Tag: finance

Give the cash to our councils, says Briggs

Scottish Conservative Lothian MSP Miles Briggs has hit out against Finance Secretary Kate Forbes’ refusal to pass on £150 million in funding from the UK government for Covid-19 relief.

City of Edinburgh Council, like the other 32 local authorities in Scotland, have been told to use their reserves for dealing with Coronavirus.  On 31 March 2019 Edinburgh had reserves of £243.1 million.

The UK Government announced another £1.6 billion in funding for local councils in England, but SNP Ministers are declining to hand the equivalent money on to cash strapped councils in Scotland.

The Scottish Conservatives have previously criticised cuts to council  budgets before the outbreak of Covid-19 and the withholding of funds to council to fight Covid-19 is a continuation of this trend.

Councils across Scotland have increasingly had to use their reserves to make up the reduction in council funding in the SNP/ Green budget each year, which has depleted their reserves and led to warning from Audit Scotland that Councils are running on empty.

Lothian MSP, Miles Briggs, said: “Edinburgh City Council has an important role to play in tackling Covid-19, but are being hindered by the refusal of SNP Ministers to pass on funding for Council that has been made available to Councils in England.

“Health and Social care services have been amongst the hardest hit by Coronavirus and they will continue to struggle if SNP Ministers to not provide them with proper funding.

“Councils are going to become increasingly important in the management of Covid-19 once lockdown is lifted and measures need to be put in place to limit social distancing and have adequate levels of PPE.

“To be effective they will need the funding to be able put these measures in place, funding which is currently being withheld by SNP Ministers.”

Small business Bounce Back Loans launch today

  • small businesses will be able to apply for quick and easy-to-access loans from today
  • businesses will be able to borrow between £2,000 and £50,000 with the cash arriving within days
  • loans will be 100% government backed for lenders, and businesses can apply online through a short and simple form

Thousands of small firms and sole traders – including high street staples like hairdressers, coffee shops and florists – will be eligible for 100% government-backed Bounce Back Loans to help them make it through the coronavirus outbreak.

From 9am this morning, small business owners can apply to accredited lenders by filling out a simple online form, with only seven questions.

The government has also agreed with lenders that an affordable flat rate of 2.5% interest will be charged on these loans. And any business that has already taken out a Coronavirus Business Interruption Loan of £50,000 or less can apply to have these switched over to this generous new scheme.

The Bounce Back Loan scheme is the latest step in a package of world-leading support measures launched by Chancellor Rishi Sunak – with £7.5 billion already awarded in business grants, 4 million jobs supported through the job retention scheme and generous tax deferrals supporting hundreds of thousands of firms.

The Chancellor of the Exchequer, Rishi Sunak, said: “Small businesses will play a key role creating jobs and securing economic growth as we recover from the Coronavirus pandemic.

“The Bounce Back loan scheme will make sure they get the finance they need – helping them bounce back and protect jobs.”

Business Secretary Alok Sharma (above) said: “We are backing small businesses, which are the backbone of our communities, with the support they need to stay afloat.

“This new scheme of 100% government-guaranteed loans gives owners of even the smallest businesses the confidence and flexibility to borrow a sum which works for them. This will help ensure they can continue to trade, and be a key part of our efforts to reboot the British economy.”

As part of the scheme, small businesses can borrow between £2,000 and £50,000. The government will provide lenders with a 100% guarantee and cover the cost of any fees and interest for the borrower for the first 12 months. No repayments will be due during this period to enable firms to get back on their feet.

The loans are available through a network of lenders, including the five largest banks.

Don’t be conned by cyber-skullduggery!

Thousands of people could be conned if they don’t pay attention, says leading tax and advisory firm Blick Rothenberg.

Fiona Fernie, a partner at the firm said: “Within hours of the Government’s Coronavirus Job Retention Scheme (CJRS) there was significant activity by cybercriminals trying to cash in on the scheme.

“These were in the form of emails that purported to come from the Government and suggested that HMRC needed bank account details into which the grant should be paid.

“The wording most commonly used to-date is:

‘Dear customer, we wrote to you last week to help you prepare to make a claim through the Coronavirus Job Retention Scheme. We are now writing to tell you how to access the COVID-19 relief. You will need to tell us which UK bank account you want the grant to be paid into, in order to ensure funds are paid as quickly as possible to you’.

