Business savings are falling faster in Scotland than UK

THE amount of cash held by Scottish SMEs has fallen by 40 per cent since the Brexit vote, with savings dwindling more steeply than in any other part of the UK, a survey has shown.

Scottish SMEs hold an average £220,000 in business savings accounts, according to new research from challenger bank Hampshire Trust Bank shows. The UK national average for business savings is £446,000, a 20 per cent drop compared to last year.

While the sluggishness of the Scottish economy relative to the UK since the historic vote on June 23, 2016 may help explain why Scottish businesses are holding less cash, the survey showed that the majority of respondents north of the Border said savings were being depleted to increase investment in business development

Across the UK’s nations and regions, only businesses in the south-east of England hold less in business savings accounts than in Scotland.

The £220,000 held in business savings accounts equates to 62 per cent of total funds, with Scottish SMEs also holding an average £136,000 in current accounts, according to the survey, which spoke to 500 SMEs across the UK.

Stuart Hulme, director of savings at Hampshire Trust Bank, said it was a “challenging time” for UK SMEs, but that the numbers were nonetheless encouraging. KEITH Cochrane, former chief executive of Weir Group and Stagecoach, has taken charge of Carillion after the company revealed it has suffered a raft of problems in its construction division, which has faced challenges in Scotland.

Carillion said Mr Cochrane had been appointed interim chief executive after Richard Howson stepped down with immediate effect yesterday.

A spokesman for Carillion said Mr Cochrane does not want to take on the job permanently. He has enjoyed pursuing a range of interests since leaving Weir in September.

But the temporary role will mean Mr Cochrane could play a key part in the development of a group which has been one of the biggest players in the PPP market for public sector construction projects in the UK.

News of his appointment came in an update which made clear the board had concluded a dramatic shake up was required at Carillion, and which sent shares in the firm plunging 40 per cent.

Carillion, whose activities range from building roads in the UK to developing oil and gas facilities overseas, has launched a comprehensive review. All options will be on the table.

The company revealed it has provided around £850 million against the value of contracts on which profits are likely to be lower than expected.

It said the financial position on three significant UK contracts worsened significantly in the first half without giving details.

One is thought to be the £745m Aberdeen bypass, which Carillion is building with Galliford Try and Balfour Beatty under the PPP programme. In December it emerged construction on a section of the scheme had fallen almost a year behind schedule.

Carillion said a review by KPMG had found common issues on some problematic PPP contracts.

FORMER Weir Group boss Keith Cochrane has been appointed interim chief executive of Carillion

It said: “These include accepting tenders with a high degree of uncertainty around key assumptions, undertaking contracts where success has been contingent on the performance of others not under our control and agreeing design changes without agreeing incremental costs and value.”

The board has decided the group will exit the business of delivering construction for PPP projects.

Wolverhampton-based Carillion has suspended dividend payments after missing its debt reduction targets.

The company warned performance in 2017 is now likely to be below the board’s expectations.

Highlighting more challenging market conditions, Carillion cited

the slower pace of new contract awards in the UK, due to political uncertainty as a result of Brexit and the UK General Election, and ongoing difficult market conditions in the Middle East.

Its chairman Philip Green said Mr Cochrane will be interim group chief executive while a search is under way for a new boss. He noted Mr Cochrane has considerable experience of running listed companies.

Mr Howson will stay for up to a year to support the transition but will not be on the board.

Mr Cochrane joined Carillion’s board in July 2015, becoming senior independent director two months later.

The Glasgow university graduate has become one of Scotland’s

best-known executives since qualifying as a chartered accountant with Arthur Andersen.

Mr Cochrane spent seven years running a global engineering business at Glasgow-based Weir.

His last three years in charge were blighted by the downturn in the oil and gas industry, which Weir has acquired a big exposure to. Announcing plans to stand down last July, Mr Cochrane said the sector had a positive outlook and his successor, Jon Stanton, had a great platform to build on.

Mr Cochrane was chief executive of Stagecoach from 2000 to 2002. He faced challenges in his attempt to turn round its Coach USA subsidiary.

Carillion shares closed down 75p at 117.1p. BUSINESS rates have been pinpointed as the single biggest worry faced by Scottish publicans, as a survey showed some operators are beginning to see signs of recovery after years of decline.

Despite action by the Scottish Government to mitigate the impact of the business rates revaluation, more than three-quarters (76 per cent) of licensed operators said it remains the most critical issue facing the industry.

The concern is highlighted in the latest survey by the Scottish Licensed Trade Association (SLTA), based on the view of 600 business owners. It comes days after the Scottish Government said its longawaited review of the country’s business rates system had been delayed by at least a month.

The Herald revealed earlier this year some pubs and hotels were facing rates rises of up to 400 per cent as a result of the latest revaluation of non-domestic properties, putting hundreds of businesses at risk of going under.

The latest SLTA survey found 38 per cent of operators reported increases in business in the first half of the year after years of falling trade. However, 39 per cent said business continues to fall. The SLTA again highlighted the impact on rural and tourist businesses from tighter drink-driving legislation, with 46 per cent stating that trade was down over the period compared with the first half of 2016.