National Insurance increase reversed

The 1.25 percentage point rise in National Insurance will be reversed from 6 November, Chancellor Kwasi Kwarteng has announced

April’s National Insurance increase to be reversed from November – delivering on key PM pledge to cut tax burden and promote economic growth
Health and Social Care Levy will be cancelled through Bill introduced today – Chancellor has confirmed funding for health and social care services will be protected and will remain at the same level as if the Levy were in place
Almost 28 million people will keep an extra £330 of their money on average next year, whilst 920,000 businesses are set to save almost £10,000 on average next year thanks to the change

Delivering on the Prime Minister’s pledge to slash taxes to help drive growth, scrapping the rise will reduce tax for 920,000 businesses by nearly £10,000 on average next year as they will no longer pay a higher level of employer National Insurance and can now invest the money as they choose.

The government will also cancel the planned Health and Social Care Levy – a separate tax which was coming into force in April 2023 to replace this year’s National Insurance rise.

This will help almost 28 million people across the UK keep more of what they earn, worth an extra £330 on average in 2023-24, with an additional saving of around £135 on average this year.

The Health and Social Care Levy (Repeal) Bill, legislating for the tax change, has been introduced into the House today. As part of the cancellation of the Levy, The Chancellor is also set to confirm that the increases to dividend tax rates will be scrapped from April 2023 in his Growth Plan tomorrow.

The increased dividend tax was introduced in April 2022 to ensure those who gained income from dividends contributed the same amount to help fund health and social care.

The Levy was expected to raise around £13 billion a year to fund health and social care. The Chancellor confirmed today that the funding for health and social care services will be maintained at the same level as if the Levy was in place, protecting the NHS through the winter and ensuring long-term investment in social care.

Chancellor of the Exchequer Kwasi Kwarteng said: “Taxing our way to prosperity has never worked. To raise living standards for all, we need to be unapologetic about growing our economy.

“Cutting tax is crucial to this – and whether businesses reinvest freed-up cash into new machinery, lower prices on shop floors or increased staff wages, the reversal of the Levy will help them grow, whilst also allowing the British public to keep more of what they earn.”

The previous government decided to raise National Insurance by 1.25 percentage points in April 2022 to fund health and social care. The rate was due to return to 2021-22 levels in April 2023, when a separate new 1.25% Health and Social Care Levy was due to take effect. Today’s legislation reverses the rise from earlier this year and cancels next year’s introduction of the Levy.

This is part of the government’s pro-growth agenda, backing business to invest, innovate and create jobs and helping raise living standards for everyone across the UK.

920,000 businesses will see a cut in National Insurance bills, with 20,000 taken out of paying National Insurance entirely due to the Employment Allowance, which rose in April 2022 from £4,000 to £5,000.

In particular, many small and medium businesses (SMEs) – who employ over 13 million people in the UK – will see a cut to their National Insurance bills. Next year this will be worth £4,200 on average for small businesses and £21,700 for medium sized firms who pay National Insurance. In total 905,000 micro, small and medium businesses will benefit from 2023-24.

National Insurance thresholds increased in July 2022 to lift 2.2 million of the poorest people in the UK out of paying the tax. The Chancellor has committed to retaining the level of these thresholds to support families. Taken together, the higher thresholds and the Levy reversal mean that almost 30 million people will be better off by an average of over £500 in 2023-24.

With immediate action pledged by the Prime Minister to maximise the cash benefit for people and businesses this year, the government is implementing the changes as soon as possible. Most employees will receive a cut to their National Insurance directly via payroll in their November pay, with some receiving it in December or January, depending on the complexity of their employer’s payroll software.

In addition, the Chancellor is expected to announce in his fiscal event tomorrow that the 1.25 percentage point increase to income tax on dividends announced alongside the Levy, and introduced in April 2022, will be reversed from April 2023.

Those who pay tax on dividends will save an average of £345 next year. The reversal of the ‘dividend tax’ rise signals renewed support for entrepreneurs and investors as part of the government’s drive to grow the economy and improve the standard of life for families across the UK.

Overall funding for health and social care services will be maintained at the same level as if the Levy were in place, and the government will be doing this without a tax increase. The additional funding used to replace the expected revenue from the Levy will come from general taxation.

The Chancellor is committed to reducing debt-to-GDP ratio over the medium-term and boosting growth, which will help sustainably fund public services.

Business leaders have welcomed the announcement.

