Spending Review Reaction – business news 26 November 2020.
James Salmon, Operations Director.
The spending review reaction, record borrowing, unemployment prediction, insolvency relief extended , the taxpayers emergency loan bill, home working hits tax receipts, covid-19, market and other business news.
Here are CPA we want to share the business news stories we have seen that we think will affect our members and readers. Many of us are busy fighting to protect our businesses and therefore might have missed some of the news that could impact small businesses, their owners and those that sell on credit.
Spending Review – key announcements
Chancellor Rishi Sunak pledged yesterday that capital spending will increase to £100bn next year, as the government looks to make a “once in a generation investment” in its infrastructure.
Public-sector workers earning over £24,000 and outside of the NHS will face a pay freeze in 2021-2. This will affect 1.3 million workers.
But more than two million earning less than £24,000 a year will get a minimum £250 increase.
More than a million doctors, nurses and other NHS workers will also see rise
The UK economy is expected to shrink by 11.3% this year.
The plans, were announced as part of the Spending Review, will see new money for house-building, funding for local projects, and a new national infrastructure bank.
The Chancellor yesterday announced that the foreign aid budget would be reduced from 0.7% of GDP to 0.5% in 2021 but intends to return it to 0.7% when the fiscal situation has improved.
The health budget in England to rise by £6bn, including an extra £3bn for the NHS to cope with Covid pressures and a total of £18bn to be spent on Covid testing, PPE and vaccines next year.
£2.6bn funding has been promised for Restart scheme to support those out of work for 12 months
Rishi Sunak also confirmed a new National Infrastructure Strategy that will invest £600bn over five years and £100bn next year – a £27bn year-on-year increase in real terms. Broadband, housebuilding and new roads are a key focus of this.
A new National Infrastructure Bank based in the North of England has been launched and a new “levelling up fund” worth £4bn was unveiled. Health spending will increase, as will funds for schools while the Ministry of Defence has secured an additional £16.5bn over four years, making the department one of the big winners from the Spending Review.
Mixed response to Spending Review
Business groups have given a lukewarm response to the Chancellor’s Spending Review, describing it as “sobering” and requiring bold decisions on the ground to deliver the sort of impetus the economy needs.
The infrastructure bank plans were lauded by the British Chambers of Commerce as an important step in overcoming the nation’s “longstanding infrastructure deficit”, but the Federation of Small Businesses said the review was a “missed opportunity” to help smaller employers aid an economic recovery.
Mike Cherry, national chairman, said: “A government which claims to be pro-enterprise had very little to say today about the importance of business and private sector job creation.” Darren Jones, chairman of the BEIS committee also said an opportunity was missed to “spell out more targeted support for sectors such as hospitality who continue to bear a terrible strain”.
Sunak warns of ‘economic emergency’ as borrowing hits record £394bn
UK Government Borrowing is set to soar to a peacetime record of £394bn this year while the economy will contract at the fastest pace since the 1700s thanks to the coronavirus pandemic, according to predictions from the budget watchdog.
The Chancellor yesterday warned that the economic emergency made manifest by the coronavirus pandemic has only just begun and that there will be lasting damage to growth and jobs. The Office for Budget Responsibility (OBR) predicts that GDP will plummet by 11.3% this year and not return to its pre-crisis size until the end of 2022. Unemployment will hit 7.5% by the middle of next year with 2.6m people out of work.
The UK is expected to borrow £393.5bn this financial year to help pay for economic relief measures. Borrowing is also forecast to remain above £100bn-a-year – or 4% of the size of the UK economy – in five years’ time.
The head of the OBR, Richard Hughes, warned that Rishi Sunak will need to find £20bn to £30bn in spending cuts or tax rises if he wants to balance revenues and day-to-day spending, and stop debt rising by the end of this parliament.
OBR: Unemployment to hit nearly 3m by spring
The Office for Budget Responsibility (OBR) has warned that 2.6m Britons will be jobless by the second quarter of 2021 when the Chancellor’s support for millions of workers is withdrawn.
Unemployment will reach a peak of 7.5%, well above the current level of 4.8%, but lower that the 12% predicted by the OBR in the summer.
The jobless rate is forecast to return to 4.5% by 2024. In yesterday’s Spending Review, Rishi Sunak confirmed a “targeted” public sector pay freeze but said the Government will still provide an increase in wages for NHS workers.
In addition, the 2.1m public sector workers that earn less than the median wage of £24,000 will be guaranteed a pay rise of at least £250.
The national living wage will still increase by 2.2% to £8.91 next year, which combined with an increase in the minimum wage will benefit around 2m Britons. The Chancellor also announced a three-year £2.9bn Restart scheme to provide the long-term unemployed with tailored and intensive jobs support. Some £1.4bn will be provided to increase Job Centre Plus capacity.
The “economic emergency” caused by the pandemic has “only just begun”, Mr Sunak said.
Insolvency rules relief extended
A relaxation of insolvency rules designed to help business owners to trade through the pandemic has been reinstated and will now run until April 30 next year.
Taxpayer faces £40bn bill for emergency loans
The Office for Budget Responsibility (OBR) has warned that between £30bn and £40bn will be lost to soured coronavirus loans, an increase on earlier predictions. The figures come as banking industry chiefs warn that billions of pounds of Government money is being lost to fraudsters.
Virgin Money chief executive David Duffy said yesterday that his bank had decided to only hand out Bounce Back loans to existing customers in order to reduce fraud. Meanwhile, the Government-backed British Business Bank (BBB) estimates that 5% to 20%of the large businesses who have borrowed under CLBILS could default on their debt. The BBB also expects 10% to 25% of smaller CBILS borrowers and 35% to 60% of Bounce Back borrowers will become unable to pay back their debt.
Home working costs Treasury £9bn in tax receipts
Tax revenue has slumped as millions of workers undertake their duties from home, reducing spending on commuting and business trips, leading to losses on fuel duty and air passenger duty. Car fuel duty income is set to plummet by £5.7bn this year, while ministers expect £3.6bn less from air passenger duty. Tom Selby, senior analyst at AJ Bell, said: “Having the vast majority of the country working at home for much of the year has played havoc with the Treasury’s tax receipts.” Meanwhile, home workers are costing an extra £25m in tax relief.
UK Cars
UK Car Production fell in October as the sector’s tough year showed no sign of ending. Just 110,179 cars were built last month, down almost a fifth on the same month last year, according to new figures from the Society of Motor Manufacturers and Traders.
Covid-19 general news
New cases bounced back up yesterday, reversing a downward trend, with 18,213 new cases in the UK. 695 new deaths took the total to 56,533.
Global Covid-19 cases topped the 60 million-mark, with 632,945 new cases and deaths reached 1,422,247
Joe Biden has called on Americans to unite in the face of a “long, hard winter,” using his Thanksgiving address to grieve for those lost to the pandemic and promise that the nation would beat the virus in the new year. “It has divided us. Angered us. And set us against one another,” he said. “I know the country has grown weary of the fight. But we need to remember we’re at war with a virus, not with each other.”
HMRC data on Eat Out to Help Out scheme released
HMRC figures reveal that a total of almost £850m was claimed under the Government’s Eat Out to Help Out initiative, with some 93% of claims made by small businesses with only one outlet, while a total of 172 large businesses including the likes of McDonald’s and Pizza Express represented 18,134 outlets which had claimed during the scheme.
Markets
The FTSE 100 dropped 0.64% to 6391 yesterday while European stocks held steady (The Euro Stoxx 50 was up 0.11% ). The UK focused 250 fell 1.1%. There appears to have been some portfolio adjustments being done ahead of the Thanksgiving celebrations in the US. Oil continued its rise but Gold halted its fall. Overnight, the DOW dropped -0.58%, the S&P 500 dropped -0.16% and the NASDAQ rose 0.48%.
The pound is at 1.335 US Dollars and 1.121 Euros.
Big Tech
Salesforce is in advanced talks to buy Slack, a work messaging service. Acquiring Slack would help it compete with Microsoft Teams, a rival software package.
