News Roundup Friday 24th May 2019

NEWS ROUNDUP

TAX NEWS

Tax hike of 2% could fund care for the elderly

A 2% income tax rise could pay for free care for the elderly at home, the left-of-centre Institute for Public Policy Research (IPPR) says. Making this element of social care free at the point of need would cost an extra £8bn a year by 2030 but would save the NHS £4.5bn a year and improve the health and independence of older people. IPPR researcher Dean Hochlaf said: “It’s a small price to pay.”

The Guardian, Page: 19 Daily Mirror, Page: 20 Daily Express, Page: 7

CORPORATE NEWS

Government rescue plan for British Steel after collapse

Business Secretary Greg Clark has drafted a rescue plan for British Steel after the firm collapsed into liquidation, threatening thousands of jobs. Pleas for a state bailout were originally rebuffed due to EU state aid rules, but Mr Clark has sought legal advice on whether his new proposal might be acceptable. The plan would see the Government act as a cornerstone investor alongside a collection of private companies. EY has been lined up to assist with the liquidation. Freddy Khalastchi, a partner at Menzies, said British Steel’s liquidation risked a “tsunami-like effect” on jobs both upstream and downstream of its steelworks. Insolvency partner at Shakespeare Martineau, Michael Mulligan, adds: “Customers and suppliers of British Steel must act quickly to mitigate against a Carillion-style domino-effect.”

Financial Times Daily Mail City AM The Daily Telegraph, Business, Page: 1, 3 The Times, Page: 12 The Guardian, Page: 1, 14

Arcadia to shut stores and axe 500 jobs

Arcadia boss Sir Philip Green and his wife have offered to inject £100m into the firm’s pension scheme in an attempt to win approval for a radical restructuring of their retail empire that will include 23 shop closures and the axing of some 500 jobs. Sir Phillip is planning a company voluntary arrangement but needs to win the support of the Pension Protection Fund as the scheme is in deficit, meaning the PPF acts as a “lifeboat” and will exercise the fund’s votes in the CVA process. However, the Pensions Regulator is pushing back against the proposals, claiming the £100m injection as inadequate to protect members’ interests.

Financial Times The Daily Telegraph The Guardian The Times, Page: 35

RBS-backed Loot enters administration

Loot, the digital current account for students, has called in administrators after it was unable to secure funding following the collapse of a potential sale to the Royal Bank of Scotland (RBS). RBS owned a 25% stake in the fintech through NatWest’s digital bank Bo, which is currently under development and invested a total of £5m in the startup. Loot had not secured a full banking licence but was able to operate through a partnership with Wirecard and investors included Speedinvest, Global Founders Capital and Portage. Smith and Williamson will oversee the administration.

City AM Financial Times

PENSIONS NEWS

Fall in pound sparks renewed pension protests

British retirees residing in mainly Commonwealth countries are protesting after the fall in sterling left them worse off because their pensions are “frozen”. A spokesman for the Department for Work and Pensions said: “The Government has a very clear position, which has remained consistent for around 70 years: the UK state pension is payable worldwide but is only uprated abroad where we have a legal requirement to do so or a reciprocal agreement is in place.” One ex-pat who retired to Canada in 1998 is said to have received £27,945 less than his peers in Britain even though he has made the same level of NICs.

The Daily Telegraph

ECONOMY NEWS

Higher energy prices push inflation above Bank of England target

Rising gas and electricity prices pushed inflation above the Bank of England’s target to 2.1% in April, according to the Consumer Prices Index, its highest level this year. Electricity prices rose at their fastest rate since 2011 last month, though air fares also contributed to the rise in inflation, soaring by more than 30% over the Easter period.

City AM Financial Times The Daily Telegraph

Borrowing steady as tax receipts fall slightly

ONS figures show the Government borrowed £5.8bn in April, down £33m or about 0.5% compared with the same month of last year. Tax receipts in April were 2.4% higher than a year earlier, below the full-year OBR forecast of 2.8% for the full year. The figures suggest the Chancellor is on course to hit full-year public finance targets.

The Daily Telegraph Financial Times The Times, Page: 35

Contact Paul Southward.

Paul Southward