40% of the beleagured self-employed feel like giving up; and a fall in employment suggests firms are…

Research conducted by the Centre for Economic Performance (CEP) at the London School of Economics and Political Science (LSE) has found that mental distress and financial insecurity has pushed 40% of self-employed workers to say they would switch to a salaried job if they could secure the same income, while one in eight would accept a 20% pay cut to get out of self-employment. The authors of the study, The Self-employment Trap, began tracking self-employment trends during the Covid-19 pandemic, and in this 7^th report reveals that more than a quarter of those surveyed are experiencing “moderate” or “severe” mental health issues, compared with 16% of the general population. Self-employed workers also told the authors they fear Government support will not be forthcoming should another crisis wreck their business. Self-employment had been increasing steadily from the turn of the century until 2020, when the decision to shut down the economy and put millions of PAYE workers on furlough sparked an exodus of “business directors and partners, and those in high-skilled occupations” into full-time permanent jobs according to the Office for National Statistics. There were 5m self-employed workers in 2000, but that fell to 4.2m in 2022, with those who remain self-employed tending to have lower incomes and be working in more precarious industries, leaving them with only low levels of savings to cope with periods when work dries up. Stephen Machin, director of CEP and co-author of the report, said: “The self-employed, especially the solo self-employed working by themselves, are experiencing on-going challenging financial conditions. And more appear to be questioning whether the rewards involved in being self-employed are worth the risks.”

An influential survey of British businesses has indicated the sharpest fall in employment in the service sector since 2009, with the exception of the Covid19 pandemic, suggesting companies think a recession is increasingly likely. The latest S&P Global Purchasing Managers’ Index (PMI) also revealed a steep decline in business activity: that PMI fell to 46.8 in September, down from 48.6 in August.

The Sunday Times claimed yesterday that Prime Minister Rishi Sunak is considering a cut to inheritance tax, with a view to eventually scrapping it. At present, inheritance tax is charged at 40% for estates worth more than £325,000, with an extra £175,000 allowance towards a main residence if it is passed to children or grandchildren. A married couple can share their allowance, which means parents can pass on £1m to their children without any tax to pay. The newspaper cited three sources as saying there is a “live discussion” at the highest level of government about reform of the levy, with proposals including reducing the 40% rate in the March budget next year. A senior government source said: “No 10 political advisers have been looking at abolishing inheritance tax as something that might go in the manifesto. It’s not something we can afford to do yet.” They added that it was the “most hated tax” in Britain, according to polls. “People also feel it is just wrong to tax people on income that has already been taxed – and at a time when they are grieving,” they added. The latest figures, for the tax year 2020-21, showed only 3.73% of UK deaths resulted in an inheritance tax charge. However, Downing Street insisted that formal plans were not being drawn up and pointed to the chancellor Jeremy Hunt’s insistence that tax cuts were “virtually impossible” given the state of the public finances.

Jeremy Hunt is also considering raising the annual investment cap on ISAs by £10,000 to £30,000, but possibly only for those backing UK equities, The Telegraph reports. Around 800,000 individuals invested the maximum sum exclusively into stocks and shares Isas last year, according to official figures, meaning they could potentially benefit from an increase in the allowance.

Former transport secretary Grant Shapps told the BBC over the weekend that it would be "crazy" and "irresponsible" to carry on pumping money into the HS2 rail link without reviewing the plans, given how high costs have soared. The first part of HS2, between west London and Birmingham, is in mid-construction, and £2.3bn has already been put towards the next sections including acquiring land and property. However, the Government has refused to commit to the current plans which link London, the Midlands and the north of England: the leg between Birmingham and Manchester is now in doubt; in March, Transport Secretary Mark Harper said there would be a two-year delay on the Birmingham to Crewe link; and work on Euston was has been paused while a more "affordable" design is drawn up. A link to Cheshire has already been scrapped. The last official estimate on HS2 costs added up to about £71bn, but that was at 2019 prices, before the recent hikes in interest rates, inflation, materials and wages. "We've not only been hit by the coronavirus, but the war in Ukraine... any responsible government has to ask whether that sequencing still stacks up for what the country requires," Shapps said. When previous commitments had been made, "no-one knew we'd be in a war in Europe right now with all of the consequences, all of the costs, and all of the inflation," he added.  Last week, Chancellor Jeremy Hunt said HS2 costs were getting "totally out of control" and that it was only to be expected that he and Prime Minister Rishi Sunak would have discussions when "major infrastructure projects overrun in their costs". However, he said no decisions had been made.

