News Roundup Friday 8th November 2019
News Roundup Friday 8th November 2019
TAX NEWS ROUNDUP
South East home to 9 in 10 top income tax towns
Analysis by UHY Hacker Young shows that commuter towns in the South East pay the highest levels of income tax in the country, with 9 of the top 10 towns for average income tax located in the area outside London dubbed the Stockbroker Belt. Surrey’s Esher took the top spot, with residents paying 28% of their average £68,600 earnings in income tax. UHY Hacker Young tax partner Neela Chauhan said the South East has “cemented its position as one of the most affluent areas in the UK,” adding that this is “likely to continue for years to come” as the towns attract high earning celebrities and City workers. Ms Chauhan urged the Government to be “careful not to kill this golden goose by overtaxing it,” adding: “We have seen signs in some areas, such as non-doms, that higher levels of tax is gradually driving high earners out of the country.”
City AM, Page; 3
Labour to increase taxes
Shadow Chancellor John McDonnell says that under a Labour government, income tax would go up for anyone earning £80,000 or above, telling the BBC’s Andrew Marr Show: “In terms of income tax we said very clearly the top 5% will pay a bit more, 95% of the population will be protected.” He added that the level of corporation tax will also rise, saying: “We will restore some of the tax cuts that have been given away to the corporations and we’ll use that for investment in skills and training.”
The Daily Telegraph, Page: 6 The Sun, Page: 9
Tax set to be the election battleground
The Telegraph’s Sam Brodbeck says that while Brexit is poised to be the central issue in December’s general election, “if history is anything to go by, tax is the real battleground.” He suggests that what is known of the Tory and Labour tax proposals point to them being “polar opposites” for the first time in 30 years, likening a “low-tax, small-state” Conservative party up against a socialist Labour party to political battles waged in the 1970s. Mr Brodbeck says that Boris Johnson will “hand an enormous tax cut to middle earners”, pushing the higher-rate threshold to earnings from £50,000 to £80,000, while Jeremy Corbyn wants to “catch more people in the 45% band”, lowering it from £150,000 to £80,000, with the Labour leader also looking to introduce a new 50% top-rate for the highest earners.
The cost of tax pledges
The Guardian’s Patrick Collinson and Rebecca Smithers detail cost forecasts for some of the tax pledges expected to be made in Conservative and Labour manifestos. The Institute for Fiscal Studies estimates that a Tory plan to increase the threshold for the 40p rate of income tax would cost £8bn a year. They add that Labour plans could see income tax rises raise £6.4bn and the corporation tax take increase by £19.4bn – while shutting tax loopholes would bring in £6.5bn.
The Guardian, Page: 7
Just Eat in digital services tax warning
Food delivery firm Just Eat has urged ministers to rethink plans for a tax on online sales, saying a digital services tax that would involve a 2% charge on sales by large internet firms would cost it £7m a year and hurt the tech industry. Just Eat CFO Paul Harrison said the tax “will penalise UK tech businesses already doing the right thing”. Data from the Centre for Economics and Business Research suggests the tech industry would see an extra £70m tax in the first year of the levy.
HMRC chases £720m
HMRC is trying to get back £720m in unpaid tax from German firms, a 48% increase on last year.
Daily Mail, Page: 71
Labour plots tax rethink
Ben Webster in the Times details Labour’s potential tax plans, saying proposals would see a 45% income tax rate for those earning more than £80,000 a year and a 50% rate for those on more than £125,000. The Resolution Foundation says the increases would mean those earning between £100,000 and £125,000 would see marginal tax rates of 67.5%, although the average tax rate would increase by only 2.5% for those earning up to £129,000 across their whole income. Meanwhile, Duncan Simpson of the TaxPayers’ Alliance has warned that Labour’s proposed plans to increase the rates of corporation tax would have a “dangerous” impact on workers and consumers, potentially driving wages down and prices up. He said that while “in a literal sense” it is businesses who pay corporation tax, in reality it is a combination of workers through lower salaries, shareholders who see lower dividends and lower returns and consumers who pay more through prices for services and goods.
The Times, Page: 11 Daily Express
Tax cuts backed
A TaxPayers’ Alliance poll of working-class voters has seen 60% say the basic rate of income tax should be cut to 15%, compared with 46% of middle-class voters, while 70% of working-class voters believe business rates should be cut.
