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The National Insurance rise of 1.25% comes into force today

   News / 06 Apr 2022

Published: 06 April 2022
Location: London, UK

By Suzanne Evans, Director, Political Insight

The National Insurance rise of 1.25% comes into force today. The Government says the tax increase will raise £39 billion over the next three years to help reduce the Covid-induced NHS backlog and later reform adult social care for the long-term.
The Times claimed yesterday that PM Boris Johnson is close to making a formal statement about plans to “outsource” the processing of asylum seekers to Rwanda. He is said to want to trial the scheme after a surge in the number of migrants crossing the English Channel. Under the plans, the government would fly asylum seekers to Rwanda for processing and settlement, a service for which Britain would pay Rwanda millions.  However, the discussions have been shrouded in secrecy, with ministers referring only to “country X” during meetings, and similar attempts to “offshore” the processing of migrants to Albania and Ghana collapsed after The Times disclosed the discussions. Also, the Nationality and Borders Bill, which will enable asylum seekers to be processed abroad, has not yet gained Royal Assent and is facing opposition in both the Commons and the Lords. So far this year some 4,550 migrants have crossed the Channel in small boats, more than triple the number that had arrived by this time in 2021.
The Liberal Democrats are launching their local election campaign by calling for a tax cut after calculating that the Treasury will pocket almost £40 billion in extra VAT receipts due to soaring inflation. Party analysis of Office for Budget Responsibility figures shows that Chancellor Rishi Sunak will receive a VAT windfall of £38.6 billion over the next four years, with working households facing a £428 higher VAT tax bill in 2022-23 alone due to rising shop prices. Lib Dem leader Sir Ed Davey plans to put the cost-of-living crisis “at the heart” of the party’s local elections campaign, officials said. They want an emergency cut to VAT, slashing the top rate from 20% to 17.5% for one year, a move they predict would save families an average of around £600.
ITV is said to be interested in buying Channel 4, which is to be privatised by 2024 with an estimated price tag of around £1bn. ITV is understood to have taken advice from its bankers Credit Suisse and Robey Warshaw in preparation for the start of a formal sale process. There is speculation that Sky,Olympics broadcaster Discovery and Channel 5 owner Paramount may also be interested.
Julian Knight MP, chair of the Commons Digital, Culture, Media and Sport Committee has said the government's decision to push ahead with plans to privatise Channel 4 represents "a big risk" and suggested the government’s motive for pushing ahead could be “revenge”. He said on Twitter: "Now, elephant in the room time - is this being done for revenge for Channel 4's biased coverage of the likes of Brexit and personal attacks on the PM? The timing of the announcement 7pm, coinciding with Channel 4 news, was very telling". “Undoubtedly, across much of the party - there is a feeling of payback time,” he added.
The BBC is to replace June Sarpong's £267,000 a year role as diversity chief. Sarpong was appointed in 2019 and has been criticised for earning a six-figure salary while working just a three-day week. The broadcaster has now advertised for a newly-created position of “director of diversity and inclusion”, which will pay below the BBC salary declaration threshold of £150,000. Whoever takes on the role will have to improve racial inclusion and ensure 25% of staff by 2027 come from lower-income backgrounds.
The European Union is poised to roll out a fifth package of sanctions against Russia. Commission President Ursula von der Leyen said the EU needed to ramp up pressure on Russian President Vladimir Putin after “heinous crimes” carried out around Kyiv, with evidence that Russian troops may have deliberately killed Ukrainian civilians. Consequently, a complete ban on Russian coal imports looks likely. The EU currently buys some 84 million tonnes of coal annually from the country, approximately one third of Russia’s total coal exports.  A block on transactions with four key Russian banks, and the closure of EU ports to Russian vessels, have also been confirmed by von der Leyen, who added the EU is also considering targeting oil. Other sanctions reportedly being lined up include a ban on importing rubber, chemicals, wood, spirits, and other commodities worth a total of €9bn (£7.5bn) per year. The EU is also expected to ban the sale of some €10bn (£8.3bn) worth of goods to Russia, including semiconductors, computers and electrical equipment.
The latest Markit Purchasing Managers' Index (PMI) survey data highlights the damage being inflicted on the Russian economy by existing sanctions imposed by the EU, the US, and the UK.  The monthly survey registers growth and contraction within industry, with a score above 50 representing growth and anything below that a contraction. Yesterday’s number for Russia's services sector last month came in at 38.1, down from 52.1 in February and the fastest contraction in activity since May 2020, during the early stages of the pandemic. A “substantial drop in client demand and new orders" was noted, with demand weak from both domestic and foreign customers. Broader measures taking in Russia's manufacturing sector were even worse: measuring 37.7 in March, down from 50.8 in February. Employment in Russia's services sector also declined at the sharpest pace since June 2020 as employers shed jobs. Business confidence in the sector was also at its lowest level in two years. “These grim figures are consistent with Russia entering a very deep recession,” Sky News reports.

There is increasing evidence that China’s economy is slowing sharply because of the authorities’ insistence on pursuing a ‘zero covid’ policy.  Activity in China’s services sector contracted at the steepest pace in two years in March, according to the closely watched Caixin purchasing managers’ index (PMI); it dived to 42.0 in March from 50.2 in February. A drop below the 50-point mark separates growth from contraction. The same survey showed a contraction in the country’s giant manufacturing sector, and the entire 26 million population of financial powerhouse Shanghai is locked down. At least 38,000 medical personnel have been deployed to the city, along with 2,000 military personnel, and the city is mass-testing residents. The ongoing closures threaten to cause major disruption to already very stretched global supply chains.
Sky News has learnt that Hyve, the London-listed exhibitions group, has struck a £100m deal to sell its business in Russia. City sources said the sale price would trigger a loss on disposal, but was nevertheless likely to be welcomed by shareholders in the wake of Vladimir Putin's invasion of Ukraine. The buyer is understood to be a Middle East-based entity. Hyve's biggest show in Russia is Mosbuild, an annual event focused on the construction and interiors industries.
The UK's car industry saw its worst March for new car sales in 24 years last month, according to the latest figures from the Society of Motor Manufacturers (SMMT). Just 243,479 new cars were registered last month, down 14.3% on March 2021. Falling car production has been blamed on an ongoing global shortage of computer chips, although electric car sales are rising rapidly, the SMMT said.
The cost of a new-build home is rising faster than the cost of an existing property. New builds shot up 25.4 per cent annually, to £367,219 in November 2021, according to the latest data from the Land Registry which is based on actual home sales. This is compared to an annual rise of 8.6 per cent to £264,684 for existing homes.
Police and fire officers have been placed on standby to maintain order at Manchester Airport amid warnings that chaos at the check-in desks will continue for days. Andy Burnham, the mayor of Greater Manchester, said that he is ready to call in emergency services to help following a string of cancelled flights and hours-long queues for passengers. Meanwhile, Manchester Airport's managing director Karen Smart has announced she is stepping down “to pursue fresh career opportunities”. She will be replaced by Ian Costigan, a senior executive at the airport, on an interim basis.
Tens of thousands of P&O Ferries customers will have their Easter holidays ruined this weekend after they were urged to stay away from the port of Dover, The Telegraph said. P&O, DFDS, and the Channel Tunnel have a reciprocal arrangement allowing them to accept each other’s tickets in the event of an emergency, but rival ferry operators will be unable to honour P&O tickets this weekend because their services are already full of holidaymakers going to France. P&O’s ferries are still moored up in Dover, following the row over their sacking of 800 British workers. The Maritime and Coastguard Agency has concluded the ferries have since failed to meet emergency equipment, crew training and documentation standards, meaning they cannot set sail.
A former P&O Ferries chef says he is suing the company for unfair dismissal, racial discrimination, and harassment. The BBC reports John Lansdown has filed a tribunal claim against the company and its chief executive, seeking financial compensation and exemplary damages of up to £76million. “This is not just about me,” he said. “Seven hundred and ninety-nine of my seafaring family have lost their livelihoods, their way of life, their homes for half the year”.  Last week, Business Secretary Kwasi Kwarteng said the Insolvency Service had started “formal criminal and civil investigations” in to the on-the-spot sackings.
Housebuilders Taylor Wimpey, Berkeley, Persimmon and Crest Nicholsonsay they have signed the government's pledge to make properties safe following the Grenfell Tower fire. Taylor Wimpey estimates it will pay a total of around £245 million in fire safety remediation works, while Persimmon estimates costs of £75 million. Crest Nicholson said the extra cost of making properties safe would be up to £120m over several years. The 2017 blaze at Grenfell Tower in west London killed 71 people when exterior cladding caught fire. Fears about further fires have left owners of properties with similar cladding fearing for their lives and unable to sell their homes.
Sky News says Chancellor Rishi Sunak has donated more than £100,000 to Winchester College, one of the most expensive private schools in the country, where he was Head Boy during his own time there.
Elon Musk has been given a seat on Twitter's board after becoming the company's single biggest shareholder, buying a 9.2% stake in the company worth around $2.9bn (£2.3bn). Musk, who has more than 80 million followers on Twitter, said he was “looking forward to working” with the board “to make significant improvements to Twitter in coming months” and posted a poll on whether Twitter should have an ‘edit’ button.  Twitter has subsequently confirmed it is working on an edit button. CEO Parag Agrawal tweeted a welcome to Musk, saying: “He’s both a passionate believer and intense critic of the service which is exactly what we need on @Twitter, and in the boardroom, to make us stronger in the long-term”. Founder Jack Dorsey – who owns a stake in the social media platform just a quarter of the size of Musk’s - tweeted: “I’m really happy Elon is joining the Twitter board! He cares deeply about our world and Twitter’s role in it”.

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