Figures reveal significant increase in UK worker bonuses

New figures from the Office for National Statistics (ONS) show that bonuses paid to UK workers have risen to almost the same levels as 2007/08, before the global financial crisis.

During the year 2014/15, the total of all bonus payments in the UK was £42.4bn, a rise of 2.7% on the previous year and in cash terms just 0.1% below the record level reached in 2007/08.

Bonuses in the financial and insurance sector were actually down by £1.5bn on the previous year and still below their pre-downturn levels. But in the rest of the economy bonuses were significantly higher, up 9.7% to £28.8bn, which is £5bn higher than their pre-crisis peak.

According to the ONS, the professional, scientific and technical services industry had the largest increase in bonuses in 2014/15, up £0.9bn on the previous year. Next was the information and communication sector, which saw an increase of £0.5bn.

However, the £1.5bn fall in bonuses in the finance and insurance sector may be partly explained by the timing of bonus payments, because, as the ONS has said: ‘this industry is more prone than others to concentrate their payments into a December-to-March ‘bonus season’, and in 2013, a number of bonus payments were deferred from March into April.

‘Thus the 2013/14 figure in this sector might have been atypically high, with some employees receiving payments both in April 2013 and March 2014, twice within the same reporting period’.

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CBI calls for new tax breaks to encourage investment in mid-sized businesses

The Confederation of British Industry (CBI) is calling for the introduction of new tax incentives to boost investment in medium-sized firms.

In a joint report entitled ‘Stepping Up: fixing the funding ladder for MSBs’, the CBI and a major financial advisory firm have outlined a long-term plan for helping businesses achieve their potential.

The report proposes the introduction of new funding vehicles, labelled ‘Long Term Lending Trusts’, which would provide income tax relief to savers investing in long term medium-sized business debt funding.

The CBI said this would work in a similar way to the existing Venture Capital Trust scheme, and would cost the government an estimated £310 million a year. However, it argues that the measure ‘could unlock billions of new long-term loans.’

Commenting, CBI Director-General John Cridland said: ‘Building up a British ‘mittelstand’ of successful medium-sized businesses is mission critical to our economic future. With little recognition, these firms quietly toil away, creating jobs in communities and boosting growth in every corner of the nation.

‘A key part of unlocking their enormous potential is for the Government to fix the funding ladder, filling in the gaps in supply of long-term finance that the UK’s brightest growing firms need to succeed.’

He continued: ‘Incentivising savers to invest in our businesses for the long-run is a win-win. It offers them attractive, alternative investment packages, while helping propel medium-sized businesses along their growth path, boosting the economy as a whole, and enhancing productivity.’

The report also suggests that the Enterprise Finance Guarantee initiative should be adapted to reward lenders for providing longer term loans.

According to the CBI, the ‘forgotten army’ of Britain’s medium-sized businesses account for 1.8% of companies, but generate almost a quarter of private sector revenue and employ 16% of the working population.CBI

Increase in income tax receipts sees first July surplus for three years

Government borrowing was in surplus by £1.3bn in July, figures from the Office for National Statistics (ONS) have shown.

This is the first time that the UK government has spent less than it received in taxes and other forms of income in the month of July since 2012.

The surplus is largely due to an increase in income tax receipts. Some £59.1bn in income was received in July 2015, which is about 4% higher than last year’s figure.

In terms of spending, the ONS says that £3.2 billion was saved on the cost of the ‘day-to-day’ activities of the public sector (the current budget deficit), while £1.9 billion was spent on infrastructure (net investment).

Although the ONS states that annual borrowing has been falling since its peak in the financial year ending March 2010, public sector net debt is still currently at £1.5 trillion (excluding public sector banks), equivalent to 80.8% of GDP.

Chancellor George Osborne said: ‘The recovery is well established, tax revenues are up and we have more than halved the deficit. But with debt over 80% of GDP, the job is not done.’

The ONS said that the £1.3bn surplus was ‘broadly in line with market expectation’.money

Withdrawal of ONS surveys to ‘cut business costs’

The Office for National Statistics (ONS) has unveiled plans to change the way it calculates its economic growth estimates, cutting the time businesses need to spend on form-filling.

The ONS intends to partially replace monthly business surveys, which are currently used to estimate growth, with data gathered from VAT returns submitted to HMRC.

Some 45,000 surveys are currently sent out each month, which is thought to cover around 55% of the economy. However, using VAT turnover data should increase this coverage substantially, with around 1.75 million companies required to file VAT returns each month.

The ONS said it expects the number of surveys sent monthly could be reduced by up to half once the transition to the new system is complete.

It says the move will cut its costs by 40%, and result in a 50% reduction in compliance costs for participating businesses, with small and medium-sized firms expected to save the most.

Commenting on the plans, Nick Vaughan, director of national accounts and economic statistics at the ONS, said: ‘These plans are part of a wider ONS agenda to develop new and better sources of data and keep producing the highest quality statistics possible.’

The ONS aims to complete the transition to VAT data by 2020.

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New apprenticeships plan is unveiled

Prime Minister David Cameron has outlined details of how the Government intends to fulfil its pledge to create three million apprenticeships by 2020.

Calling on businesses to invest in their workforce, the Prime Minister revealed that companies bidding for government contracts worth more than £10m will now be required to ‘demonstrate a clear commitment to apprenticeships’.

Mr Cameron also invited employers to give their views on plans to introduce a new apprenticeship levy, which would see employers invest in a training fund.

The consultation on the new levy will run until 2 October 2015, and the measure is expected to be in place by April 2017.

The British Chambers of Commerce (BCC) welcomed the plans. ‘Apprenticeship schemes can play a part in meeting important ambitions to boost skills and drive-up productivity,’ said the BCC’s director general, John Longworth.

‘Government policy is currently too focused on major employers, but equal effort ought to be put on encouraging and supporting smaller businesses to offer apprenticeships,’ he added.

However, manufacturers’ organisation the EEF has raised questions over the proposals.

‘With little detail of the level of the levy, who will be required to pay it and how much government will give back in return, manufacturers have a right to remain sceptical that the levy will create the three million additional quality apprenticeships that we all wish to see,’ commented Terry Scuoler, chief executive at EEF.APPRENTICE

Retail sales grow again, but at a lower than expected rate

Office for National Statistics (ONS) figures show that UK retail sales volumes rose by 0.1% in July – up 4.2% on the same period a year ago.

Falls in sales of clothes and petrol were offset by strong growth in household goods sales, particularly electrical goods and furniture which were both up almost 20% on the month. Internet sales were up by 13% and accounted for 12.6% of all retail sales.

However, despite an improvement on the figure in June, when sales fell, both the monthly and annual figures were lower than expected.

Sterling fell slightly against both the dollar and the euro following the release of the data, easing pressure on the Bank of England to raise interest rates.

British Chambers of Commerce spokesman David Kern called the annual sales growth ‘very strong’, but said the monthly figure was ‘a reminder the recovery is still fragile. Given that falling store prices show deflation in the retail sector, we believe that the clamour in some quarters for early interest rate increases is premature.’

The year-on-year data showed growth for the 28th consecutive month, the longest period of sustained year-on-year growth since May 2008. Meanwhile, the ONS said the underlying pattern in the data, as suggested by the three-month on three-month movement in volumes, showed growth for the 29th consecutive month, which is the longest period of sustained growth since records began in June 1996.

Average store prices fell by 3% compared to the previous year, although this is largely due to an 11% fall in petrol prices.money

UK fares poorly for skilled jobs

The Chartered Institute of Personnel and Development (CIPD) has reported that 58.8% of university graduates work in unskilled jobs – stating that the UK has reached ‘saturation point’ for availability of skilled jobs.

Ranked by the Organisation for Economic Co-operation and Development (OECD), the UK has one of the highest rates of graduates working in unskilled jobs, with only Greece and Estonia performing worse.

Peter Cheese, CIPD Chief Executive, said: ‘The assumption that we will transition to a more productive, higher value, higher skilled economy just by increasing the conveyor belt of graduates is proven to be flawed.

‘It’s crucial we as a nation take stock now of whether our higher education system is delivering desired returns for graduates, for organisations, and society.’

The report shows that an over-availability of graduates means that employers are increasingly asking for degrees from applicants for lower-skilled jobs, which may previously have been filled by individuals on apprenticeships.

The CIPD has called for a discussion with the Government to ensure the availability of high-skilled jobs in the UK.

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