2018 Spring Statement – the business reaction

2018 Spring Statement – the business reaction

Business groups have responded to Chancellor Philip Hammond’s Spring Statement speech.

The Federation of Small Businesses (FSB) gave a broadly positive response, and welcomed the Chancellor’s commitment to tackling the issue of late payments to small firms. Mike Cherry, FSB National Chairman, stated: ‘The Chancellor is absolutely right to commit the government to eliminate the scourge of late payments, which place cruel financial pressure on more than eight out of ten small businesses.

‘The Chancellor explicitly put himself on the side of the UK’s millions of small businesses and self-employed.’

The response from the British Chambers of Commerce (BCC), however, was decidedly lukewarm. Commenting on the speech, Dr Adam Marshall, Director General of the BCC, said: ‘As deficit and debt levels improve, the Chancellor must resist calls to pour money into politically-attractive, short-term spending priorities.

‘A far stronger push is needed to fund and fix the fundamentals here in the UK over the coming months, and business wants the Chancellor to use his Autumn Budget to double down and spend to improve digital connectivity, deliver further road and rail improvements, strengthen the UK’s energy security and build more houses.’

Meanwhile, the Confederation of British Industry (CBI) praised the Chancellor for backing British businesses to ‘secure the UK’s future prosperity in a new economy’.

Rain Newton-Smith, Chief Economist at the CBI, said: ‘It’s great to see an upgrade in the state of our public finances, and rightly sensible to set more aside for a rainy day with Brexit uncertainty still weighing on the economy.

‘The CBI has long called for just one Budget in a year, creating more room for the government and business to get to work. But the Spring Statement is still important, and this one has proved more than welcome in setting the tone and vision for the country’s economic future.’

2018 Spring Statement – what to expect

2018 Spring Statement – what to expect

Chancellor Philip Hammond will deliver his first Spring Statement today at 12.30pm. We will keep you up to date on the latest forecasts, and a full summary will appear on our site tomorrow morning.

The Chancellor will respond to the latest economic and public finance forecasts from the Office for Budget Responsibility (OBR), and announce some areas for consultation on the longer-term tax challenges.

Business groups, including the Trades Union Congress (TUC), have called on the Chancellor to take necessary action to help to boost UK growth, raise wages and invest in public services. TUC General Secretary, Frances O’Grady, said: ‘The government is paying too little attention to major problems in the economy.

‘The Chancellor should not wait until the Autumn Budget to act. We need urgent action to strengthen the economy and get wages rising.’

Meanwhile, the Federation of Small Businesses (FSB) has urged Mr Hammond to reinforce his commitment to give business rates refunds to those firms adversely affected by the so-called staircase tax, and retain his promise to abolish Class 2 national insurance contributions (NICs).

Research suggests average UK small business owed £63,000 in late payments

Research carried out by commercial data provider Dun & Bradstreet has suggested that the average UK small business is owed £63,881 in late payments.

A further 11% of small firms are owed between £100,000 and £250,000 in such payments, Dun & Bradstreet found.

A lack of payment has created cashflow issues for 35% of firms, whilst 29% of businesses have to delay paying other suppliers as a result of late payments. A worryingly high 58% of businesses stated that late payments put their business at risk of failure, Dun & Bradstreet found.

In addition, 36% of firms don’t perform thorough credit checks on their clients. Dun & Bradstreet urged businesses to make sure that they have detailed knowledge of a client’s payment behaviour prior to entering into a contract with them.

Commenting on the matter, Edward Thorne, UKI Managing Director at Dun & Bradstreet, said: ‘Although initiatives like the Prompt Payment Code are helping to highlight the issue, late payments pose a very real risk and can have a significant impact on the financial success of smaller businesses.’

TUC analysis of gender pay gap suggests women ‘work for free for two months’

TUC analysis of gender pay gap suggests women ‘work for free for two months’

A Trades Union Congress (TUC) analysis of gender pay inequality has suggested that, on average, women have to wait 67 days before they get paid, when compared to the average man.

The TUC data was published on Women’s Pay Day – the day when the average female worker ‘starts to be paid the same rate’ as the average male employee, said the organisation.

The analysis found that, in some industries, large pay discrepancies exist: in education, the current gender pay gap is 26.5%; in health and social work, the gender pay gap is 18.9%; and in finance and insurance, the gender pay gap is 35.6% – constituting one of the biggest differences.

The current average gender pay gap for full-time and part-time employees in the UK stands at 18.4%, the TUC stated.

New rules introduced from 6 April 2017 mean that large businesses are required by law to publish their gender pay gap figures on their website. Voluntary and private sector employers with 250 employees or more must publish their figures by 4 April 2018. Public sector employers must publish their figures by 30 March 2018.

TUC General Secretary, Frances O’Grady, said: ‘Companies publishing information on their gender pay gaps is a small step in the right direction, but it’s nowhere near enough. Women in the UK will only start to get paid properly when we have better-paid part-time and flexible jobs. And higher wages in key sectors like social care.’

Brexit ‘should not overshadow growth’, BCC warns government

The British Chambers of Commerce (BCC) has warned the government that Brexit should not overshadow its plans for boosting growth in the UK economy.

The business group said that the biggest challenges facing the UK are not related to exiting the EU, but to ‘getting the basics right’.

It has urged for the fundamentals to be fixed first, and called on the government to focus on building houses, stabilising the UK’s apprenticeship and training system, and eradicating mobile phone ‘not-spots’.

The BCC also stated that firms want to see a ‘radical, optimistic vision for the future of the UK’.

‘Businesses know that success so often depends on getting the basics right first,’ said Dr Adam Marshall, Director General of the BCC.

‘The same holds true for the UK economy. It’s time for Westminster to join us in focusing on the basics. We must equip this country for future success – by fixing the fundamentals first.’

A spokesperson for the Department for Business, Energy and Industrial Strategy replied: ‘The government’s commitment to boosting productivity and the earning power of people and places across the UK remains steadfast.

‘Through our industrial strategy we are building a Britain fit for the future, with a plan to help businesses create better, higher-paying jobs in every part of the UK.’

Government publishes Making Tax Digital for VAT legislation

Government publishes Making Tax Digital for VAT legislation

The government has published the Value Added Tax (Amendment) Regulations 2018, which outline the requirements for Making Tax Digital for VAT.

The new regulations are set to take effect from 1 April 2019, and will apply to VAT-registered businesses with a taxable turnover above the VAT registration threshold (currently £85,000).

The new Making Tax Digital (MTD) regime will ultimately move taxpayers to a fully digital system, which will require businesses and individuals to register, file, pay and update their information via a secure online tax account.

However, keeping digital records and making quarterly updates will not be compulsory for taxes other than VAT before April 2020.

HMRC is live piloting MTD for VAT from April 2018 and a number of UK businesses have been invited to participate in the pilot scheme. Participating businesses will be able to submit VAT returns using the new digital system, and will have the opportunity to influence how the system looks and feels.

HMRC plans to widen the pilot over the coming months.

Figures show significant increase in contactless card fraud

Figures show significant increase in contactless card fraud

Contactless card fraud increased to £5.6 million in the first half of 2017, the latest figures published by UK Finance show.

This figure comprises money stolen using the contactless function on both credit and debit cards, as well as from mobile services, such as Apple Pay. The current maximum spending limit for contactless payments is £30. Some retailers have called for this to be raised to £50 – however, finance experts are in agreement that the limit should not rise.

Sarah Lewis, Head of ID and Fraud Strategy at Equifax, said: ‘I think the £30 limit is sensible and it is safer for it to be kept at this level. If it increases, there’s more incentive for criminals to steal contactless cards, and the level of contactless fraud is likely to increase.’

Although the contactless card fraud figures appear to be significant, they are relatively low compared to the overall amount of money spent using this method of payment: around £23.23 billion was spent using contactless cards in the first half of 2017. However, with this method of payment becoming increasingly popular, and with experts stating that ‘cash and cheques are dying out’, this type of fraud is likely to increase.