business news 7 September 2021
James Salmon, Operations Director.
Johnson to announce £10bn tax raid to bail out the NHS. London gets back to work. UK recovery expected to withstand autumn surge in Covid cases. Vaccine passports worry for SMEs. Construction firms suffering severe disruption. Retail sales slow in August and more business news.
Johnson to announce £10bn tax raid to bail out the NHS
The Prime Minister will today announce a 1.25% rise in National Insurance in a move that could generate more than £10bn for the health service. The tax rise was supposed to pay for social care reforms, but Boris Johnson has said the funds will go to the NHS first to reduce waiting lists. However, there are concerns it will prove impossible to withdraw the funding from the NHS in the future, while experts say it could take up to seven years before waiting lists are back to normal. Iain Duncan Smith, the former Conservative leader, called the proposals a “sham” because they did not attempt to fundamentally reform the system of social care itself. At the centre of the social care reforms is a plan to cap the lifetime care costs of any individual at £80,000 and increase the means-testing threshold – the value of a person’s assets before the state intervenes to pay care costs – from £23,250 to as much as £100,000. “The cap stops you losing your house, the floor stops you losing everything,” said Torsten Bell, director of the Resolution Foundation, a think-tank. But one MP told the FT: “It’s totally shit. We are asking people on low incomes to pay more tax so that privileged kids can inherit expensive houses.” Amid the fury among the Tory ranks, the Chancellor has come out backing Johnson. “We take our lead from the prime minister,” Rishi Sunak said. “The leader of our party and the country – we owe him our support and loyalty.” The Mail reports that the tax, called the Health and Social Care Levy, will be “legally ringfenced” and will appear as a separate line on tax statements.
London gets back to work
Some of the nation’s biggest employers have told hundreds of thousands of staff they are now expected to turn up for work, after 18 months of employees working at home during the pandemic. Early figures showed a 19% jump in tube passengers on Monday while heavy traffic was reported in Kent going towards the capital. The Standard reports that a consensus is forming that the preferred working model, for this autumn at least, will be a hybrid. Three days in the office, two at home. Bosses at EY said they expect most staff to “normally spend at least two days a week working remotely with the remainder of their time spent working together in person.” Many firms are offering incentives to come back, such as free breakfasts or rooftop BBQs.
UK recovery expected to withstand autumn surge in Covid cases
Some economists are proving cautious about a fourth quarter recovery, but KPMG’s chief economist Yael Selfin expects consumer caution to diminish even with an expected autumn surge of the virus.
Vaccine passports worry for SMEs
Tory MP Joy Morrissey, Dominic Raab’s parliamentary assistant, expressed disquiet on Monday over the introduction of vaccine passports, stating in a tweet that she was “very concerned at the idea of vaccine passports generally, but in particular the effect they will have on small businesses”. Morrissey continued: “Beaconsfield has a lot of small businesses and hospitality venues, I will be trying to speak for them in the [Department for Health and Social Care] statement this afternoon.” Her comments follow vaccine minister Nadhim Zahawi confirming the Government was on track to make vaccine passports mandatory for night clubs and large events at the end of the month. City A.M. notes that many backbench Tory MPs will vote against mandatory vaccine passports should the measures be voted on in parliament.
FSB wants small firms to get more public work
The Federation of Small Businesses (FSB) has called for more of Scotland’s public sector spending to be done with small businesses, arguing that only 5% of that budget is spent with firms with fewer than ten employees despite them accounting for 94% of the nation’s businesses. Andrew McRae, FSB’s Scotland policy chair, said: “Too many small businesses in Scotland lose out to multinationals when it comes to winning public work.”
Construction firms suffering severe disruption
The Chartered Institute of Procurement & Supply said on Monday that construction firms faced “sustained and severe” disruption in August, pushing up firms’ costs at a near-record pace. Concrete, fuel, steel and timber prices jumped as staff and material costs “went through the roof”, CIPS director Duncan Brock said. Meanwhile, Jewson has warned customers that prices for a range of goods will rise by as much as a fifth this month due to the ongoing supply chain disruption. Jan Crosby, head of infrastructure, building and construction at KPMG UK, said supply chain delays had prevented builders “from taking on new work . . . at a time when the economy is bouncing back”.
Retail sales slow in August
Figures from the British Retail Consortium and KPMG show retail sales continued to rise in August – up 3% compared to a month earlier – but the speed of growth slowed with shoppers directing more of their money towards leisure and travel. The BRC said that with the “precarious economic backdrop and retailers grappling with higher costs” the Government had to deliver on its promise of business rates reform or brace for more shop closures and job losses. Separate data from Barclaycard indicates household spending increased by 15.4% in the year to August.
Marks & Spencer
Marks & Spencer has warned of a range of problems for food imports to the UK when Brexit rules change next month. In a letter to suppliers, it said UK and EU bodies were not ready for new paperwork needed next month when a grace period on import checks ends.
DS Smith
DS Smith said it had seen strong growth in box volumes and had made progress offsetting higher input costs with price rises. Chief executive Miles Roberts said he was ‘very pleased’ with the company’s progress since the start of its financial year on 1 may, in a trading update for its annual general meeting.
Ted Baker
Ted Baker said its second-quarter sales had risen 50% and that its turnaround plan was on track. In a trading update for the 16 weeks between 25 April and 14 August, the company said the improvement was in in line with expectations following an easing of lockdowns.
Safestore
Safestore again upgraded its annual earnings guidance as it reported an 18% rise in third-quarter revenue underpinned by higher occupancy rates. Revenue for the three months through July increased to £47.6 million, up from £40.2 million year-on-year, or by 20% on a constant currency basis.
FCA singles out social media influencers as key crypto risk
The chair of the Financial Conduct Authority has warned investors not to take cryptocurrency advice from social media influencers such as US celebrity Kim Kardashian, who recently encouraged her 250m Instagram followers to speculate on crypto tokens. Charles Randell warned that influencers “are routinely paid by scammers to help them pump and dump new tokens” some of which turn out not to exist at all. Randell went on to raise the prospect of the FCA bringing the creation and trading of cryptocurrency tokens under its scope. Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said: “The FCA is singing from the same song sheet as many other international regulators. It sees investing in crypto currencies as extremely high risk.”
Rate-setter plays down inflation threat
Catherine Mann, a former Citigroup chief economist and the latest recruit to the Bank of England’s monetary policy committee, has insisted the world economy will avoid a 1970s-style inflation crisis despite mounting evidence of soaring prices and product shortages. Ms Mann told an Australian conference that rising oil prices were less of a threat now and firms were more reluctant to hit households with price increases, while the link between inflation and wages had diminished in recent times.
Firebreak lockdown on the cards
A senior Government scientist has revealed that the Government has drawn up plans for an October “firebreak” Covid lockdown should hospitalisations continue at their current level and threaten to overload the NHS. The member of Sage said the UK is about to enter “an extended peak” of infections and hospitalisations, which are in danger of pushing the NHS beyond breaking point and could force the Government to re-introduce restrictions over the school half term period at the end of next month. A full lockdown is unlikely and would be a last resort, but there are a range of measures the Government could introduce. It is understood that the Government’s contingency plan for a “firebreak” lockdown could lead to an extension of the half-term, from one week for most schools to two weeks from late October into early November.
Why should you become a CPA member!
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 some time to come.
CPA eases cash from tardy debtors – Efficiently, Effectively, Economically and Ethically. And we provide credit information so you can monitor and assess your key customers.
Unlike other credit management companies, we charge our members a fixed annual subscription irrespective of how high the debt value is!
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.
The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections
Get compensated for previous late payments
Have you been paid late by business customers in the last six years?
Maybe you no longer work with them. Under legislation, you are entitled to compensation you for those late payments you have suffered.
You put up with the PAIN – now claim the GAIN!
Claim late payment compensation (LPC) from former business customers who paid you late in the last six years!
CPA (LPC) Recoveries is using our bespoke software and decades of experience to do just that for our clients
The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections.