NEWS – TUESDAY 2ND MARCH 2021
NEWS – TUESDAY 2ND MARCH 2021
TAX NEWS – TUESDAY 2ND MARCH 2021
Dodds suggests Labour would back rise in corporation tax
Shadow Chancellor Anneliese Dodds has indicated that Labour would back a gradual increase in corporation tax across this parliament, saying that while the party would not back an immediate hike in tomorrow’s Budget it is open-minded about future increases. Ms Dodds, writing in the Guardian, says it is “hard to find a serious economist who believes that immediate tax rises would achieve anything other than damaging Britain’s recovery”, but says there is “a clear long-term case for rises in the rate of corporation tax”. She also said Labour would support reforms to tighten corporation tax loopholes. The Guardian reports that Labour would not automatically oppose the freezing of the income tax threshold. Meanwhile, Ms Dodds, in a speech to Bloomberg, said Labour would be “guided by the economic situation” on when taxes should be increased. She pointed to “tremendous anomalies” in the tax system, noting a “big gulf ” in the way high street stores and online retailers are taxed.
The Guardian, Page: 1 The Times, Page: 13 The I, Page: 8 Daily Mirror BBC News
Hague: Some taxes have to go up
Former Conservative leader Lord Hague has said that some business and personal taxes “have to go up” to keep the nation’s debt burden sustainable, arguing that those who oppose increases to taxes in the current climate are buying into “dangerous illusions”. Writing in the Telegraph, Lord Hague says: “It pains me to say, after spending much of my life arguing for lower taxes, that we have reached the point where at least some business and personal taxes have to go up”. Pointing to “press briefings and speculation”, Lord Hague says the Chancellor is set to use his Budget to announce tax rises while adding to the “colossal support he has given to households and businesses since the pandemic began”. Saying that while there are “certainly circumstances” where lower tax rates generate more revenue, this may not be the case with the levies Rishi Sunak is reportedly considering raising. Lord Hague argues: “If the Chancellor chooses his measures judiciously, he can certainly raise more revenue with some higher tax rates.”
Government urged to keep SITR
Ministers are being urged to save Social Investment Tax Relief (SITR), a relief that helps social enterprises, community groups and charities deliver essential services. Big Society Capital is urging policymakers to protect SITR and give key organisations within the sector the power to reform it. The group has written to Jesse Norman, the Financial Secretary to the Treasury, outlining the reasons to keep SITR in place. They argue that the tax relief will help the Government fulfil its “levelling up” agenda by ensuring areas worst hit by the pandemic have access to funding. A poll shows that two-thirds of people support tax relief for businesses that aim to improve society and the environment.
Online sales tax may hit consumers
Connor Coombe-Whitlock in the Express considers the merits of an online sales tax, citing comments from KPMG’s Melissa Geiger who suggests that it is probable that such a levy “would be passed onto consumers rather than being borne by the retailer.” Suggesting that the Chancellor may see an online sales tax as a way to rejuvenate high street retail, Ms Geiger says it is “likely that something more comprehensive will be needed to help the high street.” Mr Coombe-Whitlock also notes the potential impact on smaller online retailers, with Beverley Wakefield of Vibrant Accountancy saying she is “concerned that small business owners will be penalised in new tax measures.”
Firms fear taxing time and Budget battering
Matthew Lynn in the Telegraph says most businesses are expecting a “battering” in the Budget, pointing to speculation over an increase in corporation tax, an online sales tax and a rise in capital gains tax. He suggests that among the possible tax rises, the Chancellor should “at least throw a few morsels in the direction of business”, proposing increased incentives for investment and a “radical simplification that sweeps aside dozens of fiddly reliefs and allowances”. Mr Lynn, questioning the need for tax increases, says corporate taxes are “always passed on to individuals one way or another, it is just a question of how and when”.
Fuel duty frozen but stealth taxes on the way
The Times says that while the Budget will see fuel duty frozen for the 10th year in a row, the Chancellor is expected to announce “a series of stealth taxes”, with the basic rate and higher rate thresholds for income tax set to be frozen at £12,500 and £50,000 respectively, with the lifetime allowance for pension savings also in line to be frozen.
The Times, Page: 13 The I, Page: 9
Chancellor may plant the seed for increases
Nimesh Shah of Blick Rothenberg suggests the Chancellor could use tomorrow’s Budget to “plant the seed” for breaking a manifesto promise not to increase income tax, national insurance and VAT, citing the “unprecedented times”. He also suggests a temporary windfall tax taking in income and capital gains “may be tested”.
