Britain’s biggest winemaker uncorks a record-breaking year as chief executive James Pennefather sticks to his audacious target of capturing 1 per cent of the global champagne market by 2035.

Chapel Down, Britain’s largest winemaker, has sold more than a million bottles of English sparkling wine in a single year for the first time, a watershed moment in its bid to seize 1 per cent of the global champagne market by 2035.

The Kent-based producer, listed on London’s junior Aim market and backed by the billionaire Lord Spencer of Alresford, said the million-bottle haul equates to roughly 0.4 per cent of champagne’s worldwide market share. James Pennefather, who took the helm as chief executive last year, expects that figure to climb to 0.7 per cent by the end of the decade.

Pennefather said the company’s long-term ambition was anchored in the available acreage across its native Kent. “We certainly do have options to get there faster, but it also slightly depends on what happens to the wider champagne market,” he said.

While champagne has historically been the preserve of formal celebrations, Pennefather argued that English sparkling wine was redrawing the boundaries of the category. “One of the real strengths of Chapel Down and English sparkling wine is that we’ve expanded the number of occasions on which people are drinking high-value sparkling wines,” he said. “That gives us confidence that we are also expanding the category as a whole.”

The company farms more than 1,000 acres of vineyards across the south-east of England, producing both still and sparkling wines. Its growing brand profile has been bolstered by partnerships with Ascot, The Boat Race and the England and Wales Cricket Board.

Results for the year ending 31 December 2025 lay bare the appetite for home-grown fizz. Group revenues climbed 19 per cent to £19.4 million, fuelled chiefly by a 38 per cent surge in off-trade sales through supermarkets to £9.4 million on the back of a 5 per cent rise in listings.

On-trade sales, those flowing through pubs, bars and restaurants, edged up 5 per cent to £2.6 million, helped by new account wins. International revenues jumped 49 per cent to £1 million, lifted by the firm’s tie-up with Jackson Family Wines in the United States and a higher profile at British airports and St Pancras International station.

The performance pushed Chapel Down back into the black, with pre-tax profits of £469,000 compared with a £1.4 million loss the previous year. Buoyed by a strong start to 2026, the board reaffirmed guidance for net sales of £22.1 million, in line with City consensus.

Pennefather conceded that the conflict in Iran was a watch-point for the business, although the Middle East accounts for only a “small” share of revenues. “We haven’t seen any immediate impact,” he said, “but a sustained increase in fuel costs could have an impact on profitability.”

Elsewhere, investors raised a glass to Carlsberg after the Danish brewer posted its first quarterly volume rise in a year, helped by its push into soft drinks. The world’s third-largest brewer, which counts Kronenbourg, Skol and Somersby cider among its stable, reported a 2.8 per cent lift in total organic volumes during the first quarter, with growth across every region. Soft drinks volumes leapt 10 per cent, driven in no small part by its £3.3 billion takeover of Britvic, while beer volumes nudged 0.4 per cent higher.

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Chapel Down toasts million-bottle milestone in race to challenge champagne

Premier Inn owner Whitbread is to scrap its chain of branded restaurants and recycle £1.5 billion of hotel freeholds through a sale-and-leaseback programme, placing 3,800 jobs at risk as the FTSE 100 group tears up its five-year plan in response to mounting cost pressures and a restless activist investor.

Britain’s largest hotel operator has been hunting for ways to lift returns and protect margins after the autumn Budget left it nursing a sharp rise in business rates and employer national insurance contributions. Pressure has been compounded by US activist Corvex Management, which has urged the board to launch a strategic review after a prolonged spell of share price underperformance.

Unveiling the outcome of its business review on Thursday, the company set out a new five-year roadmap targeting a £275 million uplift in annual profits and £2 billion of shareholder returns. Investors gave the plan a frosty reception: shares slumped 6 per cent, or 151p, to £22.34 in early trading.

Central to the overhaul is the extension of the £500 million restructuring of Whitbread’s food and beverage arm. Two years ago, chief executive Dominic Paul launched the so-called “accelerating growth plan”, converting 112 Beefeater and Brewers Fayre sites into 3,500 new bedrooms and offloading a further 126 restaurants. The group will now go further, replacing all 197 of its remaining branded outlets with what it described as “a more efficient integrated restaurant” format. The shift, expected to deliver a return on capital of between 15 and 20 per cent by 2031, will knock up to £160 million off food and beverage sales this year as sites transition.

The property strategy marks an equally significant pivot. Whitbread, which currently owns the freeholds of roughly half its hotels, will recycle £1.5 billion of property to fund future growth and trim net capital expenditure by more than £1 billion over the next five years. The move will reshape the company into a majority-leasehold business, with freehold ownership falling to between 30 and 40 per cent of the estate.

Paul defended the rebalancing as a pragmatic response to “significant cost increases in the form of business rates and national insurance, as well as the implied market discount of our inherent value”. He added: “Owning a significant proportion of our property is a unique strength which powers the growth of Premier Inn while supporting our resilience as a business, underpinned by a strong balance sheet. But we can improve our approach. We will refocus our capital spend and recycle more of our freehold real estate, driving increased margins and returns, reducing our capital intensity and increasing cash returns for shareholders.”