Government harms business by delaying audit reform
The Government has been accused of damaging the reputation of the accounting sector by failing to act on reforming the industry regulator. It is almost two years since Sir John Kingman’s review recommended replacing the Financial Reporting Council with a tougher regulator. The Government has also not responded to Sir Donald Brydon’s recommendations for reforming the purpose of audits, which he published last December, and the Competition and Markets Authority’s recommendations for improving choice in the market. Alok Sharma, the business secretary, failed yesterday to offer a timeline for publishing its proposals for reform, leading Michael Izza, chief executive of the ICAEW, to say: “This question mark of trust over the regulator and the profession needs to be addressed. The longer that it goes on, the more damage potentially is being done to the profession and by extension business and UK prospects.” S cott Knight, head of audit at BDO, added: “We have long been saying there’s a risk that this will get kicked into the long grass, overshadowed by Brexit and the necessary economic recovery from COVID-19. It’s important for the international standing of UK plc that this legislation gets an appropriate hearing.”
Data privacy
The European Union proposed new legislation to tighten data-privacy rules. It would give Europeans greater choice over how they share their data and for what purpose. Internet giants, such as Alphabet and Facebook, which use personal data to target advertisements at users, risk losing billions of dollars of revenue if the new rules become law.
Millions of pension payouts to be cut under RPI reform
Millions of retirees will see the future value of their pension cut owing to a planned change in the way payments are calculated from 2030. The retail prices index measure of inflation will be altered in February 2030, saving the Government £2bn a year in interest payments on RPI-linked bonds. The Pensions Policy Institute has calculated that members of defined benefit schemes that use RPI will be about 9% worse off over their lifetimes. About 64% of schemes in the private sector are upgraded by using RPI. Holders of index-linked government bonds were told that they would receive no compensation for the change, which has been estimated to cost them as much as £100bn over the decades to come.
Despite warnings over tariffs, France demands digital tax payments
The French finance ministry has begun demanding digital tax payments on the 2020 earnings of technology giants, including the US firms Google, Amazon, Facebook and Apple. The move comes despite threats from Washington that tariffs could be imposed on French imports in retaliation. The 3% tax will apply to digital companies that have global revenues of over €750m (£669m), and French revenues over €25m. About 30 companies, mostly based from the US, but also from China and Europe, will be affected. The UK is due to begin collecting its own 2% digital tax in April. The EU, meanwhile, has threatened to go it alone with a technology tax if the OECD does not act.
UK local councils banned from making risky property bets
The Treasury announced on Wednesday that local authorities would be banned from accessing the Public Works Loan Board as a source of cheap finance to fund risky property investments.
Don’t let Covid-19 bust your business!
It will if your cash flow dries up, either sooner or later.
The Credit Protection Association (CPA) has been assisting thousands of UK businesses to get paid since 1914. We have seen many financial crises, this one will be particularly deadly for suppliers for sometime to come.
CPA eases cash from tardy debtors – Efficiently, Effectively, Economically and Ethically. Above all tactfully, because maintenance of goodwill is paramount.
To meet the needs of creditors in the current crisis, we have designed a “critical care” package especially tailored for the situation.
- The annual package costs start at very low rates
- A minimum performance warranty is provided
- Several complimentary services included
Clients instruct CPA on-line via their PC or phone, completely user-friendly. Your late paying customers are told to pay you direct (not to us).
A very recent report shows a 23% increase in the number of unpaid invoices since March 11th THIS YEAR – are you getting a build-up of late payers?
Right now, overdue accounts must be a concern and CPA has a great track record of encouraging slow-payers to pay their suppliers quickly.
It takes less than 17 minutes to see how you would benefit, do you have the time now?
No face-to-face meeting required – just call Peter Uwins, CPA’s National Sales Manager, on 020 8846 0000 (business hours) or email nsm@cpa.co.uk today.
When you see your money come in, you will be so glad you used CPA.
Do you sell on credit?