The Times, Page: 13 The I, Page: 9
Sunak abandons the goal of low corporate taxes
Reflecting on a possible rise in corporation tax, the FT suggests an increase for a year or two could serve as “a windfall tax on the businesses that thrived in the pandemic”.
REGULATION NEWS – TUESDAY 2ND MARCH 2021
FRC delivers second Carillion audit report
The Financial Reporting Council (FRC) has delivered a second report into KPMG‘s audit work of collapsed construction firm Carillion, with the latest report covering the audit of Carillion’s financial statements for the year ended December 31, 2013. The FRC previously delivered findings on audit work between 2014 and 2017. The report will be published once KPMG has reviewed the findings. The regulator will then decide on appropriate sanctions
The Times, Page: 42
SMEs NEWS – TUESDAY 2ND MARCH 2021
£520m support for small businesses
Rishi Sunak is set to announce a £520m scheme that will help 130,000 UK SMEs access management training, technology advice and discounted software. The Help to Grow scheme will offer two streams, with the digital strand an online service offering free advice on how companies can improve their digital capability as well as vouchers for discounts on approved tech, while the management portion will provide subsidised training to “enhance the skills of leaders” in areas such as financial management and marketing. The Federation of Small Businesses welcomed the news but warned: “We cannot allow poor infrastructure through a lack of broadband or 5G to prevent small firms from getting a foothold on to important schemes like this.” The Chancellor said: “Brilliant small and medium-sized enterprises are the backbone of our economy – creating jobs and prosperity.” He added: “Help to Grow will ensure they are embracing t he latest technology and management training, fuelling our plan for jobs by boosting productivity.”
The Times, Page: 36 The Guardian, Page: 19 Daily Mail, Page: 8 The Independent, Page: 45 Daily Express, Page: 9
CORPORATE NEWS – TUESDAY 2ND MARCH 2021
Greensill funds frozen
Credit Suisse has suspended funds investing in Greensill Capital’s products, freezing $10bn worth of funds linked to Greensill, while SoftBank has substantially written down its $1.5bn investment in the lender. Greensill has appointed Grant Thornton to oversee a possible restructuring, saying it “could file for insolvency”. It is believed to be in talks over a $100m sale of its operating business to Apollo Global Management.
The Times, Page: 33 The Daily Telegraph, Business, Page: 8
Halfords reviewing tax perk payback
Halfords is to pay back £10.7m in furlough scheme cash to the Government after enjoying better than expected sales at the start of this year, however it has yet to confirm whether it will repay business rates relief, having previously said the issue was “under review”.
Daily Express, Page: 47 Sky News
Police probe Barcelona corruption
Barcelona CEO Óscar Grau is among four people who have been arrested as part of an investigation into an alleged misuse of funds and corruption at the Spanish football club. It is noted that PwC was last year employed to look into issues following an internal investigation.
The Guardian, Page: 45 Daily Mail, Page: 79 The Daily Telegraph, Sport, Page: 5 Financial Times, Page: 8
The Telegraph looks at the market for anti-Brexit newspaper The New European, with KPMG’s David Elms noting that it could “carve out a corner of the market and make a small profit” due to a low cost base and “niche but quite loyal” audience, while musing on how it could “increase the top line”.
The Daily Telegraph, Page: 4
PROPERTY NEWS – TUESDAY 2ND MARCH 2021
Housing market faces pressure
With Bank of England data showing borrowers took on an extra £5.2bn of debt for home purchases in January, Howard Archer, chief economic advisor to the EY Item Club, has warned that support to the housing market coming from the rise in the stamp duty threshold “has recently started to wane”. With it reported the Chancellor could extend the stamp duty holiday until June, Mr Archer says this “would likely provide near-term support to housing market activity and prices” but adds that the housing market is “likely to come under mounting pressure over the coming months”, saying the recent strengthening in the market “has been disproportionate given the economy’s contraction over 2020 and rising unemployment.”
Deloitte base sold
A consortium led by Hong Kong based real estate company Wing Tai Properties has agreed a £255m deal for London’s Athene Place, one of Deloitte’s UK bases. Henderson Park acquired the office in 2018 after Deloitte vacated the building, refurbishing the site and agreeing a pre-let back to Deloitte.
