competing stores in their area.
The CMA has previously acted against similar breaches for Morrisons and Tesco.
