Accountants play ‘vital role’ in reducing corruption, study suggests

Research published by the International Federation of Accountants (IFAC) has suggested that accountants play an important role in helping to reduce corruption levels.

The IFAC’s study, which was conducted by the Centre for Economics and Business Research (CEBR), revealed that the higher the number of accountants in a workforce, the lower the overall level of corruption.

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Accountants also have a greater impact in nations with stronger governance structures, the study highlighted.

However, the IFAC also recognised business leaders, the government and the financial sector as being key to combating corruption, alongside the accountancy profession.

Fayez Choudhury, Chief Executive Officer of the IFAC, commented: ‘The study confirms that the accountancy profession is a crucial part of strong national governance architectures that confront corruption, in partnership with good government and strong businesses.

‘And vitally, the study shows professional ethics, education and oversight – at the core of the global accountancy profession – are key to our positive impact in tackling corruption.’

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UK workers’ wages ‘fell by 1% per year’ following financial crisis, TUC suggests

Wages for workers in the UK fell drastically following the 2008 financial crisis, research from the Trades Union Congress (TUC) has suggested.

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The TUC’s analysis of International Labour Organisation (ILO) figures outlined that, from 2008 to 2015, UK real wages fell by 1% a year.

As a result, the UK ranks 103rd out of 112 countries for wage growth during the post-recession period. The business group warned that this ranking is unlikely to improve any time soon.

Wages for German workers, however, rose by 0.9% per year during the period, while wages for workers in France rose by 0.6%, the analysis revealed.

The data also showed that average wage growth across all countries was 2.3%. The median was 1.6%.

Frances O’Grady, General Secretary of the TUC, commented: ‘UK workers suffered one of the worst pay squeezes in the world after the financial crash. And with food prices and household bills shooting up again, another living standards crisis is a real danger.’

ICAEW urges Chancellor to reconsider timetable for implementing key initiatives

The Institute of Chartered Accountants in England and Wales (ICAEW) has called for Chancellor Philip Hammond to re-evaluate the timetable for the successful implementation of key government initiatives, such as Making Tax Digital (MTD) and the Apprenticeship Levy.

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In a letter to the Chancellor ahead of the 2017 Spring Budget on 8 March, the Institute warned that the cumulative effect of MTD, the Levy and the obligation to report payment practices, combined with uncertainty caused by Brexit, may ‘act to hold business back’.

The ICAEW has recommended that the initiatives be implemented gradually over a period of ‘at least ten years, if not longer’.

A call for additional resources to be provided to the Regulatory Policy Committee was also made by the Institute.

It believes that this may help the Committee to ‘better measure the impact of the new regulations’, and supply ‘comprehensive advice’ on the timing of their introduction.

Michael Izza, Chief Executive of the ICAEW, commented: ‘Concerns over the time commitment required from a growing compliance list, or the confusion caused by the sheer churn in new regulation, all create an environment which does not incentivise the kinds of productivity-enhancing investment the government wants business to carry out.’

Green Paper on defined benefit pensions is a ‘sensible start’, says CBI

The Confederation of British Industry (CBI) has labelled a new government Green Paper on defined benefit pension schemes a ‘sensible start to a complex conversation’.

The Green Paper, published this week, is intended to look at the security and sustainability of defined benefit pension schemes – also known as ‘final salary’ schemes.

Currently, around 11 million people in the UK rely on a defined benefit scheme for all or part of their retirement income and defined benefit pensions hold around £1.5 trillion of assets.

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However, increased life expectancy and changes to working patterns have raised doubts about their long-term viability. The Green Paper aims to be a ‘wide ranging call for evidence from employers, the pensions industry and consumers’ about the current state and future direction of defined benefit pensions.

Member protection, funding and investment, scheme affordability and consolidation will be reviewed as part of the consultation, and the government will also consider strengthened powers for the Pensions Regulator.

Neil Carberry, Director of People and Skills at the CBI, said: ‘The Green Paper is a sensible start to what is a complex conversation about how we both boost growth and honour pensions promises.

