Published: 21 February 2024
By Suzanne Evans, Director, Political Insight
Some good news for the Chancellor: according to figures from the Office for National Statistics (ONS) released this morning, the Treasury banked a surplus[1] of £16.7bn in January, more than double the surplus recorded last year and the highest since records began in 1993. However, it was slightly lower than the £18bn surplus expected by the Office for Budget Responsibility (OBR). Tax receipts in January are always highest, because that is when taxes on income from self-employment and other self-assessed taxes must be paid. Specifically, these amounted to £21.6bn last month, £2.4bn less than the OBR expected. The tax-take boost and falling interest rates also mean Government borrowing in the year-to-date is below official forecasts: borrowing in the financial year-to-date came in at £96.6bn, £9.2bn less than forecast by the OBR back in November. However, the ONS warned: “As a proportion of gross domestic product, public sector debt is up on the year, and remains at levels last seen in the 1960s.” Meanwhile, analysts suggest the financials means the Government could now have as much as £20bn to spend on cutting taxes in the Spring Budget on 6th March. However, Laura Trott, chief secretary to the Treasury, said the Government “will not speculate over whether further reductions in tax will be affordable”.
Bank of England (BoE) Governor Andrew Bailey has told MPs on the Treasury Committee that inflation does not need to reach the Bank’s 2% target before it starts cutting interest rates. “We don’t need inflation to come back to target before we cut interest rates, I must be very clear on that, that’s not necessary,” he said, adding that The Monetary Policy Committee will be looking for “progress” on three indicators - services prices, wage growth and the labour market before they decide on rates. However, he added it would not be “unreasonable” for the markets to expect the Bank to cut interest rates this year. Both Bailey and BoE deputy governor Ben Broadbent also indicated they did not feel the fact the UK fell into a technical recession at the end of last year, was a reason to cut interest rates in any hurry. There was a 0.3% fall in output in the final quarter. “If you look at recessions going back to the 1970s this is the weakest by a long way because the range for those two quarter numbers for all the previous recessions was something like 2.5% to 22%,” Bailey said. Broadbent also argued that the technical definition of recession – two consecutive quarters of negative GDP growth – was “unhelpful”.
Following an 18 month-long investigation, MPs on the all-party parliamentary group (APPG) on fair business banking have concluded that banks are “freezing legitimate customers out of the financial system due to their opinions or lifestyles or because of cost”. The APPG’s report also suggested that the Financial Conduct Authority (FCA) was partly to blame for an “unprecedented rise in debanking” over the last decade. FCA data shows banks closed 343,350 accounts in the 2021/22 financial year “for reasons of financial crime”, the highest since it began tracking annual figures in 2017, the report said. However, the APPG suggested these figures could be high because of debanking, rather than because of anti-fraud enforcement, having heard testimony from industry sources claiming that the FCA had encouraged banks to prioritise their reputation over duties to customers. “Although banks often cite financial crime concerns as a common reason for closing accounts with little or no explanation – to avoid “tipping off” criminals – MPs cited data from the National Crime Agency (NCA) showing just 341 “disruptions” of fraud in 2021, despite nearly 350,000 account closures,” City AM says, adding that “one challenger bank, which asked to remain anonymous, disclosed to MPs that they closed 40 accounts ‘due to fraud concerns’ in 2022/23, despite submitting just five ‘suspicious activity reports’ to the NCA over the same period”. “We need to reset the approach of the banking industry so that no genuine, legitimate customers are excluded from the financial system,” Conservative MP and group chair William Wragg said. “Having access to a bank account is an essential part of modern living and needs to be viewed as akin to a utility, like water or electricity.” An FCA spokesperson told City AM: “We have said before that it might be time to look at whether all individuals, businesses and organisations should have the right to an account but it would be for the government and parliament to legislate for that. Within our remit, we are clear that banks should treat individual customers fairly and act proportionately to tackle financial crime. If we find firms are not doing that, we will act”.
Prime Minister Rishi Sunak told the National Farmers' Union (NFU) yesterday that he intends to put a new focus on food security, pledging £220m for new food-productivity schemes, farm technology and automation to "reduce reliance on overseas workers" during the next financial year. "Food security is a vital part of our national security and recent years have brought home the truth of that," he told the NFU conference, in reference to Russia's invasion of Ukraine. He also announced plans to cut bureaucracy around permitted development rights, so farmers can more easily diversify and develop new businesses, such as farm shops, commercial space and sporting venues. He also promised that regulations due to be laid before Parliament today to ensure reasonable contracts for the dairy sector will be expanded to the pig and egg sector in due course. The Farm to Fork food-security summit held last year will also become an annual event, Sunak said. Earlier this year, NFU President Minette Batters called on all political parties to commit to giving food security the same strategic priority as the environment and energy. "There is currently an imbalance between environment and food production in government policy. We must see changes this year to redress this before many more farms just simply disappear," she said. In recent weeks, there have been widespread protests by farmers across Europe – including one in Dover over the weekend - over a range of issues among them rising energy costs, competition from cheap imports, and polices seen to be anti-farming, notably with regard to net-zero demands. Yesterday morning, Batters told BBC Breakfast that although the funding pledged by the government is "old money", she welcomed a "definite step-change" by the prime minister in what she described as "effectively a new business plan for agriculture".