The Sun, Page: 2
PM urged to tackle pension tax concerns
NHS Providers has called on the Prime Minister to address an issue around restrictions on the amount of tax relief high earners can claim on pensions savings, with the matter seeing some senior NHS staff to refuse extra shifts or take early retirement so as to avoid higher taxes. The Academy of Medical Royal Colleges has also called for action, writing to Chancellor Sajid Javid and Health Secretary Matt Hancock over the tax rules.
Financial Times, Page: 2 The Independent, Page: 11
Millennials paying more for less
A study carried in an updated edition of Lord Willetts’ book The Pinch shows that millennials will pay more in taxes yet receive less in state services than any generation since the war. It says younger millennials born in 1996 will on average pay taxes over their lifetime totalling £962,000 and get services worth just under £1.1m, while baby boomers born in the 1950s and early 1960s will receive entitlements worth more than £1.2m while paying £945,000 in tax.
The Times, Page: 16 The Sun, Page: 24
Loan charge review delayed
A review of the controversial loan charge commissioned by Chancellor Sajid Javid is unlikely to be published until a new government is formed after December’s general election, meaning it may not materialise until just before HMRC’s January 2020 deadline for settling claims. The review, which is evaluating the scheme designed to claw back money from people who entered into so-called disguised remuneration schemes, was meant to be published by mid-November. However, Jesse Norman, Financial Secretary to the Treasury, has asked Sir Amyas Morse, who is leading the review, to delay publication. MPs on the All Party-Parliamentary Group on the Loan Charge hit out at the news, demanding a delay to the charge coming into effect in January. George Bull of RSM said the fact publication of the report was not brought forward before Parliament dissolving was “disappointing,” adding that it leaves people affected by the loan charge “with yet further uncertainty that could stretch into Christmas”. Analysis shows that of the 50,000 affected individuals, around 8,000 have already settled with the Revenue and 19,000 have opened discussions over their tax bills.
Pensioners overtaxed £54m
HMRC figures show that £54m had to be repaid to pensioners in the three months to September 30, with the refunds linked to money wrongly claimed on pension withdrawals. The figure marks the highest quarterly figure since pension freedoms were introduced in 2015 and takes HMRCs total repayments for emergency tax on pension withdrawals to £535m. The Office for Tax Simplification has called on HMRC to review this process that sees the tax office incorrectly treat withdrawals from pension pots as the first of regular payments and tax the sum accordingly. Steve Webb, director of policy at Royal London, has urged ministers to tell HMRC to stop this practice “as a matter of urgency,” adding: “It cannot be right that tens of thousands of people have too much tax taken out of their pension and then have the hassle of filling in forms to get back money that is rightfully theirs.”
Daily Mail, Page: 50
TaxPayers’ Alliance: IHT is ‘cruel’
The TaxPayers’ Alliance has called for inheritance tax to be scrapped, saying it is “cruel” and “very unpopular”. With a YouGov poll showing that 59% of respondents believe the levy is “unfair”, TaxPayers’ Alliance campaign manager Duncan Simpson commented that IHT is “very cruel” to grieving families and “understandably, a very, very unpopular tax.” He added: “Fundamentally, you’re being charged after you’ve died on something which you’ve almost certainly paid tax on at least two occasions.”
Think-tank urges freeze on tax and NI thresholds
Proposals from the Fabian Society think-tank would see tax and national insurance thresholds frozen for the next five years to help finance a £45bn strategy aimed at tackling poverty. Its report contains a number of measures, including raising a range of working-age and child benefits by £5 a week as an emergency measure in the first year of the next Government.
Ex-HMRC chief questions CGT tax break
Edward Troup, a former executive chair of HMRC, has called on the next government to scrap the controversial entrepreneurs’ relief applied to capital gains tax. He says the tax break costs the country £2bn a year in lost tax but provides little incentive for entrepreneurship. Responding to a report which suggested a large number of the country’s richest are exploiting the break to pay as little as 10% tax on billions of pounds of capital gains, he said: “This inequity would be almost entirely eliminated by the abolition of entrepreneurs’ relief,” tweeting: “It gives £2bn CGT savings every year to those who have already made their gains and provides no incentive for real entrepreneurship.” He told the Guardian that while there are “lots of things getting in the way of people becoming great entrepreneurs … the fear of tax on future gains is not one.” HMRC data shows that 9,000 people paid just £5.1bn in tax on £33.7bn of capital gains – equating to an average tax rate of 14.8%, with it also revealed that the tax break cost the government £2.2bn in lost taxes in the 2017/18 financial year.
The Guardian, Page: 38
Corbyn vows to take on tax evasion, avoidance and havens
Jeremy Corbyn has vowed to clamp down on accounting practices that help high earners dodge paying their fair share of tax. He said that billionaires’ wealth means they are “in a very strong position to pay a lot more tax,” adding that Labour’s tax plans will affect the richest 5% of people. He vowed that Labour will be “chasing down tax evasion, avoidance and tax havens.” Alex Brummer in the Mail questions Mr Corbyn’s stance on society’s richest, pointing to HMRC figures showing that the wealthiest 1% are responsible for 27% of the taxes which fund vital public services. Elsewhere on the campaign trail, Prime Minister Boris Johnson warned that Labour is planning “a huge list of tax rises,” while Chancellor Sajid Javid will today urge voters to “look at the lessons of history,” insisting they show Labour will “ruin our finances, raise your taxes and saddle the next generation with debt.” Meanwhile, Rishi Sunak, the chief secretary to the Treasury, has suggested Labour securing power would see tax rises and “reckless spending” which would do irreversible damage to the economy. He added: “Their extreme plans would mean economic disaster for Britain – raising taxes to their highest level in peacetime history.” Elsewhere, a YouGov poll of more than 3,000 people for the Times saw 48% say they believe they will pay more tax under a Labour government.
Daily Mirror, Page: 1 Daily Mail, Page: 8, 82 The Independent, Page: 7 The Times, Page: 10
MPs raise loan charge suicide concerns
A study compiled by the Loan Charge All Party Parliamentary Group has warned over the loan charge, saying HMRC’s “ever changing deadlines and inconsistent communications are placing unbearable pressure” on people who are facing large and unexpected tax demands. This comes after research by the MPs found that 40% of people facing the loan charge have seriously considered suicide. With Sir Amyas Morse leading a review of the loan charge, Federation of Small Businesses chairman Mike Cherry commented: “It’s obvious that we now need a complete suspension of the loan charge until this independent review has been concluded and its findings thoroughly assessed. That could easily take a couple of years or more.”
Yorkshire Post, Business, Page: 1
Javid: Tax cuts still possible under new rules
Chancellor Sajid Javid has signalled there could be tax cuts in the Conservative manifesto, saying he could still deliver cuts as he rethinks fiscal rules in a move that will see him take advantage of low interest rates by borrowing an additional £22bn a year for capital projects. Mr Javid, who previously suggested he was considering cuts to inheritance tax, was asked if his new rules allowed room for tax cuts and said: “If we stick to these rules … we can afford to do a lot.” “We can afford some tax cuts. We have worked out the numbers, and we can – within these rules – have tax cuts, investment in infrastructure and balance the day-to-day funding of the economy,” he added. The FT calculates that Mr Javid’s pledge to balance the current budget by 2022/23 would leave just £7bn of headroom for tax cuts.
TaxPayers’ Alliance crunches income tax numbers
Duncan Simpson of the TaxPayers’ Alliance says a “strong” cut to the basic rate of income tax could save the taxpayer £22.5bn by next year. Saying the subject of income tax “needs to be a pretty high priority” for the next government, he suggests that the basic rate could be cut. He says a “moderate“ response would see it cut from 20% to 18%, offering that this would see an impact on receipts of about £9bn by next year, while a “strong” cut that takes the rate to 15% would boost the figure to £22.5bn. Mr Simpson added: “From the Treasury’s position, that would be how much the Treasury is soothing, but to everyone else, that’s how much money they’re saving.” On Labour’s plan to increase corporation tax to around 26%, Mr Simpson said: “I think the policy of increasing corporation tax is generally not advisable.&rdquo ;
Hospital trusts urged to act over pensions tax
NHS trusts have been urged to boost doctors’ pay in order to avoid a winter staffing crisis sparked by pension and tax rules. With tax rules meaning some doctors face tax rates of more than 90% on their earnings, including their pension contributions, if they earn more than £110,000 a year, a number are cutting back on extra shifts. Pauline Philip, NHS Improvement’s director of urgent and emergency care, has warned: “Our most significant shared challenge relates to workforce availability – particularly nursing, and also the continuing impact of pensions taxes on doctors .”
LEGAL NEWS ROUNDUP
Oldest tax avoidance case back in court
A tax avoidance lawsuit which dates back 45 years – making it the oldest case on HMRC’s books – has returned to court. The first tier tax tribunal hearing in London was told that the case, which involves music industry veteran Robert Gaines-Cooper, has gone on for so long that several witnesses are either dead or suffering from dementia. Mr Gaines-Cooper left the UK in 1974 in protest at the Labour government’s 98% top rate of tax and complied strictly with UK tax guidance restricting him to 91 days in the UK per year. However, HMRC still pursued him for tax, claiming his remaining ties to the UK meant he had never officially left the UK tax regime.
Morrisons’ data breach case hits Supreme Court
Morrisons begins its last appeal to the Supreme Court this week after losing a landmark case over the liability of employers in staff data breaches. More than 9,200 Morrisons employees have brought a claim against the firm after sensitive data including salaries and bank details were posted online by one of the firm’s employees – an auditor who held a grudge after facing disciplinary action.
City AM, Page: 6
Contractor in HMRC court win
A judge has sided with a contractor in a court battle which pitted him against HMRC. The tax office was pursuing freelance IT consultant Richard Alcock for around £250,000 in income tax and National Insurance contributions, arguing that he was effectively working as a full-time employee as opposed to a genuine contractor. If that were the case, HMRC could collect additional payments for unpaid tax under IR35. However, the judge ruled that Mr Alcock was “clearly self-employed”
INDUSTRY NEWS ROUNDUP
Law firm creates non-lawyer partners
With law firm Reed Smith creating non-lawyer partners, the Times’ Jonathan Ames looks at alternative business structure licences. He notes that since the Legal Services Act 2007 introduced the model, all the London offices of Deloitte, EY, KPMG and PwC have successfully applied for alternative business structure licences, making them multidisciplinary accountancy and legal firms.
The Times, Page: 36
Reeves would relish committee return
The Times profiles Rachel Reeves, chairwoman of the Business, Energy and Industrial Strategy Committee, as she prepares for the upcoming election. She says she would like to return to leading the committee after the election, a prospect the Times says is unlikely to be welcomed by KPMG, Deloitte, EY and PwC, with Ms Reeves having called for tougher regulation. She voiced concern over potential conflicts of interest between companies doing audit work and non-audit work for the same client and recommended an operational split.
MPs urge audit reform after Thomas Cook collapse
Business Secretary Andrea Leadsom has been criticised for displaying an “extraordinary lack of interest” in travel firm Thomas Cook prior to its collapse, with MPs saying failures in corporate governance, audit and government support contributed to its collapse. Reforms to the audit profession are also being called for by the Business, Energy and Industrial Strategy Committee, which last month described auditor EY’s signing Thomas Cook off as a sustainable business “inconceivable” and flagged a conflict of interest at former auditor PwC. Committee chair Rachel Reeves said it is “a matter of fact that many of the necessary measures on audit, on executive pay, and on corporate governance have been sitting in the Government’s in-tray for months”. “A new Government needs to put this right and ensure the Queen’s Speech in a new Parliament includes the laws needed to make this a reality,” she added. The committee also said they were disappointed that the Government had not pressed ahead with plans to replace accounting regulator the Financial Reporting Council with a new body, the Audit, Reporting and Governance Authority.
Audit shake-up spurs unprecedented level of demand for mid-tier firms
The FT looks at how weakened confidence in Deloitte, PwC, EY and KPMG may open up opportunities for smaller accounting firms, noting proposed reform of the sector and its regulation. The paper’s Tabby Kinder highlights a Competition and Markets Authority call for joint audits, adding that an increasing number of large companies are approaching firms outside the Big Four.
SMEs NEWS ROUNDUP
Small suppliers are paid later
A study by fintech firm Previse shows that small suppliers are paid an average of 30 days later than the largest firms. Analysis of almost 11m invoices totalling £24.6bn shows that suppliers invoicing for less than £10,000 a year did not have their bills processed until 35 days after they were received, while big suppliers’ invoices take just three days to be processed – and are paid quicker once approved. A study by the Federation of Small Businesses (FSB) suggests that late payment causes 50,000 SMES to collapse each year. Mike Cherry, national chairman of the FSB, said: “We need to see all political parties putting this issue front and centre in their manifestos over the weeks ahead. Rapid action is required by whoever takes office later this year. We have to bring this crisis – which costs our economy billions of pounds a year – to a decisive end.”
SMEs see £1m Brexit hit
A poll by distribution company CitySprint shows that almost half of SMEs do not believe the Government has done enough to help businesses prepare for Brexit. Around a fifth have not seen or accessed any Government guidance or support, while just a third have seen the Government’s “Get Ready For Brexit” advertising campaign. Only 38% of the 1,000 smaller firms polled have made specific plans to prepare for Brexit, almost 30% have plans in place specifically for a no-deal scenario and 22% have plans focused on a Brexit extension. Brexit uncertainty, the analysis suggest, has cost SMEs over £1m each in lost revenue and turnover in the past three years. Despite the uncertainty, half of respondents feel more confident than they did 12 months ago and are looking to expand their customer base across the UK in the next year.
The Independent, Page: 52
CBI survey flags SME optimism dip
Figures from the Confederation of British Industry (CBI) show optimism among SME manufacturing firms has dipped at a pace not seen since 2016, with the CBI SME Trends Survey for October showing optimism around exports for the year ahead is also gloomy. The research found that political and economic uncertainty resulting from Brexit has driven falls in both domestic and international orders over Q3. Jobs in the sector dipped by 5%, with a similar rate forecast for Q4. Alpesh Paleja, lead economist at CBI, said: “As a first step to lifting the malaise, the next government must get behind business to deliver on a Brexit deal, particularly one that unlocks a smooth transition period.”
The Independent, Page: 51
EMPLOYMENT NEWS ROUNDUP
Treasury committed to contractor pay reform
With speculation that IR35 rules set out in the draft Finance Bill could be delayed, the Treasury says it “remains committed” to changes to contractor pay rules by April. Charlotte Edwards, head of IR35 at Anderson Anderson and Brown, said it is “clear the Government does want to make these changes.” Dave Smith, tax manager at Meston Reid & Co, says the proposed changes “will have a huge impact” on contractors, and urges them to seek advice on the matter.
The Press and Journal, Page: 31
Living Wage boost
A study by KPMG shows that the number of workers paid below the real Living Wage has fallen to a seven-year low, with 20% of roles now paying below the voluntary figure of £9 an hour – and £10.55 in London. While 12% of full-time jobs pay less than the figure, 38% part-time roles fall short of it. KPMG’s James Stewart said that while Brexit has impacted the jobs market, employers “have taken decisive action to retain and motivate workforces.”
Daily Mirror, Page: 18
Female workers face pension gap
Katherine Denham in City AM looks at discrepancies in regard to gender and employment, noting that while 71.4% of women work, 41% do so part-time compared to 13% of men. She says that while inequalities around pay are well-documented, there is a lesser known knock-on effect: the gender pension gap. Figures from Now Pensions show that women typically have £51,100 saved into a pension at 60, while men have £156,500 on average. PwC‘s Jane Portas notes that the gender pay gap isn’t expected to close until 2050, commenting: “This means that women in the workplace today can still expect a gender pension gap in 30-odd years’ time, so that’s something we need to take action on.”
City AM, Page: 24
Labour would allow employees to dictate working hours
Labour has announced that it would change employment laws to allow workers to dictate to their bosses the hours they work under – a move which business leaders have branded “ineffective and unaffordable”. Workers already have a legal right to request that their hours be changed to better suit their needs, but Labour would see the law reversed, with firms instead having to set out why roles are not suitable for flexible working. Under statutory guidance, employers would be required to create roles on the basis they could be done flexibly. Federation of Small Businesses chairman Mike Cherry commented: “Small firms should not have every employment decision they take vetted by Whitehall.”
The Daily Telegraph, Page: 4 The Sun, Page: 9
CORPORATE NEWS ROUNDUP
Yorkshire insolvencies up in Q3
KPMG ’s quarterly analysis of business insolvency shows that 46 Yorkshire companies went into administration between July and September, up from 41 in Q2. The figure marks a 6% increase on that reported in Q3 2018. In the year to date, 128 Yorkshire businesses have entered administration – an increase on 121 at the same point in 2018.