With pressures on the cash flow it is essential that you stay on top of the credit limits you grant customers and watch carefully for any late payments.
Those customers will look for the easiest option to boost their cash-flow. Don’t let it be you.
You can’t just assume your customers can and will pay you eventually, no matter how big their name is.
It is essential to have credit management systems in place to monitor and check your customers credit worthiness.
It is also best practice to use a trusted third party like CPA to make sure you are paid on time by customers, no matter how good a name they have.
About CPA
The Credit Protection Association can help!
Formed in 1914, CPA has been providing credit management services to SMEs for over 100 years.
At the Credit Protection Association, we provide first class credit information that can help you avoid being over extended to customers who are at risk. Our monitoring service can flag up warning signs long before the end, giving you the chance to adjust and reduce your exposure. We provide recommended credit limits and credit scores on a traffic light system and can help you set appropriate credit policies for your customers.
We regularly publish lists of the latest insolvencies but by then it is too late. Our credit reports however predict approximately 96% of company insolvencies long before they arrive.
Companies in trouble usually have very bad cash flow and they try to deal with it by delaying payment to their suppliers, increasing your exposure to them.
If you supply on credit, help us help you identify the risks.
Why use a third party collector?
As a third party collector, we can also get your payments prioritised over those who are not as hot on collections. When your customer receives a letter from the Credit Protection Association regarding their outstanding account, they are going to want to get that resolved as a priority. Our overdue account recovery service can get your unpaid invoices to the top of their “to do” list and get your invoice paid.
Over the years we have collected billions in overdue invoices for our customers.
Our debt recovery and credit management services give our members the financial freedom needed to grow and prosper, while our new Late Payment Compensation department could unlock hidden potential and offer the compensation needed to springboard your business to success.
You might be hesitant about contacting a debt collection agency. What are they going to be like?
Can they help your particular type of business?
There is no need for concern. CPA are courteous, helpful and very probably have had direct experience of working with your type of business.
Debt collection agencies are not all alike.
Success lies in both recovering money and keeping customers happy. The Credit Protection Association was founded in 1914 and has helped tens of thousands of UK businesses to collect outstanding payments and reduce the risk of incurring bad debt. We believe that creditors deserve to be paid for the work or goods they have supplied but we fully understand the need to maintain
the best possible relationship with customers!
At The Credit Protection Association, we provide solutions, advice and back-up in all areas relating to the supply of services or goods on account. Client-members receive everything they need from a single source to reduce debtor days and write-offs.
The Credit Protection Association has helped has assisted tens of thousands of UK businesses with their credit control requirements, since the First World War.
We are polite, firm and efficient when it comes to recovering outstanding debt.
“We have used CPA for a number of years now. The website is easy to navigate around with lots of helpful reports. The staff are always at hand and very friendly. CPA has helped us reduce our debt over the years and keep track of potential issues with our customers.”
~ CPA client in Buckinghamshire
“The service from CPA has proved to be everything that you said it would be. We have already seen a huge benefit. We have had a number of overdue accounts paid promptly and directly to us. It is also a huge weight off our mind to know that once we have passed an overdue payment over to you, you take care of everything whilst keeping us informed.
~ Credit Controller client in Warrington
The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections
Ready to speak to an advisor?
For help or advice on credit management, entirely without obligation.
Call us today
0330 053 9263
CPA is passionate about late payment
The Credit Protection Association has been protecting smaller firms against poor payment practices for over 100 years.
We are extremely passionate about breaking the late payment culture that holds back the UK economy and threatens many SMEs, with cash flow difficulties being the single biggest killer of Britain’s small businesses.
If you were regularly paid late we can help. Those former customers used you to boost their own cashflow, regularly paying you late.
As a result you had extra costs, you had the distraction of having to chase payment, you had opportunity costs because your capital was tied up in their late invoices.
Under little used legislation, you are entitled to compensation for those late payments.
You put up with the PAIN – now claim the GAIN!
Now you can boost your own cash-flow.
CPA can help unearth the those hidden treasures.
