WH Smith cuts sale price of high street business after weaker trading
It said it now expects to receive gross proceeds of up to £40 million, down from the £52 million it first forecast.
WH Smith said investment firm Modella had sought to renegotiate the price due to 'softer' recent trading.
'Following the agreement and announcement of the sale, the future of the high street business under a change of ownership has led to a more cautious outlook amongst stakeholders,' it said.
WH Smith added that it agreed to renegotiate on the price 'given the original agreement was no longer deliverable'.
Shares in WH Smith – which is now purely focused on its shops based at travel sites in the UK and worldwide – fell as much as 8% at one stage, before settling around 3% lower in midday trading on Monday.
The sale to Modella agreed in March – initially valuing the high street chain at £76 million – will result in the WH Smith name disappearing from British high streets and being replaced by brand TGJones.
All of the approximately 480 stores and 5,000 staff working for the high street businesses will move under Modella's ownership as part of the deal.
The sale comes after years of under-pressure trading at the division, while WH Smith's travel business has grown to make up the bulk of the group's sales and profits, with more than 1,200 stores across 32 countries.
WH Smith's half-year results in April showed the profits at the high street chain had slumped by a quarter to just £20 million.
Buyer Modella specialises in investing in retailers.
It has previously put money into chains including Paperchase and Tie Rack, while in August last year it snapped up arts and crafts retailer Hobbycraft for an undisclosed sum.
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New Statesman
38 minutes ago
- New Statesman
From the archive: Reality: a charter for avoidance
Photo by Maurice Hibberd/Evening Standard/) In 1979 Mervyn King, later governor of the Bank of England from 2003 to 2013, argued that the British state was too dilapidated to deal with a modern economy. Labour had been complaisant, but the Tories resisted reform. 'In this world nothing can be said to be certain, except death and taxes.' It is hard to reconcile Benjamin Franklin's words with the experience of taxation in post-war Britain. Tax rates switch with bewildering frequency, and rarely do more than a few months go by without some kind of tinkering being done upon the system itself. Margaret Thatcher is basing her campaign upon the firm promise – one of the few she has made – that the immediate effect of her victory would be another – downward – shift in the rate of income tax. Indeed, Tory policy for the past few years has concentrated unflinchingly upon disseminating the myth that Britain is a heavily-overtaxed country. But at the same time the Tories have set themselves against any energetic attack on the real evils of our tax system: which are its astonishing complexity and incoherence, its lack of efficacy when dealing with company revenues, and its bias in favour of established, hereditary wealth. Not that it can be said that Labour has made, or credibly promised, any of the reforms that are urgently required. Whichever party policy is examined, uncertainty – even arbitrariness – seems likely to be the future of taxation in Britain. The system that we have is the product of innumerable ad hoc changes, few if any of which were based on any coherent view of the underlying structure they were supposed to improve. The state into which our system has drifted shows that further minor modifications to the status quo will not bring us any nearer to the objective of a reasonably efficient, fair and stable tax system. Yet no government which is concerned with the most efficient way of financing public spending, and which cares about how the tax burden is distributed, can afford to be without a coherent tax policy. Anyone analysing the system for the first time must view it in amazement – with its separate taxes on different kinds of income, each tax having its own rules and methods of administration. In addition to income tax, there are distinct and separately administered surcharges on employment income (in the form of national insurance contributions), on investment income (in the form of investment-income surcharge) and on self-employment income (in the form of special national insurance contributions for the self-employed). The methods of calculating liability differ in each case. At the lower end of the income scale, interaction between the tax system and the maze of different means-tested benefits can give rise to tax rates of well over 100 per cent on each marginal addition to income – the notorious 'poverty trap'. A good example of the unhappy effects of the ad hoc approach occurred last year, in Chancellor Healey's treatment of capital gains tax. Inflation means that real capital gains can be much less than nominal capital gains, but our system taxes nominal gains: the reverse of what a well-designed income tax should do. One remedy proposed was 'tapering relief', under which the tax rate would be lower the longer the asset had been held: another was index-linking, to ensure that tax would fall solely on real gains. Mr Healey rightly rejected 'tapering'' as economically absurd and administratively complicated. And he rejected indexation, on the proper grounds that it would be wrong to index-link capital gains without doing so for other forms of capital income, such as building-society interest. But he rejected the logic of his own argument, which was that if inflation created a problem (clearly it did) then