The strategic reset accompanied a set of full-year results that underlined why the board feels the need to act. Revenue for the 12 months to the end of February was broadly flat at £2.9 billion, in line with City forecasts, while pre-tax profit tumbled 19 per cent to £298 million after £130 million of impairment charges linked to the restaurant restructuring. The group held its full-year dividend at 97p, with a final payout of 60.6p per share.

For the wider hospitality sector, Whitbread’s retreat from its branded restaurant heritage and its tilt towards a leaner, leasehold-heavy model is likely to be read as a bellwether. With business rates revaluations, employer NICs and stubborn wage inflation continuing to bite, even the largest operators are concluding that capital-light growth and aggressive cost discipline are no longer optional.

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Whitbread axes branded restaurants and puts 3,800 jobs at risk in £1.5bn Premier Inn shake-up

Britain’s small and medium-sized businesses are about to be marched back into the inflationary trenches they thought they had left behind.

According to fresh modelling from the National Institute of Economic and Social Research (Niesr), the war in Iran and the resulting blockade of the Strait of Hormuz will tear a £35 billion hole in UK output over the next two years, push consumer price inflation back above 4 per cent, and force the Bank of England to raise interest rates rather than cut them.

That is the optimistic reading. It assumes the fighting ends soon and that crude, currently trading near $110 a barrel, drifts back to $65 by the close of next year. Should the conflict drag on and oil spike to $140, a level last seen in the run-up to the 2008 crash, the damage doubles to £68 billion, and Threadneedle Street may be forced into the steepest emergency tightening since Black Wednesday in September 1992.

For the owner-managed firms that make up the bulk of the British economy, the implications are uncomfortably familiar. Energy bills are heading north again, household budgets will tighten just as confidence had begun to recover, and the cost of credit, already a millstone for growth-stage companies, is unlikely to ease before the autumn.

Niesr has cut its UK growth forecast for 2026 to 0.9 per cent, down from the 1.4 per cent it pencilled in as recently as February. The early-year momentum was real enough, gross domestic product expanded by 0.5 per cent in the three months to February and is on course for a respectable 1 per cent in the first half. The trouble starts in the second. As fuel and energy costs feed through into household bills, consumer spending power will be eroded and growth is expected to flatline for the remainder of the year.

Annual consumer price inflation, currently drifting back towards target, is forecast to climb to 4.1 per cent at the start of 2027. That, Niesr argues, will compel the Bank of England to lift Bank Rate to 4 per cent in July, rather than allow it to fall towards 3 per cent as markets had been pricing in only weeks ago.

“Even in a relatively benign scenario, where the conflict in the Middle East is resolved quickly from here, the shock is likely to have a material impact on the UK economy,” said David Aikman, director of Niesr.

The bond market is already drawing its own conclusions. Yields on ten-year gilts breached 5 per cent on Tuesday for the third time since hostilities began two months ago, the highest borrowing costs Britain has paid since the financial crisis. The benchmark briefly hit 5.07 per cent before settling at 5.03 per cent in the afternoon. Gilts were the worst-performing major asset class of the day, a stark reminder of the UK’s structural exposure to imported energy.

That repricing piles fresh pressure on Rachel Reeves. With higher inflation eating into the real value of departmental budgets, Niesr calculates a 4 per cent erosion by the end of the decade unless the Treasury tops them up, the chancellor faces what the institute politely terms “tough calls” at the autumn Budget. Translated for boardrooms across the country: expect the tax-raising conversation to begin again.

In the adverse scenario, the picture turns considerably bleaker. Inflation would remain stuck above 4 per cent, more than double the Bank’s 2 per cent mandate, and the Monetary Policy Committee could be forced to push borrowing costs up by a punishing 1.5 percentage points in short order. Stephen Millard, Niesr’s deputy director, described $140 oil as “severe but plausible”, warning that central banks would have to “respond big time” if it materialised.

For now, the MPC is expected to sit on its hands when it meets on Thursday, holding Bank Rate at 3.75 per cent while officials assess how the next round of energy price rises, due in June, ripples through wages and the labour market. The institute’s central concern is the spectre of “second-round effects”, pay settlements rising to compensate for higher bills and embedding inflation in the system, much as they did in 2022 and 2023.

For SME leaders, the message from Niesr is bracing but clear. The cost-of-doing-business crisis is not over; it has merely been paused. Hedging energy exposure, locking in financing where possible and stress-testing margins against another year of elevated rates ought to be back at the top of the boardroom agenda.

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Britain braces for £35bn energy shock as Iran conflict pushes inflation back above 4%

The Tony Blair Institute has called on ministers to pull an “emergency handbrake” on Britain’s runaway sickness benefits bill, urging Whitehall to strip cash entitlements from claimants with mild depression, ADHD and other conditions the think tank argues are compatible with work.

In an intervention that will land squarely on the desks of finance directors and HR chiefs across the country, the institute founded by Sir Tony Blair has proposed a new statutory category of “non-work limiting conditions” covering anxiety, stress-related disorders, lower back pain, common musculoskeletal complaints and certain neurodevelopmental conditions. Claimants would receive treatment and employment support in place of benefits, in a shift the TBI insists could be introduced without primary legislation.

