News Roundup Wednesday 10th July 2019
News Roundup Wednesday 10th July 2019
Pension tax issue hits hospitals
Hospital services are being hit due to issues centred on NHS pensions, with some senior doctors refusing to work beyond their planned shifts as extra hours push them over a threshold that can prompt large pension tax bills. The issue stems from rules introduced in 2016 that limit the sums that can be paid into pension pots without losing tax relief, with some consultants facing marginal tax rates of up to 100%. Dr Tony Goldstone, a clinical director at Hull University Teaching Hospitals NHS Trust, says: “The stark reality of the pensions taxation is now becoming abundantly clear.” He says some staff can no longer afford to “help prop up services by working additional weekends.”
The Guardian, Page: 1 Financial Times, Page: 2
Spotlight on sin taxes
With Conservative leadership candidate Boris Johnson questioning the effectiveness of sin taxes, Prof Graham MacGregor, chair of Action on Sugar/Action on Salt, says charges like the sugar tax have the potential to tackle the root causes of obesity and other health issues. In a letter to the Guardian, he argues “we should be looking to extend levies to other high sugar, salt and fat products, not halting them.” Elsewhere, the FT looks at Mr Johnson’s comments on sin taxes, noting that the sugar tax on fizzy drinks raised less than half the amount it had been forecast to pull in.
The Guardian, Journal, Page: 6 Financial Times, Page: 22
Administrators in financial dispute
The Times reports that two sets of administrators are locked in a financial dispute stemming from the collapse of London Capital & Finance (LCF). Kirker & Co, which was in April appointed administrator of London Power Corporation – a firm which borrowed money from LCF, says Smith & Williamson, the administrator of London Oil & Gas, “made demand upon the company for a purported inter-company debt”. Directors of London Power Corporation believe “that the accounting records of London Oil & Gas are deficient and do not reflect a number of transactions that took place”.
Failed hotel deal hits investors
The Guardian says investors have been hit by the collapse of a deal that would have seen financier Gavin Woodhouse’s Northern Powerhouse Developments (NPD) buy the Moorland Garden in Devon. Details of the failed deal were contained in documents submitted to the High Court on behalf of creditors to Mr Woodhouse’s businesses, with the entrepreneur last week losing control of three of his companies as a judge ruled his business model appeared to be “thoroughly dishonest”. Phil Duffy, a managing director of Duff & Phelps – which was appointed as an interim manager of the three businesses, said investments used to fund the deposit paid by NPD will have been lost.
The Guardian, Page: 25
Select creditors owed £53m
Creditors of collapsed fashion retailer Select, which include landlords and HMRC, claim to be owed £53.1m as part of the firm’s administration. Documents show claims of more than £2.3m from HMRC, including £1.7m in relation to unpaid VAT.
Daily Express, Page: 49 I, Page: 42
Employment outlook dips
BDO analysis shows Britain’s employment outlook fell again in June, continuing a dip that comes after six years of sustained growth. BDO’s Employment Index, which analyses forward-looking employment intentions, declined by 2.29 points from January to 112.82 points for June. The firm found that the outlook for the labour market at its lowest in more than a year after falling for the second consecutive month. Peter Hemington, a partner at BDO, said: “The glory years of rising UK employment figures could be coming to an end. While the numbers remain in positive territory, growth is slowing.” He added: “There’s no sugar-coating the fear that job prospects will take a hit.”
The Times, Page: 35 I, Page: 43 Daily Express, Page: 49
Pressure on for P2P?
Lucy Burton in the Telegraph considers the climate for the peer-to-peer lending sector after Funding Circle halved its revenue forecast, suggesting growth of 20% where it had previously pointed to a 40% increase. Ms Burton says MPs are monitoring the sector, noting that Kevin Hollinrake, chairman of the parliamentary group on fair business banking, has expressed concern that large banks are responsible for 90% of business loans, suggesting that demand for new borrowing has fallen in recent years due in part to “a lack of trust between banks and SMEs”. Numis economist James Hamilton suggests P2P lenders may welcome an economic downturn as banks “don’t like to do SME lending [during a recession].”
Poor rural connections hit small firms
The Times looks at efforts to improve connections for rural communities blighted by poor internet services, saying that small business owners in such areas may feel increasingly left behind as “everything from commerce to stock management, accountancy and tax returns have moved online.” The Federation of Small Businesses has warned that poor rural broadband “reduces productivity, stifles innovation and restricts the ability of firms to grow and compete in global markets”.
The Times, Page: 42
CBI: No-deal threat sees investment dip
The Confederation of British Industry (CBI) has warned that Brexit uncertainty is dragging on investment, estimating that business spending is set to decline by about 1.3% in 2019, marking the steepest drop since 2009. With the economy growing by 1.5% in 2018, the business lobby group expects GDP growth will ease slightly to 1.4% in 2019, before a slight acceleration to 1.5% in 2020. The CBI’s chief economist, Rain Newton-Smith, said: “For any business it’s hard to take spending decisions now. When the risk of a no-deal Brexit feels very real at the moment, why would you take a big decision now? You would wait and see until the end of October. The main risk, though, is we fall off a cliff of no-deal Brexit.”
I, Page: 40 The Guardian
KPMG lowers growth expectation
KPMG ‘s Economic Outlook report predicts GDP growth will reach 1.4% in 2019, falling to 1.3% in 2020. This is a 0.2% decline since the firm’s previous report, which was published in March. KPMG chief economist Yael Selfin said: “Recent weeks saw the gathering of clouds over the global horizon, with growing talk of a possible recession and a change in tune by major central banks as they gather their depleted arsenal to the rescue. The UK now has to consider the global backdrop a headwind.” Meanwhile, separate KPMG research shows that total funds raised in the UK in the first half of 2019 reached £19.2bn, up 22% on H2 2018. While the number of IPOs dipped compared to H1 2018, funds raised through them rose 4%.
City AM, Page: 3 Yorkshire Post, Page: 17
Surveys raise Q2 concerns
City AM ’s Julian Harris says that the Office for National Statistics’ (ONS) GDP estimate for May, due this week, will offer a clue to whether the economy shrank in the second quarter, saying “so far, the signs are not good.” He notes that the ONS estimated a 0.4% contraction in April and points to private sector business surveys which suggests Q2 will deliver a decline. Mr Harris highlights new EY analysis which predicts a 1.6% drop in business investment in 2019, with growth set to be lower if the Brexit deadline is extended beyond October, as well as a CFO survey from Deloitte which shows finance chiefs are at their most risk-averse since the financial crisis.
City AM, Page: 2
Emissions target a towering task?
Louisa Clarence-Smith in the Times looks at efforts to get owners of skyscrapers to comply with the Government’s commitment to reach net zero carbon emissions by 2050. She cites Jon Barnes, head of buildings and technical services at PwC, who says: “We have to get past the idea that renewable tariffs come at a huge premium, or that commercial tenants don’t care about these issues.” He says some landlords get the business case for clean energy and can act as a catalyst for others, adding: “I’m confident we’ll get to 100% renewable. The question is just how quickly.”
The Times, Page: 36
Will London be Berned like the Swiss?
The FT believes a “Brexit tit-for-tat” on share trading is unlikely, with Olivier Carré of PwC saying the EU “is not very keen to have disruptive market results alongside Brexit.”
Contact Paul Southward