indexation should be introduced across-the-board, And if it did not, there was no case for giving special treatment to capital gains. What the Chancellor actually did (and it scarcely fits with the image of a Chancellor 'making the pips squeak') was merely reduce the rate of capital gains tax: so that the first £1,000 of gain is exempt altogether, and gains up to £5,000 in a year pay a maximum average of only 12 per cent. The marginal rate then jumps to 50 per cent, before falling to 30 per cent on gains above £9,500. This is a curious rate schedule, to say the least. Its design has nothing to do with the incidence of inflation: it appears to be merely a device for buying time until the government can think of something more sensible to do, or until inflation disappears, or until people stop worrying about it. Such pragmatism, lacking any base in underlying principles, leads to complexity, excessive cost, and the loopholes and anomalies on which the tax avoidance industry thrives. It is this allegedly practical, but actually impractical, approach which has produced an accumulation of legislation like a patchwork quilt coming apart at the seams. Subscribe to The New Statesman today from only £8.99 per month Subscribe Although neither the Conservative manifesto nor the Labour one faces up to the issue, there certainly are reforms which could be instituted – at the cost of upsetting the status quo. But before looking at such proposals, it is necessary to describe the real, as against the imagined effect of taxes in Britain. The redistributive elements in the system rely largely on high tax rates on earned income, although variations in earnings are no longer (if they ever were) the major source of inequality. The main sources of wealth are inheritances and capital gains – including those from building-up and selling a business – and effective tax rates on income from capital are lower than on employment income, because those taxes are easier to avoid. The attempt to impose very high tax rates on earned income gives rise to a proliferation of fringe benefits which are not only a less efficient method of rewarding managers, but serve to increase the visibility of differentials. Employees might find it easier to accept that senior staff should receive larger salaries than that they should get longer holidays, more lavish working conditions, private medical insurance, special dining rooms and use of company cars. According to the Diamond Commission 94 per cent of senior managers in 1975 had personal use of a company car, and a system under which executives are twice as likely to get a free car than receive bonus payments is one which emphasises status rather than performance. The argument against the highest rates of tax on earned income is not that they discourage hard work (they may, though the evidence is limited). But they encourage inefficient forms of reward, and they do not achieve much redistribution. Consequently, they raise little revenue: reducing the top rate of tax on earned income to 60 per cent would cost about £250 million in a full year, much less than cutting the basic rate by one point. At the other end of the scale some five million people, nearly ten per cent of the population, are supported by supplementary benefits – with many others failing to claim the benefits to which they are entitled. Although this is a far cry from Beveridge's idea of national assistance as a final line of help for a handful of families, it can perhaps be said that concentrating help on recipients of supplementary benefit is a cost-effective form of income maintenance. The trouble is that it does not maintain the incomes of the low-paid, because those in work are not eligible for supplementary benefit. If the low-paid try to increase their earnings – by working over-time, or by changing jobs – they are apt to be little better off: this is where the combination of income tax, national insurance contributions and the withdrawal of means-tested benefits can produce marginal tax rates over 100 per cent. Income tax, national insurance contribution and Family Income Supplement alone imply a marginal rate of between 80 and 90 per cent, and at the beginning of last year there were 100,000 families getting Family Income Supplement, and there is a myriad of other means-tested benefits like rent and rates rebates. It is immensely difficult to calculate the implicit marginal tax rates which are produced, and if families could work them out (which is unlikely) many would be very depressed. There are a good many wage-earners who would be better-off if they could arrange to be sick, or unemployed, for a part – but only a part – of the tax year. (This does not apply to the long-term sick and unemployed, who are unjustly given lower rates of assistance than those whose misfortune is temporary.) The strange situation has two causes: first, sickness and unemployment benefits paid in lieu of taxed earnings are not themselves taxed; second, child benefits for those in work are less generous than those for people out of work. It is hardly likely that many people are able to contrive short periods of unemployment so as to maximise net income. But the fact that such anomalies exist – with their true nature being poorly understood – makes it easy to whip up resentment against 'scroungers', as the tabloid press has not hesitated to do, thus making it harder to persuade the average wage-earner to meet the cost of adequate benefits for those in need. Sickness and unemployment benefits could be taxed – thus providing revenue to improve benefits for the longterm unemployed – provided there were