Midweek News Roundup
Midweek News Roundup
NEWS ROUNDUP to 27th NOVEMBER 2019
TAX – Midweek News Roundup
Johnson sets out his vision for post-Brexit Britain
Boris Johnson pledged an extra 50,000 NHS nurses, thousands of doctors and primary care staff and to restore a nurse bursary in his manifesto launch yesterday. Central to Mr Johnson’s manifesto was his commitment to “get Brexit done” in order to move the country forward. He contrasted his “sensible, tax-cutting One Nation Conservative Government” with “the Friday 13th horror show if the Corbyn-Sturgeon coalition of chaos is triumphant”. The PM pledged not to raise the rates of income tax, national insurance or VAT – a “triple tax lock” – and promised a £10bn plan to raise the national insurance contributions threshold for working people. Mr Johnson acknowledged that the Tories were “not prioritising tax cuts for high earners at the moment” and the manifesto did not include a previous promise to cut stamp duty. The Conservative Party’s manifesto also pledges to increase the R&D tax credit rate fr om 12% to 13% and initiate “the fastest-ever increase in domestic public R&D spending, including in basic science research”. A review of the definition of R&D to include investment in areas such as data gathering and processing, and cloud computing would also be undertaken. Business leaders welcomed the “pro-enterprise” manifesto but some were left in doubt that it alone would be sufficient to turbocharge Britain’s economy. British Chambers of Commerce director general Dr Adam Marshall said: “While the manifesto strikes some of the right notes, business communities across the UK will be looking to see more substantial measures to boost growth, enterprise and investment.” The Tories are widely regarded to have played it safe with this manifesto, with day-to-day spending increases 28 times lower than Labour’s. Paul Johnson, director of the Institute for Fiscal Studies, said: “As a blueprint for five years in government the lack of significant policy action is remarkable.”
VAT ruling to make holiday camps cheaper
A tax tribunal has found that one of the largest holiday activity camps for children had been wrongly paying hundreds of thousands of pounds in VAT, which as a provider of childcare it ought never to have paid. Get Active Sports is in line to receive a refund of £500,000 from HMRC. Mitch Young, co-founder of Fusion Consulting, the tax adviser that represented Get Active Sports , said: “The bottom line is that tens of thousands of providers could be paying tax they do not owe. This will have an impact on how much parents are charged for summer camps. It could have a knock-on effect for an awful lot of people.”
IFS says Labour’s tax plans are a good start
Paul Johnson of the Institute of Fiscal Studies comes out in support of some of Labour’s tax plans, arguing that raising income tax rates on those with incomes over £80,000 would reduce inequality. He adds that Labour’s proposed reforms to CGT and tax rates on dividends would improve the equity and efficiency of the tax system. However, Johnson adds that predicting revenue from the latter moves would be difficult and “the dividend tax proposal, in particular, would hit plenty of those well outside the top 5%.”
Number arrested for tax evasion falls
Arrests for suspected tax evasion fell by 11% this year, with 782 arrests made in the 12 months to March 2019, compared with 877 a year earlier. In 2015-16, 1,072 people were arrested. Adam Craggs, partner at RPC, said that there had been some criticism of the taxman for being too “trigger happy” in the past, and added: “Fewer arrests could be a sign that HMRC is now exercising its powers of arrest more responsibly and in accordance with the law.”
Boris Johnson too timid to break with Europe
The Telegraph’s Ambrose Evans-Pritchard argues that the Conservatives’ tax policies as outlined in their manifesto indicate a signal alignment with the EU rather than any desire to promote free market economics. He points to digital taxes, the hike in the minimum wage, the failure to cut corporation tax and maintaining income tax rates at “the upper end of the OECD pack”. Mr Evans-Pritchard says the Tory message to Europe is “the post-Brexit model will be aligned with their ideology” and that the UK will remain “hemmed in by maximalist ‘level playing-field’ clauses, and not really rid of EU law.” To conclude, Mr Evans-Pritchard contends that the Tories “also see Brexit as damage control rather than a chance to lift the UK’s trend growth rate and restore lost dynamism with radical change.” Juliet Samuel follows a similar line elsewhere in the paper, accusing the Tories of promising “fiscal stasis” – Boris Johnson “does not dare cut taxes, for fear of rewarding the beneficiaries of a system that needs reform, but nor does he dare raise them to fund their public spending promises.”
£8.8bn may well prove a low estimate of tax take
Avinash Persaud backs Labour’s plans for a financial transaction tax, adding that the estimated £8.8bn annual tax take from the tax “will probably prove on the low side.”
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Jeremy Corbyn admits low-earners will pay more tax too
Jeremy Corbyn’s BBC interview with Andrew Neil receives widespread coverage after the Labour leader refused to apologise to Britain’s Jews for the antisemitism in his party. During the interview, Mr Corbyn was also forced to admit the party’s £58bn pledge to compensate women hit by a rise in the pensions age would have to come from borrowing and that people earning less than £80k would also be hurt by his tax policies – be it through the loss of the marriage allowance or rises in dividend taxes. Mr Corbyn also did not know that the top 5% of earners pay 50% of all income tax and denied high earners would flee the country, destroying the tax base the party would rely on to fund its plans.
Javid pledges to cut taxes at every single Budget
The Chancellor has warned that Labour would need to introduce six new taxes and impose rises on six existing taxes to pay for a “spending black hole” in the party’s manifesto costings. Speaking at an event in Bolton, Sajid Javid predicted that the UK would be in crisis “in days and weeks” if Jeremy Corbyn got into power with the “pound crashing in the early hours of the morning” and “foreign investors rushing their money out of the country”. Working people would have to pay £2,400 each to fill a £385bn black hole in Jeremy Corbyn’s spending plans, Mr Javid claimed. He added: “Unless they find that magic money tree in the next couple of weeks, they’re going to bring in the biggest tax hike of modern times.” Mr Javid pledged that the Conservatives will increase the national insurance threshold to £9,500 in his first budget and work towards a £12,500 “when we can afford it.”
Daily Mail, Page: 14 The Sun, Page: 10-11 The Daily Telegraph, Page: 7 City AM, Page: 7
Britain’s biggest companies increase tax contribution
The total tax contribution of Britain’s biggest listed companies increased to £84.7bn last year, up from £84.1bn in the 2017-18 financial year, according to PwC. The figure included £26bn in direct taxes and £58.7bn was collected by companies on behalf of employees.
The Times, Page: 50
PROPERTY – Midweek News Roundup
Business groups welcome Tory business rate pledge
Business groups have welcomed plans by the Conservative party to “cut the burden of tax” by reviewing business rates, specifically promising to cut rates for retailers, alongside plans to create a £3bn National Skills Fund to retrain workers and meet the needs of business and a promise to “drive down costs” and “support small businesses”. The British Retail Consortium’s chief executive Helen Dickinson welcomed the focus on retailers, describing the current rates system as “broken” and responsible for job losses and store closures. She said a reduction in business rates was needed and should be applied to retailers of all sizes to support the struggling British high street. Mike Cherry, from the Federation of Small Businesses, said the manifesto clearly recognised small businesses and their needs, and was effusive over the Tories’ skills and retraining policy. He said the proposed fund was essential to no one being left behind.
The Daily Telegraph, Business, Page: 3 Daily Mail, Page: 69
Mortgage approvals fall to seven-month low
According to data from UK Finance, new residential mortgage lending was £25.5bn last month, 0.9% lower than in October 2018 and a seven-month low. The number of approvals for house purchases fell by 1,000 to 41,219 from 42,216 – the third month running they had dropped. Howard Archer, chief economic adviser to the EY Item Club, said: “With Brexit uncertainties extended and the UK facing a general election, it looks a racing certainty that the housing market will continue to find life challenging in the near term at least, keeping prices soft.”
City AM The Times
SMEs – Midweek News Roundup
Investment community concerned over relief review
Conservative Party plans to review entrepreneurs relief, which allows business owners to pay a lower rate of capital gains tax when they sell a business compared to the normal rate, has led to concern among entrepreneurs. Nimesh Shah, a partner at Blick Rothenberg, said: “It’s one of the key reliefs that they strive to achieve when they’re setting up a business. It’s really a measure of success when you ultimately sell your business and you do benefit from that favourable rate.” Steve Chandler, from Notion Capital, added: “Whilst I’m open to tightening requirements to ensure it does what was intended, anything that curtails entrepreneurial risk appetite at that end of the market is a negative in my view.”
Is the end in sight for hard cash?
Arthi Nachiappan looks at how hard cash could be on the way out as an increasing number of small businesses ditch physical money not only because of the expense of dealing with it but also the risk of it being stolen. Natalie Ceeney, who chaired the Access to Cash Review, comments: “It’s harder to bank cash when small business owners have got it in their till because bank branches are closing down. But if they keep money in their till for longer, it raises security concerns. In comparison, digital providers are making it easier to pay for digital. This isn’t about beating up local shops. Everybody is behaving economically rationally. Whether that is a good thing for society is another question.”
Shoppers urged to buy locally this Christmas
The Mirror is launching a campaign to persuade people to shop locally to support their high streets this Christmas. The move coincides with research from the Centre for Retail Research, which found 10,503 small independent shops closed in the first nine months of 2019, costing almost 45,000 jobs. The paper also reports that the GMB union has calculated that Amazon should have paid £103m in tax last year, compared with the £14m it did pay. Mick Rix, of the GMB, said: “Small businesses are being forced to the wall while billion-dollar multinationals enjoy tax breaks thanks to a cosy relationship with Tory cronies.” Amazon disputed the calculations describing them as ”completely incorrect.”
Daily Mirror, Page: 2
Entrepreneurs publish Start-up Manifesto
Over 250 British entrepreneurs have signed an open letter calling for reforms to help the UK’s start-up sector. The Start-up Manifesto urges the next government to reform the visa system so firms can attract the best talent and streamline tax reliefs and reform pension regulations to attract more funding in early-stage businesses. The manifesto is published today by the Entrepreneurs Network and Coadec and signatories include the founders of Transferwise, Lendinvest, Mumsnet and Zopa. Philip Salter, founder of the Entrepreneurs Network, comments: “The party manifestos have policies that will impact business owners, but they don’t go far enough in terms of the reforms needed to boost UK entrepreneurship and ultimately support economic growth.”
City AM, Page: 14
Bank launches top rate account for small firms
Shawbrook Bank has launched an easy access account for small businesses paying 1.05%. The move follows a Centre For Economics & Business Research study that shows small businesses are keeping £100bn sitting in business current accounts earning no interest. Mike Cherry, national chairman of the Federation of Small Businesses, says: “More competition from smaller banks is welcome.”
Daily Mail, Page: 50
PENSIONS – Midweek News Roundup
Labour pledges compensation for pension age rise women
Labour has promised to pay £58bn in compensation to more than three million women who lost out on years of state pension payments when their retirement age was raised. Those expecting to retire at 60 were told they would have to wait years longer when changes to the state pension age were accelerated in 2010.
Labour would hand Theresa May £22k in pension compo
Labour’s plans to spend £58bn compensating more than three million women left out of pocket by rises in the state pension age would see Theresa May handed nearly £22,000, the Times’ Steven Swinford reports. Paul Johnson of the Institute for Fiscal Studies pointed out on BBC Radio 4 yesterday that some “women really have suffered hardship as a result of not realising that this pension age increase is happening, although it was announced back in the early 1990s, [but] many of them are actually quite well off.”
The Times, Page: 7 Daily Mail, Page: 9
Huge tax bills await thousands for failing to report pensions growth
HMRC said yesterday it was aware some individuals have not reported exceeding the annual allowance for pensions contributions, which currently stands at £40,000. Royal London policy director Sir Steve Webb, a former pensions minister, said: “This admission means that potentially thousands of people may have failed to declare large pension inputs on their tax return and could face a large bill when HMRC finally catches up with them.”
City AM, Page: 12 The Daily Telegraph, Business, Page: 8
EMPLOYMENT – Midweek News Roundup
Labour to extend pay gap reporting
Labour will today publish a Race and Faith Manifesto that will outline how schools will teach children about the “historical injustice” of the British empire and promise to diversify the teaching workforce. Charges for passports , visas and Home Office tests would be scrapped and a probe into far-right extremism launched. If in government, Labour would also extend pay gap reporting to tackle discrimination based on race, and scrap name-based recruitment. Companies with more than 250 employees would be required to disclose wage disparities for ethnic minority workers.
The Daily Telegraph The Independent
UK employer confidence down
New data from the Recruitment and Employment Confederation’s (REC) show a fall in employers confidence to its lowest level in over three years. Confidence levels in the economy fell from minus 31 in October to minus 34 in November, the worst since records began in 2016. However, significantly more employers were looking to increase rather than decrease their permanent staffing but were being held back by political and economic uncertainty. Neil Carberry, chief executive of the REC, said: “This month’s figures show there is a great deal of potential in Britain’s businesses waiting to be unleashed.”
City AM, Page: 14
ECONOMY – Midweek News Roundup
UKs tech sector suffers weakest growth since 2015
KPMG ‘s UK Tech Monitor report shows a global economic slowdown and domestic political uncertainty led to the slowest rate of growth in the UK’s tech sector in almost four years in Q3. KPMG UK vice chair Bernard Brown said: “Businesses are losing confidence and combined with activity expectations nearing lows last seen during the recession, it is easy to see why.” “Any positive growth forecasts cited for 2020 are often dependent on a clearer path to Brexit in the coming months, painting a pretty gloomy picture,” Brown added. Separately, a report from BDO found that Scotland and Northern Ireland are home to most of the 20 areas in the UK with the lowest figure for gross value added (GVA) from the technology sector.
