The childcare plans form the centrepiece of new proposals set out in the Coalition’s mid-term review and under the measures, working parents could be entitled to claim up to £2,000 per child every year from their tax bills to cover the cost of childminders and nurseries.
This could mean working parents becoming entitled to claim a flat-rate tax allowance to help cover the costly bills in a move that would replace the £700m voucher and allowances scheme.
The proposals form part of a review to mark the midway point of the Coalition's government and other measures include action on state pensions, infrastructure investment to help boost the economy and help towards care costs for the elderly.
Details of some policy pledges are still being finalised and announcements fleshing out the proposals are expected to be rolled out in the coming months at a rate of almost one a week.
In a foreword to their speech to be delivered later, the two leaders have said that they will support working families with their childcare costs and build more houses to make the dream of home ownership a reality for more people.
They also pledged to set out plans for long-term investment in Britain's transport infrastructure, while under plans to improve help for the elderly, they have said they will implement an improved state pension that rewards saving, and more help with the costs of long-term care.
They have also listed welfare reform and fuel duty cuts, along with help towards energy bills and the rise in the personal income tax allowance as being amongst the Government's achievements so far.
For more information, please contact Glazers, Chartered Accountants London or visit www.glazers.co.uk
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( 3 / 539 )In one of his first big policy announcements to be made later today (January 4th), Shadow Chancellor Ed Balls will propose a new tax on the pension savings of more than 300,000 wealthier Britons, claiming that those earning more than £150,000 should only receive basic rate tax relief on their retirement savings.
Costing high earners thousands of pounds a year, the proposal would mean that they could only get tax relief of 20 per cent on their savings, compared with 50 per cent today, and 45 per cent from April this year.
Under the proposed scheme, the money raised, which is estimated to amount to around £1bn annually, would be used to subsidise private companies to take on people over the age of 25 who have been out of work for at least two years, which number around 129,400. The new workers would be offered 25 hours of work for six months and be paid at least the minimum wage.
Mr Balls went on to say that if the unemployed people refuse the offer of work, they would be excluded from claiming benefits. This plan follows his previously proposed £2bn tax on bank bonuses, which would partly fund a youth job scheme.
The powers that be in the party have been saying for some time that Labour needs to set out concrete policies this year in a bid to boost its economic credibility and to answer Tory claims it has no strategy for tackling welfare costs.
However, Prime Minister David Cameron said the Government's welfare-to-work scheme was "massive", while the Treasury said Labour was trying to spend the same money twice and that Mr Balls had already earmarked cuts in pension tax relief to reverse austerity measures.
For more information, please contact Glazers, Chartered Accountants London or visit www.glazers.co.uk
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( 3 / 575 )A survey published yesterday (January 2nd) has revealed that the Markit/CIPS Manufacturing Purchasing Managers' Index (PMI) rose unexpectedly to a 15-month high of 51.4 in December from an upwardly revised 49.2 in November, leading to hopes of a more successful 2013 for the manufacturing sector, which accounts for 10 per cent of GDP.
The upturn of the index takes it above the 50-mark that separates growth from contraction for the first time since March 2012, and breaks with poor official data, which showed a 1.3 per cent fall in factory output for October.
The domestic market remained the main spur for growth, although there are also signs that global trade flows are stabilising, as China and the US strengthen and the downturn in the Eurozone eases.
New orders rose at the fastest rate since March 2011, driven by domestic demand, while export orders fell, albeit at the slowest pace since September last year.
The data showed continued price pressures on manufacturers, whose costs rose at the fastest rate since March 2012, driven by chemicals, energy, food products and plastics, leading to the fastest rise in the prices they charged since April 2012.
However, despite being positive overall, the PMI data did not alter the likelihood that manufacturing output fell in the final quarter overall and a quarterly contraction in manufacturing still seems likely.
Meanwhile, data on the construction industry, released today (January 3rd), shows that construction output declined at the steepest pace for six months and new business intakes fell back at the fastest rate since April 2009.
The services sector PMI is due tomorrow and the three sectors together will give a stronger guide to the health of the economy as a whole, which is only forecast to grow slowly in 2013.
For more information, please contact Glazers, Chartered Accountants London or visit www.glazers.co.uk
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( 3 / 527 )The Federation of Small Businesses (FSB) has conducted a survey for the start of the New Year, which shows that, while confidence remains low, business owners feel more optimistic about their success in 2013 than they have in the previous two years.
However, the business group, which has over 200,000 members, has warned that many small firms are not ready for the Universal Credit (UC) system, which is being brought in this year.
The recent pilot for the system, which will require employers' payments to employees' bank accounts to be reported in real time, has recently had a 25 per cent IT failure rate and the FSB has described the system as a "huge compliance burden" for small businesses.
The Department for Work and Pensions (DWP) conducted the pilot last year and the latest figures show that over a quarter of cases failed in November, leading to assertions that the complex technology necessary for UC is not ready, and that the system will not create the promised incentives to work.
The real time information (RTI) system was developed to enable universal credit payments to be made on a monthly basis taking into account actual income.
When an employee receives their monthly wage, both the employer and the employee's bank must let HMRC know how much the employee has been paid. Both the employer and the bank use a hashtag that identifies the employee. But on the basis of these latest figures, this is not happening on a sufficiently regular basis.
In its report, the FSB also criticised the banking industry for failing to help small businesses, saying that less than 10 per cent of small businesses reported having easy access to finance.
For more information, please contact Glazers, Chartered Accountants London or visit www.glazers.co.uk
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( 3 / 551 )As the Parliamentary Commission on Banking Standards publishes its report on Government plans to ring-fence the banks, so a Bank of England Director has predicted that peer-to-peer lenders could replace them altogether.
Andrew Haldane, director of financial stability for the Bank has said that the mono-banking culture in the country is “on its way out” and that the sees “opportunity knocking” for finance.
He added that he hopes the growth of peer-to-peer lenders and those involved in crowd-funding will help solve the problems business has with lending for small and medium enterprises, saying that “the banking middlemen may in time become surplus links in the chain”.
However, if peer-to-peer lending is to become anything like large enough to compete with the high street banks, the Bank of England and other regulators would have to change the rules.
In addition, peer-to-peer lending is not protected by the statutory safety net that safeguards depositors with conventional banks and building societies and neither does it tick the boxes needed by official bodies such as the Financial Services Authority.
But if the banks are “electrically” ring-fenced, as the Banking Commission recommends, then there is potential for them to be broken up, which could have a negative impact on their ability to lend.
Given the uncertainty hanging over the banking sector it would be difficult to return to having an investable banking sector that would be customer-focused and globally competitive, which means that lending to businesses could be impacted.
The Government has said it will study the Banking Commission’s report and respond in detail when the Financial Services (Banking Reform) Bill is formally introduced to Parliament early next year.
For more information, please contact Glazers, Chartered Accountants London or visit www.glazers.co.uk
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