Farmers have forced HM Revenue & Customs (HMRC) to backtrack on proposals to make the owners of four-door pickup trucks pay thousands more in car tax, The Telegraph reports. HMRC said last week that it would reclassify commercial pick-up trucks as cars rather than vans, a change that would have put an end to a flat-rate charge, with bills calculated based on carbon dioxide emissions instead. In practice, the change would mean that a basic-rate taxpayer driving, for example, a Ford Ranger Wildtrak as a company vehicle, would have seen their annual car tax rise from £792 a year to as much as £3,492. A statement from HMRC and the Treasury said: “Following the decision, farmers raised concerns about the risk of unintended harm to agricultural businesses affected. The government has listened carefully to views from farmers and the motoring industry on the potential impacts of the change in tax treatment”. The proposals were “not consistent with wider aims to support businesses”, the statement added, before confirming that double-cab pick-ups will “continue to be treated as goods vehicles rather than cars”.
Fiat has told the Government it must reinstate its axed grant for electric cars (EVs) if it wants Britain to meet a target for 80% of all vehicle sales to be EV sales by 2030. A ban on sales of new petrol and diesel vehicles is due to come into force in 2035.
The Body Shop’s administrators are to close almost half of its 198 stores, meaning hundreds of jobs lost, it was reported yesterday. Seven stores will close immediately: Surrey Quays (London), Oxford Street Bond Street (London), Canary Wharf (London), Cheapside (London), Nuneaton (Warwickshire), Ashford town centre (Kent) and Queens Road, Bristol. The Body Shop’s head office staff will be cut by around 40% down to just over 400 full-time employees, it has also been confirmed.
Wilko is opening two new stores in Rotherham and St Albans next month, as part of a national roll-out under new ownership. Wilko will also reopen its former store in Poole just four months “shortly”.
Heathrow Airport has made a profit for the first time since covid lockdowns and other travel restrictions. The £38m pre-tax profit comes after a 2022/23 £685m loss, and a cumulative £4.5bn in losses since 2019. Heathrow is understandably positive about the profit, small compared to pre-pandemic gains, but nevertheless an indication of significant passenger recovery and confidence. Some 79.2m passengers passed through Heathrow in 2023, up nearly a quarter on 2022, taking revenues to just under £3.7bn. Meanwhile, The Abu Dhabi sovereign wealth fund, The Mubadala Investment Com, is considering investing in Heathrow, Bloomberg reports, having been approached by Ardian, who bought a large stake last year. The Saudi Public Investment Fund and Qatar’s Investment Authority are already Heathrow shareholders; should a further share be granted to a third middle-eastern country, that would no doubt fuel existing concerns about Gulf influence over UK infrastructure.
HSBC Holdings has reported a record annual pretax profit of $30.3 billion, up 78% from 2022, but short of a consensus estimate of $34.1bn because of China's deepening real estate crisis, Reuters reports. HSBC was also forced to take a $3bn impairment on its stake in China's Bank of Communications amid mounting bad loans in the world's second-largest economy.
Pride in London, the organisation behind the annual Pride march, has said corporate groups who want to join the annual Pride in London Parade will need to join its Pride in the City campaign, at a cost of £7,000, or they won’t be able to participate. City AM says members also get training on topics including how to make trans and non-binary colleagues feel more welcome in the office, and on creating an inclusive LGBTQ workplace. Dee Llewellyn, Director of Partnerships & Growth, Pride in London, told the newspaper: “It’s about time that we set the bar higher for businesses marching at Pride in London. We want to be collaborating closely with them to make meaningful progress on LGBTQ+ inclusion in their workplaces all year, not just on the day of the Parade. Because Pride in London is so much more than a march—it’s about creating a world where everyone can be their authentic selves, 365 days a year.” Smaller businesses can pay a subsidised fee of £5,250 if they have an annual turnover of less than £1m.
Andy Bell, the founder of retail investment platform AJ Bell, has been appointed chairman of Applied Nutrition, it was reported yesterday by Sky News. Applied Nutrition is a fast-growing sports nutrition, health, and wellness brand based in Liverpool, and is said to be mulling a stock market listing. It has turnover in the region of £61m. Bell took AJ Bell public in 2018l He stepped down as its CEO in 2022.
Why Media is an award-winning design, marketing, digital communications and PR agency offering tailored solutions to companies on a global scale. We have extensive experience in delivering design and marketing services to a spectrum of companies including professional services, property companies, financial institutions and shopping centres. We have offices in London UK, Hertford UK, Finestrat ES & Brescia IT.
Marketing Contact
Name: Claire White
E-Mail: claire@whymedia.com
Telephone: 01992 586 507
