NEWS – TUESDAY 1ST SEPTEMBER 2020
NEWS – TUESDAY 1ST SEPTEMBER 2020
TAX NEWS – TUESDAY 1ST SEPTEMBER 2020
Sunak urged to ‘go for growth’
With Chancellor Rishi Sunak reportedly considering tax increases in an effort to cover the cost of COVID-19 pandemic, the Confederation of British Industry has urged ministers to “go for growth”. In what the Telegraph’s Russell Lynch describes as “a veiled message to the Chancellor over tax”, CBI deputy director-general Josh Hardie said: “However the Government decides to handle debt, one thing is certain – a growing economy backed by investment will make it easier.” “With so much uncertainty ahead with the pandemic and Brexit, now is the time to go for growth,” he added. Mike Cherry, national chairman of the Federation of Small Business, also voiced concern over possible increases in corporation and capital gains taxes, saying: “It’s an approach that would send completely the wrong message to those who are out of work and thinking about starting up their own venture.” Meanwhile, Paul Johnson of the Institute for Fiscal Studies, has said that the Chancellor will have to introduce some “pretty hefty” tax rises “at some point” but told Radio 4’s Today programme: “I think we should be looking probably initially at a couple of years where the Government is supporting the economy and only really when the recovery is fairly clearly underway and the economy is getting back closer to normal will we be looking at tax rises.” Elsewhere, Gerard Lyons, chief economic strategist at Netwealth, suggests that increasing taxes is not needed to bring the deficit down, calling instead for measures to drive growth. Matthew Lynn in the Telegraph argues that while “there is never a good time to tax wealth creation … this is an especially bad moment.”
Tax rises could deter investors
Business leaders have warned that investors could look outside Britain for opportunities if the Chancellor opts to increase corporation tax and capital gains tax, with Rishi Sunak said to be considering reforms to the levies ahead of the next Budget. Sir Martin Sorrell, the founder and former chief executive of WPP, said such moves would “disincentive and push away external investment”, suggesting that business needs “further stimulus not a further depressant or downer”. Richard Tice, Brexit Party chairman and chief executive of property investor Quidnet Capital, has called for pro-growth tax reform that would support UK firms and “provide some incentive for international investors to come to the country”. Julian Jessop, an independent economist, said of the potential tax rethink: “It would backfire partly because it would drive companies overseas and but also because taxes aren’t paid by companies, the y are paid by people – it is not pain free.”
Lamont: Now is not the time for tax hikes
Former Chancellor Norman Lamont believes Rishi Sunak should “put the emphasis on expenditure cuts rather than tax rises” as he looks to balance the books in the wake of the coronavirus crisis, arguing that increased taxes “diminish incentives for enterprise.” Writing in the Daily Mail, Mr Lamont, who warns that economic recovery is not assured, argues that it is not necessary – or desirable – to introduce a drastic rethink on taxes at this point, saying it would risk “choking off” the recovery and hurting businesses at a time when they need support, given the “fragility” of the economy. Mr Lamont quotes Winston Churchill, who once suggested: “For a nation to try and tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handles.”
Whistleblower numbers climb
Analysis by UHY Hacker Young shows that there has been a 10% increase in the number of whistleblowing reports about potential tax evasion, with HMRC receiving 73,000 tip offs in the year to March 31 compared to 66,000 in the previous year. Tighter rules ensuring accountants and other advisers report all possible cases are believed to have contributed to the increase. Sean Glancy of UHY Hacker Young said: “It appears that more people than ever are choosing to report a neighbour, employer or business partner for tax evasion.”
The I, Page: 45 Daily Mail, Page: 67
Tax may be a licence fee alternative
The Guardian reports that the BBC has looked into whether the licence fee could be replaced with a special income tax. The shift would be based on a Swedish model of funding public service broadcasting, with Sweden having replaced its TV licence fee with a special tax, with the ring-fenced levy set at about half the cost of the previous licence.
The Guardian, Page: 17
EMPLOYMENT NEWS – TUESDAY 1ST SEPTEMBER 2020
Worker demand points to ‘asymmetric recovery’
Analysis of positions being taken up suggests that the labour market is undergoing an “asymmetric recovery”, with data from LinkedIn showing that demand for office workers is lagging behind other types of roles. Following the jobs market all but coming to a halt during the coronavirus lockdown, the proportion of workers taking up white-collar roles has fallen behind those joining other sectors despite the gradual return to workplaces. The new job rate for workers in transport and logistics has risen by 18% year-on-year, with new jobs in healthcare up 12% while those in construction are up by 9%. In contrast, new jobs in media are down 17%, with a 9% year-on-year dip in software and IT roles and a decline of almost 10% in the finance and legal jobs rate. The analysis shows that leisure industries have been the hardest hit, with a 31% dip in the rate of new jobs for recreation and travel workers. LinkedIn economist Mariano Mamertino says there is “an asymmetric recovery across industries”, with sectors that offer largely white-collar roles “facing stronger headwinds”.
CORPORATE NEWS – TUESDAY 1ST SEPTEMBER 2020
Energy company moves to offload customers
Robin Hood Energy, a council-owned supplier launched by Nottingham City Council in 2015, is in talks to sell customer accounts after falling into debt and has hired Deloitte to oversee the sale of its book to an unnamed buyer.
The Daily Telegraph, Business, Page: 1
SMEs NEWS – TUESDAY 1ST SEPTEMBER 2020
FSB calls for Eat Out to Help Out extension
The Federation of Small Businesses (FSB) have called on ministers to extend the Eat Out to Help Out scheme, with the scheme offering diners a discount on meals in a bid to encourage people to eat out coming to an end yesterday. FSB chairman Mike Cherry believes the initiative should be extended “to continue the critical support that it is providing for small firms as we enter a period of economic make or break.” He added: “As we enter September with schools reopening and more people going back to their places of work, there are still strong merits to continuing this for one more month.” The FSB has also suggested that the Eat Out to Help Out scheme should be “reactivated” in areas that have gone through local lockdowns.
The Independent The Sun
ECONOMY NEWS – TUESDAY 1ST SEPTEMBER 2020
KPMG in growth warning
KPMG has predicted a 10.3% decline in growth for the UK this year, with a potential decline of 12.6% if a second coronavirus lockdown occurs. The 10.3% estimate compares to a decline of 7.2% it forecast in June. KPMG expects an 8.4% recovery in growth during 2021 if a Brexit deal is struck with the EU by the end of 2020 and a coronavirus vaccine is approved early next year. KPMG’s chief economist Yael Selfin expects the end of the furlough scheme to send unemployment above 9% in the final quarter of 2020, up from the current level of 3.9%. The forecast exceeds the 7.5% predicted by the Bank of England.
The Daily Telegraph, Business, Page: 1 Daily Mail, Page: 67 The Scotsman, Page: 42 The Press and Journal, Page: 31
School return set to boost economy
With schools reopening this week, analysts have said the economy could be set for a £70bn boost, with children returning to the classroom full-time enabling more parents to return to the office. The Centre for Economics and Business Research (CEBR) said that with as many as 5% more employees set to return to their workplaces, GDP could climb by more than 3%, with productivity boosted and the hospitality sector given a lift by workers returning to cafes, sandwich bars, pubs and restaurants. The CEBR says that measured GDP could be 3.3% higher, which equates to roughly £70bn a year.
Contact Paul Southward