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Chancellor unveils plans for business-Government forum
NewsMaster Bulletin - 7 May 2008
A new business-Government working group will be established to examine the competitiveness of the corporate tax regime, the Chancellor has announced.
Speaking at a conference on ‘New Financial Frontiers,’ Alistair Darling revealed his intention to develop a tax forum to look at the long-term challenges facing the UK tax system.
The group will discuss ways in which the tax system can provide the long-term certainty that multinational companies need in the face of increased competitiveness and other global challenges facing both business and Government.
Outlining plans for the proposed new working group, Darling said: ‘Tax is one element of the strong business environment which makes the UK competitive at a global level. The UK corporation tax rate is one of the lowest in the G7.
‘I am determined that we do what is necessary to remain one of the world's best places to do business - and critically to ensure that we maintain our strong and resilient economy and our position as the world's leading financial centre,’ he continued.
Richard Lambert, Director-General of the Confederation of British Industry has described the initiative as ‘a welcome development’ and an ‘encouraging’ step forward for business-Government relations.
Small firms gain free access to public sector contracts
NewsMaster Bulletin - 7 May 2008
Small businesses are to gain improved access to thousands of public sector contract opportunities under a new scheme launched by the Government.
From 1 May until 31 July 2008 firms will have free access to public sector contracts that are valued under £100,000 for the UK and Northern Ireland. The trial forms part of the Department for Business' Enterprise Strategy which was released in March.
Over 3,000 new contracts are available on www.supply2.gov.uk every month. The three month free trial, which is available to new registrants, will provide access to contracts throughout the UK rather than a nominated local area.
Business Minister Shriti Vadera hopes the new scheme will provide enterprises with greater opportunities and enable buyers to benefit from ‘increased competition.’
Meanwhile John Wright, National Chairman of the Federation of Small Businesses, has welcomed the move: ‘We supported the Supply2 initiative from the outset and we hope that this free trial period will encourage more small businesses to try their hand at delivering goods and services to the public sector.’
However, Wright has urged local authorities and Government departments to ‘play their part’ and ensure that contractual opportunities are advertised sufficiently.
‘Restore postal services’ for small firms, urges FPB
NewsMaster Bulletin - 7 May 2008
A leading business group is calling on the Government to restore postal services for small firms, following the findings of a report into the matter.
According to the Forum of Private Business (FPB) small enterprises are suffering as a result of the recent shake-up of the UK’s postal system, which will see the eventual closure of more than 2,500 post office branches.
‘Following the announcement that so many branches are to close, it is important that these services are restored as quickly as possible, and that suggested measures, such as locating post offices in alternative locations and introducing mobile units, are put into practice as a matter of urgency,’ said the FPB's Chief Executive, Phil Orford.
The move comes in the wake of the initial findings of an independent review into the recent postal reforms.
Launched by the Department of Business, Enterprise and Regulatory Reform, the report claims that large businesses have benefited from greater choice and lower prices as a result of the ‘liberalisation’ of the postal services market.
However, it found that the changes did not have any ‘significant benefits' for smaller firms, which have no choice over their provider and pay higher stamp prices.
The final report is expected to be published later this year.
Court backs OFT over ‘unfair’ bank charges
NewsMaster Bulletin - 30 April 2008
A High Court judge has ruled in favour of the Office of Fair Trading (OFT) and against Britain’s biggest banks in a dispute over ‘unfair’ overdraft charges.
Mr Justice Andrew Smith has authorised the OFT to decide whether unlawful overdraft penalties levied on bank customers are subject to ‘unfair contract’ rules.
The highly complex test case follows a flood of complaints from bank customers who have been trying to reclaim the charges, arguing that the fines are too high.
Some experts predict that banks have made between £2bn and £3.5bn a year in overdraft fees in the last six years. Once the final outcome is reached, banks and building societies may be forced to pay billions of pounds back to those customers affected.
The OFT has described the judgement as an ‘important early milestone’ for its investigation into an area of ‘high consumer interest.’
However, Angela Knight from the British Bankers’ Association, emphasised that the case is still in its early stages: ‘We need to take what the judge has said very carefully and not jump to conclusions. This is the start of a process,’ she said.
Commission calls for supermarket ‘shake-up’
NewsMaster Bulletin - 30 April 2008
Measures designed to boost competitiveness in the grocery sector and improve consumer choice have been unveiled by the industry watchdog.
Proposed changes include the introduction of a new ‘competition test’ that would be applied when making planning decisions for larger stores. Action will also be taken to prevent land agreements restricting competitors from entering the market.
The recommendations follow a two-year probe by the Competition Commission into concerns that supermarkets hold an unfair monopoly in many UK towns, consequently forcing smaller stores out of business.
‘Although, in many areas, there is good choice and strong competition between retailers, there are also a significant number of local areas where larger grocery stores face limited competition and local shoppers lose out,’ the report said.
The reformed code of practice, which will apply to grocery retailers with a turnover of more than £1 billion, is to be regulated by a new supermarket ombudsman.
The ombudsman will resolve complaints made by suppliers against supermarkets and, according to the Competition Commission, should have the power to ‘levy significant financial penalties’ on retailers that do not comply with their findings.