City AM, Page: 7 The Scotsman, Page: 32
Londoners will spend most on Black Friday
PwC research reveals that Londoners plan to spend the most in the UK on Black Friday, with an average spend of £326, more than £100 above the national average, and 75% of Londoners plan to do their shopping online.
City AM, Page: 9
Retailers expect stable conditions ahead
The CBI’s latest distributive trades survey shows retail sales were broadly unchanged in November in a sign that retailers are entering the Christmas period on a stable footing. Anna Leach, deputy chief economist at the CBI, said: “Retailers are entering the festive season with a bit of hope that sales will head up, with the strongest expectations in half a year. Actual sales have also stabilised and have nudged above average for the time of year. Employment has stopped falling after three years of decline. But Brexit uncertainty continues to weigh on investment plans for the year ahead, which remain weak.” However, Howard Archer, chief economic adviser to the EY Item Club, said. “Other factors may limit consumer spending. In particular, many consumers may be keen to avoid “dissaving” [spending more than one has earned in a given period], especially given current major uncertainties.”
Regional productivity lagging behind London
A report by PwC claims that productivity levels in London are significantly ahead of the rest of the country, and that the regions have been falling further behind. It estimates that the economy would be boosted by 4% (£83bn) if regions with sub-par productivity were able to close just half of their shortfall with the national average. Wales, the East Midlands and Yorkshire and the Humber are the lowest-productivity areas in the UK. Productivity in London is 40% above the national average. PwC says Britain needs to invest in transport infrastructure and to raise skills through workplace training schemes.
The Times, Page: 47 City AM, Page: 5 The I, Page: 42 The Scotsman, Page: 32 The Press and Journal, Page: 30
Goldman bullish on the UK economy
Goldman Sachs has taken a bullish position on the UK economy urging clients to buy up stakes in British firms. Goldman economists have upgraded their growth forecasts for the next three years, predicting a rise of 2.4% in the second half of 2020. For 2021 the bank is expecting growth of 2%, up from 1.6%, and in 2022 it has raised its forecasts from 1.8% to 2.1%, providing Brexit clarity and fiscal stimulus can be delivered. Goldman’s economists also expect a modest recovery in global growth in 2020 adding that “downside risks to equity markets seem limited”.
City AM, Page: 1
OTHER – Midweek News Roundup
Capital flight if Labour wins
The Centre for Economics and Business Research (Cebr) has warned that Labour’s manifesto pledges “would not inspire market confidence” with the think tank’s founder Douglas McWilliams adding that if Labour was elected, “it is likely that there could be capital flight and a falling pound”. Mark Littlewood, director general of the Institute of Economic Affairs, concurred, arguing that a surprise Labour win would see a dramatic response; Ruth Lea, an economic adviser at Arbuthnot Banking Group, expects a “cash flight” adding: “There’s no doubt the Labour Party would have to consider bringing in exchange controls.” Writing in the Telegraph, Fidelity’s director of investment, Tom Stevenson, says the super-rich may be sweating at the prospect of a Corbyn-led Labour government but “the markets are telling us to relax. The odds on it being delivered remain long.”
The Daily Telegraph, Business, Page: 1 The Daily Telegraph, Business, Page: 3
Domestic abuse against women costs UK businesses a total of £316m a year
New research by KPMG for Vodafone suggests that per woman, the potential loss of earnings as a result of the negative impact domestic abuse can have on career progression could be as much as £5,800. The study also found that more than half a million working women in the UK have experienced domestic violence and abuse in the past 12 months. Of these, 122,000 have taken time off work in the past year.
City AM, Page: 17 The Scotsman, Page: 5
The Labour party deserves to form the next UK government, say academics
David Blanchflower tops a list of 163 economists who argue that Labour “has devised serious proposals for dealing with” the “deep problems we face” and “deserves to form the next government.” Roger Bootle, chairman of Capital Economics, proffers a different view in the Telegraph, asserting that the Labour leadership is intent not on creating a system of social democracy but rather “socialism red in tooth and claw” and that they realise full well that their programme would lead to economic disaster, taking the view that “it is only through a period of economic chaos that the country can be shifted radically towards the truly socialist society that they want.”
Katie Price declared bankrupt
Former glamour model Katie Price was declared bankrupt on Tuesday, meaning a trustee can now be appointed to sell off her assets. Price, married three times with five children, is believed to have debts of £800,000 and has been failing to pay £12,000 a month to her creditors but chose not to attend or send a lawyer. Adam Taylor, from JMW Solicitors, who represented the insolvency practitioner overseeing her Individual Voluntary Agreement, brought the case to court after she failed to stick to the terms of her agreement, noted: “She hasn’t acknowledged the petition. ”
Daily Mail, Page: 25 Daily Express, Page: 11 The Times, Page: 4
Contact Paul Southward.