Fiona added: “Most scams focus on obtaining the banking details of the recipient either by suggesting they can claim some kind of financial benefit from following the instructions in the correspondence, (for example a tax refund to help protect themselves from the Coronavirus outbreak, a goodwill payment from HMRC or a large sum of money in return for a set-up payment), or that they have a ‘fine’ to pay as a result of some misdemeanour: such as leaving the house more than once a day during lock down.

“The most frequent forms of communication are emails and text messages purporting to come from Government or HMRC officials and are designed to lure the recipient into precipitate action before thinking carefully about the substance of the message.

“People should be aware that neither HMRC specifically nor Government more widely communicates with individuals either by email or by text, unless you have signed up to the relevant protocol with them.  Certainly, payments that can be claimed by taxpayers or fines that can be imposed are not dealt with in this way.”

Fiona warned: “The communications are designed to look entirely legitimate and as well as using official logos, fraudsters change the ‘display name’ on their email address to only show the name of the body they purport to represent. They are very clever.

“It is imperative to treat any email or text apparently received from an official body with extreme caution – if you are taken in it could be a very costly mistake.

“WhatsApp or social media messages are also used by cybercriminals and should be treated with similar caution.”

So, what should you do if you receive one of these messages? 

Fiona lists below some of the things that you can do to protect yourself:

  • Do not reply to these emails, texts, WhatsApp or social media messages
  • Do not call the phone number listed in an email or text
  • Do not click on any links or open any attachments in emails
  • Do not provide any personal or financial details
  • If in doubt about whether an email or text is genuine, click on/hover over the ‘display name’ email address from which you have received the email. This will show you the full details of the sender and will make it clear whether the email is from a genuine Government or HMRC source
  • If you are in doubt about the source of one of these messages which appears to be from HMRC, forward it to them. You can do this via email at phishing@hmrc.gov.uk or via text at 60599 (network charges apply) and then delete it.

Fiona said: “In addition, the National Cyber Security Centre (NCSC) has recently launched a reporting service urging the public to forward any questionable emails to report@phishing.gov.uk.  The NCSC’s automated scanning system then checks them, and immediately shuts down and removes criminal sites.

“However, there are other scams which are even less easy to spot, and which are designed to play on the other major anxiety caused by the Coronavirus pandemic – protecting our health.

“Of the over 2,000 online coronavirus scams which have been removed over the last month by the NCSC, almost 500 were fake online shops selling personal protective equipment items such as gloves and face masks which either never arrive or do not meet the required standards.  Some of the sites also distribute malware which damages the computer systems of those who visit the sites.

“Even charities are at risk: some have been contacted by fraudsters claiming to be from an organisation able to provide helpful information such as a list of ‘at risk’ elderly people in the community who may require support from the charity.  The recipient is then directed to click on a link leading to a fake website or a request to make a cryptocurrency (such as Bitcoin) payment, to enable the release of the information.”

Fiona said: “The messages are not confined to scams allegedly coming from this Government; one received yesterday by a colleague purported to come from the National Crime Investigation Center, USA which is part of the FBI – it was another scam.”

Dear Scam victim,

This is National Crime Investigation Center USA.

In our investigations from banks on International and National Funds Transfer (INFT) protocols in the past 10 years from all banks worldwide. We have come across your contact details and records with one of these Banks. In view of the carried investigations, we have contacted you confidentially for vital information toward your transaction with this bank. It was clear that the bank have delayed your payment thereby looking for a means to divert your fund to different individual account not belonging to you.

However, all bank officials who mishandled your transaction has been duly sacked and management dissolved and dismissed from bank work as a result of this attempt. Upon our investigation conclusion, we found out that your transaction was legitimate and for this reason, a compensation amount of $3,150,567.00 (Three million one hundred and fifty thousand, five hundred and sixty seven dollars) has been allocated to you for immediate payment through our accredited bank, Federal Reserve Escrow.

Kindly contact the compensation paying officer with the below details.

Fiona said: “Sadly, there are always those who are happy to exploit the problems of others to their own advantage.  Despite the many pressures we are all under in these difficult and unprecedented times: we must be vigilant so that we do not become their victims.”

Coronavirus could see Scotland’s economy shrink by a third

The economic impact of the efforts to tackle the coronavirus (COVID-19) pandemic could see Gross Domestic Product (GDP) fall by around a third, according to a report by the Chief Economist.