Martin McTague, National Chair, the Federation of Small Businesses said: “This is clear and decisive action to support growth.

“The decision to reverse all four of these tax rises will support livelihoods, jobs and small businesses across the UK. Removing taxes on jobs, investment and growth is the right thing to do, and FSB has campaigned long and hard for this decision.

“The Chancellor is making clear he will let small businesses do what they do best: create jobs and support their local communities.

Shevaun Haviland, Director General, the British Chambers of Commerce said: “After months of campaigning, today’s Government announcement to reverse the increase to the National Insurance Contribution (NIC) is a big win for the British Chambers of Commerce and the business community.

“This is much needed support for businesses during these difficult times.

“There are a range of other challenges that must be addressed including labour shortages, supply chain disruption, and rising raw material costs.

“Tomorrow’s mini budget from the Chancellor is now a critical moment. To truly revitalise our economy for the difficult months ahead then tomorrow must bring a clear long-term plan that gives business the confidence to grow.”

Michelle Ovens CBE, founder, Small Business Britain said: “Small businesses need all the help they can get right now, so this move to reverse the national insurance rise will no doubt be received positively by business owners across the country, providing a boost that will go some way to help the many small firms out there struggling with cash flow.

“It is also good to see the immediacy of the action taken.”

Kitty Ussher, Chief Economist, the Institute of Directors, said: ““Businesses right across the country will be applauding the Government’s realisation that raising employers’ national insurance was a mistake.

“As the Institute of Directors has consistently and repeatedly argued from the outset, this was quite simply a tax on jobs, which businesses had to pay regardless of whether they are profitable. And the public agreed – the petition we launched at the beginning of the year attracted over 189,000 signatures.

“Many of our members told us that the impact of the increase was that they would have no choice but to push up prices, making inflation even worse. Others said the rise in the cost of employing people meant they would think twice about taking new staff on, or potentially make the difficult decision to let colleagues go.

“An independent report we commissioned from NIESR confirmed that the tax would reduce the UK’s international competitiveness and hit hardest those parts of the economy that suffered most from the pandemic. And even the Treasury itself said it would have ‘significant macroeconomic impact’.

Verity Davidge, Director of Policy, Make UK, said: “The Chancellor has clearly recognised the difficult situation companies are facing in response to eye watering increases in costs across the board.

“This is a welcome common sense reversal of a proposal which was both illogical and ill-timed when it was announced and, is even more so now given it is a tax on jobs. With the cost of employment in particular skyrocketing this will put cash back in the pockets of businesses and consumers at a time when they are burning through their cashflow at a rate of knots.

“Therefore, at a time when business is already facing unprecedented energy and other supply-side costs, this is a hugely important change that can improve the situation for SMEs trying to grow in very difficult circumstances.”

Andrew Goodacre, Chief Executive, British Independent Retailers Association said: “We have been concerned for some time about the rising costs of running a business. We therefore welcome this reversal of the NI increases as it will reduce the burden on employers as well as employees.

“Together with the recent energy support package, we hope the consumer confidence and business confidence return in readiness for the most important trading time of the year”.

REVERSAL OF THE HEALTH AND SOCIAL CARE LEVY: FACTSHEET

The government is committed to a low-tax, high-growth economy. To make sure people keep more of the money they earn and for businesses to have the right conditions to drive investment, growth and productivity.
The government is therefore cancelling the Health and Social Care Levy – initially introduced via a 1.25 percentage point rise in National Insurance contributions (NICs) – which took effect in April 2022.
This will be delivered in two parts:
- The government will reduce National Insurance rates from 6 November 2022, in effect removing the temporary 1.25 percentage point increase for the remainder of the 2022-23 tax year;
- The 1.25% Health and Social Care Levy will not come into force as a separate tax from 6 April 2023 as previously planned.
This tax cut reduces 920,000 businesses’ tax liabilities by £9,600 on average in 2023-24. This is 60% of the UK’s businesses with employer NICs liabilities.
It means 28 million people across the UK will keep an extra £330 a year, on average, in 2023-24.
We are making this change as quickly as possible, with it coming into force on 6 November.

How does cancelling the Health and Social Care Levy help spur growth?

This government’s central mission is to raise living standards for all in the UK through growing the economy through the private sector.
As a result of this tax cut, businesses will have more money to invest in becoming more productive, pay higher wages, create more jobs and support the overall growth of the UK economy.
Approximately 60% (920,000) of businesses with NICs liabilities will see a reduction their National Insurance bills, with 20,000 of these businesses taken out of paying NICs entirely due to the Employment Allowance, a relief which allows eligible businesses to reduce their employer National Insurance bills each year.
- At Spring Statement, on 23 March 2022, the previous government announced this would be rising by £1,000 from £4,000 to £5,000, which means 40% of businesses with NIC liabilities do not pay NICs.
The average saving for businesses is £9,600 in 2023-24.
For small and medium businesses who see their NICs bills reduced, the average saving is £4,200 and £21,700 respectively in 2023-24.
The sectors benefitting most from the reversal are professional, scientific and technical; wholesale and retail trade, repair of motor vehicles and motorcycles; and construction.

When will people receive the extra cash?

Most employees will receive the cut in their November 2022 pay directly via their payroll.
Basic rate taxpayers will on average see a gain of approximately £75 in 2022-23 rising to £175 in 23-24. For higher rate taxpayers, these figures are on average approximately £300 in 2022-23 rising to £700 in 23-24. For additional rate taxpayers, the gain will be on average approximately £1,650 in 2022-23 rising to £3,890 in 23-24.
Due to the complexities of some payroll software systems, there will be some people who receive the cut backdated in December 2022 or January 2023.
Although individuals should contact their employer for refunds as a first port of call in all circumstances, there may be circumstances where individuals may need to apply to HMRC for a refund (for example, if their employer is no longer trading, or if an individual has moved roles and their previous employer has confirmed they are unable to issue a refund retrospectively themselves).

Will there be less funding for health and social care as a result?

The Levy and increased dividend tax was expected to raise approximately £13 billion a year to fund health and social care. Funding for health and social care services will be maintained at the same level as if the Levy was in place.

What does this mean for the self-employed ?

Self-employed people and company directors will pay a blended rate of National Insurance – taking into account the changes in rates throughout the year – when they submit their annual self-assessment return.

What is happening to income tax on dividends?

From April 2023 the government is reversing the 1.25 percentage point increase to the rate of income tax on dividends which took effect in April 2022.
This move is designed to support entrepreneurs and investors as we seek to raise living standards through economic growth.

Extra information

For more information on National Insurance click here.

New cultural exhibition launches at Edinburgh’s Gleneagles Townhouse

Gleneagles Townhouse, the hotel and all-day restaurant in Edinburgh, has launched the latest in its series of unique cultural exhibitions.

Edinburgh-born artist and director David Eustace, in collaboration with The Fine Art Society and Gleneagles Townhouse, presents ‘Memento Mori’ – an exhibition of new work inspired by the perception and inevitability of death – is available to view until 9th October.

Open to members, hotel residents and visitors to The Spence, the venue’s all-day dining restaurant, Eustace’s exhibition follows the success of Gleneagles Townhouse’s first ever photography exhibition in partnership with Soo Burnell, which took place throughout August.

The inspiration for ‘Memento Mori’ dates to 2018, on a visit to Père Lachaise cemetery in Paris with Eustace’s friend and fellow artist, Douglas Gordon. While sitting next to Gertrude Stein’s grave, Eustace collected some leaves in a box which went forgotten until lockdown two years ago.

He began studying decaying plants and flowers and took pictures which then developed into a series. Eustace’s arresting and humbling documentation of decaying flowers serves as a reminder of human’s own immediacy and fragility.

With a diverse background, Eustace began his career serving in the Royal Navy and worked as a Prison Officer at HMP Barlinnie in Glasgow. Returning to education he graduated in 1991 and became a masthead contributor to Conde Nast Publications (GQ, Vogue and Tatler).

He has travelled extensively through-out his career and for 15 years was primarily based in NYC. In 2015 Eustace accepted the responsibility of Chancellor of Edinburgh Napier University, a post he held for six years.

His work has been exhibited both nationally and internationally and is included in both private and public collections. Eustace was the first photographic artist to have an exhibition in The Scottish Gallery’s 173-history.

His commercial and personal work often go hand in hand, highlighted by Panasonic when Eustace was approached to star in their global Lumix campaign based around his work and commentary.

He has created campaigns for global clients including Paramount Pictures, Sony, Anthropologie. He also serves as a creative consultant for several companies including recently writing and directing the ‘Precious Time’ campaign for Balblair whisky.

Gleneagles Townhouse said: “David’s work is much admired all around the world, so it is a privilege for us to be showcasing his latest exhibition from our new Edinburgh Townhouse.