The proposals arrive at a critical moment for British employers. The Office for Budget Responsibility forecast in March that spending on health and sickness benefits for working-age adults will hit £78.1bn by 2029-30, a 15 per cent jump on this year’s outlay. With around 1,000 people a day becoming newly eligible for health and disability payments, business groups have grown increasingly vocal about the squeeze on the labour market and the corresponding drag on productivity.

The TBI’s report lands in awkward political territory for the Labour government, which last year tabled plans to tighten disability benefit eligibility only to gut its own proposals after a backbench revolt. Whitehall now points to a review led by Social Security Minister Sir Stephen Timms, expected to report later this year, as the vehicle for any further reform.

Dr Charlotte Refsu, a former GP and the institute’s director of health policy, said the welfare system was “drawing too many people into long-term dependency for conditions that are often treatable and compatible with work, and not doing enough to support recovery”. She added: “A system that leaves people on benefits without timely treatment or a route back to work is not compassionate. It is bad for the country and bad for people’s health.”

Under the TBI blueprint, every claimant would require a formal diagnosis before applying for benefits, and those already on the books would face more frequent and rigorous reassessment. The think tank stopped short of estimating either fiscal savings or the number of claimants who would lose entitlement, but argued any windfall should be ploughed back into employment support and NHS treatment for mental health and musculoskeletal conditions, the two clusters that have driven much of the post-pandemic surge in claims.

YouGov polling of more than 4,000 British adults, commissioned by the institute, found that 54 per cent of voters believe the welfare system is too easy to access and fails to prevent misuse, a finding likely to embolden ministers minded to revisit reform.

For SME owners contending with stubborn vacancies and rising employment costs, the report sharpens a debate that has been simmering in boardrooms since the pandemic. Smaller employers have repeatedly flagged the difficulty of recruiting from the economically inactive cohort, particularly the more than 2.8 million working-age people currently signed off long-term sick. The TBI argues that supporting claimants into “appropriate work” would not only ease the fiscal pressure but also reduce social isolation and improve mobility and independence, a framing that aligns with the back-to-work rhetoric increasingly heard from both Labour ministers and the Conservative and Reform UK opposition.

The proposals have, however, drawn fierce criticism from the disability sector. Jon Holmes, chief executive of the learning disability charity Scope, branded the report “deeply unhelpful and ill-informed”, arguing it ignored “the lived reality of people with a learning disability and plays to a populist trope about welfare”. He warned: “Slapping labels on people and denying them benefits will not tackle the root cause. It will push people into deeper anxiety, misery and poverty. That’s not reform, it’s a recipe for making things worse.”

The Department for Work and Pensions said it had already “rebalanced” Universal Credit to deliver £1bn of savings, with the health-related element for new claimants cut by up to 50 per cent earlier this month. A spokesperson said the department had “increased face-to-face assessments and improved use of NHS evidence, all while ensuring those who genuinely can’t work are always protected”, adding that ministers would “consider the TBI’s report”.

For Britain’s small and medium-sized employers, the question is no longer whether reform comes, but how quickly, and whether it will deliver the workforce uplift that has eluded successive administrations.

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Blair think tank urges ’emergency handbrake’ on sickness benefits as bill races towards £78bn

The United Arab Emirates has announced it is to withdraw from Opec and the wider Opec+ alliance after nearly six decades of membership, in a move that analysts warn could herald the unravelling of the world’s most powerful oil cartel and usher in a fresh wave of price volatility for British businesses already grappling with stubborn energy costs.

The Gulf state, which joined the Organization of the Petroleum Exporting Countries in 1967, said the decision reflected its “long-term strategic and economic vision and evolving energy profile”. Abu Dhabi’s energy minister suggested that operating outside the cartel’s quota system would afford the country greater flexibility to pursue its own production ambitions, free of the collective discipline that has long shaped global crude markets.

For the UK’s small and medium-sized enterprises, the immediate consequences are far from academic. Energy-intensive sectors, from manufacturing and logistics to hospitality, have spent the past three years contending with input costs that swung wildly on the back of geopolitical shocks and Opec+ output decisions. A weakened cartel could mean cheaper oil in the short term as producers compete for market share, but it also raises the spectre of greater price swings as the disciplinary mechanism that has historically tempered volatility begins to fray.

Saul Kavonic, head of energy research at MST Financial, did not mince his words, describing the move as “the beginning of the end of Opec”. With the UAE’s departure, the cartel loses roughly 15 per cent of its production capacity and what Mr Kavonic called “one of its most compliant members”. The UAE currently pumps approximately 2.9 million barrels per day, against Saudi Arabia’s nine million.

“Saudi Arabia will struggle to keep the rest of Opec together, and will effectively have to do most of the heavy lifting regarding internal compliance and market management on its own,” he warned, adding that other members may yet follow Abu Dhabi’s lead. He went further, characterising the development as a “fundamental geopolitical reshaping of the Middle East and oil markets”.

