Business news 17 November 2022
James Salmon, Operations Director.
Businesses fear for their futures. WFH disputes increase. Energy bill support warning. Inflation hits a 41-year high. Chancellor set to deliver higher taxes. And more business news.
Businesses fear for their futures
A poll by software company FreeAgent shows that a quarter of SMEs believe the economy has been damaged irreversibly by Brexit and the pandemic. It was also shown that 64% of business are worried their businesses may not survive the next 12 months. The study found that while a fifth of SMEs believe there is a much greater chance of their business surviving now that Rishi Sunak is Prime Minister, the rate is just 7% among accountants. An earlier version of the survey in October saw 28% of accountants and small business owners say they believed economic pressures would ease within 3-5 years. This has now increased to 38% after the mini-Budget and election of Mr Sunak. When looking ahead, 43% of SMEs want ministers to expand the energy cap to cover small businesses, 37% want to see new government loans specifically for energy bills and 33% want officials to implement a windfall tax on energy and fuel companies. Among accountants, 43% agree that a windfall tax would be the most useful measure for ministers to introduce, alongside expanding the energy cap (41%) and introducing government-driven discounts on bills (34%).
WFH disputes increase
Analysis by employment law firm GQ Littler points to a rise in the number of disputes between employees and their bosses over flexible working, with staff increasingly wanting the option of working remotely. The report shows there were 190 employment tribunal cases relating to flexible working in the past year, with this a slight increase on the previous year. Sophie Vanhegan of GQ Littler said: “Although many businesses have listened to their employees and implemented hybrid-working models, in some cases it’s proven difficult to find a balance that works for everyone.”
Energy bill support warning
The Social Market Foundation (SMF), a cross-party think-tank, says restricting energy bill support to just those in the benefits and pension systems could exclude over 10m people in fuel poverty. The report calculates that 4.5m households spending more than 10% on their income on energy bills will miss out on help if support is limited. With an average of 2.4 people per household, it equates to 10.8m people. Around 784,000 households who would get energy bill support with a social security-based package are in the richest tenth of the population. Amy Norman, senior researcher at the SMF, said: “Restricting energy bill support to only households getting welfare or pensions would mean millions of people in the missing middle are left facing painful financial trouble over energy bills, while others with higher incomes would get help from the taxpayer.”
Inflation hits a 41-year high
Office for National Statistics (ONS) figures show that inflation increased to 11.1% in October, with this up from 10.1% in September and marking the highest level since 1981. The jump came with food price inflation rising at the fastest rate for 45 years, hitting 16.2% in the year to October compared to 14.5% in September. However, gas and electricity prices remained the main drivers of inflation, with the costs up by nearly 130% and 66% respectively compared with a year ago. Ahead of his Autumn Statement, Chancellor Jeremy Hunt said tighter fiscal policy can help bring down inflation, saying this requires “some tough but necessary decisions on tax and spending to help balance the books.” Meanwhile, separate ONS analysis of October’s figures shows that the poorest 10% of households were hit by a 12.5% rise in their living costs last month, while the richest 10% of households experienced a 9.6% increase. Looking ahead, Martin Beck, chief economic adviser to the EY Item Club, said he “wouldn’t be surprised if inflation falls to close to 2% by the turn of 2023 and 2024, substantially easing the current squeeze on spending power faced by consumers.” KPMG economist Yael Selfin said annual price rises had probably hit a peak but added that inflation could stay above the Bank of England’s 2% target until the middle of 2024.
Chancellor set to deliver higher taxes
Jeremy Hunt is expected to confirm spending cuts and tax rises in today’s Autumn Statement, with the Chancellor set to say “difficult decisions” are needed to tackle soaring inflation. While last minute changes are possible, Whitehall and Parliament sources suggest that around 55% of the measures will be spending cuts and 45% will be tax increases. The measures are likely to equate to around £30bn in spending cuts and £24bn in tax rises. Measures around taxation are set to involve thresholds being frozen. This will mean people end up paying more tax due to inflation and pay increases. The threshold when the highest earners start paying the 45% top rate of income tax is to be lowered to £125,000 from £150,000. Other thresholds, such as those for VAT, inheritance tax, capital gains tax and the pension lifetime allowance, are also set to be frozen. Nimesh Shah, CEO of Blick Rothenberg, said freezing thresholds “has a more severe effect than raising the rate in that we end up paying more – especially with record inflation.” Ahead of the Budget, some Tory MPs have voiced concern about the possibility of higher taxes, with former cabinet minister Esther McVey arguing that putting up taxes is the “last thing” a Conservative government should be doing. Former Levelling Up Secretary Simon Clarke told BBC Radio 4’s PM programme that he hopes to see the Chancellor “strike a balance which leans much more to spending reductions than tax rises to balance the books.”
Production will be hit by tougher windfall tax, says Investec
Investec has warned that the Chancellor could jeopardise future North Sea oil and gas production if he opts to roll out a tougher windfall tax. The financial services firm predicts that expanding and raising the Energy Profits Levy will have damaging “medium term consequences,” while also having ”implications for the wider supply chain.” Investec’s forecast comes a week after investment group Stifel said that the UK risks no new investment in the North Sea oil and gas sector if taxes are hiked. The warnings come ahead of the Autumn Statement, with it suggested that Jeremy Hunt could increase the windfall tax from 25% to 35% and extend it from 2025 to 2028.
Royal Mail
Royal Mail said revenue dropped as the delivery giant grapples with ongoing strike action. Royal Mail’s parent firm International Distributions Services posted an operating loss of £163m for the half year, 152.4% down from the previous year, where it had a profit of £311m. Revenue was also down nearly 4% to £5.7bn, with the Royal Mail arm dragging the firm down, with revenue falling 10.5% to £3.6bn.
To change its fortunes, Royal Mail has asked the government if it can stop its letter deliveries on Saturdays and wants to move from a six-days-a-week letter delivery to five, from Monday to Friday only. However, parcel services would continue to run all days of the week.
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 offer our members a fixed annual subscription regardless of how high the debt value maybe!
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
Do you have a commercial late payer that is causing you grief? Use CPA’s no-win, no-fee, commercial debt recovery service!
If you have a particular business customer who is late paying and causing you sleepless nights, why not offer it to CPA for purchase on recourse?
CPA’s collection department will then pursue the debt. We will be liable for any costs incurred and then when we have recovered the debt, we will pay you the net principle debt recovered less our percentage.
Once you have enjoyed that success then you can consider the more cost effective membership which includes our Overdue Account Recovery service and Status/Credit reports as well as a range of other complimentary services.
Just call 020 8846 0000 and ask for Godfrey Nelson or Cris Shirley (business hours) or email debtpurchase@cpa.co.uk today.
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
Check our compensation calculator to see how much your business could be owed!
Discover NOW the potential value of late payment compensation hidden in your sales ledger!
The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections.