IFS: Budget black hole may mean higher taxes

The Institute for Fiscal Studies (IFS) says a £4bn black hole in Rishi Sunak’s spending plans mean Britain faces tax hikes, with the think-tank saying the shortfall for the 2022/23 financial year went “entirely unmentioned” in the Chancellor’s recent Budget. The IFS says tax rises and borrowing are likely to increase as the Treasury looks to tackle the shortfall, with officials against the idea of another period of austerity. The think-tank said that under current plans, spending on some areas of government would be 3% lower in 2022/23 than a year earlier, and 8% lower than what was planned pre-pandemic.

Daily Mail


South-west leads Women in Work Index

PwC ’s Women in Work Index has seen south-west England come out on top in regard to female participation in the workforce. Scotland came second place in the rankings on an index with gauges areas such as the gender pay gap, female full-time employment, female unemployment and labour force participation. PwC has warned that the pandemic is expected to have a disproportionately negative effect on women, setting back their progress in work. “Even if job market growth returned to pre-pandemic rates by 2022, PwC estimates that progress would still be four years behind where it would have been by 2030. To reverse this damage, progress will need to proceed at twice the pre-pandemic rate,” the report said. Laura Hinton, chief people officer at PwC, commented: “There is absolutely no time to lose in addressing the very real impact of the pandemic on women”, urging governments, policymakers and businesses to work together “to empower women and create opportunities for meaningful participation in the workforce.”

The Times The Scotsman


Capital’s occupied office space expected to rise

Property agent CBRE has predicted that firms will occupy an extra 13m square feet of office space in central London by 2026, adding to the 232m square feet already used. This come s despite some firms looking to reduce workspace after the pandemic drove a shift toward greater remote working. CBRE’s estimate is based around a forecast that office-based employment in central London could increase by almost 190,000 in the five years to 2025, equivalent to annualised growth of 1.8% per year between 2021 and 2025.

Evening Standard


OSB reveals suspected £28.6m fraud

OneSavings Bank has delayed its results after disclosing that it has been the victim of a suspected £28.6m fraud by a corporate customer. The bank has reported the matter to Action Fraud and informed the Financial Conduct Authority and Prudential Regulation Authority. It has also called in Smith & Williamson, which specialises in forensic investigations. The Times reports that it is not clear whether the suspected fraud was discovered internally or by the bank’s auditor Deloitte.

The Times, Page: 44

Premier League set to score less for TV deals

Andy Turner, a partner at Mercer & Hole, says the Premier League and its clubs may be concerned ahead of the auction for TV rights for 2022 to 2025, saying they are likely to go for less than the £5.1bn high seen in 2015 and the £4.5bn secured in 2018. He suggests that a rights auction needs aggressive bidders and new entrants to maximize the price, adding that if Sky and BT are happy with their existing packages and there are no new entrants, this is likely to be reflected in the price.

City AM

Lookers sees profits ahead

Car dealership Lookers has published an update on its 2020 financial results to say it expects to report underlying profit before tax of £10m, compared to analysts’ consensus of a small loss. The firm, which has recently switched auditor from Deloitte to BDO, said it was still working on its full accounts for the last financial year. Lookers had faced a Financial Conduct Authority probe after a £19m hole was discovered in a past set of accounts.

City AM


German tax revenues slip 7.2%

German tax revenues slipped to €54.67bn in February, a 7.2% fall compared to the same period last year due to the economic fallout of the coronavirus crisis. The dip marks a slightly slower rate of decline than the 11.1% drop recorded in January. Data from the finance ministry shows that sales tax was down by almost 19% last month due to a lockdown which has kept most shops shut.

Daily Mail


BoE keeps rates steady

The Bank of England has held interest rates at 0.1% and its bond-buying programme at £895bn, with its Monetary Policy Committee (MPC) voting unanimously to keep rates at record-low levels. The Bank said the outlook for the economy remained unusually uncertain, adding that it depends on the evolution of the pandemic and how households, businesses and financial markets respond to developments. Noting that plans for the easing of lockdowns suggested restrictions being lifted “somewhat more rapidly” than had been assumed in its February report, the Bank said this “may be consistent with a slightly stronger outlook for consumption growth” in the April-June period than had been previously suggested. Meanwhile, the Bank’s chief economist has said a rapid economic recovery could soon be underway. Andy Haldane said he believes that it is “more likely than not” that a “rapid-fire recovery” is on the cards. “That is coming, and I think that is coming soon,” he told a Women in Business and Finance awards ceremony. Mr Haldane, however, warned that there are risks of more persistent damage to people’s job prospects as a result of the pandemic, saying: “It seems very likely, based on the evidence we have so far, that the deepest and the most damaging of those scars will be felt by those least advantaged in the job market”.

Daily Mail City AM Sky News

Consumer confidence climbs in March

GfK’s monthly consumer confidence index shows British consumer morale has hit a one-year high, rising to -16 in March from -23 in February. GfK client strategy director Joe Staton said: “If this improved mood translates into spending, it might help reverse some of the economic damage the UK has suffered”. Howard Archer, chief economic adviser at the EY Item Club, said the rise in consumer confidence “fuels belief that the consumer can play a leading role in robust recovery”.

Reuters Financial Times


Industry calls for audit reform timetable

The audit industry has urged the Government to set out a timetable detailing when it plans to implement changes outlined in an audit reform consultation that sets out measures to reduce the dominance of the Big Four and deliver an industry regulator with greater powers. John Wood, CEO of the Chartered Institute of Internal Auditors, commented: “It is disappointing that there is no detailed legislative timetable in the white paper and we need to see a clear roadmap for reform without delay or else we risk further corporate collapses.” He added that the reforms “need to be implemented with urgency to protect and enhance the UK’s enviable reputation for good corporate governance.” Mazars’ head of audit David Herbinet highlighted a need to “focus upon establishing clarity on timings and the process of implementation to move forward at pace and seize this generational opportunity”. Meanwhile, PwC chairman Kevin Ellis has welcomed the reform proposals, saying the UK “has an opportunity to lead the world on corporate governance” and describing the consultation as a “crucial step in driving trust and confidence in our reporting and regulatory frameworks.” EY chair Hywel Ball commented: “The introduction of a new regulator alongside tighter accountability for directors as part of a UK equivalent of the US Sarbanes-Oxley framework is essential.” Jon Holt, head of audit at KPMG, said: “It is an ambitious package of strategic reform. Prioritising and clarifying the audit reform agenda is an important step to rebuild trust in the profession.”

City AM BBC News

Reform could cost business more than £430m a year

Analysis suggests that plans to reform the audit sector and crack down on poor practices at large firms could add more than £430m to businesses ’ costs. The analysis of reform set out in a Department for Business, Energy and Industrial Strategy report says the largest cost to business would come from extending the number of companies that fall within the proposed rules, while strengthening internal controls would also deliver another large bill. The calculations made by the FT suggest that the creation of the Audit, Reporting and Governance Authority could cost £39m per year. The Times says bringing 2,000 large private and Aim-listed companies under tougher reporting standards will cost business up to £1.7bn over ten years. It says companies affected would have to appoint an audit committee if they do not have one and undertake a re-tendering exercise and rotate their auditor more frequently. It notes that a Government cost analysis does not take into account a likely increase in audit fees for new public interest entities. Bob Neate of Mazars said extra quality control processes around public interest entity audits “will enhance the cost of delivering the audit and somebody has to pay for that.”

City AM The Times, Page: 47 Financial Times, Page: 2

Contact Paul Southward

Paul Southward