Former prime minister Boris Johnson though, has warned against "mutilating" the project, saying suggestions the high-speed rail link that began construction under his premiership could be scaled back were "Treasury-driven nonsense". What he called "desperate truncations" would not yield any short-term savings, he said, nor would they make any “difference to the case for tax cuts". There is a "need" for the rail link in the north of England, he said. Former chancellor, George Osborne has also waded into the row, writing in The Times that scrapping the HS2 rail link to Manchester would be a "gross act of vandalism” and an "act of huge economic self-harm". Manchester Mayor Andy Burnham also said abandoning the extension risked creating a "north-south chasm". Meanwhile, more than 80 companies and business leaders also sought clarity over the commitment to HS2 on Saturday. The bosses of dozens of businesses and business groups - including Manchester Airports Group, British Land, Virgin Money, and the Northern Powerhouse - all signed a letter to the Government urging renewed commitment to HS2, saying that repeated mixed signals are damaging the UK's reputation and the wider supply chain. In the letter, they expressed "deep concern" over "the constant uncertainty" that "plagues" the project.

Howard Watson, BT’s chief networks officer has told staff that the telecoms giant’s diversity targets are a “significant factor” behind its decision to move jobs from rural offices to city centres, the Mail on Sunday reported yesterday.   BT is cutting tens of thousands of jobs as part of a “transformation” cost-cutting plan which includes removing roles in rural hubs such as Adastral Park in Martlesham, Suffolk, where it is cutting 1,100 jobs. Overall, BT plans to cut 55,000 jobs by the end of the decade from a workforce of 130,000. The newspaper says Watson made the comments at a meeting in the summer, telling employees BT would be able to “improve diversity [and] inclusion” by hiring in “many more places”. The current workforce is 25.7% female, 10.8% ethnic minority, and 6.5% disabled. It plans to increase these to 32%, 13% and 10% respectively by 2025. BT’s new CEO Allison Kirkby also has £220,000 in bonus payments tied to diversity and inclusion targets.

Wilko will close the last 111 of its remaining high street stores early next month, with the loss of around 10,000 jobs. Rival retailer The Range has bought Wilko's brand, website and intellectual property, and 120 stores - more than a quarter of its estate - have been sold to B&M European Value Retail and the owner of Poundland. 

Aldi has reported record UK sales for last year, saying it attracted an extra 1m customers to its 1,000 UK stores. Aldi UK recorded annual sales of £15.5bn in 2022, an increase of almost £2bn on a year earlier, and a new record for the 33 years it has been trading in Britain. Profits tripled to nearly £179m from £60m a year earlier, when its margin and profits were hit by investment in measures related to covid restrictions.

Pimlico Plumbers saw sales tumble last year as revenue fell 11% to £45million (on a pro-rata basis as it changed its accounting period) according to documents filed at Companies House. The firm blames rival firms ramping up their business.

‘Big Four’ accountancy firm KPMG is facing a record fine of around £20m for failings in its audit of Carillion, the construction company which collapsed in 2018 with £7bn of debt, Sky News says, having learnt that the firm is in negotiations with the Financial Reporting Council (FRC) about the matter. City sources said the two sides had been negotiating penalties of between £25m and £30m, but that a discount on the basis of KPMG's co-operation with the probe could take it down to £20m or so. However, those same sources cautioned the figures still remained subject to change, and one source suggested the fine could be even larger.  

Sky News said over the weekend that Paul Zwillenberg, the former Daily Mail & General Trust CEO who stepped down from the role a year ago, is in talks to work with the hedge fund tycoon Sir Paul Marshall on a bid for the Daily and Sunday Telegraph newspapers, and potentially The Spectator magazine. One source said Zwillenberg was likely to act as a consultant and potentially join the Telegraph owner's board if Sir Paul wins the auction for the titles. Sir Paul is also a shareholder in TV channel GB News and has an estimated fortune of £800m, according to The Sunday Times Rich List.