‘Firms will welcome proposals to offer schemes greater flexibility, as well as proportionate changes to the powers of the Pensions Regulator, as businesses carry the bulk of the costs of failure through the PPF levy.

‘Actions like moving to the official measure of inflation for indexation (CPI) and encouraging different ways to accurately and appropriately measure the funding position of schemes could provide real support to businesses.’

The Green Paper can be viewed here: www.gov.uk/government/consultations/defined-benefit-pension-schemes-security-and-sustainability.

Chancellor claims he is ‘listening’ to business rates concerns

Ahead of his first Budget speech on 8 March, Chancellor Philip Hammond has told Conservative MPs that he is ‘listening’ to concerns about an imminent re-evaluation of business rates.

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At a recent meeting of the Conservative backbench 1922 Committee in Westminster, a number of MPs raised concerns about businesses in their constituencies facing significantly increased costs when the new rates come into effect in England on 1 April. Revaluation processes are also underway in Scotland and Wales, with Northern Ireland having carried out a revaluation in 2015.

Conservative Andrew Bridgen, the MP for the North West Leicestershire constituency, has said that some businesses in his area are facing ‘eye-watering’ rises, with one firm’s monthly rates increasing from £50 to £700. Along with others, he has called for Mr Hammond to take action on business rates in the Budget to avoid high street business closures and potential damage to the economy.

However, a spokesperson for the Department for Communities and Local Government insisted the rate changes were ‘fairer’ and ‘will mean businesses in 80% of council areas will see an average fall in their business rates bills due to revaluation before inflation’.

Meanwhile, the Federation of Small Businesses (FSB) and Camden Town Unlimited Business Improvement District have called for the Chancellor to make a special London business rate concession.

Their survey of businesses in London found that the average micro business (businesses with less than ten employees) will be paying £17,000 in business rates in April 2017, and that 74% of respondents said that business rates was the single biggest issue affecting their business.

The FSB and Camden Town Unlimited Business Improvement District are calling for the government to create an increased inner and outer London Small Business Rate Relief (SBRR) threshold.

Small businesses ‘not ready’ for Making Tax Digital, survey finds

A survey carried out by the UK200Group has suggested that many small businesses do not feel prepared for the introduction of the government’s new Making Tax Digital (MTD) initiative, which is due to be implemented between 2018 and 2020.

The measure is intended to create a ‘transparent and accessible tax system fit for the digital age’.

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The UK200Group found that 65% of firms currently do not make use of accounting software.

It also discovered that 22% of small businesses still keep their records manually, while 27% use basic computer programmes such as spreadsheets for their bookkeeping.

The Group notes that these firms will be required to ‘adopt a full accounting package to make them compatible with the Revenue’s plans’.

Richard McNeilly, Chair of the Digitalisation Taskforce at the UK200Group, commented: ‘MTD represents the single most significant change to the UK’s system of taxation in recent times, and many of our smaller business clients are simply not ready for it.

‘If the Revenue stays committed to having businesses report and pay tax digitally by 2018, small firms have only a short time to update their systems.’

Savings gap between low and high income households widens, report reveals

A report published by insurance company Aviva has revealed that the savings gap between low and high income families in the UK has grown by 25% year on year.

According to Aviva’s latest Family Finances Report, families with low incomes have just £95 in savings and investments, whilst those with high incomes have an average of £62,885.

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25% of families in the UK are now classed as low income, whilst 8% are classed as high income.

The report also suggested that families’ savings have fallen to the lowest level in 18 months as a result of a decline in typical monthly incomes. Such incomes have fallen to £2,006 – representing a two-year low.

Paul Brencher, Managing Director of Individual Protection at Aviva, stated: ‘The gulf between low and high income families is showing signs of widening, in a worrying indication that those less fortunate are finding their finances increasingly stretched.

‘Without a financial back-up, any sudden unexpected expense could put low income families in particular under added pressure.’