EMPLOYMENT NEWS – TUESDAY 2ND MARCH 2021
CIPD: Apprenticeships levy ‘has failed on every measure’
The Chartered Institute of Personnel and Development (CIPD) says employer investment in training has fallen since the introduction of an apprenticeship levy in 2017, with a decline in apprenticeship starts and fewer going to young people. The HR industry body says total apprenticeship starts have fallen from 494,000 in 2016/17 to 322,500 in 2019/20, with the number of apprenticeships going to under-19s falling from 122,800 to 76,300 in the period. Peter Cheese, chief executive of the CIPD, said: “On all key measures the apprenticeship levy has failed and is even acting to constrain firms’ investment in apprenticeships and skills more broadly.” He warned: “Without reform it will act as a handbrake on employer investment in skills, damaging firms’ ability to recover from the pandemic.”
Pandemic stalls women’s workplace progress
A report from PwC shows that the coronavirus crisis has halted and reversed years of women’s progress in the workplace, with women more likely to lose their jobs or be furloughed. The report says female-dominated industries have the highest share of furloughed jobs, with more than half of those on the scheme women, even though only 48% of the workforce is female. The report says the pandemic has halted nine years of “consistent gains towards women’s economic empowerment”, with PwC’s Laura Hinton saying the findings reveal the “very real” impact of the pandemic on women.
Daily Mail, Page: 12
Office return off the agenda?
Hugo Rifkind in the Times considers whether the end of restrictions will see a broad return to offices, noting that a number of large UK firms, including PwC, are looking into moving toward hybrid working. On what a shift toward remote work could mean for cities, he cites PwC analysis suggesting the population of London could decline by up 300,000 this year.
FINANCIAL SERVICES NEWS – TUESDAY 2ND MARCH 2021
43% of finance firms move jobs to the EU
A report from EY shows that 7,600 jobs in the financial sector have moved abroad because of Brexit, with 100 relocated since October. In total, 43% of businesses in the sector have moved or plan to move some of their operations or staff to the EU. EY found that Dublin and Luxembourg were the most popular alternatives to Britain. The firm’s Omar Ali commented: “Financial services firms across Europe have a number of chapters still to write before they can close the book on Brexit.” Meanwhile, more than a quarter of firms polled by EY said that Brexit was having a negative impact on their business.
The Times The Guardian, Page: 33
ECONOMY NEWS – TUESDAY 2ND MARCH 2021
Consumer credit falls in January
Bank of England data released yesterday shows that consumer borrowing fell at its fastest pace since May 2020 in January. The £2.4bn decline in unsecured lending to consumers was the steepest fall since the £4.5bn recorded in May 2020. January’s total takes the year-on-year fall to 8.9%, the biggest decline since monthly records began. The figures show that British lenders approved almost 99,000 mortgages in January, down from 102,800 in December. British households paid back £2.4bn of borrowing on credit cards, personal loans and overdrafts in the first month of 2021. The total amount outstanding on credit cards and loans shrank to £199.4bn, falling below £200bn for the first time since April 2017.
The Daily Telegraph The Guardian City AM
Manufacturing optimism up
The IHS Markit/CIPS Purchasing Managers’ Index for February increased to 55.1 in February from 54.1 a month earlier, with UK manufacturing activity returning to its highest levels since the start of the most recent lockdown. The index, where a reading above 50 signifies growth, shows that optimism rose to a 77-month high last month. Despite this, 58% of companies reported longer delivery times from suppliers. Rob Dobson, director at IHS Markit, commented: “The UK manufacturing sector was again hit by supply chain issues, COVID-19 restrictions, stalling exports, input shortages and rising cost pressures in February.” He added: “Look past the headline PMI and the survey reveals near stagnant production, widespread shipping and port delays and confusion following the end of the Brexit transition period.”
The Guardian City AM
OTHER NEWS – TUESDAY 2ND MARCH 2021
Ministers urged to invest in schools
A letter to the Times says disruption to education bought about by the coronavirus crisis means young people, especially those from low income or disadvantaged backgrounds, are “less equipped to demonstrate their potential and gain access to the opportunities they deserve.” Signatories including Deloitte chair Nick Owen urge the Chancellor to set out a national recovery plan for young people in the Budget, calling for extra investment in schools serving the hardest-hit communities for at least five years as a first step.
Contact Paul Southward