News Roundup Wednesday 7th August 2019
News Roundup Wednesday 7th August 2019
Record numbers pay no income tax
Institute of Fiscal Studies (IFS) analysis of HMRC tax records shows that a record number of adults are paying no income tax, with the proportion rising from 38% in 2010 to 43% now. The figures reveal that the top 1% of earners account for 27% of the income tax take. The IFS says relying on such a small group is “risky”, suggesting that any policy that threatened them could have a disproportionate effect on tax and public spending. Robert Joyce, the IFS’ head of income, work and welfare, said: “It creates additional risks if such a large share of your revenues is coming from a small group. Suddenly, the behaviour of that group becomes a particularly big issue for the rest of us.” RSM’s George Bull attributed the increase in people not paying income tax to efforts to remove the lowest paid from contributions, saying an increase in the tax-free personal allowance has led to “a situation where t he tax burden is concentrated among the highest earners”. He added: “I don’t think there is any good reason why we can’t have a much more sophisticated set of tax bands which reflect more accurately the circumstances of different income groups.” The IFS analysis shows that there are just 30 of the 650 parliamentary constituencies where more than 2% of adults are in the top 1% of taxpayers, with 17 of these in London. Researchers found that men make up 83% of the top 1% of income tax payers and 89% of the top 0.1% – who earn more than £650,000 a year.
Sports Direct wins race for Jack Wills
Sports Direct has won the bidding war for retail fashion chain Jack Wills, adding yet another brand to Mike Ashley’s high street empire. Advisers at KPMG said Jack Wills had been put into administration and was immediately sold to Sports Direct for £12.75m in a pre-pack administration. The sale includes all 100 UK and Ireland stores and stock, as well as a distribution centre, along with all employees. Will Wright, partner at KPMG and joint administrator, said: “Jack Wills has a strong brand and proud British heritage, so it is pleasing to have been able to secure this agreement with Sports Direct.”
Financial Times, Page 17 The Guardian, Page: 28 BBC News The Times, Page: 43 The Daily Telegraph, Business, Page: 27 The I, Page: 41 Daily Express, Page: 51 Daily Mirror, Page: 43 Daily Mail, Page: 68-69 The Sun, Page: 43 The Scotsman, Page: 5
Administrator appointed at Titanic shipyard
BDO has been appointed as administrator to Harland and Wolff, the Belfast shipyard where the Titanic was built. The shipyard’s owners had been seeking to sell the business but failed to find a suitable buyer. It is set to file for insolvency today. Unite, the union representing the shipyard’s workers, has called on the Government to save the shipyard by placing it into the hands of the official receiver and underwriting the business.
SVS Securities collapse prompts probe
Stockbroker SVS Securities is to face a regulatory investigation amid “serious concerns” about its business after the City-based broker fell into administration. Administrators at Leonard Curtis have been appointed to take control of the business and are exploring options – including a sale – the Financial Conduct Authority said in a statement.
The Times, Page: 34 City AM
PE investment at 5-year low
Analysis by KPMG shows that private equity investment in the UK has fallen to its lowest level in over five years. A total of 384 deals were completed between January and June 2019, with a combined value of £28.5bn. This marks and a decline of 31% in deal volumes compared to H1 2018, with a 40% dip in deal values. The figures also fall short of the 483 completed deals totalling £31.5bn during the first half of 2014. The number of first-half deals involving private equity in the middle market also fell, from 273 in 2018 to 199 this year, although the total value of these deals increased, hitting £18.4bn compared to £17.69bn last year. Jonathan Boyers at KPMG attributed the slowdown in transactions on “a reticence amongst vendors to bring assets to market,” but added: “The truth is that private equity remain incredibly hungry to invest.” He suggests that it is likely that “most deal decisions” will be “deferred until a Brexit outcome is known”.
Services growth sees recession fears recede
Stronger than expected growth in the services sector means the economy is set to avoid a recession, offering a boost after contractions in the manufacturing and construction sectors. IHS Markit’s purchasing managers’ index (PMI) rose to 51.5, marking the strongest score for the industry since October and an increase on June’s 50.2 on an index in which a score above 50 indicates growth. Combining all sectors the PMI rose to 50.7, up from 49.7 in June. Chris Williamson, chief business economist at IHS Markit, said the improved rate of growth in the service sector is “welcome news” after other sector surveys revealed “the sharpest drop in manufacturing output for seven years and a construction sector that is mired in its deepest downturn for a decade”. He added: “The overall picture is one of an economy that is only just managing to skirt recession,” noting that July’s performance was “among the worst since the height of the global financial crisis in 2009”.
Sales growth down in July
Figures from KPMG and the British Retail Consortium (BRC) show that retail sales growth fell to its lowest level on record last month, hitting 0.3% in July. This was down from a 1.6% increase in July 2018 and represents the lowest rate for July since records began in 1995. While online sales of non-food items rose by 3.7% in July, in-store sales fell by 4.1% and food sales fell by 0.3%. The BRC attributed the month’s weak performance to “the combination of slow real wage growth and Brexit uncertainty”. Paul Martin, head of retail at KPMG said: “Shoppers are notably disengaged overall. The pressure continues to build between online and physical offerings, costs continue to rise and the demands of consumers continue to grow.”
The Times, Page: 36 The Guardian, Page: 28 Daily Express, Page: 51 The I, Page: 39 Yorkshire Post, Page: 7
Contact Paul Southward.