NEWS – TUESSDAY 19TH JANUARY 2021

NEWS ROUNDUP

TAX NEWS – TUESSDAY 19TH JANUARY 2021

Treasury minister downplays need for tax rises

Jesse Norman, Financial Secretary to the Treasury, has downplayed the need for immediate tax rises to help balance the nation’s books following the coronavirus crisis. Answering questions from the Commons Treasury Committee, he suggested a swift economic recovery from a recession brought about by the pandemic could see ministers avoid increasing taxes in response to record levels of government borrowing. He was speaking in the wake of press reports over the weekend which suggested Chancellor Rishi Sunak could be set to announce tax increases in his March 3 budget. Mr Norman said it is “not absolutely obvious” that taxes will need to be raised, saying there may be a “somewhat delayed but nevertheless very pronounced bounce” and pointing to “features of the economy which would suggest that could be quite significant”. Mr Norman said Mr Sunak is “looking to build strong, sustainable public finances over the longer term”, adding this this “seems to me to be a judicious recognition that some taxation could impede growth, could damage our recovery”. Mel Stride, chair of the Treasury Committee, said: “I take away from this that it’s not a done deal that there will be tax rises.” Meanwhile, Mr Norman also revealed that policymakers are “still reflecting on” the possibility of an online sales tax.

The Daily Telegraph, Business, Page: 1 The Times, Page: 12 Daily Mail, Page: 8 The Guardian, Page: 28 The Independent Daily Star, Page: 5

Targeted tax rises may not hit the economy

Philip Aldrick in the Times considers reports that the Chancellor is planning tax rises in his March budget, with corporation tax and council tax reforms among those being considered. He notes a backlash that saw the Institute for Economic Affairs say hiking rates would slow economic growth, but asks if that really is the case. Mr Aldrick argues that rises don’t have to slow the economy if they are carefully targeted. He says levy reform that squeezes spending should be avoided, with increased VAT or income tax likely to stall the recovery by taking money out of people’s pockets, while higher business taxes would hit vital investment. He argues that while tax rises “in general are contractionary, tax policy does not have to be.”

The Times, Page: 37

HMRC urged to consider deadline shift

The Times’ David Byers has suggested HMRC should push back the deadline for self-assessment tax returns, warning that as the Revenue “groans under the weight of applications from workers for coronavirus support”, it is set for further pressure, with 5.4m taxpayers yet to file and the January 31 deadline fast approaching. He says that “with danger signs flashing”, HMRC should take the unprecedented decision to move the entire tax return deadline back two months, arguing that a brief delay would provide respite to HMRC staff, accountancy firms and millions of self-employed people.

The Times, Page: 24

Hambro sceptical over ‘one-off’ wealth tax

Writing in the Telegraph, Jamie Hambro, chairman of wealth manager James Hambro & Partners, reflects on suggestions that a wealth tax may help foot the UK’s coronavirus bill. He notes that the Wealth Tax Commission has calculated that a one-off wealth tax on all individual wealth above £500,000 and charged at 1% a year for five years would raise £260bn, commenting: “I have some difficulty with thinking of a wealth tax as a one-off if it is repeated for five consecutive years”, adding a doubt that it would end after five years. Mr Hambro says any tax reform must be accompanied by a reduction in government expenditure.

The Daily Telegraph

Homing in on property taxes

Russell Lynch in the Telegraph looks at potential reform of property taxes, arguing that stamp duty “needs toppling in quick time”, suggesting that “any tax levied on how much something changes hands, rather than its value, is by definition flawed.” Among options he suggests the Chancellor could consider is a land value tax, targeting the land which a property sits on.

