In a stark warning, the Centre for Policy Studies claimed that UK civil servants' final-salary pension schemes are as unstable as fraudster Bernard Madoff’s Ponzi £31 billion scam and are “now collapsing under insufficient contributions, rising longevity and an ageing workforce”.
In his report for the Centre for Policy Studies, Michael Johnson revealed that Britain will be forced into a “societal division”. Final-salary pensions also came under fire, with Johnson declaring that there will be a “fiscal calamity” if civil servants continue in having a high final-salary pay out.
Former pensions secretary, Lord Hutton, was asked by the Government to conduct a review of public sector pensions and has declared final-salary schemes as being “inherently unfair.”
Compared to three-quarters of civil servants, only a fifth of private-sector employees have a final-salary pension plan. The final-salary pension schemes mean that there are also “disproportionately high pensions paid to high earners” within the public sector.
The “societal division”, which the report warns of, will not be helped by the fact that the tax payer is paying for 80% of the public sector’s final-salary pensions.
These statistics may change after Lord Hutton ruled that six-million public sector workers will have to pay more into their pension plans. He also advised that the government should raise the retirement age for public sector pensions.
With the retirement age continually rising, having a good and fair pension scheme becomes more important. Hopefully a fair balance in pension plans can be found for private and public sector workers.
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( 2.9 / 238 )The UK’s largest banks made an agreement on the Project Merlin lending and bonus deal, the government announced yesterday.
Under the new agreement, HSBC, Barclays, Royal Bank of Scotland (RBS) and Lloyds Banking Group are set to lend around £190bn to businesses this year, including £76bn to smaller companies. The deal will also see the controversial bankers’ bonuses being curbed and details of top earners salaries will be revealed.
The banks will be set targets for giving out loans to businesses and these targets will be monitored by the Bank of England to see if they are being met.
The chancellor also declared that a tax on bonuses would not be imposed, even though he was under considerable pressure from Labour to do so.
On Tuesday, we reported that the deal was imminent between the banks after chancellor George Osbourne announced the government had raised a levy on banks to £2.5bn this year, raising an extra £800m.
The raising on the levy was not warmly received by the shadow chancellor Ed Balls who said that he believed that the banks will not be forced to lend if they do not want to and that George Osbourne was “putting politics ahead of economics.”
It will be interesting to see if Ed Balls’ predictions are right. Let’s hope that if the banks’ loan targets are to be monitored by the Bank of England, it will motivate them into giving more to smaller companies.
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( 3 / 256 )Driven by a sharp rise in imports, the UK trade deficit in goods and services widened in December, official data has revealed.
The Office for National Statistics (ONS) revealed the deficit grew to £4.831bn in December, its highest level since August 2005, compared with £3.947bn in November.
The UK goods trade deficit hit a record high with imports lifted by orders for aircraft orders being ahead of a change in VAT tax sales. The gap expanded to £9.247bn in December, from £8.460bn in November. Economists had previously forecast an optimistic reading of £8.6bn.
The ONS believe the torrential bad weather during the winter months is partly to blame for affecting trade volumes, by causing disruption at airports and ports in December.
It was one of the coldest months the UK has experienced in one hundred years and it was inevitable that the economy was going to be affected. News of the deficit may cause concern amongst economists who had been hoping for a smoother recovery for the UK’s economy.
In reaction to the deficit, the government is set to release a new strategy containing new measures to encourage small and medium-sized businesses to export more outside of the UK. The new strategy will be made clear in a Trade and Investment White Paper
The hope is that by encouraging and supporting smaller businesses to export more, it will improve the state of the UK’s economy and have a more positive effect on the UK’s trade deficit in the future.
For more information, please visit www.glazers.co.uk
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( 3 / 140 )Chancellor George Osborne has announced that the bank levy has been permanently increased to £2.5bn per year as talks continue on plans to increase lending to small businesses.
Speaking on BBC Radio 4’s Today programme, George Osborne announced that the levy had been increased because the banks’ performances had been stronger than anticipated. He also stated that he was acting in “good faith” with the hope that the move would encourage banks to pay more tax, limit their bonuses and to increase loans given to small businesses.
Although a deal for banks to increase loans to businesses and to limit their bonuses has not been finalised, Osborne did speak of the importance for banks to have a “commitment to lending”.
The rise of the bank levy was to be announced during next month’s budget, but the Chancellor decided to bring forward the announcement.
The bank levy was originally announced in June 2010 with the idea of the process being slowly phased in; however, because the banks’' profits were healthier than expected the levy was set in full this year.
With the government's continued efforts to get the banks lending more, it will be interesting to see if there will be a positive outcome for smaller businesses, with the hope that it will improve financial support from the banks.
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( 3 / 223 )Business Secretary Vince Cable is today urging more businesses to follow the lead of Lord Sugar and say “You’re hired” to apprentices.
His call comes at the start of Apprenticeship Week, which runs until Friday, and is designed to showcase the benefits of apprenticeships.
The government is demonstrating its own commitment to apprenticeships as a route to create a new generation of skilled workers by increasing the budget for the initiative to more than £1,400 million in the 2011-2012 financial year. The goal is to deliver 100,000 more apprentices by 2014.
Dr Cable also highlighted some of the 85,000 employers in England to offer apprenticeships in around 200 job roles, including British Airways, BT and Jaguar Land Rover, pointing out that 80 per cent of those who employ apprentices agree that they make the workplace more productive.
With unemployment among 16 to 24-year-olds at record levels, any initiative that helps to set those at the start of their working life on the path to a worthwhile career is to be welcomed.
But it appears there are still some glitches to be ironed out in the apprenticeship initiative. Government figures that emerged at the weekend show that some 26.2 per cent of apprentices gave up their on-the-job training in 2009-2010 compared with only 7.2 per cent who abandoned university.
One small firm that takes on three apprentices a year was quoted in the Daily Telegraph as saying the dropout rate was “frightening” and was likely to be a factor in businesses being reluctant to get involved. Other reasons cited for the high number of apprentices leaving the scheme early included a change of heart about the career path they wanted to follow, finding it hard to make early starts or adapting to longer working hours.
The government’s National Apprenticeship Service, which runs the schemes, says that the dropout rate has vastly improved over the last decade: in 2002, just 24 per cent of candidates completed the programme.
But in these times of austerity, hard-pressed taxpayers will be looking for the government’s extra money for apprenticeships to deliver a real return on the investment. They may think that might start with schools, colleges and businesses making sure candidates have the clearest possible picture of what an apprenticeship will require of them and the benefits it will bring in the longer term.
For example, there’s evidence that apprentices will earn up to £100,000 over their lifetime than non-apprentice counterparts. And that’s a bonus that many might think it’s worth getting hired for.
For more information, please visit www.glazers.co.uk
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