Business news 19 June 2024

Some of the business news that we thought would interest our members.

James Salmon, Operations Director.


Labour’s ‘working people’ definition leads to tax hike claims
Sir Keir Starmer has come under fire for his definition of “working people” leading to claims Labour intends to “wallop” anyone with modest savings or a home with tax increases. Labour has said it will not put up taxes on “working people” but when asked on LBC what he meant he said: “When I say working people, it is people who earn their living, rely on our services and don’t really have the ability to write a cheque when they get into trouble.” The Conservatives promptly accused him of using a “narrow and misguided” definition of working people that opened the door for tax rises for millions of savers. According to the Resolution Foundation two-thirds of working-age households have savings of more than £1,000 while a YouGov survey found last year that one in eight Britons now use private healthcare. Sir Iain Duncan Smith, a former Tory leader, said: “If you have savings, if you own a home, if you own wealth, you are going to get walloped. That is a big admission.”

Labour softens position on taxing private equity profits
The shadow chancellor has softened her stance on private equity profits slightly telling the Financial Times that if bosses are putting their own funds at risk they should continue to have their carried interest taxed as a capital gain, at 28%. Rachel Reeves previously said carried interest should be taxed as income at 45% plus national insurance, leading to concerns some private equity managers would leave the UK. In Germany, the effective rate is 28.5% while in France carried interest is taxed at up to 34%. Michael Moore, chief executive of the British Private Equity & Venture Capital Association, said the clarifications were encouraging while Sandy Bhogal, tax partner at Gibson Dunn, said Reeves’s comments showed that “Labour recognise the issue is nuanced, and are prepared to listen before deciding on how to amend the law.”

Labour frontbenchers accused of hypocrisy over VAT tax raid
Nearly 25% of Labour frontbenchers attended private schools, the Telegraph reports, leading to accusations of hypocrisy over the party’s plans to impose VAT on fee-paying schools. Rudolf Eliott Lockhart, the chief executive of the Independent Schools Association, said: “Irrespective of where they went to school, you would have thought Labour would want those schools to be thriving. The VAT plan is a blunt policy that will damage those schools serving vulnerable or special needs pupils.” Angela Richardson, Deputy Chairman of the Conservative Party said: “There is no greater show of Labour hypocrisy than Keir Starmer choosing to deny children the same opportunities members of his shadow cabinet have benefited from.”

UK to see millionaire exodus
Wealth manager Henley & Partners predicts that a record 9,500 people with assets, excluding property, of $1m or more will leave the UK this year, more than double the 4,200 who left in 2023. The only country to lose more millionaires will be China. Hostile policy decisions around non-dom and VAT on private school fees, combined with political instability are driving the exodus. Dominic Volek, of Henley & Partners, said: “As the world grapples with a perfect storm of geopolitical tensions, economic uncertainty, and social upheaval, millionaires are voting with their feet in record numbers.” The United Arab Emirates is forecast to attract the most millionaires, followed by the US and Singapore.


Council tax overhaul would push up bills by £1,230
According to an analysis by the Institute for Fiscal Studies (IFS), if Labour were to redraw the method in which council tax is calculated, bills would rise by an average of £1,230 for over four million households. The overhaul could add hundreds to annual bills, with some homeowners facing rises of up to £4,609. Labour MPs have been divided on the issue, with Sir Keir Starmer failing to rule out an overhaul of the banding system. The Fairer Share think tank has suggested replacing the current system with a “proportional” council tax which would apply a flat charge of say 0.5% of a property’s value to be uprated annually. A spokesman for the IFS said: “We wouldn’t tax people based on the relative pay of their jobs 33 years ago – but that is exactly what we do with their council tax.” They added: “Revaluing properties – and updating bands to account for average house price growth – need not change how much revenue is raised. But by redistributing bills to reflect circumstances now rather than a third of a century ago, it would make the system fairer.”