Chancellor unveils concessionary tax deal
NewsMaster Bulletin - 30 April 2008
Government plans to compensate those adversely affected by the recent abolition of the 10p rate of income tax, have been described as a ‘climb-down’ by opposition parties.
In a letter to the chairman of the Commons Treasury committee, Chancellor Alistair Darling pledged to review the national minimum wage, tax credits and the Winter fuel payments system to help lower earners.
The concessionary deal, which is to be backdated to the beginning of the financial year, comes in the wake of fierce criticism from Labour MPs and growing concerns of a backbench rebellion.
Despite being accused of making a ‘u-turn’ and ‘panicking’ by Conservative leader David Cameron, Gordon Brown insisted that he has made ‘the right long-term decisions.’
Earlier this month the 10p starting rate of income tax was scrapped, meaning that those who earn less than £18,000 per year and are ineligible for working tax credit would be financially worse off.
While the Prime Minister admitted that the proposed compensatory package would not help everyone affected by the tax changes, the Trades Union Congress (TUC) has welcomed the latest move.
Responding to Darling’s statement, Brendan Barber, TUC General Secretary, said: ‘The Chancellor has been right to listen to MPs and unions who have said that the abolition of the 10p tax has hit the poor.
‘Let us hope that [this ...] signals the start of a new commitment to a progressive tax system and the relief of poverty.’
Small business profits
‘hit by rogue sales tactics’
NewsMaster Bulletin - 23 April 2008
A large number of small firms believe
their profits are suffering as a result of unfair selling
practices employed by their competitors, according to
a new study.
Research carried out by the Department
for Business, Enterprise and Regulatory Reform reveals
that 53% of business leaders think their bottom line
has been dented by rogue sales techniques used by rival
firms.
Of those affected, one in ten estimate
that such unethical tactics are costing their business
more than one fifth of its revenue.
The Government has now outlined plans
to implement legislation to address the issue and appease
the growing concerns of the small business community.
Subject to Parliamentary approval, the
Consumer Protection Regulations (CPRs) will see 31 types
of unfair selling methods, such as prize draw scams
and aggressive doorstep selling, outlawed from 26 May
2008.
John Wright, Chairman of the Federation
of Small Businesses, has welcomed the new law. ‘Legitimate
businesses should no longer have to face unfair competition
from firms who use underhand tactics to get ahead,’
he said.
‘These regulations will create a
level playing field for all, allowing businesses to
thrive based on merit and not on who is best at duping
or pressuring consumers.’
Consumers ‘swap
credit cards for cash’
NewsMaster Bulletin - 23 April 2008
Consumers are choosing to pay with cash
rather than credit cards in an effort to rein in their
finances, a recent study by the British Retail Consortium
(BRC) has suggested.
In a survey of 17,000 shops it was revealed
that cash had been used for 60% of transactions carried
out last year – up from 54% in 2006.
BRC Director General, Stephen Robertson,
said cash was ‘alive and thriving,’ with an
increasing number of shoppers choosing to curb the outgoings
on their credit cards.
‘Hard-up customers are increasingly
reluctant to spend money they haven’t actually
got in their hands,’ he said.
‘While total retail spending continues
to grow, there is a widening gap between the amount
spent in cash and the amount spent using cards, suggesting
customers want to keep tight control of their finances.’
The BRC report also urged credit card
companies to reduce the charges they impose on retailers,
revealing that a £20 transaction would cost the
retailer four times more if paid with a credit card
rather than cash.
Business group seeks
to raise profile of corporation tax debate
NewsMaster Bulletin - 23 April 2008
The business community has urged MPs to
give criticisms of the recent rise in small firms’
corporation tax the same weighting as public concern
over the abolition of the 10% starting rate of personal
income tax.
The Forum of Private Business (FPB) believes
that politicians should dedicate the same level of attention
to the increase in the lower rate of corporation tax,
which has risen from 19% to 21% in the last 12 months.
The lower rate is scheduled to inflate
to 22% in April 2009 while the higher rate, which is
paid by larger firms, is being cut from 30% to 28%.
‘It is not only lower-income individuals
who are being adversely affected by this Government’s
tax regime,’ said the FPB’s Chief Executive,
Phil Orford.
‘It is understandable that media
coverage has highlighted the burdens for individuals,
however, the wellbeing of smaller UK businesses is also
being seriously undermined, and all MPs should be aware
that their business constituents are also being subjected
to an unfair taxation policy.’
Indeed in a survey conducted by the FPB,
67% of respondents said they would be more likely to
reinvest in their business if plans to increase small
firms’ corporation tax were scrapped.
Meanwhile, 49% of those quizzed claimed
the reversal of the controversial tax hike would give
them extra funds to invest in skills and training, and
47% said they would be more likely to seek to grow their
businesses.
Businesses to pay ‘extra
£4bn’ in tax, claims CBI
NewsMaster Bulletin - 16 April 2008
UK businesses will be forced to pay an
extra £4.2 billion in tax over the next three
years as a result of recent Government changes, the
Confederation of British Industry (CBI) has argued.
