The American investment giant Carlyle is preparing to take control of Very Group, one of Britain’s biggest online retailers, in a deal that will end the Barclay family’s long tenure at another major UK company.

Sky News has learnt that Carlyle, which is the biggest lender to Very Group’s immediate parent company, could assume ownership of the retailer as soon as October under the terms of its financing arrangements.

On Friday, sources said that Carlyle was expected to hold further talks in the coming weeks with fellow creditors including IMI, the Abu Dhabi-based vehicle which assumed part of Very Group’s debts in a complex deal related to ownership of the Telegraph newspaper titles.

Carlyle will probably end up holding a majority stake in Very Group, which has about 4.5 million customers, once it exercises a ‘step-in right’ which effectively converts its debt into equity ownership, the sources said.

Very Group – which is chaired by the former Conservative chancellor Nadhim Zahawi – borrowed a further £600m from Arini, a Mayfair-based fund, earlier this year as it sought to stave off a cash crunch and buy itself breathing space.

Precise details of the company’s capital and ownership structure will be thrashed out before the change of control rights are triggered at the beginning of October.

The Barclay family drew up plans to hire bankers to run an auction of Very Group earlier this year, but a process was never formally launched.

Carlyle, which declined to comment, may hold onto the business for a further period before looking to offload it.

IMI is also likely to end up with an equity stake or a preferred position in the recapitalised company’s debt structure, sources added.

Prospective bidders for Very Group were expected to be courted on the basis of its technology-driven financial services arm as well as the core retail offering which sells everything from electrical goods to fashion.

Retail industry insiders have long speculated that the business was likely to be valued in the region of £2.5bn – below the valuation which the Barclay family was holding out for in an auction which took place several years ago.

Very Group – previously known as Shop Direct – is one of the UK’s biggest online shopping businesses, owning the Very and Littlewoods brands and employing 3,700 people.

It boasts well over £2bn in annual sales, with about one-fifth of that generated by its Very Finance consumer lending arm.

Mr Zahawi was appointed as the company’s chairman last year, days after he announced that he was standing down as the MP for Stratford-on-Avon at July’s general election.

He replaced Aidan Barclay, a senior member of the family which has owned the business for decades.

In the 39 weeks to 29 March, Very Group reported a 3.8% fall in revenue to £1.67bn, which it said included “a decrease in Littlewoods revenue of 15.1%, reflecting the ongoing managed decline of this business”.

Nevertheless, it said sales in its home and sports categories were performing strongly.

IMI’s position is expected to be pivotal to the talks about the future of the business, given Abu Dhabi’s status as an important global backer of buyout, credit and infrastructure funds such as those raised and managed by Carlyle.

The UAE vehicle is expected to emerge from the protracted saga over the Telegraph’s ownership with a 15% stake in the newspapers.

Under the original deal struck in 2023, RedBird and IMI paid a total of £1.2bn to refinance the Barclay family’s debts to Lloyds Banking Group, with half tied to the media assets and the other half – solely funded by IMI – secured against other family assets including part of Very Group’s debt pile.

The Barclays, who used to own London’s Ritz hotel, have already lost control of other corporate assets including the Yodel parcel delivery service.

A spokesman for Very Group declined to comment, while IMI also declined to comment.

What do we do about the non-doms? 

It’s a question more than a handful of people have been asking themselves at the Treasury lately.

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It had seemed simple enough. In her first budget as chancellor, Rachel Reeves promised a crackdown on the non-dom regime, which for the past 200 years has allowed residents to declare they are permanently domiciled in another country for tax purposes.

Under the scheme, non-doms, some of the richest people in the country, were not taxed on their foreign incomes.

Then that all changed.

Standing at the despatch box in October last year, the chancellor said: “I have always said that if you make Britain your home, you should pay your tax here. So today, I can confirm we will abolish the non-dom tax regime and remove the outdated concept of domicile from the tax system from April 2025.”

The hope was that the move would raise £3.8bn for the public purse. However, there are signs that the non-doms are leaving in such great numbers that the policy could end up costing the UK investment, jobs and, of course, the tax that the non-doms already pay on their UK earnings.

If the numbers don’t add up, this tax-raising policy could morph into an act of self-harm.

With the budget already under strain, a poor calculation would be costly financially. The alternative, a U-turn, could be expensive for other reasons, eroding faith in a chancellor who has already been on a turbulent ride.

So, how worried should she be?

The data on the number of non-doms in the country is published with a considerable lag. So, it will be a while before we know the full impact of this policy.

However, there is much uncertainty about how this group will behave.

While the Office for Budget Responsibility forecast that the policy could generate £3.8bn for the government over the next five years, assuming between 12 and 25% of them leave, it admitted it lacked confidence in those numbers.

Worryingly for ministers, there are signs, especially in London, that the exodus could be greater.

Property sales

Analysis from the property company LonRes, shows there were 35.8% fewer transactions in May for properties in London’s most exclusive postcodes compared with a year earlier and 33.5% fewer than the pre-pandemic average.

