Published: 22 February 2023
By Suzanne Evans, Director, Political Insight
Inheritance tax (IHT) receipts for January 2023 totalled £578m, up from £443m in the same month a year ago, according to HMRC figures. It takes the total inheritance tax take for the 2022-23 Financial Year to date to £5.9 billion, £853 million higher than through the same period last year. However, the total IHT take for 2021-22 (the last full financial year) was £6.1bn, so this year is £178m short of that. The OBR forecast a tax-take of £6.7bn for the current financial year rising to £6.8bn by 2025-2026.
Chancellor Jeremy Hunt said yesterday that the United States' Inflation Reduction Act, which promises hundreds of billions of dollars of subsidies to green industries, was a "very real competitive threat". Speaking at a green energy conference in London, he said: "This is not a time when it's going to be easy for us to access the GDP equivalent of $369 billion," but added that the government would announce in the next few months some policies to help shield companies based in Britain, including looking at unlocking £5tn in pension funds to support the industry. Meanwhile, the Chairman of the environment audit committee, Philip Dunne MP, has told City AM: “Other countries are offering impressive incentives for investment. The UK risks losing immense talent if it fails to make the UK an attractive place for innovators to invest and spur green growth”. “The UK cannot allow its net zero standing in the world to be eroded, with UK innovators attracted by overseas incentives. These vital demand signals are needed urgently,” he added, and urged ministers to “act now” to ensure the UK’s global net zero standing was not “eroded” by companies heading overseas.
The Government's Boiler Upgrade Scheme, which grants households £5,000 to help switch from a gas boiler to a low-carbon heat pump, has been described by the House of Lords’ Net Zero Committee as "seriously failing". Take-up of the grant is so low the national target for green heating is "very unlikely to be met," the Peers concluded. The government responded by saying it would launch a marketing campaign to make people more aware of the scheme.
Water companies who break the law will still face "substantial penalties" of up to £250m, Environment Minister Rebecca Pow has said, following allegations by The Times that the plan to increase maximum fines for dumping sewage in rivers and seas was to be dropped. Pow said water firms "must act urgently" to improve their performance. Proposals to increase the maximum fine from £250,000 to £250m were put forward originally by the previous Environment Secretary, Ranil Jayawardena, in October.
Ofgem has warned energy firms that they could be fined if they break new rules on the forced instillation of prepayment meter installation. Ofgem told all suppliers to stop forced installations until the end of March following an investigation by The Times newspaper which found British Gas was using third party companies to break in and fit prepayment meters in the homes of vulnerable customers. CEO Jonathan Brearley said: “We expect suppliers to treat customers with compassion and professionalism and those executing a warrant should take into account what they find when they visit a home and pause the installation if they see a safety risk. Where this hasn’t happened, we will hold suppliers to account”. Yesterday, the energy regulator also said it has launched an investigation into Centrica's British Gas regarding force-fitting meters, saying the review would be "comprehensive, independent and wide-ranging".
The Federation of Small Businesses (FSB) has warned that the UK will become an “innovation wasteland” if the government pushes ahead with plans to slash research and development (R&D) tax relief, and urged ministers today to drop the proposal, claiming it would spark a mass withdrawal of small firms from innovation projects. Start-ups and smaller firms have benefitted from the system, which offers rebates on innovation spending, but in November, Chancellor Jeremy Hunt announced plans to scale the rebate back to reduce fraud, while offering more credits to bigger companies. Research from the FSB found 64% - some 50,000 - of those firms who have earned the tax credits in the last three years would rein in their innovation investment if the changes go ahead. A quarter of them also said they would refocus their efforts on “lower-risk” projects in light of the move. 12% have already frozen recruitment and begun laying off staff as a result of the proposed changes.
A coalition of almost 200 sports governing bodies, health organisations and top athletes has written to prime minister Rishi Sunak warning of the "final straw" for many gyms, pools and clubs because of the "ongoing energy crisis," the BBC reports. The group makes an "urgent plea" for the government to "think again and provide the necessary support to the sport, recreation and physical activity sector". The government is scaling back its energy support scheme from April with the leisure sector losing out. While libraries, museums and galleries will be eligible for extra help, pools and leisure centres will not be protected. Figures compiled by trade body UK Active show already that 29 leisure centres, pools or gyms have closed temporarily or permanently because of rising energy prices in the last year.
In an interview with the Sydney Morning Herald (SMH) ahead of a trip to Australia this week, the Lord Mayor of London, Nicholas Lyons, said British businesses got “complacent” prior to Brexit – and will now need to work harder to develop relationships across the world. “One of the things about being in Europe was that British businesses generally got complacent because they had access to this huge market on their doorstep,” he told the SMH. “They didn’t work hard enough to push hard on Australia and New Zealand, Canada, Asia and other markets in the gulf.” There now needed to be an “enormous step up from this government and the City” to push into global markets, he added. He also said he thought “nothing good has been delivered” so far post-Brexit but that he believed there are reasons to be positive about regulatory changes currently in train. He was also keen to quash the idea that the Square Mile has suffered significantly from Brexit, noting only 7,000 jobs moving to other European financial centres. “Each of those financial centres has something that they’re good at, but nobody can compete with the depth and breadth of what we do, even in post-Brexit London,” he said.
Private businesses has returned to growth for the first time in half a year, according to the closely watched S&P Global and the Chartered Institute of Procurement and Supply’s (CIPS) composite flash purchasing managers’ index (PMI) for February. It hit 53 points in the month, up from 48.5 points in January. It marked the first time the composite PMI has topped the 50 point threshold that separates growth and contraction in six months, and suggest warnings the UK is headed for a recession may be misplaced, City AM reports. Today’s PMI does not mean the UK will definitely skirt a recession, but suggests any slump “will be mild,” Thomas Pugh, UK economist at consultancy RSM, told the newspaper. Services output accounts for around £1 in every £3 produced in the UK.
The world’s largest trial of a four-day week has come to an end and been declared a success. Of the 61 companies that took part in the six-month UK-based trial, run by the 4 Day Week Campaign and 4 Day Week Global, 56 have decided to continue with the new working pattern, and 18 have made it permanent, citing a range of benefits, from improved work-life balance and health to fewer sick days. Over 2,900 people took part in the trial, which saw companies agree to give workers an extra day off with no cut to pay. Company revenue barely changed during the trial period, the report says, even increasing marginally by 1.4% on average for the 23 organisations able to provide data. Although hiring costs increased, absenteeism and sick days decreased by 65%. An average of 8.5 out of 10 employees and employers said they benefited.
Women founded a record 150,000 new firms last year, according to a major review by Natwest CEO Dame Alison Rose. The Rose Review Progress Report for 2022 shows female entrepreneurs started twice as many companies last year as they did in 2018, despite the challenging economic environment. There was also an increase in the number of all-female led businesses, up 16% on the previous year.
Ambulance workers in Wales have set two more strike days for 6th and 10th March with "no end in sight" to the dispute, the Unite union says. Members rejected the government's last pay offer of 3% for 2022-23, which was on top of the average 4.5% increase paid to health workers last autumn.
British Steel is expected to announce the closure of its coking ovens in Scunthorpe today, with the loss of 300 jobs, the BBC reports. The closure means British Steel will have to import coke henceforth. Government sources described the decision as "disappointing" given that negotiations are still ongoing between British Steel's Chinese owners Jingye, Tata, and the Treasury about a support package worth £300m to each company. A British Steel spokesman said: "Unfortunately, like many other businesses we are reluctantly having to consider cost cutting in light of the global recession and increased costs." Jingye has invested £330m in three years, and is committed long-term, but British Steel is "facing significant challenges because of the economic slowdown, rising inflation and exceptionally high energy prices", the spokesperson said, adding that UK steelmaking is "uncompetitive" internationally.
Lloyds Banking Group reported flat annual profit for 2022 yesterday, as a jump in income driven by higher interest rates was offset by mounting bad loan provisions, for which it set aside £1.5bn. Lloyds - Britain's biggest mortgage lender - reported pre-tax profit of £6.9bn, unchanged on the year prior, with revenue rising 14% to £18bn. ounds and it raised its medium and long-term outlook for returns. It is now targeting a return on tangible equity in excess of 15% by 2026, having previously targeted more than 12%.
A BBC report reveals how Tesco is charging customers who are not Tesco Clubcard members much higher prices for an array of essential household products, including milk, toilet paper, and mobile phone contracts. On the supermarket's website, Nutella chocolate spread is lowered to £2 with a Clubcard membership but those without the card have to pay £2.90. Nine rolls of Andrex toilet paper are listed at £5.95 for those with the loyalty card but £6.95 for those without one. Yorkshire Tea teabags, at £3.80 for regular customers, are £1.30 less for Clubcard holders, and a bag of five oranges 51p less. Two Cravendale semi-skimmed milk 2 Litre bottles cost £4 for Tesco Clubcard holders, but for non-members it's £5.20. Tesco defended the price difference, saying more than 70% of its customers currently use the Tesco Clubcard.
A variety of British vegetables, from tomatoes to cauliflower, risk being rationed this year as farmers struggle to meet energy costs, the head of the National Farmers' Union (NFU) has warned. Minette Batters said the production of some British vegetables grown in lit, heated buildings, such as tomatoes and cucumbers, was already falling. Many glasshouses are standing empty or even being mothballed, she said. Meanwhile Asda and Morrisons have imposed customer purchase limits on some lines of vegetables and fruit due to "sourcing challenges" for products grown in southern Spain and north Africa. All major supermarkets have been hit by supply issues stemming from disrupted harvests in southern Europe and North Africa.
The Co-operative Bank has tabled an offer for Sainsbury’s Bank’s £650m loan portfolio being, according to reports by Sky News. The Co-op is among a number of parties understood to have tabled a bid for the supermarket bank’s loan book, among them Starling Bank, which also expressed an interest, but withdrew “some time” ago. Sainsbury’s Bank ceased new lending in 2019 and was reported to be planning a sale in October 2020.
Newcastle Building Society and Manchester Building Society have agreed to a merger in an effort to secure the latter's long-term future. The two parties initially entered into an agreement last August to explore the possibility of combining operations.
Exhibition business Hyve has confirmed it has received a preliminary and conditional £306m takeover approach from US private equity firm Providence Equity. The latest offer of 105p a share follows an earlier offer of 101p a share, Hyve said, adding it is considering its position. Shares in the London listed business rose over 16% to 100.2p on the news yesterday.
Wizz Air has been voted Britain’s worst performing short haul airline in a survey by Which? because of poor customer service, troublesome boarding experiences, “constant delays” and almost “zero seat comfort”. Wizz received a customer score of 48%. Civil Aviation Authority (CAA) data revealed the airline was indeed among the worst for punctuality last year, with just 56% of flights arriving on time. Of the short haul airlines included in the survey, only Tui fared worse for punctuality, with less than half (45%) of its flights on time. Ryanair scored 52%, Eurowings 53%, British Airways 56% and Lufthansa 57%.
BT Sport is to be rebranded as TNT Sports in the first major development of the joint venture between BT Group and Warner Bros Discovery. The rebrand will take place in July.
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