Yorkshire Post, Page: 15
Gym goers lift spending
A study by Moore shows that spending at the top 15 gym chains rose by 8% last year, with add-ons such as DJs, spas, cafes and live-streaming of classes helping drive up the figure. Spending rose to £1.61bn in 2017/18, up from £1.24bn two years earlier. Moore’s Tim Woodgates said: “Gyms that have quickly reacted to the latest trends tend to be the ones driving growth in the sector.”
Daily Express, Page: 48 The Sun, Page: 24
Mothercare’s UK business to go into administration
Mothercare says it plans to call in administrators from PwC to its UK business, putting 2,500 jobs at risk. The retailer expects its 79 UK stores and online business to be wound down by administrators, saying it has become clear UK retail operations “are not capable of returning to a level of structural profitability and returns that are sustainable”. The firm says administration is a “necessary step in the restructuring and refinancing of the group”. The children’s retailer has already used a CVA, closing 55 UK stores in the past year. Julie Palmer of Begbies Traynor said Mothercare had become “a byword for trouble on the High Street”, demonstrating “the failure of well-established brands to stay afloat”. Considering the climate for retailers in light of Mothercare’s struggles, the Times cites KPMG analysis showing 44 retailers entered administration in the six months to the end of September.
Under Armour accounting probed
US sportswear firm Under Armour has confirmed that the Justice Department and the Securities and Exchange Commission are conducting an investigation into its accounting practices.
The Daily Telegraph, Business, Page: 7 The Times, Page: 43 Financial Times, Page: 15
Mothercare stores to close
Mothercare UK has collapsed and appointed PwC as administrators, with 79 stores to close and more than 2,800 jobs under threat. Although potential franchise partners could still appear, Zelf Hussain, PwC partner and one of the administrators, said: “It’s with real regret that we have to implement a phased closure of all UK stores.” He added that Mothercare “has been hit hard by increasing cost pressures and changes in consumer spending.” Restructuring experts from KPMG were brought in last week to try and save the retailer.
The Daily Telegraph, Business, Page: 3 The Times, Page: 41 The Guardian, Page: 33 Daily Mail, Page: 73 Financial Times The Independent, Page: 23 The I, Page: 43 The Sun, Page: 43 Daily Express, Page: 5 Daily Mirror City AM, Page: 4 Yorkshire Post, Page: 6 BBC News
Wirecard snaps up Beijing-based payments business
Wirecard is to acquire AllScore Payment Services for up to €109m. The FT notes that Wirecard has hired KPMG to review accounting practices after concerns were raised by whistleblowers.
French mogul takes on Sorrell with stake deal
French billionaire Marc Ladreit de Lacharrière’s holding group, Fimalac, has bought a majority stake in digital marketer Jellyfish, which was advised on the transaction by GP Bullhound.
CVAs hit Intu
Hit with a number of CVAs, shopping centre owner Intu has revealed a higher-than-anticipated volume of insolvencies from its occupants, prompting the firm to indicate that it may be pushed to make a cash call or even sell off assets. During the third quarter, the retail landlord agreed 47 long-term leases amounting to £5m in annual rent, compared with 84 leases equalling £15m in annual rent in the same period a year ago, and Intu has forecast like-for-like net rental income for 2019 to be down by around 9% on last year.
The Daily Telegraph, Business, Page: 7 Daily Mail, Page: 81 Daily Mirror, Page: 53 City AM Evening Standard
Corporate liaisons have become dangerous
PwC data shows that last year saw more chief executives removed for ethical lapses than poor company performance for the first time since its survey of large businesses started in 2000.
‘Bear with’ Mothercare, shoppers told
Mothercare customers are facing delays over online transactions which are being honoured despite the retailer collapsing. Administrators from PwC urged customers to “bear with” the company in the interim while they review its assets. PwC said Mothercare branded gift cards are continuing to be accepted, however third party vouchers are no longer being accepted. The retailer added that standard returns are no longer being accepted, with only the statutory returns policy applying.
The Guardian, Page: 25 Daily Mirror
Copycats crowd fashionable sectors
Andy Bounds reflects upon the brewing industry, citing UHY Hacker Young analysis showing that the net number of UK breweries opening last year was eight, compared with 395 in 2017
Recycling Lives founder comes first by offering second chances
The FT profiles founder of Recycling Lives Steve Jackson, winner of the EY UK Entrepreneur of the Year Award for 2019.
Halfords acquires tyre fitting firm McConechys
Halfords has snapped up tyre repair and MOT businesses McConechy’s. PwC advised Halfords while McConechy’s shareholders were advised by Grant Thornton.
The Scotsman, Page: 34
PENSIONS NEWS ROUNDUP
Pension withdrawals dip
Data from HMRC shows that the average amount taken out of a pension pot in a quarter has fallen from £7,600 to £7,250. Steve Webb, director of policy at Royal London, says: “There is evidence people are being savvy about the timing of their withdrawals, spreading them over more than one tax year to reduce their overall tax bill.”
Daily Mail, Page: 50
House price growth slows in October
UK house price growth slowed in October according to the Halifax House Price Index, as uncertainty over Brexit continued to dog the market. House prices were up just 0.9% last month – the lowest growth seen so far this year – as potential buyers hold off making purchases whilst the Brexit saga continues. The 0.9% increase, which follows a 1.1% climb in September, takes the value of the average house to £232,249. Analysis shows prices have climbed by an average of £165 a month this year, with values now climbing at the slowest pace annually since the 0.6% recorded in April 2013.
The Daily Telegraph Daily Mail City AM
ECONOMY NEWS ROUNDUP
Brexit uncertainty hits confidence
A quarterly report from the ICAEW shows that confidence among business professionals hit a decade low due to Brexit uncertainty, political instability and weak growth between July and October. Meanwhile, EY Item Club has warned of slowing economic growth, cutting its estimate for 2020 to 1%, down on the 1.5% it forecast in August. “Even if the UK leaves the EU with a deal on January 31, 2020, significant uncertainties will remain,” its report said.
The Daily Telegraph, Business, Page: 1 The Times, Page: 37 City AM, Page: 9
ECB warned over bond-buying
Analysts have warned European Central Bank president Christine Lagarde that its quantitative easing programme (QE) risks causing significant damage to stock markets. Bank of America Merrill Lynch (BoAML) has warned that prolonged QE will see companies turn to debt, rather than issuing stocks, for their funding needs. BoAML voiced concern over the decline of stock markets, with the number of listed companies falling by around a quarter in the EU over the last decade. BoAML said fewer listings mean the number of companies releasing detailed results would fall, giving investors “a less reliable pulse on the economy”.
Public spending to increase, says think tank
Research from the Resolution Foundation has found that with both Labour and the Conservatives planning big increases in the size of the state, government spending is likely to head back towards levels seen in the 1970s. The Resolution Foundation estimated that if the Conservatives were to maintain current spending levels then public spending as a share of the economy would increase to 41.3% by 2023/24, while under Labour government spending as a share of GDP would rise to 43.3%.
Sales boost for retailers
Data from the British Retail Consortium and KPMG shows that retailers saw their best sales performance since April in October, with total sales up 0.6% on October 2018 and up 0.1% on a like-for-like basis. However, growth was down on the 1.3% recorded in October 2018. KPMG’s Paul Martin commented: “The jury is still out on whether this progress will benefit the retailers’ bottom line.” Helen Dickinson, chief executive of the BRC, said that economic uncertainty means that retailers “will be looking nervously” at the run-up to Christmas. Meanwhile, Barclaycard reports a 1.5% rise in consumer spending last month, with an almost 7% rise in fast food and takeaway sales.
The Daily Telegraph, Business, Page: 8 The Times, Page: 40 The I, Page: 40 Daily Express, Page: 51
Services ‘stagnating’ amid ongoing Brexit uncertainty
The UK services sector came in flat for October, as the continuing Brexit uncertainty slowed demand. A weak start to the third quarter left the IHS Markit and the Chartered Institute of Procurement and Supply’s services purchasing managers’ index (PMI) at 50 last month, up from 49.5 in September on an index where a figure above 50 indicates growth. Chris Williamson, chief business economist at IHS Markit, said: “The underlying business trend remains one of stagnation at best.” The seasonally-adjusted IHS Markit/CIPS all-sector output index rose from 48.8 in September to 49.5 in October.
Daily Mail. Page: 72 The Independent, Page: 51 The Guardian The I, Page: 38 City AM, Page: 6
IFS: Government will break spending rules
The Institute for Fiscal Studies (IFS) expects the next government to break rules on spending due to levels of borrowing, saying the gap between what the Government spends and what it brings in is set to be higher than previously forecast. The IFS expects the deficit to be higher in each of the next five years, exceeding £55bn this year and £50bn next year. While the Office for Budgetary Responsibility in March suggested that the deficit would likely halve over five years, the IFS expects it to remain at around £50bn, meaning the Government would breach a rule which says borrowing should remain below 2% of national income, passing the figure in 2020/21.