Estate agents blame falling demand from non-dom buyers.

This comes as no surprise to Magda Wierzycka, a South African billionaire businesswoman, who runs an investment fund in London. She herself is threatening to leave the UK unless the government waters down its plans.

“Non-doms are leaving, as we speak, and the problem with numbers is that the consequences will only become known in the next 12 to 18 months,” she said.

“But I have absolutely no doubt, based on people I know who have already left, that the consequences would be quite significant.

“It’s not just about the people who are leaving that everyone is focusing on. It’s also about the people who are not coming, people who would have come, set up businesses, created jobs, they’re not coming. They take one look at what has happened here, and they’re not coming.”

Lack of options for non-doms

But where will they go? Britain was unusual in offering such an attractive regime. Bar a few notable exceptions, such as Italy, most countries run residency-based tax systems, meaning people pay tax to the country in which they live.

This approach meant many non-doms escaped paying tax on their foreign income altogether because they didn’t live in those countries where they earned their foreign income.

In any case, widespread double taxation treaties mean people are generally not taxed twice, although they may have to pay the difference.

In one important sense, Magda is right. It could take a while before the consequences are fully known. There are few firm data points for us to draw conclusions from right now, but the past could be illustrative.

Read more on Sky News:
Reeves warned over tax rises
What is a wealth tax?

The non-dom regime has been through repeated reform. George Osborne changed the system back in 2017 to limit it to just 15 years. Then Jeremy Hunt announced the Tories would abolish the regime altogether in one of his final budgets.

Following the 2017 reforms there was an initial shock, but the numbers stabilised, falling just 5% after a few years. The data suggests there was an initial exodus of people who were probably considering leaving anyway, but those who remained – and then arrived – were intent on staying in the UK.

So, should the government look through the numbers and hold its nerve? Not necessarily.

Have Labour crossed a red line?

Stuart Adam, a senior economist at the Institute for Fiscal Studies, said the response could be far greater this time because of some key changes under Labour.

The government will no longer allow non-doms to protect money held in trusts, so 40% inheritance tax will be due on their estates. For many, that is a red line.

Mr Adam said: “The 2017 reform deliberately built in what you might call a loophole, a way to avoid paying a lot more tax through the use of existing offshore trusts. That was a route deliberately left open to enable many people to avoid the tax.

“So it’s not then surprising that they didn’t up sticks and leave. Part of the reform that was announced last year was actually not having that kind of gap in the system to enable people to avoid the tax using trusts, and therefore you might expect to see a bigger response to the kind of reforms we’ve seen announced now, but it also means we don’t have very much idea about how big a response to expect.”

With the public finances under considerable pressure, that will offer little comfort to a chancellor who is operating on the finest of margins.

The economy is stagnating and job losses are mounting. Now is the time to cut interest rates again.

That was the view of the Bank of England’s nine-member rate setting committee on Thursday.

Well, at least five of them.

The other four presented us with a different view: Inflation is above target and climbing – this is no time to cut interest rates.

Who is right? All of them and none of them.

Central bankers have been backed into a corner by the current economic climate and navigating a path out is challenging.

The difficulty in charting that route was on display as the Bank struggled to decide on the best course of monetary policy.

The committee had to take it to a re-vote for the first time in the Bank’s history.

On one side, central bankers – including Andrew Bailey – were swayed by the data on the economy. Growth is “subdued”, they said, and job losses are mounting.

This should weigh on wage increases, which are already moderating, and in turn inflation.

One member, Alan Taylor, was so worried about the economy he initially suggested a larger half a percentage point cut.

On the other side, their colleagues were alarmed by inflation.

The Bank upgraded its inflation forecasts, with the headline index expected to hit 4% in September.

In a blow to the chancellor, the September figure is used to uprate a number of benefits and pensions. The Bank lifted it from a previous forecast of 3.75%.

In explaining the increase, the Bank blamed higher utility bills and food prices.

Food price inflation could hit 5.5% this year, an increase driven by poor harvests, some expensive packaging regulations as well as higher employment costs arising from the Autumn Budget.

When pressed by Sky News on the main contributor to that increase – poor harvests or government policy – the governor said: “It’s about 50-50.”

The Bank doesn’t like to get political but nothing about this is flattering for the chancellor.

The Bank said food retailers, including supermarkets, were passing on higher national insurance and living wage costs – the ones announced in the Autumn Budget – to customers.

Economists at the Bank pointed out that food retailers employ a large proportion of low wage workers and are more vulnerable to the lowering of the national insurance threshold because they have a larger proportion of part-time workers.

The danger doesn’t end there.

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Chancellor doesn’t rule out rising gambling taxes

Of all the types of inflation, food price inflation is among the most dangerous.

Households spend 11% of their disposable income, meaning higher food price inflation can play an outsized role in our perception of how high overall inflation in the economy is.

When that happens, workers are more likely to push for pay rises, a dangerous loop that can lead to higher inflation.

So while the chancellor is publicly celebrating the Bank’s fifth interest rate cut in a year, behind the scenes she will have very little to cheer.