The latest State of the Economy report, published by the Scottish Government’s Chief Economist Gary Gillespie, presents analysis showing that GDP in Scotland could fall by around 33% during the current period of social distancing, similar to estimates from UK and international bodies such as the Office for Budget Responsibility (OBR) and the Organisation for Economic Co-operation and Development (OECD).

Alongside a summary of latest economic developments, the report includes Scottish Government analysis of:

• channels through which COVID-19 is impacting Scotland’s economy;
• short term impact of social distancing on GDP and the labour market;
• exposure of different sectors to COVID-19 risks;
• medium term path of the economic recovery.

Economy Secretary Fiona Hyslop said: “Our response to COVID-19 is saving lives, but I am deeply aware that the pandemic is having an economic effect that is already being felt across Scotland.

“The Scottish Government is doing everything we can to support businesses at this very difficult time.

“We want Scotland to recover as quickly as possible from this outbreak, and that includes rebuilding our economy as quickly as is safely possible.

“None of us should be under any illusions about the scale of economic recovery and, as we have said before, no government will have all of those answers.

“That is why we have set up an independent advisory group to provide expert economic advice and this will be crucial to help us deal with the challenge of rebuilding our economy.”

state-economy

 

Thousands of businesses benefit from support grants

More than £215 million has been awarded to over 18,000 Scottish business ratepayers in just two weeks, the Scottish Government has announced.

The money has been allocated under two new schemes to help firms combat the effects of the coronavirus (COVID-19) outbreak.

Latest Scottish Government figures show that 59,385 applications were made to 32 local authorities for the business grants by April 14 this year. There have been 18,528 grants awarded so far worth £215,445,000.

Finance Secretary Kate Forbes said: “We are doing everything we can to support business at this very difficult time and will continue to listen to and engage with the sector. Our total support for Scottish business now exceeds the £2.2 billion passed on from the UK Government.

“The fact we have managed to pay out this large amount to so many businesses across Scotland is a substantial achievement and demonstrates the capability of our partners in local government. I am grateful for their continued efforts in helping to deliver these vital grants.

“In addition to our generous backing for businesses we are also committed to helping sectors of the economy that are not being supported in other parts of the UK such as aviation, seafood fishing, fish processing and farming and charities.

“This scheme complements other support available and many businesses applying will also be eligible for the furlough scheme and rates relief. I would encourage only businesses who need support to apply, enabling us to direct as much help as possible to those who need it most.

“We promised to pass every penny received from the UK Government on to businesses in Scotland and we are. Our priority remains to protect lives but we are doing all we can to protect livelihoods too.”

Business Gateway has been working closely with local authorities to support the delivery of grants throughout Scotland.

Councillor Steven Heddle, COSLA’s spokesperson for Environment and Economy, said: “I want to thank council staff and colleagues from Business Gateway for their incredible efforts to implement the grant schemes so quickly.

“Small to medium-sized enterprises have been severely impacted so delivery of support grants as quickly and effectively as possible is a top priority.

“This support will be fundamental in helping businesses put plans in place to recover and grow beyond this crisis, protecting jobs and supporting economic recovery in communities across the country.”

The funding has been allocated between two funds:

· The Small Business Support Grant scheme allows small businesses to apply for grants up to £10,000.

· The Retail, Hospitality and Licenced Premises Support Grant allows firms to apply for up to £25,000.

Compared with a week earlier, grant applications grew by around 10,000, awards by around 11,000 and the value of payouts by around £127 million. On April 6, the totals stood at 49,214 applications received, 7,650 paid out, worth £88,625,000.

Business Gateway delivers advice and support to Scottish businesses on behalf of COSLA.

Post Office helps self-isolating people to access cash

The Post Office is making two of its products available to all UK banks, building societies and credit unions, to make it easier for people who are self-isolating to access cash.

The products are Payout Now – a voucher sent by text, email or post to a customer who can share it with a trusted person to withdraw cash; and Fast Pace – a service allowing a customer to arrange for a trusted person to collect a cheque from them, cash it at Post Office and return with the money.

Martin Kearsley, banking director at the Post Office, said: “Being able to easily access cash is a vital service for older people and those self-isolating.