The departure leaves Opec with eleven members. Founded in 1960 by Iran, Iraq, Kuwait, Saudi Arabia and Venezuela, the cartel was created to coordinate production and stabilise revenues for member states. The current line-up also includes Algeria, Equatorial Guinea, Gabon, Libya, Nigeria and the Republic of the Congo.

For SME owners watching from Britain, the message is clear: hedging strategies, fixed-price energy contracts and supply chain stress-testing are no longer the preserve of FTSE 100 boardrooms. The post-Opec era, if it does indeed dawn, promises a more fragmented and unpredictable global energy market, and the businesses that prepare now will be best placed to weather what comes next.

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UAE’s shock Opec exit signals a new era of energy market volatility for British business

Lloyds Banking Group has cemented its position as the most complained-about name in British financial services, racking up more grievances with the City regulator than any other lender during the second half of 2025, as the wider sector handed nearly a quarter of a billion pounds back to disgruntled customers.

Fresh figures from the Financial Conduct Authority show the FTSE 100 banking giant fielded a hefty 187,516 complaints across its subsidiaries between July and December last year. The black horse brand itself bore the brunt, accounting for 90,837, while its Edinburgh-based commercial arm Bank of Scotland was not far behind on 79,508.

The scale of the figures partly reflects the sheer footprint of the group, which counts roughly 28 million customers and remains the country’s biggest financial services provider. Santander, which serves around 14 million Britons, came in a distant second with 124,919 complaints.

Despite the eye-catching numbers at the top of the table, the wider picture is one of relative stasis. Total grievances across the industry edged up to 1.9 million, a rise of just under one per cent on the first half of the year and broadly consistent with the trend that has prevailed since early 2021, when figures have fluctuated between 1.7 million and 2 million.

There was, however, a measure of good news for the sector. The proportion of complaints upheld in the customer’s favour slipped from 57.9 per cent to 55.5 per cent, while the total bill for redress fell to £236.2m, down sharply from £283.7m in the first half of 2025. The average payout also tracked lower, dropping to £215 from £238.

The findings come at a sensitive moment for the high street, with both Lloyds and Santander under fire from consumer groups for the pace at which they are pruning their branch estates. Analysis by Lightyear shows the Spanish-owned lender has shuttered close to 500 sites over the past two years and announced a further 44 closures in January, fuelling accusations that vulnerable customers are being left stranded.

Lurking behind the headline numbers is the motor finance mis-selling scandal, which continues to cast a long shadow over Britain’s lenders. Lloyds has set aside £2bn to cover potential redress linked to so-called secret commission arrangements between car dealers and banks, while Santander has earmarked £461m. Both are among the most heavily exposed names in the sector.

The FCA’s pause on motor finance complaints, in place since January 2024 after volumes surged on the back of concerns over discretionary commission arrangements, is due to be lifted on 31 May 2026, raising the prospect of a fresh wave of grievances landing on lenders’ desks this summer.

Elsewhere, motor and transport insurance proved the standout pain point of the period, with complaints leaping by more than a third to 340,000. That surge helped drive a 10 per cent jump in overall insurance and protection grievances to 790,329. Current accounts remained the single largest category, although the volume eased to 492,149 from 541,493 in the first half.

For Britain’s biggest banks, the latest data offers little immediate respite. With the motor finance reckoning still to come and branch closures continuing to draw political heat, the pressure on customer service teams looks set to remain firmly elevated through 2026.

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Lloyds tops the league of shame as Britain’s finance firms pay out £236m to aggrieved customers

British founders are being urged to think twice before accepting cheques from investors lured by tax breaks, after fresh analysis revealed that companies relying on the Enterprise Investment Scheme (EIS) and the Seed Enterprise Investment Scheme (SEIS) are overwhelmingly failing to scale.

Antler, the Singapore-headquartered early-stage venture capital firm, has crunched the numbers on more than 40,000 UK funding rounds over the past decade and concluded that the schemes, long held up by successive chancellors as the jewels in the crown of British start-up finance, are doing the opposite of what was intended.

Just 12 per cent of all UK companies raise follow-on capital after their initial round, according to Antler’s research. For those backed exclusively by EIS or SEIS money, the picture is bleaker still: a mere 3.7 per cent ever go on to secure further investment.

Adam French, partner at Antler and a familiar face on the British venture scene, did not mince his words. The schemes, he argued, prioritise “quantity over quality” and fail to provide founders with the strategic backing they need to grow into the kind of businesses that genuinely move the dial.

“If you were an investor in an SEIS fund, you’re primarily excited about the fact that you’re going to get 30 to 50 per cent of your investment back as a tax benefit in your tax return, and you don’t care as much about the outcome of the business that you’re investing in,” Mr French said.

The contrast with conventionally backed start-ups is stark. Where a company secured at least one institutional co-investor or an active angel in its opening round, the proportion going on to raise more capital leapt to 25.7 per cent, almost seven times the rate seen by the tax-relief-only cohort.

“The only way to do a good job in venture capital is to find the companies that go on to be outliers, and the tax-incentivised funds don’t have that mandate,” Mr French added. “They’re not looking to take insane amounts of risk because that’s ultimately what you have to do in venture to make a lot of money.”