We have the technology to reveal the compensation you are due and we have the extensive experience and expertise to then turn those claims into cash.
Did you know that your business is entitled to a minimum of £40 for every commercial invoice paid late to you over the past 6 years?
How many of your invoices are paid late each month – 20, 50, 100 or more?
At £40 per invoice that’s claim of £57,600, £144,000, £288,000 plus interest. The more invoices the bigger the claim!
At £100 per invoice it’s £144,000, £360,000, £720,000 plus interest.
For over 20 years, CPA has calculated and recovered Late Payment Compensation on behalf of Clients!
Yes, CPA can help you boost your business cash-flow.
Don’t let your bankers control you, contact CPA today.
The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections.
Do you realise you could be sitting on a fortune?
Late payments often result in a cash flow crunch and leave SMEs in need of a cash injection.
If you sold B2B on credit then there may be a hidden source of capital you can call on.
If you fancy an extra bit of extra cash in your business, rather than jumping through hoops with your bank, you could look to uncover the resources from an unexpected source within your own business.
Not many are aware but there could be a hidden fortune within your business, sitting there, just waiting to be uncovered and released.
We can help you uncover the pile of gold, you didn’t even know you were sitting on.
If you trade with other businesses and were often paid late then you could be entitled to significant compensation.
Under little known and under-utilised legislation your business could be due huge amounts in compensation that you didn’t even know about.
Let’s be clear – this is not a way to weaken any customer relationships you value. It is one that identifies who’s been paying late and then recover the potentially significant sums in compensation using Late Payment Legislation from businesses where the relationship has already ended.
You can pick and choose who you want us to follow up – but once we’ve agreed which companies you’d like to pursue compensation from it’s a fast process and there’s no financial outlay to you whatsoever. My team at CPA put its expertise to work to recover the compensation due and fight late payment culture.
That compensation could provide the cash boost your business needed.
But don’t delay, that compensation evaporates if not claimed within six years of the late payment.
How can CPA help?
CPA has developed a unique technology to dig into your accounting records and discover the cash injection you are due by means of compensation. The software does all the hard work. Our software interacts over the cloud with over 300 different software packages, working directly with your accounts package, just so long as it’s stored on a computer.
We recognise that most companies do not have the resources to spend time on the identification and calculation of Late Payment Compensation. Our service can produce an Analyses within just a few days with (usually) less than 30 mins of co-operation from our clients. We work directly with over 300 accounting packages but can also work with bespoke accounts packages. Indeed, speed is essential as the oldest invoices may fall foul of the 6-year time limit.
Once the Sales Ledger Analyses is made available to clients, all that is required is that management decide which commercially sensitive ex-customers to remove from the list and return it to us.
CPA then uses its years of collection experience to explain and recover the Late Payment Compensation Claims. Clients do not handle any part of the recovery process as our team will take all communications from the companies against who the claims has been made. Often, it’s simply a case of explaining the legislation, sometimes we have to go all the way and enforce the legislation through the courts.
The result is that we are realising clients’ claims worth tens and sometimes hundreds of thousands of pounds which, of course, is pure net profit. You may also be among the recipients of “hundreds of thousands of pounds” should you elect to take advantage of our services.
We do the work, you receive the cash.
If you have supplied goods and services to businesses on credit and were regularly paid late then you could be due significant sums in late payment compensation.
We are talking to companies and unearthing claims in the hundreds of thousands from former business customers who paid them late. Large business customers who abused their power to inflict unfair and sometimes illegal payment practices.
We are helping business owners who are looking to boost the returns from their business before they retire. We are helping businesses who have lost major clients after years of loyal service to get properly compensated for systematic late payment. We are helping companies that were looking to close down, who looked insolvent and finding that cash injection they need to avoid insolvency.
Those former clients who regularly paid you late can finally be made to pay.
Ready to speak to an advisor?
For help or advice on credit management, entirely without obligation.
Call us today
0330 053 9263
The Credit Protection Association is a credit management company established in 1914. If you supply goods or services on credit then we can help you!
The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections.
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The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections.