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Thursday, 21 December 2017

Bank of England offers EU investment banks easy access to city after Brexit

Yesterday, in a move to maintain London's status as a global financial centre, the bank of England said it would allow EU based investment banks access to the City with 'EU passport' similar to schemes employed by Japan the US.

The Governor of the Bank of England, Mark Carney said the UK's stance of "responsible openness" was dependant on a similar response from the EU. He told the parliamentary committee "Our approach is... best with a high degree of supervisory co-operation. We would hope it's reciprocated. If it's not, there will be consequences."

The Financial Conduct Authority also temporary waivers to be granted to more than 8,000 European banks, insurers and asset managers to allow them to run in the UK as if it were still in the EU.

Phillip Hammond, the chancellor, said the initiatives "will ensure that the UK's exit from the EU is smooth and orderly, will underpin the UK's status as a global financial services sector and will ensure that UK consumers are protected."

The initiatives from the Bank of England stand in contrast to the banks of Paris and Frankfurt who have actively been courting international banks to relocate from London after Brexit.

The new scheme could fend off such moves as it would allow finance to operate in the UK as if it hadn't left the EU.

Source: FT

Tuesday, 19 December 2017

Household Cost Indices from the ONS Show Retirees Living Standards Improve Whilst Worker's Fall

The Office for National Statistics today released their new Household Costs Indices, a new kind of experimental data that tracks indices for household groups from 2005 to 2017.

Disposable income for those of working age decrease year on year from 2006. Wages during this time grew by 26% whilst costs rose by 27%.

By contrast, retired household's disposable income grew by 49% and living cost 32%.

Although the generational gap grew during this period, poorer household income growth rose. This was particularly apparent in 2015-2016 financial year. However, costs for low income households (the ninth decile in the ONS survey) grew faster than for richer ones.

The report also shows that households without children experienced "stronger rises in prices and costs" than those with children.

The ONS said “given this pattern has only been seen at one time point it is difficult to discern whether this is a trend in the data or a temporary divergence in the figures”.

Monday, 18 December 2017

SNP asked to find extra £150 million in budget or lose Green's support

On Friday evening the Scottish Green Party told Nicola Sturgeon's government that she must find an extra £150 million for funding of Scottish local councils in order to gain the parties support. 

Since the SNP is a minority government, they must gain three votes from another part in order to pass the budget. 

The Greens are seen as the most likely to back the budget, as they supported last year's. However, their support was only won after two-months of negotiations saw the government make concessions totalling £220m of extra spending - including £160m for local authorities.

Green MSP Andy Wightman said "We want a real terms increase (in council budgets) and that would involve somewhere in the region of £150m as I calculate it this morning".

This figure is similar to the £153m that council body Cosla says has been cut from council budgets in real terms, although Mr Wightman said there were "various figures".

In Thursday's budget, a 3% council tax increase was offered to local councils to use if they wish, if they choose to implement the rise, then funding for local authorities could be covered. 

Public-sector trade unions are dismayed that Mackay did not increase funding for Scotland’s 32 councils to allow them to match an offer he made to other civil servants, police and nurses to increase their wages by up to 3%.

Dave Watson, a Scottish official with the public-sector union Unison, said pay policy “was moving in the right direction but it’s not been met with proportionate funding. What is absolutely clear is it is not funded at all for local government.”

Watson said it would cost councils roughly £210m to fund the pay deal, so the £150m extra being demanded by the Greens would be quickly swallowed up.

Negotiations of where the extra £150 million could be found are ongoing, leading to speculation of a further taxation rise. 

Wednesday, 13 December 2017

Derek McKay advised against 50p top rate of tax by senior government advisor.

A report released by senior advisor to Nicola Sturgeon; Gary Gillespie has recommended against raising the top rate of tax to 50p. 

The report claims that additional rate (AR) tax payers are 'more mobile' and have 'more opportunities for reducing their tax bill compared to taxpayers on lower incomes' meaning that a rise of 5p could lead to capital flight. 

It is estimated that around 20,000 adults in Scotland currently pay the top rate of tax, under 1% of the population, it only applies to earnings over £150,000. Many of those paying AR are involved in mining, professional service and financial services that tend to compete globally for staff, meaning that these higher earners are potentially more mobile. 

The report does concede that there are many factor as to why you might wish to stay in Scotland, including quality of public services, education and culture. Factors that might mitigate against mass migration of top earners. 

It warns that in a worst case scenario raising the top rate of tax to 50p could cost the Scottish Government £24m a year in lost revenues. 

Gillespie said: “However our analysis also notes that a lower increase in the additional rate could mitigate the behavioural response and provide a greater opportunity to raise revenues."

One of the members of the council of economic advisers, top economist Anton Muscatelli, has called for a "slight increase" in taxes for what he describes as “the cost of living in a civilised society”. 

The advice comes the day before the Scottish budget is announced. Nicola Sturgeon has said that 'the time is right' to consider a taxation rise.
Last month the SNP published a “discussion paper” on income tax which set out four scenarios, the first of which proposed raising the higher and additional rates by 1p each.

Reform Scotland, meanwhile, have argued Scotland should not alter its income tax rates from UK levels until other taxes such as VAT and business tax are also devolved.Chairman Alan McFarlane said: 
“Altering the Income Tax rate to make it different from Westminster, far from being beneficial, could be detrimental to Scotland’s economic performance and lead to a drop in revenue available to spend on public services. The Scottish Government has itself acknowledged the potential for adverse behavioural change in response to income tax policies. “We need more tax levers to equip us to introduce coherent reform. There are viable options with precedent, including VAT and Corporation Tax."

The budget will be announced tomorrow at 2pm Thursday the 14th of December.

Monday, 11 December 2017

The Federation of Small Business urge ministers to 'Steady Economic Ship'

In a report published today, the Federation of Small Business (FSB) found that three fifths of businesses don't want the government to change income taxation, with two thirds believing it would be detrimental to the economy. 

The survey conducted this November on 315 Businesses in Scotland, found that 20.7% wanted a decrease in taxation and 21.0% would welcome an increase. 

The poll comes just before the draft budget is announced on Thursday. FBS have written to Cabinet Secretary Derek Mackay with the results, asking for a 'steady economic ship' in times of uncertainty. 

The First Minister has spoken about taxation increases to fund public spending in the last few months, the extent of which will be revealed in Thursday's budget.

Andy Willox, FSB’s Scottish policy convenor, said: “A clear majority of those that run their own business in Scotland don’t want the Finance Secretary to increase income tax rates. Those asked warned of the impact on the wider economy, and little wonder with pressure on household incomes and uncertainties about the impact of Brexit.”

The research from FSB also showed that 68% of businesses are on the basic tax rate, meaning they earn between £11,501 and £43,000.

The government's four alternative approaches include having anything up to six tax bands, while three out of the four feature a 50p additional rate and incremental changes to the basic and higher rates.

The FSB survey found that just under half of business owners preferred the proposal with the largest number of bands and rates.

Andy Wilcox added: “This data scotches the myth that business owners are all high earners. Further, when forced to choose between Ministers’ palette of tax options, the largest share of business owners chose what could be regarded as the more progressive option.

“They seem to be less worried about their own wallets and more concerned about the wider economy.

“That’s why, overall, smaller businesses don’t want to see tax change. As FSB warned ahead of the UK Budget, trading conditions are already turbulent, and additional tax hikes – for them or their customers – are not what we need right now. The Scottish Government must resist the siren song of a big change budget, and do what they can to steady Scotland’s economic ship.”

Source: FBS Scotland

Friday, 8 December 2017

£15 million grants available through 'Tampon Tax' fund

Following legislation from the Westminster government's 2015 Autumn statement, VAT on sanitary wear is now used to provide grants for women's health support and economic development charities. 

There are currently grants of £1 million pounds each available to charities that support women's mental health and wellbeing, as well as organisations that tackle violence against women and girls. 

Tracey Crouch, the minister for civil society said: "The tampon tax fund is already making a real difference to the lives of women and girls across the country. We are ensuring that the money generated from sanitary products continues to support good causes and address the serious issues that women of all ages face."

She also specifically welcomed applications for projects that support women and girls "across multiple regions" of the UK.

The tax has been criticised as it is based on tampons and sanitary towels being classed as 'luxury items', rather than necessary to menstruating women. 

The recipients of funding from the Tampon Tax were also called into question in October when an anti-abortion charity received £250,000 from the government. 

Period poverty has also been highlighted world world as lack of sanitary products can prevent school attendance and negatively impact girls education. 

Applications are open until midnight on Sunday 28 January for projects delivered over either one or two years.

Source: third source news.

Monday, 4 December 2017

Joseph Rowntree Foundation finds an increase in children and pensioners living in poverty

Figures from the think tank show that 300,000 more children and 400,000 more pensioners are now living in poverty than in 2012-13: the first sustained increase in child poverty for 20 years. 

14 million people in the UK currently live in poverty – more than one in five of the population. While poverty levels fell in the years to 2011-12, changes to welfare policy – especially since the 2015 Budget – have seen the numbers creep up again.

The report's release follows the entire social mobility commission quitting over the weekend citing a lack of progress towards a 'fairer Britain'.

Alan Milburn, the government tsar for social mobility said on his resignation that the venture had been rife with “indecision, dysfunctionality and lack of leadership” seeing 'little hope' that Theresa May's government would be able to contribute to a more equal society. 

Frances O'Grady the general secretary of the Trade Unions Congress said: “Working people are not getting a fair deal from the economy, with real wages still worth less than a decade ago.” She called for a minimum wage of £10 an hour.

JRF chief executive Campbell Robb said: “These worrying figures suggest that we are at a turning point in our fight against poverty. Political choices, wage stagnation and economic uncertainty mean that hundreds of thousands more people are now struggling to make ends meet.”

Oxfam’s Rachael Orr said: “It’s not just working adults who are affected, but their children too, and it’s a real worry to see progress on child poverty going into reverse.”

Chief executive of the Child Poverty Action Group Alison Garnham added: “As today’s report shows, we know how to reduce child poverty in the UK – we’ve done it before. Yet at the start of a sustained rise in the rate of child poverty – bewilderingly – there is inaction. The question the report begs is why are we not investing in our children?

“Families with children have had a decade of cuts to their incomes and the damage is showing. Unless there is action now to protect the living standards of low-income families, we will pile up problems for future generations and for the UK economy.”

Source: Joesph Rowntree Foundation.