NEWS – THURSDAY 13TH AUGUST 2020

NEWS ROUNDUP

TAX NEWS – THURSDAY 13TH AUGUST 2020

Government consults on rates reform and online sales tax

The Government has issued a call for evidence for a consultation on reform of the business rates system and a new online sales tax. In a statement, the Government said: “Some stakeholders continue to advocate for alternative or complementary systems of taxation to business rates, as highlighted by the Treasury Select Committee’s 2019 report. More recently, COVID-19 and associated public health measures have significantly affected how non-domestic property can be used. COVID-19 has also, in the near-term, increased the use of online shopping.” It continued: “Historical trends in online retail sales, and the more recent increases driven by COVID-19, suggests that while an online sales tax would not replace business rates, it could still provide a sustainable and meaningful revenue source for the Government.”

Tax Scan

Radical Budget needed to lift Britain out of recession, Sunak told

Rishi Sunak has been urged to use his autumn Budget to slash taxes or face long-term economic damage. Lobby groups have called for national insurance cuts, support for retail rents, deregulation and a huge investment in innovation. Mike Cherry, chairman of the Federation of Small Businesses, said: “We need the most probusiness, pro-self-employed Budget ever this autumn, one that lowers the costs of innovating and bringing great goods and services to market and eschews tax rises.” Suren Thiru, head of economics at the British Chambers of Commerce, said measures must include “a cut in employer national insurance contributions and targeted support to help businesses under local lockdowns.”

The Times, Page: 33 The Daily Telegraph, Business, Page: 2

EMPLOYMENT NEWS – THURSDAY 13TH AUGUST 2020

Concern as freelancer numbers nosedive

The Telegraph’s Harry Brennan reports that over a quarter of a million self-employed workers returned to full-time employment between April and July, as the coronavirus crisis “dealt a crushing blow to the freelancer dream.” Andrew Chamberlain of the freelancer trade body IPSE said the “concerning decline” was bad news for the economy. The economic impact of coronavirus combined with Government policies that favoured employees has created “the perfect storm,” he said, adding that a “nimble and innovative” workforce could help the nation recover from the economic malaise. “We need these entrepreneurial workers to help companies grow and then leave early so businesses have funds to reinvest in themselves.”

The Daily Telegraph

PwC chair says some staff wary of returning to offices

Chair and senior partner of PwC UK, Kevin Ellis, has told City AM’s The City View podcast that some workers remained fearful about returning to the office. He commented: “When people have come into the office and I have chatted to them they have said they have got used to working from home, they were more nervous about coming in, but now they have come in they have enjoyed it… and they have also said they will be back more often,” after the firm moved 6,000 of its 22,000 staff back to the office since lockdown restrictions were lifted.

City AM

CORPORATE NEWS – THURSDAY 13TH AUGUST 2020

Restaurants and bars struggle to get back on their feet

The UK’s largest restaurant and pub chains suffered a 50% slump in sales in July as hospitality businesses reopened for the first time after lockdown. Mark Sheehan, managing director of adviser Coffer Corporate Leisure, which produces a business tracker alongside consultancy CGA and accountant RSM, said: “Despite the fanfare over the July 4 reopening date for hospitality, in reality trade is recovering slowly. The restaurant sector, already under severe pressure pre-Covid has been decimated by the lockdown. The pub sector has proven to be more resilient as expected and is now bouncing back strongly in many areas.” Elsewhere, the FT cites Russell Nathan, head of hospitality at HW Fisher, who says although the Government’s discount eating out scheme offered “good money” to struggling businesses, many said customers were spending less per head: “There is a limit to what people will spend even with t he £10 voucher. It is attracting a lot of young people who don’t spend as much as older people.”

The Daily Telegraph, Business, Page: 3 Financial Times, Page: 10

Profit warnings up 139%

Research from EY shows companies issued 165 profit warnings between April and June, with 84% citing the pandemic. The figure marked a 139% increase on the same time a year ago.

Daily Mirror, Page: 6

Companies desperate for cash must be better corporate citizens

ShareAction CEO Catherine Howarth says private and individual investors “have a mandate to insist on companies adopting more ambitious social and environmental standards” in a post-Covid world.

Financial Times

PROPERTY NEWS – THURSDAY 13TH AUGUST 2020

UK house prices move out of negative territory

UK house prices moved out of negative territory last month for the first time since lockdown began as the Government’s stamp duty holiday motivated buyers. However, the bounce is expected to be short-lived, as Government support schemes wind down in the winter. Simon Rubinsohn, of the Royal Institution of Chartered Surveyors, said: “There remains rather more caution about the medium term outlook with the macro environment, job losses and the ending or tapering of government support measures for the sector expected to take their toll. Significantly, some contributors are now even referencing the possibility of a boom followed by a bust.”

The Times, Page: 34 The Daily Telegraph, Business, Page: 3 Daily Express, Page: 22 Daily Star, Page: 2

WEALTH MANAGEMENT NEWS – THURSDAY 13TH AUGUST 2020

Property funds at risk of liquidation

Investment analysts have warned that proposed rules requiring investors to give notice to receive their cash from property funds are adding to a perfect storm in the sector. Specialists predict the notice period proposed by the Financial Conduct Authority, which could be up to 180 days, combined with the economic slump, already suspended portfolios, and the uncertain fate of many office and High Street buildings, could result in the end of open-ended property funds. “The perfect storm is here for these funds” said Tom Becket of Psigma.

FT Adviser

PENSIONS NEWS – THURSDAY 13TH AUGUST 2020

Record values make DB transfers ‘tempting’ option

Figures from XPS Pensions show defined benefit transfer values reached record highs in July, with the number of savers making a transfer returning to pre-lockdown levels. The consultancy said its transfer value index reached an all-time high of £261,500 on July 30, compared with £259,700 at the end of June.

FT Adviser

ECONOMY NEWS – THURSDAY 13TH AUGUST 2020

UK suffers deepest recession on record

The UK economy shrunk by a fifth and fell into its deepest recession on record in the second quarter. Official data released on Wednesday confirmed a 20.4% fall in GDP quarter on quarter, a decline double that of the US. The contraction followed a 2.2% dip in the first quarter, sending the country into a technical recession. In Germany, GDP fell 11.9% in the first half, Italy shrank 12.4%, France 13.8% while Spain suffered the worst second-quarter slump of any leading economy of 18.5%. Responding to the figures, Rishi Sunak, the Chancellor, said: “Hundreds of thousands of people have already lost their jobs, and sadly in the coming months many more will. But while there are difficult choices to be made ahead, we will get through this, and I can assure people that nobody will be left without hope or opportunity.” Samuel Tombs, of Pantheon Macroeconomics, said the length of the lockdown in the second quarter worsened the performance, a view shared by former Treasury minister Lord O’Neill, who added: “It’s not as though our system-wide shutdown resulted in better health outcomes.”

Financial Times, Page: 1 The Daily Telegraph, Business, Page: 1 The Times, Page: 10 The I, Page: 9 The Guardian, Page: 8 The Scotsman, Page: 11

Productivity crash worse than 3-day week

Figures from the Office for National Statistics (ONS) show productivity fell at the fastest pace on record during lockdown, driven by social distancing on building sites and production lines and difficulties in organising work from home arrangements. Productivity was even lower than when the three-day week was temporarily introduced by Ted Heath in 1974. However, FTSE 100 stocks rose to a three-week high on Wednesday on the back of “encouraging” June figures, which showed the economy grew 8.7% as lockdown measures were lifted.

Daily Mail, Page: 73 The Daily Telegraph, Business, Page: 7 The Scotsman, Page: 38 Yorkshire Post, Business, Page: 5

Contact Paul Southward

Paul Southward