administrative reforms. Chiefly, this would require the abolition of 'cumulative withholding' in the PAYE system, so that any one payment could be specifically taxed, with any necessary adjustments being made after the annual tax peter, which all taxpayers would have to make. And rapid changes in mortgage interest over the past two years have meant that cumulative withholding has been effectively scrapped for many owner-occupiers: it should be extended to other taxpayers as soon as computers can make it feasible. If anyone is not convinced of the simplifications this would bring. I suggest a look at the leaflet entitled Autumn 1977 – Income Tax Changes for 1977-78 which was sent out last year with the notices of coding for 1978-79. See if you can understand page two, which is all about mortgage interest relief – a prize for the best solution. Some reforms have been made: from this month, child tax allowances and family allowances are replaced by a single child benefit, amounting to £4 per week for each child, with an additional £2 for the first child in some one-parent families. Further reductions in the gap between child support given to the employed and the unemployed could be given by making an extra payment for the first child, which could be financed by abolishing the married-man's tax allowance. But investment income, and the treatment of savings, produce anomalies more striking than anything in the mythology of 'scrounging'. A top rate of 98 per cent may give an impression of penal taxation, but it is misleading. It is, of course, silly to tax anything at 98 per cent, and in reality the government does not try to. For instance, the Bank of England has designed special government stocks for high-rate taxpayers which cuts their effective tax rate to about 50-60 per cent. Capital gains are taxed lightly in comparison with investment income – particularly after last year's Budget – and this gives scope for tax advisers to dream-up wondrous schemes for converting income into capital. Failure to index the system does increase the tax burden, but the practical outcome is one in which the rate varies enormously, virtually haphazardly, from person to person and from year to year. Three forms of personal saving receive especially favoured treatment: investment in owner-occupied housing; contributions to pension funds; and life-insurance premiums. This is on the whole advantageous to middle-class families, and the three items make up the bulk of personal savings, so that the institutions which hold them dominate the capital market. Pension funds and life-insurance companies own between them nearly half of the equity capital of British companies, and their behaviour is critical to the government's ability to borrow the money that it needs. Discrimination between different types of saving involves different rules for each kind of asset, which produces the complexity on which the investment-columns of the newspapers thrive, and makes the basis of avoidance devices. The consequence of failure to apply consistent treatment to savings and investment income is that much decision-making is dominated by tax considerations, both at the personal and the industrial level – where the financing package associated with a decision is often more critical than the basis profitability of the investment being examined. What is the rationale for a system in which mergers may take place essentially for tax reasonsL in which tax advisers are more Important than engineer and export managers, and there is an incentive for valuable time to be spent on socially pointless activities. The favours given to life-insurance companies, pension funds and owner-occupiers, though taken politically for granted, are very hard to justify. They happen to suit the life-style of middle-class people with predictable career-patterns, who remain largely immobile both geographically and occupationally. The sort of person who comes to mind, in fact, closely resembles the people who construct and control the tax system. He is a civil servant, living in (say) Wimbledon: able to stay without interruption in the same owner-occupied house; travel to work by train (zero-rated for VAT): look forward to a secure and inflation-proofed pension; able to put any spare cash into a life-insurance policy which will mature at the right moment to pay school fees, and thus secure a foothold in the system for a future generation. I have absolutely no wish to discriminate against civil servants living in Wimbledon, but neither can I think of a good reason for discriminating in their favour. Given the deficiencies of our economic performance – central so much campaign rhetoric – it is odd that we should offer incentives to people in the City so that they can think up dis-incentives which work against those who move around after employment (thus wishing to rent, rather than buy a home); who disagree with staid employers (thus placing low value on pension rights) and wish to exploit new business ideas, but cannot do so because any savings they may have are locked-up in life insurance. Here we come to the argument, which will be much rehearsed in the next few weeks, which says that only a big reduction in the tax burden can eliminate the worst distortions, and 'free the spirit of enterprise from the straitjacket of excessive taxation', etc. Although a cut in rates would reduce the magnitude of the problem – depending upon what sacrifice is made in essential services – there are two large difficulties in the argument. First, as the tables show, Britain simply is not highly taxed in comparison with many of those countries which are exhibited as examples of economic success. Despite the problems of comparison, the broad picture is clear. We bear less tax than Scandinavia, rather more than America and Japan, and about the same as the West European neighbours which out perform us. Secondly, many of the problems I have described derive from the weakness of the tax base, rather than the rates which are applied. We are taxing the wrong things, and failing to tax the right things. Only a virtual elimination of direct taxation would deal with this – and the point is important in terms of the present political argument, which often proposes a shift to indirect taxation. A small shift to indirect taxation would make no impact on the inadequacies of the present tax base: to make a large shift would be to abandon any pretence of progressive taxation. I believe the only way to deal with the problem is to have a uniform treatment of income from capital, through a progressive personal expenditure tax of the kind proposed by Nicholas Kaldor in 1955, and again by the Meade Committee last year. This has not been welcomed, or even much discussed by those British politicians who are most vehement about the evils of taxation: and what they perhaps care for as little as anything is the Meade finding that the whole system could be much simpler in operation than that we have at present. It would be based purely on cash flow, eliminating the distinction between income and capital on which most of the present-day opportunities for avoidance depend. An expenditure tax would be levied directly on individuals, and by choice of rate could be made as progressive as the government of the day desired. Taxable expenditure would be receipts of cash from all sources (whether tips, or sales of shares) minus cash deposited in 'registered assets' which would include practically all kinds of saving except current accounts. PAYE would continue to be deducted at source, and the majority of taxpayers would notice little administrative change. It might be argued that such a tax favours the rich, because only the rich can afford to save. But this forgets that the rich also dis-save, and that the system we have makes little impact on spending out of capital gains and inherited wealth. Indeed, capital taxes are largely ineffective at the moment: the high exemption level means that most of the wealth transferred between generations pays a very low average rate. Even since the introduction of Capital Transfer Tax (CTT) it remains easy for a couple who are well advised to pass on more than £100,000 tax-free. For this reason, gifts and bequests made to other people should be treated as part of taxable spending: resulting in an increase of the average fax on capital transfers, without the need for self-defeating marginal rates at the top. A good example of the weakness of CTT, and of the extent to which political debate on taxation is divorced from reality, occurs in the treatment of small businesses. There is a wide range of concessions, but most of them assist the founder of the business only at the end of his or her career. The problem with small business is not that it is crushed under transfer taxes, but rather that policy fails to find ways of encouraging new firms to arise and old ones to die in peace. There is little evidence that the dynasties motive is important to innovators (it is thought important by those who have inherited themselves) and some evidence that firms perform less well when the inheritors take them over. 'Small is beautiful' makes as mindless an axiom as 'big is beautiful', which ruled the sixties. Yet already, under Labour, the 1977 and '78 Budgets have produced inexplicable concessions for small business which the Tories will find it difficult to out-do. In one year these were so enormous that the size of a business liable to CTT increased eight-fold. This change was not announced by Mr Healey, and part of it could only be detected through the omission of certain words in the Finance Bill. The truth is that the decline of small business did not occur overnight, and it cannot be corrected through such huge concessions to the owners of established concerns. Indeed, an expenditure tax is more likely to do something for small-scale industrial innovation: by facilitating personal saving, and by reversing the trend towards 'institutionalisation' of the capital market. A stock item of political debate is the idea that British industry staggers under a vast tax burden. If the personal tax system is rather a shambles, the corporate tax system is chaos enclosed in mythology, with most industrial companies paying little, if any, tax. John Kay and I found that of 20 leading UK industrial concerns, 13 paid no mainstream corporation tax in 1977, and in total only £117 million of tax was paid compared with total reported profits in 1976 of £4,276 million. The 'temporary' stock relief of November 1974 has survived almost five years, with no sign of a permanent solution. Because nothing has been announced, companies are uncertain about their tax liability, and so we have a tax which raises scarcely any revenue but yet generates economic distortions. There appears to be a complete absence of ideas about what to do. In 1974, the corporate sector was threatened with financial bankruptcy because of inflation's effect on stocks: now it is intellectual bankruptcy. The most convincing alternative would be a 'cash flow corporation tax', which would be levied on the difference between receipts from sales and outlays made for current and capital inputs. Stock relief could be abolished, inflation accounting would be for tax purposes, and distinction between different types of finance would occupy less attention. I believe that such a tax, coupled with a progressive personal expenditure tax, would redress many injustices. It would represent the first serious attempt in this country to tax spending out of inherited wealth, and to lessen the transmission of privilege from one generation to the next. The effects on the economy would, I think, be restorative. Of course, there may be other solutions which can be put forward. But if any politician suggests that major reform is less than imperative, or that what is required is to 'lighten the burden', by some ad hoc juggling with the rates, he or she is avoiding one of the central problems of present political economy. [See also: Just raise tax] Related