The Daily Telegraph, Business, Page; 2

REGULATION NEWS – TUESSDAY 19TH JANUARY 2021

Kingman questions council audit watchdog veto

Sir John Kingman has questioned the Government’s decision to veto a proposal calling for a watchdog to monitor auditing in local councils. Sir John, who raised serious concerns about the adequacy of the regulation of council audits in his wider review into the Financial Reporting Council (FRC) in December 2018, has written to the Public Accounts Committee to voice concern over the decision to reject the proposal, calling it “perplexing”. In his letter to committee chairwoman Meg Hillier, Sir John said: “No compelling reason was given, other than a dislike of setting up new bodies.” He says the fact ministers commissioned a thorough report and agree that its findings are deeply concerning yet are not persuaded to implement its central recommendation “does not seem very satisfactory.” The letter was copied to Sir Tom Scholar, permanent secretary at the Treasury, and Jeremy Pocklington, his peer at the Ministry of Housing, Communities and Local Government. Meanwhile, Patrick Hosking in the Times, says that while the private sector is increasingly aware of a need for strong audits and is starting to support reform, “progress in the public sector is slower, if not imperceptible.” He goes on to warn that the “scope for dodgy accounting” in town halls seems even greater than in FTSE 100 companies. Listing areas of concern, he highlights complexity of council accounts and a lack of accountability, with six organisations sharing responsibility for overseeing council audits, including the FRC and ICAEW.

The Times, Page: 34 The Times, Page: 37

PROPERTY NEWS – TUESSDAY 19TH JANUARY 2021

House prices slip

Rightmove says average property prices have fallen nearly £3,000 in the last month, with the 0.9% dip coming as sellers looks to attract buyers hoping to snap up a home ahead of the end of the stamp duty holiday on March 31. The report shows that annual growth has slowed to 3.3%, down from the 6.6% year-on-year increase recorded a month ago. The analysis also reveals that while prices have declined slightly, the number of buyers contacting agents between and January 2 and January 12 was up by 12% and sales agreed were up by 9% compared with the same period last year. Rightmove director of property data, Tim Bannister, said the tax savings brought about by the stamp duty cut are an “added incentive” for movers, while also warning that there are still “a huge number” of sales agreed in 2020 that are “stuck in the processing logjam” and awaiting completion.

Daily Mail Daily Express City AM Sky News Reuters

Ending stamp duty break will see 44k fewer new homes

There will be 44,000 fewer new homes built if the Government does not extend the stamp duty holiday, research suggests. A property slump will take hold after the tax break ends on March 31, according to consultant Capital Economics – forcing housebuilders to scale back their plans and adding to the housing crisis which has locked a generation out of ownership. Capital Economics predicts new build starts will drop from a total of 152,000 in 2019 to 130,000 in both 2021 and 2022. This would be equivalent to 44,000 lost homes over the next two years, helping to thwart the Government’s target for 300,000 properties to be built per year. In 2020, housing starts dropped by 30,000 due to the pandemic.

The Daily Telegraph

Stamp duty holiday drives BTL company surge

Analysis from estate agents Hamptons International shows that landlords formed 41,700 new buy-to-let limited companies in 2020, a 23% increase on 2019’s total. The Telegraph’s Melissa Lawford says the increase has been driven by “punitive” buy-to-let tax changes and an opportunity created by the stamp duty holiday. She says that many property investors hold their assets in companies as it is more tax efficient and helps mitigate the effects of a tax squeeze on landlords. More landlords, she adds, have seemingly opted to place assets in limited companies during the stamp duty holiday as the tax break reduced the cost of moving a property into a company structure.

The Daily Telegraph

CORPORATE NEWS – TUESSDAY 19TH JANUARY 2021

CBI: Firms need more support and no tax hikes

The CBI has told Rishi Sunak that businesses under pressure amid the coronavirus crisis cannot afford to wait for the March budget to secure more financial help from the Government. Director-general Tony Danker has urged the Chancellor to extend the furlough scheme, defer VAT payments and extend the business rates holiday for at least another three months. Mr Danker, who warned that business resilience “has hit a sobering new low”, also urged Mr Sunak not to raise corporate taxes as he looks to tackle the budget deficit, saying: “It would be wrong to raise business taxes when we don’t have a recovery. It’s as simple as that”. The CBI is calling for an immediate £7.6bn injection from the Treasury as part of a £17.9bn package designed to support the economy through lockdown and stimulate investment over the coming year.