The SEIS was introduced in 2012 by then-chancellor George Osborne to turbocharge the flow of capital into Britain’s fledgling start-ups, building on the older EIS, which dates back to 1994. Both offer generous reliefs designed to compensate investors for the considerable risk of backing unproven businesses.

Under current rules, investors can deploy up to £1 million per tax year, rising to £2 million for so-called knowledge-intensive companies that pour resources into research and development. Hold the shares for at least two years and any losses can be offset against income tax, an arrangement that, in effect, allows the Treasury to underwrite a significant chunk of the downside.

For more than a decade the schemes have channelled billions of pounds into the British innovation economy, and they have plenty of defenders in Whitehall and the City. But Antler’s findings will reignite a long-simmering debate about whether tax-led investment is genuinely building the next generation of British scale-ups, or merely creating a cottage industry of tax-efficient portfolios that quietly run aground.

Antler’s analysis did find that companies raising $1 million or more in their opening round were more likely to attract further backing, suggesting that cheque size remains a meaningful signal. But Mr French was emphatic that the calibre of the investor on the cap table mattered more than the headline figure.

His message to founders is blunt. “My advice to founders is to make sure you’re very selective about who you’re taking money from,” he said. “Don’t go for the first capital that lands on your table, make sure you go for the right capital.”

For Britain’s army of seed-stage entrepreneurs, the warning lands at a delicate moment. With venture funding still well below the highs of 2021 and the cost of capital biting across the board, the temptation to grab whatever money is on offer has rarely been greater. Antler’s data suggests that succumbing to that temptation may be the surest route to a dead end.

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Beware the tax-break brigade: founders warned over EIS and SEIS investors who ‘don’t care about the outcome’

A British artificial intelligence company founded by one of the architects of fintech unicorn Tide has written to every Member of Parliament warning that the political debate over children’s smartphone use has descended into a “false choice” between blanket bans and unrestricted access.

SafetyMode, the London-headquartered child safety technology firm led by Tide founder George Bevis, has used the parliamentary intervention to press ministers to consider a third path, arguing that on-device technology can give parents meaningful control without locking children out of the digital economy altogether.

The timing is not accidental. The letter lands in Westminster postbags days after a landmark American court ruling found that several of Silicon Valley’s largest platforms had knowingly engineered addictive products for young users, a judgment that has sharpened the appetite among legislators on both sides of the Atlantic for tougher action.

In Britain, the political mood music has shifted markedly over the past eighteen months, with cross-party support building for tighter restrictions on under-16s. Yet SafetyMode’s pitch to MPs is that the conversation has narrowed prematurely.

“Right now, the entirety of the conversation around social media and phone safety seems to pretend all we can achieve is either to open the floodgates entirely or to ban them completely, losing all benefits these technologies may offer,” the company writes in its letter, copies of which have been seen by Business Matters.

The firm, founded by Mr Bevis alongside Bertie Aspinall and product specialist Dan Barker, has spent the past two years developing what it claims is one of the most sophisticated parental control platforms on the market. Unlike rival products that route children’s data through cloud servers, SafetyMode’s technology runs artificial intelligence directly on the device, filtering harmful content in real time while keeping personal information off external servers.

The product was built in partnership with parenting forum Mumsnet, whose research underpins much of the company’s commercial thesis. More than 90 per cent of parents surveyed told Mumsnet that current smartphones are not safe enough for children, while 86 per cent expressed concern about the impact of devices on their child’s mental health and attention span.

Speaking to Business Matters, Mr Bevis said the political class risks reaching for the bluntest available instrument. “We are at a turning point in how society views children and smartphones. There is clear agreement that there is a problem, but the solutions being discussed are too narrow. Regulation matters, but it takes time, and it cannot be the only answer.”

Mr Aspinall, the firm’s co-founder, struck a more pointed note. “The courts, governments, schools and parents all recognise the risks. But companies at the heart of this won’t fix it themselves. So the question becomes, what do we do next? On the one hand is regulation. But if we want to protect children now, the answer is simple. You build safety into the device itself and put control back in the hands of parents.”

The company’s technology has been designed to read context rather than merely scan for prohibited keywords, identifying when conversations turn abusive, sexualised or otherwise damaging, even when those exchanges would slip past conventional filters.

For now, SafetyMode is available only on Android handsets. The firm has been openly critical of Apple, arguing that the Cupertino giant’s restrictions on third-party developers prevent meaningful parental controls being built for iPhone users, a complaint that echoes broader regulatory scrutiny of Apple’s walled garden in both Brussels and Washington.

There is also an industrial strategy dimension to the company’s lobbying. SafetyMode is positioning Britain as a potential global hub for what it calls the “safe tech for kids” movement, arguing that ministers could combine child protection with a fresh wave of innovation, investment and skilled job creation if they chose to back domestic firms developing protective technologies.

Whether MPs will be receptive remains to be seen. Backbench pressure for outright restrictions on under-16s using social media has hardened in recent months, and Whitehall has shown limited appetite for technological solutions that depend on parental engagement. But with the American courts now exposing platform behaviour in unprecedented detail, the case for action of some kind appears unstoppable.

The question Mr Bevis and his colleagues are putting to Parliament is whether that action should empower parents or simply slam the door shut.

Read more:
SafetyMode warns MPs of ‘false choice’ on child smartphone safety as global pressure mounts

The 50-strong flooring chain backed by Sir Richard Harpin’s Growth Partner has appointed restructuring advisers, raising the prospect of store closures and redundancies as the cost-of-living squeeze continues to drag on consumer spending.

Flooring Superstore, which employs around 300 people from its Bishop Auckland headquarters in County Durham, has drafted in Begbies Traynor and the restructuring arm of Santander to weigh its options. People familiar with the matter said a company voluntary arrangement (CVA) or a full administration are both on the table, controversial routes that typically squeeze landlords and suppliers while preserving the equity of incumbent owners and senior creditors.

The retailer was co-founded in 2012 by Dan Foskett and sells vinyl, laminate and wood flooring alongside artificial grass through its branded showrooms and online channels. Growth Partner, the investment vehicle established by Harpin, the entrepreneur behind home emergency repair group HomeServe, backed the business in 2020 with a £5 million injection that allowed Foskett to crystallise a portion of his shareholding. He retains a 22 per cent stake, while Growth Partner holds 25 per cent. The remainder is split between three individual investors.

Harpin, who last year published “How to Make a Billion in Nine Steps”, focuses on British and European retail names primed for scale. His portfolio includes pizza oven specialist Gozney and bathroom retailer Easy Bathrooms. However, several Growth Partner-backed businesses have collapsed in recent years, among them Crafters’ Companion, co-founded by Dragons’ Den investor Sara Davies, and Yorkshire-based Keelham Farm Shop.

Flooring Superstore was a pandemic winner, riding the wave of home-improvement spending while consumers were confined to their properties. That tailwind reversed sharply once lockdowns eased, as the chain was forced to absorb spiralling energy and raw material costs and unwind the additional capacity it had built. The cost-of-living crisis has since hammered demand for big-ticket household refurbishments.

Connection Retail, the parent company that also owns Direct Wood Flooring, Grass Direct and Snug Carpets, posted turnover of £49.3 million in the year to the end of July 2024, down from £51.8 million a year earlier. Pre-tax profit nonetheless swung from a £3.3 million loss to a £619,000 profit, while net debt stood at £3.5 million at the year-end.

Santander shored up the group’s balance sheet last June with a debenture, a secured loan agreement under which the lender acts as security trustee. Filings at Companies House show Connection Retail has two outstanding charges, having pledged its property and overall business assets as collateral to both Growth Partner and the high-street bank.

The disclosed restructuring talks mark a striking pivot from the expansion blueprint Foskett set out only twelve months ago, when he told The Times that he intended to grow the estate to as many as 150 stores, deepen the brand’s marketing reach and continue building its exclusive product range.

Growth Partner and Flooring Superstore had not responded to requests for comment at the time of publication. Santander and Begbies Traynor declined to comment.

Read more:
Harpin-backed Flooring Superstore weighs restructure as sales slip

Ministers are turning up the heat on Britain’s biggest companies to fortify their cyber-defences, warning that a new generation of artificial intelligence tools, including Anthropic’s controversial Mythos model, risks unleashing a fresh wave of sophisticated hacking against UK plc.

In a pointed intervention, Baroness Lloyd of Effra (pictured), the cybersecurity minister, has written to almost 200 business leaders pressing them to back a new “cyber-resilience pledge” designed to drag boardrooms into the front line of digital defence.

To sign up, companies must make cybersecurity an explicit board-level responsibility, enrol with the National Cyber Security Centre’s early-warning service, and require the “Cyber Essentials” certification throughout their supply chains. The pledge will be formally launched in the summer and is intended to give investors, customers and trading partners a clearer benchmark by which to judge a business’s digital defences.

The push comes against a febrile backdrop. Anthropic, the San Francisco-based AI developer, revealed last week that it had decided not to release Mythos, a model honed for cybersecurity work, because of its uncanny ability to sniff out vulnerabilities in software. Instead, the company has quietly handed it to 40 US technology firms to help them shore up their defences.

While some industry watchers have dismissed the move as a marketing flourish, Wall Street, the City and financial regulators are taking it seriously. Britain’s biggest high-street lenders, including Barclays, Lloyds and NatWest, are understood to be in talks with Anthropic about gaining access to the model.

Andrew Bailey, governor of the Bank of England, has gone so far as to suggest that Anthropic may have “found a way to crack the whole cyber-risk world open”, an unusually colourful assessment from Threadneedle Street.

The UK’s AI Security Institute, one of the few bodies outside the United States to have put Mythos through its paces, described the model as a “step up” in capability. It concluded that Mythos was “at least capable of autonomously attacking small, weakly defended and vulnerable enterprise systems where access to a network has been gained”, though it stopped short of saying whether the model could breach better-fortified targets.

For SMEs, the assessment is uncomfortable reading. The lion’s share of “small, weakly defended” enterprise systems sits squarely in the small and medium-sized business community, where IT budgets are tight and dedicated security teams a rarity.

Dan Jarvis, the security minister, will press the pledge at this week’s CyberUK conference in Glasgow, where he is expected to argue that the country still suffers from a yawning perception gap between digital and physical crime. Drawing on the recent ransomware attack that crippled Jaguar Land Rover, Jarvis will tell delegates that had the same damage been done by “an old-school physical attack, it would have been the equivalent of hundreds of masked criminals turning up to dealerships across the country, breaking glass, smashing up computers and driving cars right off the forecourt”.

His message: “There is no real difference between them; they are both brazen acts of criminality.”

Lloyd struck a similarly urgent tone, telling business leaders: “The cyber threat facing UK businesses is serious, growing and evolving fast. AI is giving attackers capabilities that would have seemed extraordinary just a year ago and no organisation can afford to be complacent. Cyber-resilience isn’t just a technical issue; it’s a board responsibility and we’re asking every boardroom in Britain to prove they treat it as one.”

Despite years of warnings from Whitehall and the NCSC, the take-up of basic cyber hygiene measures remains stubbornly low. Just 56,000 Cyber Essentials certificates were issued in 2025, covering roughly 1 per cent of UK businesses, a figure that ought to give every chair, chief executive and finance director pause for thought.

Help, of a sort, is on the way. The Cyber Security and Resilience Bill, currently working its way through Parliament, will compel firms operating in critical sectors to raise their game. But ministers appear unwilling to wait for the legislation to land before applying pressure on the boardrooms they believe should already be ahead of the curve.

For SME owners and directors, the practical takeaway is unambiguous. AI-powered attack tools are no longer a theoretical worry kept at bay by the world’s best-resourced criminals. They are, increasingly, a clear and present danger, and a signature on a government pledge will count for little if the basics are not in place behind the boardroom door.

Read more:
Ministers urge British boardrooms to sign cyber-resilience pledge as AI threat escalates

The taxman has been forced into a tactical retreat over a contentious VAT levy on free medicines supplied to seriously ill patients, after Britain’s pharmaceutical heavyweights warned the policy was jeopardising the country’s standing as a global life sciences hub.

HM Revenue & Customs has confirmed to the industry that it will pause enforcement of disputed VAT bills issued against drugs companies providing medicines free of charge under early access programmes, while Whitehall thrashes out a longer-term settlement with the sector.

The climbdown follows mounting alarm in boardrooms after Bayer, the German pharmaceutical multinational, took the unprecedented step last month of halting new patient enrolments under its UK compassionate use scheme. *Business Matters* understands that at least one further major drugmaker is now actively weighing a similar withdrawal, raising the spectre of vulnerable patients being denied cutting-edge therapies.

At the heart of the dispute are post-clinical trial continuity of care and compassionate use schemes, arrangements designed to bridge the gap for patients with life-threatening or severely debilitating conditions who require access to medicines that have yet to secure marketing authorisation or NHS funding. For many of these patients, the schemes represent a clinical lifeline.

HMRC had begun issuing VAT demands to pharma companies on the basis that supplying these medicines, even gratis, constituted a taxable transaction. Industry leaders have argued the interpretation is not only commercially punishing but threatens to undermine the UK’s hard-won reputation as a destination of choice for clinical research, a sector ministers have repeatedly identified as central to the government’s growth ambitions.

The Association of the British Pharmaceutical Industry has been pressing ministers to confirm that “clinically justified” free-of-charge supply should fall outside the scope of VAT altogether. Without that assurance, executives warn, multinational sponsors will simply route their next generation of trials to more accommodating jurisdictions.

Following a recent meeting between Treasury officials and pharma chief executives, HMRC policy officials have informed the industry that, while the agency retains an obligation to protect Exchequer revenue, it accepts the government is “actively considering” the issue. The taxman has therefore agreed to exercise its discretion by extending review periods and holding off on enforcement action while talks continue. Crucially, however, HMRC has not budged on its view of historic tax liabilities, meaning bills already issued remain on the table.

A Whitehall source insisted that no blanket reprieve was on offer, with each case being assessed individually. “HMRC is not systemically extending review periods,” the source said.

The political temperature has been rising for months. Julia Lopez, the shadow science, innovation and technology secretary, wrote to Liz Kendall, her opposite number, in February warning that “the UK’s reputation as a home for clinical research is essential to our status as a life sciences superpower. That reputation is now at risk.”

In a reply this month, Lord Vallance, the science minister and a former senior executive at GSK, acknowledged ministers were “aware of the issue” and recognised “the importance of patients across the UK having access to innovative medicines.” He confirmed the government was in “discussions with the sector on this matter” and added: “I fully recognise the concerns you have raised.”

Bayer, in announcing its decision to suspend new enrolments, said it had been supplying treatments to patients with “life-threatening, long-lasting, or severely debilitating conditions or diseases which cannot satisfactorily be treated by any licensed and reimbursed drug in the UK.” Following the change in HMRC’s stance, the company said it had “made the difficult decision to pause the addition of new patients” while continuing to serve those already enrolled.

The Treasury maintains that “in certain circumstances the giving of goods away for free can be outside the scope of VAT,” and that where supply does fall within scope, a relief may apply. A government spokesperson said: “We are in active discussions with the sector. We fully recognise the importance of early access and compassionate use schemes and are fully committed to ensuring patients can continue to benefit from them.” A government source added that there had been no recent changes to UK VAT policy.

Lopez was unconvinced. “Even if HMRC has paused this damaging VAT charge, and it’s still not clear, the harm has already begun,” she said.

For an industry that contributes more than £17bn annually to the British economy and employs tens of thousands in high-skilled research roles, the affair has crystallised wider anxieties about the predictability of the UK tax environment. With the government banking heavily on life sciences as an engine of post-Brexit growth, ministers will be acutely conscious that a swift and unambiguous resolution is now needed — not least to reassure the international boardrooms where the next round of investment decisions is already being weighed.

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HMRC backs down on free-drugs VAT raid as pharma giants threaten UK exodus

Britain’s public finances delivered a rare slice of good news for the chancellor this week, with government borrowing sinking to a four-year low in March. But business leaders and economists are already bracing for the figures to sour, warning that the escalating conflict in the Middle East could swiftly unravel Rachel Reeves’s carefully constructed fiscal plans.

According to figures released on Thursday by the Office for National Statistics, the government borrowed £12.6bn last month, the lowest March total since 2022 and £1.4bn below the same month a year earlier. The drop was driven by a sharp fall in debt interest spending and a bumper £100bn haul in tax receipts.

For small and medium-sized businesses, which continue to shoulder the weight of frozen income tax thresholds, higher employer national insurance and stubborn inflation, the figures offer only cold comfort. While the Treasury has edged closer to meeting its borrowing targets, the improvement owes less to restraint on Whitehall and more to a quirk of the retail price index.

Despite the monthly improvement, March’s figure came in above the £10.4bn consensus forecast from City economists. Borrowing over the full financial year reached £132bn — £700m below the Office for Budget Responsibility’s projection, but still the sixth-highest annual total since records began in 1947. The figure was nonetheless nearly £20bn lower than the previous year.

The headline reduction was flattered by a dramatic fall in debt interest costs, which dropped to £3.2bn in March from £13bn in February and £4.5bn in the same month last year. A substantial portion of the UK’s debt stock remains linked to the retail price index, a measure economists have long dismissed as outdated. A sharp deceleration in RPI between December and January fed directly through to lower payments to index-linked gilt holders.

Tax revenues also did much of the heavy lifting. Public sector receipts rose £5.4bn year on year to cross the £100bn threshold in March, propelled by higher income tax and national insurance takings. Public spending climbed more modestly, up £2.9bn to £91.6bn.

Tom Davies, senior statistician at the ONS, said the figures showed that “although spending has risen this financial year, this was more than offset by increased receipts,” noting that March’s borrowing was 10 per cent lower than a year earlier.

Yet the optimism was tempered by warnings that the tailwinds of the past month could quickly reverse. Economists fear that the war in the Middle East is already feeding through to British inflation and growth forecasts, threatening to squeeze the chancellor’s room for manoeuvre.

“A sustained rise in energy prices would create a double squeeze on the public finances,” said Martin Beck, chief economist at WPI Strategy. “True, higher oil and gas prices could boost North Sea revenues, while stronger inflation might lift VAT receipts and income tax revenues through frozen thresholds. However, those gains would likely be outweighed by weaker economic growth and higher spending pressures, including increased welfare costs, rising debt interest payments, and potential support for households and energy-intensive firms.”

Figures published earlier this week showed consumer price inflation climbing to 3.3 per cent in March, up from 3 per cent in February. Some economists now expect it to peak at double the Bank of England’s 2 per cent target later this year, a development that would push the government’s debt interest bill higher once more and heap fresh pressure on already stretched SMEs.

The Bank’s nine-member monetary policy committee meets next Thursday and is widely expected to hold the base rate at 3.75 per cent. A minority of analysts, however, now believe Threadneedle Street could be forced to raise rates later in the year to counter the inflationary fallout from the Middle East. Updated forecasts for inflation, growth and unemployment will accompany the decision.

Debt as a share of gross domestic product stood at 93.8 per cent, up 0.6 percentage points year on year and back at levels not seen since the 1960s.

The picture could worsen quickly. The Resolution Foundation warned in a report this month that a further escalation in the Middle East war could erase £16bn of the £23.6bn fiscal headroom Reeves carved out in her March spring statement. Under her own fiscal rules, the chancellor must balance day-to-day spending with tax receipts within five years.

Ellie Henderson, economist at Investec, said: “The spike in energy prices has likely dampened the outlook, with higher inflation increasing the cost of servicing index-linked gilts, and the slower growth forecasts constraining growth in potential tax receipts.”

The Treasury, for its part, is keen to claim credit. James Murray, chief secretary to the Treasury, said: “Our deficit is down [by] £19.8bn because of our plan to cut borrowing. In a volatile world the decisions we are taking are the right ones to keep costs down, take back our energy security and cut borrowing and debt.”

For British businesses, and especially the SMEs that make up the bulk of the country’s employers, the figures underline an uncomfortable truth: however benign March’s numbers appear, the margin for error has rarely been thinner.

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UK borrowing slips to four-year low but Middle East tensions threaten Reeves’s fiscal plan