“From our early discussions around Townhouse, we knew we wanted to create a series of ongoing events which would showcase the diverse talent on our doorstep to our visitors – whether they were local or from further afield – and we’re thrilled David has joined us on the journey.”

gleneaglestownhouse.com

Letter: No one wants to see more veterans on our streets this winter

Dear Editor

As the cost-of-living crisis deepens, we welcome any action to prevent the very real possibility of more people ending up homeless on our streets.

Since the start of the pandemic, charities have seen a rise in the number of homeless Armed Forces veterans seeking their help – some report an increase of 50%.

We are also seeing people with more severe and complex needs.

When someone has served their country, the least we can do is support them when they make the move back to civilian life. Yet every year thousands of veterans end up sleeping rough, sofa surfing or living in unsuitable hostels because they’re unable to access housing and slip through the net. The cost-of-living crisis will only make the situation worse.

The Armed Forces Covenant states that anyone who has served should face no disadvantage and that veterans who are especially vulnerable should be prioritised for support.

It’s vital that when someone needs help with housing, they are asked whether they’ve served in the Forces. If they have, this should be recorded. Once identified, they can be directed towards support that’s available.

We are concerned that without action, things will get much worse. A more coordinated approach between local authorities, housing providers, homelessness charities and veterans’ organisations is needed.

No one wants to see more veterans on our streets this winter. Those that have served, often through the most trying of times, deserve better.

Yours

Richard Gammage,

No Homeless Veterans Campaign

(www.nohomelessveterans.org.uk)

Amazon staff step out in support of Edinburgh Women’s Aid

A group of employees from the Dunfermline Amazon fulfilment centre and the Bathgate Amazon delivery station and sortation centre recently set out to walk from Bathgate to Dunfermline to raise money for Edinburgh Women’s Aid.

The employees set off on their 22-mile excursion from the Amazon delivery station in Bathgate and finished the walk at the Amazon fulfilment centre in Dunfermline. The colleagues joined forces with the team from Amazon’s delivery station and sortation centre in Bathgate with the aim of raising £1,000 for Edinburgh Women’s Aid.

Edinburgh Women’s Aid is a non-profit organisation that offers practical and emotional support to women and young people. Its aim is to provide a safe environment for those in need of protection from abuse.

The team completed the walk in 8 hours and donated a total of £1,740 to Edinburgh Women’s Aid.

The donation from Amazon will be used to purchase safety devices, food vouchers, clothes and other necessities for those using the charity’s services.

Jamie Strain, General Manager at Amazon in Dunfermline, said: “We are proud of the men and women from Amazon in Dunfermline and Bathgate who took part in the fundraising walk for Edinburgh Women’s Aid.

“It was great to see their enthusiasm for a good cause and we are grateful to have them on our team.”

Clare Cornbleet, Senior Delivery Station Manager at Amazon in Bathgate, added: “The sponsored walk for Edinburgh Women’s Aid was a fantastic achievement.

“We want to thank everyone who took part in raising money for the charity at both the Amazon delivery station in Bathgate and at the fulfilment centre in Dunfermline – they’ve helped raise money for a great organisation.”

Olivia Angus, an employee at Amazon in Dunfermline who took part in the charity walk, said: “From everyone who took part in the walk, we want to say thank you for the support from our team at Amazon in Dunfermline and our colleagues in Bathgate.

“It was great to see the team cheering us on at the finish line. Although the weather was not on our side throughout the walk, we had a great time, and it was worth it to be able to provide a donation for such a worthy cause.”

Linda Rodgers, Edinburgh Women’s Aid’s CEO, said: “The team at Edinburgh Women’s Aid would like to say a big thank you to the teams at Amazon in Dunfermline and Bathgate for taking the time to raise money for our charity.

“Well done to everyone involved; your colleagues should be so proud of your achievements.”

The donation to Edinburgh Women’s Aid was made as part of Amazon’s programme to support the communities around its operating locations across the UK.

Delivering economic transformation?

Scotland’s inward investment and export growth plans

Strategies to attract foreign investment and open up international trade for Scottish companies have reported successful results.

Business Minister Ivan McKee told the Scottish Parliament that the export growth strategy, A Trading Nation, has delivered an additional £3 billion of planned international sales in its first three years.

Goods exports are growing more quickly than the UK as a whole and Scotland is also the only part of the UK with a positive trade balance in goods with the rest of the world, exporting £2.2 billion more than it imported in 2021.

A separate progress report on the Scottish Government’s Inward Investment Plan highlights that enterprise agencies attracted 113 inward investment projects and a total of 7,780 jobs in 2021-22, with 39 new investors choosing to locate here. The latest EY Annual Attractiveness Survey 2022 showed Scotland remains the most attractive part of the UK outside London for attracting foreign direct investment.

Ahead of his update to Parliament, Mr McKee visited the Tartan Blanket Co. in Edinburgh to hear how it was aiming to increase international sales.

The Business Minister said: “Despite unprecedented challenges for businesses and the economy, Scotland continues to punch above its weight on both exports and inward investment.

“A Trading Nation and our Inward Investment Plan have delivered important contributions to export growth and attracting inward investment to date. Delivery of these plans are key to Scotland’s National Strategy for Economic Transformation.

“The plans help build on Scotland’s strengths to win an ever-greater share of domestic and international market opportunities, support the development of Scottish supply chains, lay the foundations of a net zero industrial strategy, and attract and deploy significant domestic and private investment in Scotland.

“Scotland can take huge confidence – based on the progress reports and the growth of companies like The Tartan Blanket Co. – that our trade and investment strategies remain the right approach to growing exports and attracting inward investment in the years ahead.”

Neil Francis, Interim Managing Director of Scottish Development International (SDI), the international arm of Scottish Enterprise, said: “Global trade and investment is absolutely vital to Scotland’s economy and achieving the sustainable economic growth we all want to see.

“These progress reports underscore the strengths Scotland has on the international stage, both in terms of the attractiveness of our companies to global markets and as a location for companies to invest, locate and grow in.

“Our SDI colleagues based here and in target markets across the world will continue to bang the drum for Scotland, highlighting the incredible investment opportunities that exist here while supporting Scottish companies, such as The Tartan Blanket Co., export their world-class products and services overseas.”

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Ever considered a sporting career? Open Day being held for lifeguards

As the historic Warrender Swim Centre prepares to reopen its doors to the public once again after two years of renovations, Edinburgh Leisure is holding a recruitment open day and is searching for people who are ready to dive into a new opportunity.

The Open Day is being held at the Royal Commonwealth Pool on Monday, 26^th September from 11am – 7pm and they are looking for a new team of lifeguards.

Brian King, Manager of Warrender Swim Centre explained: “The open day is a great opportunity for prospective candidates to find out more about a career with Edinburgh Leisure, the role of a lifeguard first hand from our team, and how to apply quickly and easily for the role. You’ll need to be a good swimmer, but we can offer either full or part-time work and great career prospects.”

Prospective candidates attending will be registered on our applicant system and once registered, they’ll undertake a short competency-based interview and need to complete a water test.

If the interview is successful, appointed candidates would be required to apply for a PVG (Protecting Vulnerable Groups) certificate. Interested candidates should visit the Edinburgh Leisure website or drop into the Royal Commonwealth Pool between 11am – 7 pm on 26^th September.

As a charity, Edinburgh Leisure is dedicated to keeping people in Edinburgh active, and over 5 million annual visits are made to their 50 venues, which includes leisure centres, swimming pools, golf courses and the UK’s biggest indoor climbing wall.

But they’re more than their venues. Each year their Active Communities programme uses the power of physical activity and sport to support over 10,000 people affected by disabilities, health conditions, poverty, and inequalities to improve their health and wellbeing.

Making a positive impact on people’s health and wellbeing is at the heart of what Edinburgh Leisure does and it takes a big team to deliver this ambition with everyone playing their part.

As an employer, they pride themselves on providing a supportive and enjoyable work environment that their team are proud to be a part of. They offer a generous rewards package, staff discount scheme and the option to join their Group Personal Pension Fund.

If you have what it takes for a career with Edinburgh Leisure, they will support you with the necessary training and support to have a long and fulfilling career.

For more information: https://www.edinburghleisure.co.uk/careers/open-days

A National Discussion: Let’s Talk Scottish Education

Young people invited to take part in National Discussion

Every child and young person in Scotland is being encouraged to get involved in a National Discussion on education.

Let’s Talk Scottish Education invites those aged three to 18 to share their ideas, views and experiences.

Feedback from young people, as well as from parents, carers, teachers and others working in education and beyond, will play a vital part in shaping the future of education. This will include the reform programme that will see the creation of three new education bodies and a review of qualifications and assessment.

The National Discussion, which is being co-convened by COSLA, will run until 5 December. It is being independently facilitated by Professor Carol Campbell and Professor Alma Harris, who will report their findings to Ministers and COSLA in spring 2023.

Schools are being invited to take part in the Discussion in ways that best suit them and their learners. This may be through classroom discussions, homework tasks or by encouraging children and young people to have discussions at home or with friends. Discussion guides have been issued to schools to help encourage involvement.

Children and young people can also contribute by emailing the Scottish Government or through social media, using the hashtag #TalkScottishEducation.

More information will be available over the coming weeks on other ways that young people can get involved in online and regional events.

Ahead of launching the Discussion during a visit to Carnegie Primary School in Dunfermline, Education Secretary Shirley-Anne Somerville said: “It has been 20 years since Scotland last held a national debate on the future of education. Since then, the education landscape has changed beyond recognition, as has the world around us. It’s time for a new National Discussion.

“Our reform programme will build on all that is good in Scottish education and deliver real change and improvement. Our children and young people hold the biggest stake in the education system so it is right that their views should be at the centre of those plans.

“We are inviting every child and young person to get involved. We want to hear all voices, particularly those who feel they haven’t been heard in the past.

“Resources have been developed to help prompt discussions around the country; within organisations, around kitchen tables and in our schools and youth settings.

“The vision which is created following the National Discussion will set out what education in Scotland needs to look like not only in the near future but 20 years from now – so Let’s Talk Education.”

COSLA Children and Young People Spokesperson Councillor Tony Buchanan said: “I’m delighted that we are launching the National Discussion and pleased that COSLA will co-convene the discussion with the Scottish Government, reflecting the importance we place on learning in Scotland, and the joint responsibility we have when it comes to education.

“This is an exciting opportunity for children and young people, staff in our schools, families and wider communities to get involved and make their voices heard. I hope that everyone who has something to say on how we deliver education in Scotland takes the time to get involved in the months ahead.”

Patrick McGlinchey, Executive Director of national parents group Connect, said: “We welcome the launch of the National Discussion and look forward to supporting learners and their families to participate fully.

“Connect will work hard to ensure children, young people, and their families are heard loud and clear during the national discussion, and that the future of Scottish education is child-centred, with parents by their side.”

Chancellor Kwasi Kwarteng ‘to get Britain working again’

The Chancellor is expected to announce reforms to the welfare system that will encourage thousands more into work and to boost their earnings, helping grow the economy.
Around 120,000 more benefit claimants will be asked to take active steps to seek more and better paid work, or face having their benefits reduced.
Over 50s to get more support to find work, boosting economic growth.

The Chancellor is this week expected to announce changes to Britain’s welfare system that will help boost people’s earnings, get them into work and support economic growth.

Changes to Universal Credit expected to be announced later this week will require benefit claimants working up to 15 hours a week at National Living Wage to meet regularly with their Work Coach and take active steps to increase their earnings or face having their benefits reduced.

This gradual expansion is an increase from the 12-hour threshold and will bring an additional 120,000 benefit claimants into the Intensive Work Search Regime.

With more than 1.2 million job vacancies across the UK, Work Coaches will set clear expectations with claimants and make sure they stick to their commitments. These commitments could include applying for jobs, attending interviews or increasing their hours. People who don’t fulfil their job-search commitments without good reason could have their benefits reduced in line with existing benefit sanctions policy.

Eligible claimants over 50 years old, including new claimants and the long-term unemployed, will also get extra support from Work Coaches. The newly unemployed will get 9 months of targeted sessions, and people who are long-term unemployed will receive a booster session followed by 3 months of intensive employment support.

Rising economic inactivity in the over 50s is contributing to shortages in the jobs market, driving up inflation and limiting growth. Returning to pre-pandemic activity rates in the over 50s could boost the level of GDP by up to 1 percentage point.

Chancellor Kwasi Kwarteng said: “Our jobs market is remarkably resilient, but it is not perfect. While unemployment is at is at its lowest rate for nearly fifty years, the high number of vacancies that still exist and inactivity in the labour market is limiting economic growth.

“We must get Britain working again. These gradual changes focus on getting people back into work and maximising the hours people take on to help grow the economy and raise living standards for all.

“It’s a win-win. It boosts incomes for families and helps businesses get the domestic workers they need, all while supporting economic growth.”

Secretary of State for Work and Pensions Chloe Smith MP said: “As we continue to face economic challenges and labour market shortages, we are committed to helping people on lower incomes to boost their pay – because we know work is one of the best ways to support your family and help grow our economy.

“Whether it’s increasing their hours in their current role, entering a new sector or switching careers, we want people of all ages and all stages to be able to progress into fulfilling careers.

“The expertise our dedicated DWP Work Coaches bring, will help to drive this change by removing barriers to progression and opening up opportunities for training and building skills, to increase earnings.”

These changes will be Great Britain-wide and, in line with usual practice, the UK Government will work with the Northern Ireland Civil Service to determine the most suitable way to deliver support in Northern Ireland in due course.

Certain groups will remain exempt from sanctions, including people who are unable to work due to long-term sickness or a disability.

Mortgage Misery: Experts predict interest rates hike today

How the new interest rates affect house prices and rent across the UK

Housing market: hurry if you’re selling, halt if you’re buying, stay if you’ve borrowed, finance experts advise
Landlords will likely increase rent prices or sell to cope with increased mortgage repayments
Inflation and interest rates will keep rising, but house prices are already slowing down

TODAY, the Bank of England will decide what the new base interest rates might be, currently at 1.75%. Top market analysts expect this to further rise to 2.25%.

The Office for National Statistics announced on August 17^th that UK inflation rose to 10.1%, from 9.4% two months earlier. The Bank of England expects it to further increase, peaking at 13.3% in October. The accompanying higher interest rates and bleak two-year economic outlook generally means bad news for homebuyers, landlords and renters across the UK.

Top market analysts at CMC Markets expect interest rates to further rise to 2.25% this month. This directly impacts mortgages on variable rates – around 1 in 5 households in the UK – and another 3.1 million whose fixed-rate periods expire in 2022-2023, according to UK Finance estimates.

Borrowers whose repayments are directly linked to the base rate, as set by the Bank of England, will now face mortgage repayments at rates between 3% and 4%, up from 1.75% and 2.75% only five months earlier. This will inevitably spill into rent prices.

CMC Markets analysed the latest data for June 2022 from HM Land Registry, published on August 17^th, and concluded that the likely tendency for house prices is in a temporary slowdown, which is good news for those waiting a little longer to buy a home.

Michael Hewson, Chief Market Analyst at CMC Markets comments: “Houses sold in June 2022 only increased in price by 1% compared to May, whereas, last year, this constituted a much more generous 5.7% surge.

“This is only the first month this year for prices to slow down at such a fast rate, so some caution before jumping to conclusions is advised. Remember, house prices may be slowing down, but they are not decreasing. Importantly, since this is transactions data processed at the time, it does not take into account the big leap in interest rates that the Bank of England announced later that month, let alone the even bigger hike in August.

“Therefore, despite the soaring inflation and rising consumer prices across the board, UK house prices appear to be trailing behind because demand for homes has generally come to a screeching halt. Most buyers are weathering the storm for a few more months at least, while some are also working out how the cost of living crisis will pan out in the medium term so that the new mortgage is not squeezing their pockets beyond their comfort zone.

“For those still keen to get on the property ladder, there are plenty of fixed-rate banking products that can insulate them from the current spiralling interest rates on mortgages. They should, however, prepare for the possibility of being faced with higher-than-expected repayments once the fixed rate period expires, as the new variable rates are at the lender’s discretion. Fixed rates are not a cure-all either, as they may now be set to a higher level to start with.

“The buy-to-let market is equally volatile. Landlords will either pass the increased mortgage repayments onto tenants by increasing their rent or simply sell fast to lock in a better price. Right now though, those already on the property ladder are generally better off staying put rather than moving or re-mortgaging. They would not get a good deal on their old house in this market and may likely end up losing more money overall.”

What did the Bank of England do earlier in August?

The Bank of England explained that the rise in interest rates was necessary due to external pressures which are expected to persist. This means that British firms and residents will continue to feel this weight reflected on rising domestic prices, wages outpaced by soaring inflation, and even higher mortgage repayments, despite the Bank’s attempt to widen the borrowing pool through less restrictive mortgage rules.

Although historic, the Bank’s decision was not a surprise for trading analysts at CMC Markets, a London-headquartered financial services company, who believe the Bank was expected to raise interest rates higher than 1.25% during the June meeting, as a means to keep import inflation in check.

This is on the backdrop of a 10% year-to-date depreciation of the British pound sterling against the US dollar and an indication from the Federal Reserve, the US central bank, of a further interest rate increase by 0.5% or 0.75% in September.

Michael Hewson comments: “The UK currently fares worse than both the EU and the US. This is due to its closer dependence on energy shocks than the States and less government intervention to soften the blow compared to its European counterparts.”

What’s next and when will things calm down?

Other than adjusting the interest rates to the accurate level to keep abreast of import inflation, the economic projections for the UK paint a bleak outlook for the next two years.

The UK is projected to enter a recession in the final quarter of this year, the Bank of England announced. The country’s economy will contract by 1.25% in 2023 and 0.25% in 2024, however, inflation is becoming a much bigger long-term threat, with unrealistic chances of falling back to the desired 2% much before 2024.

The current political race for the Conservative Party leadership and the consequent fiscal policies promoted by the new British government is a major factor to take into account for any inflation, GDP, and unemployment projections and investment decisions.

As it stands with the current measures, inflation is expected to peak at 13.3% in October – a sharper increase than the Bank anticipated in June, originally estimated at 11%. It will continue to rise throughout 2023 only to decline in 2024.

Meanwhile, forecasts for the Consumer Price Index (CPI) are less optimistic now, expected to decrease only to 9.5% in the third quarter of 2023, although the Bank anticipates a sharp fall in prices immediately thereafter.

Selling prices are set to increase to reflect rising costs while real household post-tax income is expected to plunge in 2022 and 2023. The Bank predicted that core prices will peak at 6.5% this year, meaning that, in the following six months, food and energy will constitute more than half of the headline CPI.

The next meeting for the Monetary Policy Committee, where the Bank of England will decide what the new base interest rates might be, is today – September 22^nd.

TUC: Ministers should boost wages, not slash taxes, in emergency budget

Union body says government must prioritise lifting workers’ pay over “bungs to big business and City bankers”
**New TUC analysis** shows real wages are down £100 a month compared to same period last year
“Don’t reheat failed Osborne-era policies”, TUC warns Chancellor

The TUC has today (Thursday) called on the Chancellor to bring forward an emergency budget that delivers for “working Britain”.

In a submission to the Treasury, the union body warns the government not to repeat the same mistakes of the “Osborne era” when pay and public services were slashed and huge tax breaks were given to big business.

The TUC says the priority for ministers must be to get wages rising across the economy and to fix the staffing crises plaguing hospitals, social care, education and other frontline services.

Pressure on wages

New analysis from the union federation shows that real wages down are down by over £100 a month compared to this time last year – a number that rises to £190 for public sector workers.

For the typical nurse this means a real-terms pay cut of £1,000 over the next year and a real-terms pay drop of £4,300 since 2010.

The TUC says rather than “handing out bungs” to corporations and City bankers the government should:

Bring forward inflation proof increases in the minimum wage, universal credit and pensions to October to help families through the cost-of-living emergency.
Get the minimum wage on a path to £15 an hour as soon as possible.
Give public service staff a real-terms pay rise that at least matches the rising cost of living and begins to restore earnings lost over the last decade.
Strengthen and extend collective bargaining across the economy, including introducing fair pay agreements to set minimum pay across whole sectors.
Impose a larger windfall tax on oil and gas companies that that are profiteering from UK families.
Make sure everyone pays their fair share of taxes by going ahead with increases in corporate tax, and equalising capital gains tax rates with income tax as a first step to fair taxes on wealth.

Speaking ahead of Friday’s emergency budget, TUC General Secretary Frances O’Grady said: “Friday’s mini budget is an acid test for this government. Are ministers on the side of working people, or more interested in handing out bungs to big business and City bankers?

“Tax cuts will do nothing to jumpstart the economy and will only line the pockets of the wealthy and companies like Amazon.

“When millions are struggling to make ends meet, the Chancellor should focus on getting wages rising across the economy – not helping out corporations.

“That means a £15 minimum wage as soon as possible, boosting universal credit and fair pay deals for workers across the economy.

“And it means ensuring those who’ve profited from this crisis pay their fair share – with a bigger windfall tax on oil and gas giants like Shell and BP, and new taxes on wealth.”

On the need to avoid repeating the mistakes of the past, Frances added: “We need a budget the delivers for working Britain – not more continuity conservatism.

“Kwasi Kwarteng mustn’t reheat the failed policies of the Cameron-Osborne government, which slashed pay, workers’ rights and public services.

“This pushed people into debt and locked families into years of declining living standards.

“After the longest wage squeeze in modern history, people can’t afford to tighten their belts any more.”