The Guardian Financial Times, Page: 2 Daily Express, Page: 46 Daily Mirror, Page: 45

EMPLOYMENT NEWS – TUESSDAY 19TH JANUARY 2021

Applications dip, vacancies increase

New figures show that the number of people applying for jobs in December was the lowest it had been in five years. The analysis by jobs website Broadbean Technology shows that 2.2m job applications were made last month, down 34% on December 2019. With the number of applications dipping despite the unemployment rate being pushed up by the coronavirus crisis, Broadbean says the extension of the government’s furlough scheme may be a factor. The report also highlights that vacancies in the first week of January were up 4% compared to the middle of December. Broadbean Technology managing director Alex Fourlis welcomed the uptick in vacancies and said the progress of the coronavirus vaccine programme and the fact many employers are better able to facilitate remote working means the firm is “quietly confident that the positivity we have seen so far will continue.”

Daily Mail

UK workplace sexual harassment rules not enforced say researchers

Campaigners have identified a gap in enforcement of sexual harassment rules, with regulation outside the remit of the Health and Safety Executive (HSE) and the Equality and Human Rights Commission lacking enforcement powers.

Financial Times

ECONOMY NEWS – TUESSDAY 19TH JANUARY 2021

PM: Vaccine is the best way out of recession

Boris Johnson has told business leaders that efficient delivery of the coronavirus vaccine offers Britain the best opportunity for an economic recovery in the wake of the pandemic. Chairing the first meeting of a business council designed to coordinate the Government’s economic response to the coronavirus crisis, the Prime Minister told bosses from thirty of the country’s biggest companies that it was important for ministers and businesses to work together to rebuild the economy. He told the executives that his Government will support job creation, upgrade infrastructure and launch a “green industrial revolution” that will help the UK “build back better”. Chancellor Rishi Sunak told the Build Back Better Council effectively distributing the vaccine is currently the most important economic policy, saying the inoculation programme will help to build a platform for a strong economic recovery in the second half of the year.

The Guardian The Daily Telegraph Financial Times

OTHER NEWS – TUESSDAY 19TH JANUARY 2021

Cost cut could spark sales surge for electric cars

A study by Deloitte shows that 29% of drivers would buy an electric car if it was priced below £20,000, while 13% would do so if prices fell to £10,000 or less. Jamie Hamilton, Deloitte’s head of electric vehicles, said: “Many UK drivers are poised to switch to electric but remain cost conscious.”

The Daily Telegraph, Business, Page: 4

Accountant scoops lottery win

Accountant Malcolm Haines has won a £1m prize on the National Lottery. He said yesterday: “I’m an accountant so used to seeing lots of noughts but when they are your noughts it’s a completely different matter.”

The I, Page: 24 Daily Express, Page: 23

Test and Trace consultants cost £900,000 a day

The Commons Public Accounts Committee has been told that the NHS Test and Trace system is spending nearly £1m a day on external management consultants. MPs were told that the service is relying on about 900 external consultants from Deloitte, with these being paid an average of £1,000 a day. David Williams, Second Permanent Secretary at the Department of Health and Social Care, was asked if he was confident no “super-profits” were being made out of test and trace, to which he responded: “I see no evidence that causes me concern.”

The Daily Telegraph, Page: 4 The Times, Page: 9 Daily Mail, Page: 8 The I, Page: 8 Financial Times, Page: 3 Daily Mirror, Page: 6

Well, it causes concern to me, this is being paid out of our taxes, and I think it’s about time the government became more accountable for its actions over the last 11 months!

Contact Paul Southward

Paul Southward