Your commercial news round-up: minimum wage, WH Smith, Heathrow runway, AI music

Reading time: four minutes

Have you been staying up to date with the commercial news? The government has announced an increase in the minimum wage and WH Smith faces an inquiry following an accounting error. Meanwhile, Heathrow’s plan for a third runway has been chosen over a rival proposal from Arora Group, and Warner Music Group is set to collaborate with AI music company Suno, a firm it sued just a year ago.

• Millions of people will receive a pay rise in April due to an increase in minimum wage. For over 21s, the rate will increase by 50p to £12.71. Meanwhile, those aged 18 to 20 will receive the largest boost of 85p to £10.85 and under-18s will get a 45p increase to £8. This was announced by the government ahead of the Autumn budget, which was released on Wednesday 26 November. Chancellor Rachel Reeves said 2.7 million people will benefit but businesses have previously warned that changes to minimum wage can cause hiring freezes. The pay increase follows a 6.7% rise for over-21s and a 16.3% increase for 18-to-20-year-olds last year. The Resolution Foundation think tank, which focuses on low to middle-income households, argued that the increase for 18-to-20-year-olds was "unnecessarily big" and could make it harder for people in that age group to find a job. However, the Low Pay Commission, the government agency that recommended the increases, highlighted that previous changes haven’t had a negative impact on job availability.
   
• The Financial Conduct Authority (FCA) is conducting an inquiry into retail company WH Smith to determine whether it breached UK disclosure rules for listed companies. This assessment follows an accounting error made by WH Smith, which knocked £600 million of the company’s stock market value.  The error, discovered in August within its North American division, led WH Smith to commission an independent investigation by Deloitte. That review revealed profits had been overstated by up to £50 million, largely due to income being recorded too early. The announcement prompted CEO Carl Cowling to step down, with an interim CEO now in place. While the FCA hasn’t launched a formal investigation, it often engages with listed companies through inquiries. Earlier this month, WH Smith said its full-year profits are expected to come in between £100 million and £110 million, about 55% lower than the previous year. Meanwhile, shares rose by 1.5% on Tuesday 25 November, but remain down 45% so far this year.
   
• The government has chosen Heathrow’s proposal for a third runway over a competing plan from the Arora Group. Although one plan has been selected, the final decision on whether the third runway will get a green light is still years away. In addition, any company can submit an application to build the new runway and terminals at the site. Heathrow’s proposed runway will be up to 3.5km and requires a new road tunnel under the airport. Meanwhile, Arora’s bid involved a shorter runway that wouldn’t have impacted the M25. However, the Department for Transport said Heathrow's proposal offered the most deliverable option and the "greatest likelihood" of receiving planning approval from parliament. Currently, the government is carrying out a review of the Airports National Policy Statement. Once this is complete, Heathrow is expected to apply for planning permission, with a decision forecasted for 2029. Heathrow’s £49 billion plan includes:
  • a new runway to boost capacity to 756,000 flights and 150 million passengers annually (up from 84 million);
  • a new terminal;
  • expansion of Terminal 2 and closure of Terminal 3;
  • three satellite terminals; and
  • upgrades to rail links and bus/coach stations.
     
• Warner Music Group (WMG) is set to begin an AI music venture with startup Suno, a year after it sued the firm, with claims that it was benefitting off existing songs. As part of the settlement agreement struck between the two companies, WMG will allow users to create AI-generated music on Suno using the voices, names and likeness of artists who opt-in to the programme. Suno, which was launched two years ago, has around 100 million users. Next year, Suno plans to roll out advanced and licensed models that will allow users to create music. WMG said that this is a "first-of-its-kind partnership" that’ll open "new frontiers" in music creation, while compensating artists. It stated: "Artists and songwriters will have full control over whether and how their names, images, likenesses, voices and compositions are used in new AI-generated music.”

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