The lobby group claims the loss of plant
and machinery investment allowances and the abolishment
of empty property relief is largely responsible for
the projected ‘tax hike’.
Despite a 2p cut in the headline rate
of corporation tax, the CBI predicts that UK enterprises
will pay an extra £1.84bn in tax in 2008/9, £1.24bn
in 2009/10 and £1.13bn in 2010/11.
According to the CBI, amends to the discrimination
law and rules on consulting employees, which came into
effect on 6 April, will also add to the financial pressure
incurred by small firms.
John Cridland, deputy director-general
of the CBI, said: ‘When the economy is slowing,
the last thing a Government should do is raise taxes
on the part of society which creates jobs and wealth,
but that’s what’s happening.
‘The consequence will be that hard-pressed
companies, which are already paying high rates of tax,
will find life getting even tougher.’
Meanwhile, a spokesperson for the Treasury
has insisted that other measures introduced by the Government
will help boost British business:
‘The UK’s corporation tax rate
[has been] cut by 2p to 28p – its lowest ever level,
and the lowest of all major industrialised nations –
and a new annual investment allowance will be introduced
for all UK firms, providing a major incentive for them
to expand or improve their business.
Pensions provide only
‘modest’ income
NewsMaster Bulletin - 16 April 2008
The latest findings from the Office for
National Statistics (ONS) suggest that combined state
and private pensions still provide most pensioners with
only a ‘modest’ income.
In 2005/06, 62% of pensioner couples had
less £10,000 in pension income and half of single
pensioners had income from pensions of less than £6,000.
Pensioners are also still relying heavily
on the state pension. While the average pensioner couple
had state pension and benefits worth £7,296, their
average income from private pension sources was just
£2,115.
However, the Department for Work and Pensions
(DWP) claims that pensioners are still substantially
better off than they were 10 years ago.
ONS research from December 2007 shows
that pensioner income from all sources outstripped inflation
by a third in the decade to 2005/06.
"We've lifted more than a million
pensioners out of poverty by targeting help to those
who need it most. Pension Credit guarantees an income
of £124 a week compared with £69 a week
in 1997" said a spokeswoman for the DWP.
Meanwhile, the Government has given greater
powers to the Pensions Regulator to protect pension
schemes in companies which are bought up by other specialist
forms.
The past few years have seen a growing
trend for buy-out firms to take over unwanted pension
schemes to make a profit for their investors. Now the
Regulator will be able to insist that such companies
can be forced to make extra contributions to those pension
funds if they reduce the level of security.
Profit warnings hit
new high
NewsMaster Bulletin - 16 April 2008
The number of profit warnings from UK
listed companies in the first three months of 2008 hit
the highest level for a first quarter since 2001.
According to a survey by a major financial
firm, there were 114 profit warnings in the period,
11% up on the same period in 2007 and the most since
the end of the ‘dotcom’ boom.
Retailers faced more warning than any
other sector, as consumers cut back on spending in the
current climate of mortgage worries, following the ‘credit
crunch’.
Meanwhile, Shadow Chancellor George Osborne
has blamed Gordon Brown for the country’s economic
difficulties. In a speech to the Policy Exchange think
tank he said: "At the root of the problem is the
failure of the government's economic policy… [the
Prime Minister has] rested his claim to competence on
three pillars - stability, prudence and competitiveness.
“Instead, after a decade of worldwide
growth, we have ended up with housing boom followed
by bust, spending followed by debt, and a country finding
it more and more difficult to compete.”
Following the recent cut in interest rates,
Chancellor Alistair Darling urged the banks to pass
on the cut to home-owners.
"We have been supporting the system
- through the Bank of England an extra £15bn has
been put in to help them get through this difficult
period," he said.
"We know this is a difficult time.
We've got to get through it and we can get through it.
What we are saying is - we are helping the banks, the
banks have got to help people as well."
Despite all this, an online survey by
Harris Interactive suggested that while more than a
third of people in the UK expected their financial position
to worsen next year, 44% said the credit crunch had
so far had "no impact" on their lives.
Business welcomes
interest rate cut
NewsMaster Bulletin - 16 April 2008
Business groups have applauded the Bank
of England’s decision to cut interest rates from
5.25% to 5%, amid growing concerns over the volatile
financial and economic climate.
The rate reduction, which was widely anticipated
by analysts, means that UK interest rates have now been
revised on three occasions since early December.
The central bank hopes the latest drop
will inject life into the country’s ailing economy
and boost consumer confidence as the global credit crisis
deepens.
Richard Lambert, Director-General of the
Confederation of British Industry, has welcomed the
decision: ‘This cut was badly needed, and will
be welcomed by a business world that is feeling the
pressures of the credit crunch and of slower growth.
‘Higher interbank and mortgage lending
rates are dampening investment, consumer demand and
economic activity, and [this] cut should ease conditions
a little.’
However, the British Chambers of Commerce
warns that ‘undue delay in acting threatens to
reduce the effectiveness of interest rate cuts’
that had already been forecast.
Meanwhile, some experts believe the 0.25%
rate reduction to be in line with economic forecasts
originally set out by the Bank.
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