News Roundup Tuesday 17th September 2019

NEWS ROUNDUP

TAX NEWS

Labour to strip tax-avoiders of government contracts

Shadow Chancellor John McDonnell has said that a Labour government will not give public sector contracts “to tax avoiders”, telling the Daily Mirror that the party will ensure the likes of Amazon pay their fair share of tax or face losing public sector deals. Mr McDonnell told the paper: “What they have done is use every device not to pay their way,” and when asked if Labour would scrap Amazon’s contracts, he said: “We would have to look at the legislation.” “We would do ­whatever it takes to make sure that companies like Amazon pay their fair share of tax,” he added. Research from the GMB union shows that Amazon Web Services – Amazon’s cloud computing arm – has been awarded taxpayer-funded contracts worth £460m in the past four years, including a £47m deal with HMRC. Amazon last year paid £793m in tax on its UK operation, which had a turnover of £10.9bn.

Daily Mirror, Page: 2

UK’s high-earners pay more tax than the European average

Research from UHY International shows that high-earners in the UK pay 3% more tax than the European average. Individuals earning $250,000 in the UK pay on average $103,721 in tax, compared with $100,398 among European neighbours. At 41.5%, the UK has the ninth highest rate among the 30 countries studied. Mark Giddens, partner at UHY Hacker Young, said: “It is surprising to see that high earners in the UK pay more in tax than in traditionally high-tax economies like France.”

City AM, Page: 3

Costa lobbied ministers over latte levy

The Independent reports that Costa Coffee argued that there was no evidence a 25p environmental “latte levy” – a tax on single-use cups – would work and lobbied the Government before proposals to introduce the tax were scrapped. Greenpeace UK ocean plastics campaigner Fiona Nicholls said it was “galling” the Treasury scrapped plans for a levy on throwaway cups after “obstructive lobbying” from Costa.

The Independent, Page: 3

Opinion: FTT may appeal to voters

Larry Elliott in the Guardian considers Shadow Chancellor John McDonnell’s support for tax on financial transactions that could raise an estimated £7bn a year for the exchequer. He cites Stephen Jones, the chief executive of UK Finance, who has suggested that a financial transaction tax is a “tax on growth that will ultimately hit savers, homeowners and SMEs.” Mr Elliott argues that while the City would be against such a levy, the public would be likely to be more welcoming of it.

The Guardian, Page: 30

FINANCIAL SERVICES NEWS

Financial sector optimism falls

A survey conducted by Lloyds Bank shows that the majority of executives at UK financial institutions are less optimistic about the economic outlook than they were a year ago. Around 60% expect UK economic growth to slow in the next 12 months, while two-thirds expect domestic growth in the coming year to be weaker than in other G7 countries. Some 55% believe growth in the financial services sector will deteriorate in the year ahead, up from 27% in 2018. Although 40% said they expected their own revenue to increase in the next year, this is down from 64% in 2018. More than half of firms polled said they are prepared for Brexit, with almost 60% of those ready for a no-deal with little or no transition period or further extension. Robina Barker Bennett, head of financial institutions at Lloyds, said: “Against a backdrop of ongoing global economic turbulence, it is unsurprising that sentiment among financial institutions towards the sector and the wider economy is lower than in previous years.”

City AM

Liquidity crunches heat up debate over capital buffers

FT analysis of liquidity in the fund industry cites KPMG research from 2018 showing that 80% of UK investment businesses had increased regulatory capital levels since their last internal review process.

Financial Times, FT Fm, Page: 6

CORPORATE NEWS

Restaurant insolvencies climb

Analysis by UHY Hacker Young shows that the number of restaurants collapsing into insolvency has risen by 25% in the last year. Figures show that around 1,410 restaurants went insolvent in the year to the end of June. The firm said that media coverage focusing on troubles faced by big name operators has obscured the problem at thousands of smaller restaurant businesses. Peter Kubik, partner at UHY Hacker Young, said: “Good restaurants and bad have all struggled from over-capacity, weak consumer spending and surging costs.“ He added: “For those businesses that are suffering distress, aggressive management of cash flow will be key in the coming months.” Previous research by UHY Hacker Young found that the UK’s top 100 restaurants made an £82m loss in the last year, down from a pre-tax profit of £102m in the 12 months before.

The Daily Telegraph, Page: 2 Daily Express, Page: 49 The Guardian, Page: 28 The I, Page: 38 Daily Star, Page: 9 City AM, Page: 12

Apple to take on EU in tax fight

Apple will this week go head to head with European Commissioner for Competition Margrethe Vestager in the European Court of Justice over a £11.4bn tax bill that came on the back of Commission ruling that the tax Apple paid on its operations in Ireland was so low it amounted to an unlawful subsidy. Ireland’s Ministry of Finance said it “profoundly disagrees” with the argument put forward by the European Commission, adding that the Commission interfered with its sovereignty by blocking it from offering Apple the deal it did.

The Daily Telegraph, Business, Page: 5

PERSONAL FINANCE NEWS

Twenty-somethings spend a third of wages on rent

A study by property firm Hamptons International shows that the average 21- to 29-year-old now spends 34% of their pre-tax income on private rent. This marks a decline on the 39% average recorded in 2017.

Daily Express, Page: 49 The Sun, Page: 26

EMPLOYMENT NEWS

One in 20 workers get no holiday pay

Research by the Resolution Foundation think-tank suggests that more than a million workers in Britain do not receive any of the holiday pay they are guaranteed by law. The report says as many as one in 20 workers did not receive any holiday pay despite being entitled to at least 28 days a year. It was also found that some workers are unable to calculate whether they are receiving the right level of pay as almost one in 10 do not receive a payslip. HMRC figures show it has identified 200,000 cases of workers not receiving the minimum wage.

The Times, Page: 41 The Guardian, Page: 30

Permanent appointments slip

Callum Gray of Anderson Anderson & Brown looks at Scotland’s recruitment market in a piece for the Press and Journal. He cites a recent report from Royal Bank of Scotland which shows demand for temporary workers increased significantly in July while appointments of permanent staff fell for the first time in more than two-and-a-half years.

The Press and Journal, The Business, Page: 4

ECONOMY NEWS

BCC cuts growth forecast

The British Chambers of Commerce (BCC) has downgraded its forecast for economic growth. It expects the economy to grow by 1.2% this year and 0.8% in 2020 – having previously forecast growth of 1.3% and 1% respectively. Its GDP growth forecast of 1.2% for 2021 remains unchanged. The business group expects business investment to decline by 1.5% this year and by 0.1% in 2020. Its report said: “Relentless Brexit uncertainty and the diversion of resources by many businesses to guard against the chaos of a messy and disorderly Brexit, are expected to limit investment intentions over the forecast period.” Suren Thiru, the head of economics at the BCC, commented: “Businesses have had to switch plans and enact their no-deal planning – that’s going to have a hangover effect into next year.”

The Guardian, Page: 29 Daily Mail, Page: 76 Daily Express, Page: 49 City AM, Page: 2 The Scotsman, Page: 37 Yorkshire Post, Page: 1

Tories in economy warning over Labour plans

The Conservatives have criticised plans put forward by Shadow Chancellor John McDonnell that would see greater trade union rights and workers’ wages set by collective bargaining. James Cleverly, chairman of the Conservative Party, said Mr McDonnell and Labour leader Jeremy Corbyn were “would wreck the economy and scare off vital investment, threatening the jobs of the very people they claim to want to help.”

The Times, Page: 2

Contact Paul Southward.

Paul Southward