EY launches Scottish fintech lab in Edinburgh
Accountancy firm EY has launched its first Scottish fintech “lab” with the aim of collaborating with start-up and scale-up companies in the sector, with a focus on sustainable finance. EY’s lab will be based in Edinburgh and will connect fintechs, potential investors, clients, established financial services firms, regulators, and other partners to develop real-world solutions.  Sue Dawe, EY Scotland financial services managing partner, said: “We’re seeing some very exciting start-up and scale-up activity across the UK, and Scotland’s fintech sector is going from strength to strength.”


Government holds secret talks over Atos turmoil
Secret talks have been held by the Government over financial turmoil facing major contractor Atos, which has almost a billion pounds worth of UK Government contracts. Concerns are growing about cash flow issues affecting Atos’s UK arm, with internal Government documents warning of “severe implications” for critical public services if the firm collapses. The Government is working on contingency plans and seeking an alternative IT provider for major departments such as the NHS, Home Office, and the Department for Work and Pensions. Atos provides services for disability benefit assessments, the Student Loans Company, NHS records, and critical software testing for HMRC. The French parent company admitted to facing a wall of debt amounting to £3.3bn. Atos has invoiced the Government over £6bn for services since 2016.


Rothschild backs AI venture identifying corporate dishonesty
Activist investor Richard Bernstein has gained support from Nat Rothschild for his AI venture, Insig AI. The company uses machine learning to analyse company disclosures and identify instances of ‘greenwashing’ or other forms of corporate dishonesty. Bernstein, who owns nearly 20% of Insig AI, believes that the venture will raise the level of disclosure for companies and prevent future scandals. Rothschild has purchased a 5% stake in the company for £1m. Insig AI has already identified a FTSE 100 company worth over £10bn that is in need of a greenwashing investigation, which could potentially wipe £700m to £800m off its value. Bernstein aims to use machine learning to improve corporate reporting and governance standards.
Daily Mail  


Firms remain under pressure despite decline in insolvencies
The number of monthly insolvencies has come down slightly but remains well above levels just a couple of years ago. In May, 2,006 firms went bust, which was 6% lower than the previous month and 21% lower than May last year. However, the Insolvency Service pointed out that the number of monthly insolvencies remains “much higher” than seen during the pandemic and between 2014 and 2019. Voluntary liquidations accounted for the majority of the monthly collapses. Last year saw the highest number of company insolvencies since 1993, with 25,000 firms going under. But despite the recent falls, the Centre for Economics and Business Research (CEBR) suggests there could be as many as 33,000 insolvencies this year, surpassing 2023’s 30-year high. “To see a sustained decrease in numbers, we’ll need to observe a corresponding easing of both interest rate pressure and inflationary pressures. If these factors remain high or continue to rise, we may see further challenges for businesses before any improvement,” said John Cullen, insolvency partner at Menzies.


BoE’s QE programme costing Britain billions
An analyst at Columbia Threadneedle Investments has said the Bank of England is losing three times more on its quantitative easing (QE) programme than the Federal Reserve in the US. The Treasury is obliged to cover tens of billions of pounds in losses as the Bank sells bonds it issued under QE at a loss, without holding them until maturity. Christopher Mahon points out that the Bank recently suffered losses of up to 70% on the sale of some long-dated bonds. He adds: “It is too late to salvage most of the losses but we think scaling back active QT could still reduce overall costs for the taxpayer – albeit modestly.”
The Daily Telegraph  


Inflation expected to fall to BoE’s 2% target
City analysts expect inflation in May to have fallen back to target for the first time in three years when official figures are published today. Investec expects the headline rate to hit 2% while Capital Economics predicts a fall to 1.8%, while Deutsche Bank predicted a fall to 2.1%. The Bank of England said it expects the rate of inflation to decline to 1.9%. However, economists still expect the Bank to keep interest rates unchanged at 5.25% for the seventh meeting in a row when the monetary policy committee meets on Thursday due to stronger than anticipated services inflation.
The Times  

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The Credit Protection Association (CPA) has been assisting thousands of UK businesses to get paid, since 1914. We have seen many financial crises, this last one was particularly deadly for suppliers fand we are still seeing elevated insolvencies as businesses struggle.

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Just call Peter Uwins, CPA’s National Sales Manager, on 020 8846 0000 (business hours) or email today.

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The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections


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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?

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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 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!

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The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections.