Chancellor Kwasi Kwarteng will deliver his mini-budget very shortly

By Suzanne Evans, Director, Political Insight

Chancellor Kwasi Kwarteng will deliver his mini-budget very shortly, having already announced that the 1.25% rise in national insurance contributions(NICs) and a tax hike to fund health and social care planned by former Chancellor Rishi Sunak will both the scrapped. Prime Minister Liz Truss made the pledge to cut taxes and promote economic growth - and specifically to abolish the planned NIC contribution rise - during her Conservative leadership campaign. The move means almost 28 million people will be able to keep an extra £330 of their money on average next year, while 920,000 businesses are set to save £9,600 on average, as they will no longer have to pay a higher level of employer national insurance. "As a result of this tax cut, businesses will have more money to invest in becoming more productive, pay higher wages, create more jobs and support the overall growth of the UK economy," the Treasury Department said yesterday. Meanwhile, the government also confirmed the cancellation of the planned Health and Social Care Levy – a separate tax expected to raise around £13bn annually, and which was coming into force in April 2023, to aid recovery from the coronavirus pandemic. As part of the cancellation of this Levy, Kwarteng is also reversing the 1.25% increase to the rate of income tax on dividends which took effect in April 2022. Funding for health and social care services will be maintained at the same level as if the levy was in place, but via general taxation. Kwarteng said: “Taxing our way to prosperity has never worked. To raise living standards for all, we need to be unapologetic about growing our economy”.

The Bank of England (BoE) raised the interest base rate by 0.5% to 2.25% yesterday, in view of "tight labour with wage growth and domestic inflation" above targets that called for a "forceful response". The rate is now the highest it has been for 14 years, since the 2008 financial crisis. The financial markets had expected a larger rise of 0.75%, which would have marked the biggest increase in 33 years, however yesterday’s decision was still the seventh consecutive rise from the central bank. The decision-making monetary policy committee (MPC) was split 5-3-1 on the move. The MPC also voted unanimously to reduce the stock of purchased UK government bonds, financed by the issuance of central bank reserves, by £80 billion over the next twelve months, to a total of £758 billion. The BoE also warned the country could already be in a technical recession, saying it now believed the UK was on course to record a second consecutive quarter of negative growth. It had forecast just last month that the economy would grow by 0.4% between July and September, but now says the additional Bank Holiday for the day of the Queen's funeral is likely to contribute to a negative growth figure for the three-month period.

There is only one week left to use the old £20 and £50 paper banknotes before they cease to be legal tender, the Bank of England (BoE) has advised. After 30th September, the Bank will take old notes out of circulation and businesses will no longer accept them as payment. Although the majority of paper £20 and £50 notes have been replaced with the recently issued polymer versions, there are still more than £5bn in paper £20 notes, and nearly £6bn of paper £50 banknotes still circulation. "That’s more than 250 million individual £20 banknotes, and more than 110 million paper £50 banknotes," the BoE said yesterday. It also confirmed that all polymer banknotes carrying a portrait of Queen Elizabeth II will remain legal tender following her death, and the public can continue to use these as normal.

Consumer confidence has slumped to a record low this month amid deep concerns about personal finances and the economy over next 12 months, according to consumer goods’ data analyst GfK. Its consumer confidence barometer slipped five points this month to -49, the worst overall score since records began in 1974.

The voluntary real living wage has been raised again, earlier than usual. The Living Wage Foundation, which sets hourly rates employers can opt in to, has increased pay by £1 to £10.90 across the UK and by 90p to £11.95 in London. The wage is paid by more than 11,000 employers who have signed up to the scheme, leading the foundation to say that 390,000 people would benefit, to the tune of almost £2,000 for a full-time worker. The statutory minimum wage is £9.50 an hour for adults.

German energy company Uniper has agreed to keep a unit of one of its UK coal stations open for longer than planned. Earlier this year, the UK government asked Uniper about the possibility of keeping the unit at Ratcliffe power station, due to close in September 2022, open for longer. Uniper said that following discussions with National Grid ESO and "in this unprecedented situation", it is able to support the government's request and help maintain energy supply security. The unit will now remain open until the end of March next year. Uniper is also reviewing the potential for operation after this time and is planning to make the unit available until the September 2024 coal phase out date, with the power station still set to close at the end of September 2024.

The Royal Mail (RM) said yesterday that it wants to take talks with the Communication Workers Union (CWU) to arbitration, having failed to make any progress over pay rises after five months. It also said it will "review" agreements aimed at protecting jobs and conditions that were signed nine years ago when the company was privatised. Sharecast News reports that RM said the CWU has blocked any meaningful discussion on the change agenda it has set out, and has not put forward any viable alternatives that will fund further pay increases. It also highlighted “the ongoing damaging strikes” that have contributed to its £92m first-quarter loss, equivalent to around £1m a day. Hence, it has written to the CWU to propose that talks be taken to the Advisory, Conciliation and Arbitration Service, and informed the union that it wants to modernise the ways of working with them.

Ofcom has launched an investigation into the dominance of technology titans Amazon, Microsoft and Google in cloud services. The communications regulator will spend 12 months assessing how well the market is working, and “any market features that might limit innovation and growth in this sector by making it difficult for other companies to enter the market and expand their share." The three tech giants - known as ‘hyperscalers’ because of the size of the data centres they use to process and store data - account for around 81% of revenues in the UK cloud market, according to Ofcom.

Sky News reports that London-listed Jupiter Fund Management is in advanced talks with several existing investors in Starling Bank about selling 7% of its stake at a big discount to the bank’s most recent valuation of £2.5bn. Insiders have told the broadcaster that the discussions have settled on a valuation for Starling Bank of about £1.5bn, and that Jupiter is expected to generate just over £100m from the sale. The sale does not include the almost 10% Starling shareholding owned by Chrysalis, the London-listed investment trust overseen by Jupiter fund managers Richard Watts and Nick Williamson. Starling Bank was founded by Anne Boden in 2014 and since launching its app in 2017, it has opened nearly 3m accounts, including more than 450,000 small and medium size business accounts, giving Starling a 7.5% share of the UK small business banking market. It is expected to generate profit of some £200m for this financial year, Sky’s source says. Neither Jupiter nor Starling would comment on Sky’s story.

Current chair Lord Rothermere is to take over as chief executive of Daily Mail and General Trust following the departure of current incumbent Paul Zwillenberg, the media group confirmed yesterday. Rothermere bought the company out for some £850m earlier this year, taking the group private and ending its 90-year listing on the London Stock Exchange. He is the great-grandson of Harold Harmsworth, who founded the Daily Mail in 1896. During its long previous public ownership, the Harmsworth family always maintained a significant stake in the newspaper group, which as well as theDaily Mail includes the i and Metro newspapers, as well as New Scientist magazine. The Daily Mail has the highest circulation figures of any newspaper in the UK, with approximately 1.13 million copies sold daily.

And finally…. Pub Sir Gawain and The Green Knight in Wales is struggling to hire someone to run it due to its "ridiculous" bar rules, The Sun says, reporting a story originally published by NorthWales Live. Mobile phones, music, TVs and children are banned at the former farmhouse, and swearing is also strictly forbidden, draconian rules which led one local applicant to say: "The brewery needs to lighten up a bit, pubs like this don’t work anymore”. An advert placed on the building – and on online platform Gumtree – is inviting applications for a “live-in joint pub management couple" for a salary in the region of £20,000, plus a flat with all rent and utility bills paid by the brewery. Anyone interested in taking on the pub has until September 27 to apply.

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