For the first time in more than 50 years, Britten-Norman — the UK's only sovereign commercial aircraft manufacturer — will build its iconic Islander in Britain after transferring production from Eastern Europe to its historic home in Bembridge on the Isle of Wight, with the aim of quadrupling output over the coming years. CEO William Hynett said: “We are immensely proud to bring production back to the UK, where our manufacturing story began nearly seven decades ago.  This move underlines our dedication to the highest standards of quality, innovation, and the resurgence of British aerospace manufacturing."

Superdrug is to stop selling disposable vapes in all its UK and Ireland stores. The chemist, which sells an average of 1,300 units of single-use vapes a week in stores, said brands such as Vuse GO and Flavaah Bars would be gone by the end of the year, and that it had made the decision in order to protect the environment.

Hambledon, Britain’s oldest commercial vineyard is to be sold in a £22.3m deal. The sparkling wine specialist said this morning it had agreed terms with a consortium led by Berry Bros. & Rudd, the UK’s oldest wine and spirit merchant, founded in 1698, and The Symington Group, a Portuguese wine maker.

Westminster City Council is exploring plans to introduce an “overnight levy” for tourists amid a crackdown on Airbnb rentals, where more properties are listed than in any other London borough. The levy would also include hotels and be collected by hosts as an additional expense on bills before being paid to Westminster in the same way as council tax. Adam Hug, leader of Westminster Council, said at a speech on Tuesday that the funds would go toward maintaining the city. “When you consider the impact of events like the King’s Coronation which drew millions to Westminster, this has to be seriously considered,” he said, before blaming the rise of Airbnb for “creating an uneven playing field” for local hospitality businesses. “At one point, a block of apartments in our city had almost as many rooms available for short-term letting as the Ritz has hotel rooms,” Hug said, adding: “The combined council tax bill for those apartments was a measly £92k, compared to the £2.27m The Ritz pays in business rates annually.” In March, the Government in March said it planned to introduce a register through the Levelling Up and Regeneration Bill to help councils identify and take action against problem landlords or noisy or disorderly holidaymakers. An Airbnb spokesman said the US-listed firm was not opposed to tourist taxes. “The vast majority of the economics generated by travel on Airbnb goes to local families and their communities. The typical London host rents their space for around 3 nights a month, and 4 in 10 say the extra income helps them make ends meet and afford rising costs,” they said, adding: “We have long-supported the Government’s work to introduce new rules for hosting; we also have a long track record of supporting decisions from governments to introduce tourism taxes. Our collaborations with governments to date has seen more than $7bn in tourist tax collected and remitted globally.”

'Gold-plated' final salary pension schemes have lost £626bn, falling almost a third from more than £2tn at the start of 2022 to less than £1.4tn at the end of March, data from The Office for National Statistics shows. The fall is being attributed to the use of controversial Liability Driven Investment (LDI) strategies, based on gilts, which were meant to be low risk, and diverted schemes away from equity investment. However, the price of gilts fell sharply when former Prime Minister Liz Truss's mini-Budget a year ago exposed what the Daily Mail calls the crisis “lurking in the pensions system,” forcing a fire-sale of assets, and prompting a £19bn Bank of England bailout of the pensions sector. “£600bn is a staggering sum,” Iain Clacher, pensions professor at Leeds University told the newspaper. “Nobody has been held accountable for the regime that got us here.” Rachael Healey at law firm RPC said lessons had been learnt from the LDI debacle, adding: “They are much better understood than a year ago. If a similar crisis were to happen again, pensions funds would be better equipped as most schemes should have bigger buffers and improved funding levels.”

The CBI has secured emergency funding from a number of banks to stave off potential collapse, it said yesterday. The scandal-hit business lobby group was seeking to raise £3m and in a statement said it had "secured the financing necessary to overcome the short-term cash flow challenge." The CBI cancelled its in-person annual general meeting that was due to be held last week because of cash shortages.