Daily Mail
an hour ago
- Daily Mail
Jaguar in crisis after woke rebrand that stunned fans crashes sales
Jaguar's sales have plummeted after the legendary British car marque's ' woke ' rebrand left fans outraged. Sales of the luxury motoring manufacturer appear to be in freefall following its controversial move to scrap its iconic 'growler' big cat logo in November. The firm's rebrand saw it replace the well-known badge in favour of a geometric 'J' design - which lovers of the brand raged looked like the logo on a handbag clasp. Meanwhile, a glossy ad campaign accompanying the design overhaul, featuring androgynous-looking men and women in exuberant clothes, also came under fire. And as the firestorm surrounding the famed car maker's change continues to rage, sales at Jaguar Europe have plunged a staggering 97.5 per cent. According to figures from the European Automobile Manufacturers' Association (AECA), the company registered just 49 new vehicles in April 2025 compared to 1,961 units sold in the same month last year. Year-to-date sales from January to April also slumped, dropping 75.1 per cent with just 2,665 motors sold. Globally, Jaguar sold just 26,862 vehicles for the 2024/25 financial year - an 85 per cent drop compared to 2018. The sales dip followed Jaguar's repositioning away from its performance and heritage roots towards a lifestyle-focused, fashion-forward brand. Jag's big rebrand had been in development for three years as the company prepares to become an all-electric car manufacturer ahead of the UK's 2030 target to stop selling new purely fossil fuel-powered cars. Launched under the slogan 'copy nothing' - an adage from company founder Sir William Lyons - the new ad featured diverse models in technicolour outfits walking through an alien landscape. Around 800 people are believed to have worked on the rebrand, which peaked with the unveiling of a 'design vision concept' at Miami Art Week in December. However, the sales slump may not be as catastrophic as it first appears. As part of Jaguar's refresh, the car firm intentionally stopped producing cars at the end of 2024, a move which stretched into 2025. The manufacturer - now owned by an Indian firm - is currently seeking to bring in a new range of entirely electric vehicles, which were due for release this year. It's unclear whether the brand's gamble - thought to be in a bid to attract younger, more environmentally conscious motorists - will pay off. Jaguar's head of global brand strategy and insight, Richard Green, shared images of a pop-out panel on the concept car However, global branding experts appeared to be less than convinced, ridiculing the makeover and dubbing it a 'dog's dinner'. Californian designer Joseph Alessio said it would be 'taught in schools as how not to do a rebrand,' while another designer labelled it 'one of the most destructive marketing moves ever attempted.' While public relations experts said they were stumped by the firm's decisions - from the 'vandalism' of the company's iconic logo to the apparent casting off of decades of motoring heritage to attract new buyers. Brand and culture expert Nick Ede said he was 'baffled' by the marketing push - which featured precisely no cars - while Oli Garnett, co-founder of creative design agency Something Familiar, called the rebrand a 'dog's dinner'. The likes of Nigel Farage and Elon Musk led other critics, with Farage describing it as 'woke' and warned the automaker risked 'going bust' due to its new design choice. And billionaire Space X owner Musk turned the knife on X, simply asking Jaguar: 'Do you sell cars?' Jaguar, meanwhile, doubled down on the rebrand, sending sassy and saccharine replies to detractors on social media who question the wisdom of moving away from the kind of thinking that birthed iconic vehicles such as the E-Type. And the company's boss, Rawdon Glover - managing director of the Indian-owned firm - hit out at the 'vile hatred and intolerance' directed at the eccentric-looking models who appeared in the video released on November 18. Mr Glover denied the firm was throwing away its near-100-year heritage with its most dramatic rebrand in decades - instead claiming the car maker needed to step away from 'traditional automotive stereotypes' to find its place in the market. Mr Glover told the Financial Times he believed the overall reaction to the campaign had been 'very positive', but that he was disappointed by the 'level of vile hatred and intolerance' directed at the models in the advert. 'If we play in the same way that everybody else does, we'll just get drowned out. So we shouldn't turn up like an auto brand,' Glover said. 'We need to re-establish our brand and at a completely different price point so we need to act differently. We wanted to move away from traditional automotive stereotypes.' MailOnline has approached Jaguar for comment.
Daily Record
an hour ago
- Daily Record
How much debt is the UK in and how do we fare compared to other countries?
From defence spending to rising tariffs, governments across the world seem to have gone borrowing daft The UK's financial climate is precarious and ever-changing, to say the least. From the cost of living crisis to the ongoing energy crisis, Brits are being forced to tighten their belts and watch what they're spending day to day. New figures from the Office for National Statistics (ONS) show just how tough things are right now. More than 2.7 per cent of gas and electricity direct debits failed in April because there wasn't enough money in people's accounts. At the same time, more people are missing loan repayments, often taken out to cover everyday costs. But how healthy is the UK's economy compared to other countries in the world, and how deep in debt are we? Well, the picture isn't too pretty across the world when it comes to the total sum of money owed by governments. In fact, global public debt has soared dramatically past a record $100 trillion (£74.4trn), according to Love Money. Along with 10 per cent tariffs on all British goods, the president imposed 25 per cent levies on cars and steel. He later increased the tariff on steel to 50 per cent, but gave the UK a reprieve, keeping its rate at 25 per cent until at least July 9. The International Monetary Fund (IMF) has warned public debt is set to soar to 100 per cent of global GDP by 2030, up from 95.1 per cent this year. But plenty of countries have already surpassed this alarming threshold. The UK's debt-to-GDP ratio, which compares a nation's public debt to its annual economic output, is set to climb over the next few years. The UK's GDP is currently sitting at 103.9 per cent, but could be 106.1 per cent by the end of the decade. This would be a historic high not seen since the 1950s, when Britain was still recovering from the Second World War. The IMF has warned the UK's high debt levels could harm economic growth and leave it vulnerable to sudden shocks. due to a significant amount of its government bonds now held by riskier hedge funds and foreign investors. Elsewhere in Europe, France is sitting at 116.3 per cent of GDP. Almost everyone is covered by the social security system in France, and its large welfare state shields households and businesses from external shocks such as the pandemic. The country is cutting an extra €4.7billion (£4bn) in spending this year, but it might not make a difference. France owes $3.8trillion (£2.82trn) and the interest payments alone eclipse the entire French defence and education budgets. Across the Atlantic, the US is sitting on the biggest public debt pile in the world, with 112.5 per cent of GDP. Government liabilities amount to a whopping $36.2trillion (£28.65trn), which is more than double what China owes. Meanwhile, Russia has the smallest current debt-to-GDP ratios out of the world's 25 leading economies, sitting at 21.4 per cent of GDP. In 2014, Russia invaded and subsequently annexed the Crimean Peninsula from Ukraine. Since then, Russia has worked to protect its economy from sanctions, minimising external debt through strict fiscal and monetary restraint. But amid ongoing military spending as a result of the Ukraine war, and international sanctions, the Russian economy is now suffering, with Putin's regime having resorted to aggressive borrowing. Russia is now relying on internal financing as its main lifeline, again as per Love Money. Join the Daily Record WhatsApp community! Get the latest news sent straight to your messages by joining our WhatsApp community today. You'll receive daily updates on breaking news as well as the top headlines across Scotland. No one will be able to see who is signed up and no one can send messages except the Daily Record team. All you have to do is click here if you're on mobile, select 'Join Community' and you're in! If you're on a desktop, simply scan the QR code above with your phone and click 'Join Community'. We also treat our community members to special offers, promotions, and adverts from us and our partners. If you don't like our community, you can check out any time you like. To leave our community click on the name at the top of your screen and choose 'exit group'.