Britain falls behind on growth, investment and exports
TUC analysis shows that growth, investment and exports in Britain are lagging behind those in other leading economies. Between Q2 2017 and Q2 2019, the UK has ranked 30th or worse among the Organisation for Economic Co-operation and Development’s (OECD) 36 members in all three categories. In the period, quarterly growth in the UK averaged 1.3% compared to an OECD average of 2.7%, investment fell by 0.2% while it was typically up 3.4% across OECD nations, while UK exports contracted by 2.6% compared with an average of 3.4% growth across the 36 countries.
The Times, Page: 40 The Independent, Page: 50
Brexit and trade wars will hold back economy, BoE warns
Amid the backdrop of global trade tensions, the Bank of England (BoE) has warned that Boris Johnson’s Brexit deal is likely to hold back growth in the UK economy over the next three years. UK national income will be 1% lower by 2022 than originally thought, the BoE said in its quarterly economic statement, most of which due to “weaker global growth, driven by trade protectionism.” The Bank expects the annual pace of growth to rise from around 1% at the end of this year to more than 2% by the end of 2022, but warned that growth over the next three years will be 1% down on its August forecast. Policymakers believe the UK economy grew 0.4% in the three months to September, double their estimate in August. Meanwhile, two external members of the BoE’s Monetary Policy Committee – which sets interest rates – have called for an immediate interest rate cut. Michael Saunders and Jonathan Haskel voted to cut interest rates to 0.5%, from the current rate of 0.75%.
High street sees sales hit
BDO ’s High Street Sales Tracker shows that retailers saw sales climb just 0.7% in October, with sales down 6.45% in the final week of the month. Footfall was down 5.3%. BDO’s Sophie Michael comments: “As retailers continue to trade on paper-thin margins, and their pleas for business rates reform remain ignored, they enter the vital Christmas trading period facing a perfect storm of unfavourable conditions.” Meanwhile, the Telegraph notes the challenging climate in the retail sector, pointing to research from PwC and the Local Data Company which shows the number of shops, pubs and restaurants lying empty is rising at the fastest rate in nearly a decade.
Daily Mail, Page: 18 The I, Page: 47 The Sun, Page: 25 The Daily Telegraph, Page: 11
Tax blow for Trump
The US’ 2nd Circuit Court of Appeals has ruled that Donald Trump cannot invoke presidential immunity to shield his tax returns, with the case stemming from a Manhattan district attorney subpoena issued to Mazars USA.
The Guardian Financial Times, Page: 4
OTHER NEWS ROUNDUP
Builders and contractors kicked from all sides
The FT reflects on the construction sector, with Begbies Traynor’s Julie Palmer warning that a number of firms in the sector could be forced out of business in the next few years.
Electric cars better value after two years
A study by PwC suggests that despite higher upfront costs, some electric cars are cheaper than their petrol equivalents after less than two years because of lower running costs. Looking at six of the most popular models, it was found that they were better value for money after an average of seven years for conventional road users, and about four and a half for owners who drive more.
The Times, Page: 20
Fans face £1,888 footy bill
A report from KPMG and investment firm eToro shows that football fans will spend £1.3bn supporting Premier League teams this season, with the average fan shelling out £1,888 a year on tickets, merchandise, travel, match day programmes and food and drink. Football shirt sales alone are expected to total £23.8m.
Daily Mirror, Page: 22
UK tech listings: Green-eyed present land
The PwC/CBI Insights report shows that venture capitalists funnelled $16bn into European start-ups, $34bn into Asian firms and $57bn into new US businesses in H1 2019.
Revolut tops tech growth rankings
Fintech bank Revolut has taken top place in a ranking of the 50 fastest-growing tech companies in the UK compiled by Deloitte. The study identified the firms with the quickest revenue expansion, placing challenger bank Oaknorth and credit provider Dividebuy second and third respectively. The average revenue growth of all 50 firms was 3,878%, with Deloitte partner Duncan Brown saying this is “nothing short of exceptional” and “testament to the innovation and success enjoyed by the UK’s technology industry”.
City AM, Page: 1
Contact Paul Southward.