“Our Payout Now and Fast Pace services mean they can access cash quickly and securely to repay someone for a helpful service like shopping, or simply manage their finances, providing peace of mind that cash can be securely sourced with the help of any trusted helper.”

Gareth Shaw, Head of Money at Which?, said: “Millions of people rely on cash every day but many will struggle to access their money during the coronavirus crisis.

“Our research has found a third of people, including those aged 65 and over and vulnerable consumers, have concerns about managing their money digitally, so this initiative will ensure those who rely on cash will not be cut off during this difficult time.

“Initiatives like this also highlight how close to collapse the UK’s cash network is and further drives home the need for swift action to guarantee access to cash over the long-term.”

The Post Office has a UK network of more than 11,500 branches.

FCA confirms temporary financial relief for customers impacted by coronavirus

The Financial Conduct Authority (FCA) has today confirmed a package of targeted temporary measures to help people with some of the most commonly used consumer credit products. 

Following a short consultation the FCA will be going ahead with the proposals outlined last week, which will give firms the flexibility under our rules to provide temporary financial relief to those facing payment difficulties during the coronavirus (Covid-19) pandemic.

Christopher Woolard, interim Chief Executive at the FCA, said: ‘We know many people are suffering financial pressures brought on as a result of the coronavirus pandemic.

“The measures we’ve announced are designed to provide people affected with short-term financial support through what could be a very difficult time. The changes will provide support for consumers with credit cards, loans and overdrafts, facing temporary financial difficulties because of the pandemic.

‘Customers should think carefully before making use of these measures and only do so if they need immediate help. Where they can still afford to make payments, they should continue to do so.

‘We know there is still more work to be done, and we will be announcing further measures to support consumers in other parts of the credit market in the future, including in the motor finance sector next week.’

The measures include firms being expected to:

  • offer a temporary payment freeze on loans and credit cards for up to three months, for consumers negatively impacted by coronavirus
  • allow customers who are negatively impacted by coronavirus and who already have an arranged overdraft on their main personal current account, up to £500 charged at zero interest for three months
  • make sure that all overdraft customers are no worse off on price when compared to the prices they were charged before the recent overdraft pricing changes came into force
  • ensure consumers using any of these temporary payment freeze measures will not have their credit file affected

The rule changes will be in force from today and the full range of measures will apply by Tuesday 14 April 2020.

This is to allow firms time to ensure they have the appropriate level of resources available to handle customer requests. All firms will be ready to receive customer requests by 14 April, although some firms including the major banks and building societies, will be adopting the changes today.

Consumers should check firm websites or social media posts for more information, and where possible use online services to request assistance.

This will reduce the pressure on firm call centres who are experiencing a high demand in calls due to the current pandemic situation. If consumers need to get in touch by telephone please be patient and, if you can, wait until after the Easter weekend, even if your lender is offering help sooner than the 14 April 2020.

In response to the consultation, the guidance now includes clarification on which products are in scope. In particular, the FCA are confirming that the following products are covered: guarantor loans, logbook loans, home collected credit, a loan issued by Community Development Finance Institution and some loans issued by credit unions, but only where these are regulated. The guidance also applies to firms which have acquired such loans.

These measures won’t replace normal forbearance rules where these would be more suitable for a consumer in serious and immediate financial difficulty. Consumers in financial difficulty should contact the Money Advice Service (MAS) for further guidance.

The FCA will keep this guidance under review.

Which? urges clarity on financial help for bank customers

Which? is calling on the financial regulator to urgently provide greater clarity on temporary measures to help people struggling financially because of coronavirus, as new research reveals the huge toll the outbreak is expected to take on people’s finances.

A survey by the consumer champion carried out between 20-22 March, just before the government asked people to stay at home to stop the spread of coronavirus, highlights that significant numbers of people are expecting to struggle with their finances over the next year.

With the Financial Conduct Authority (FCA) set to introduce temporary measures tomorrow designed to help consumers falling into financial difficulty as a result of the crisis, Which? can reveal people of all levels of working status are now expecting their household finances to worsen over the next 12 months, with those who work part time reporting the highest level of concern.

Taking the proportion of people expecting their financial situation to get better and subtracting the proportion who expects it to get worse, confidence among part-time workers was at -56 percentage points. The figure stands at -36 for those in full time work.

Of those that are retired, confidence in the future of their household finances stood at -49 for those on a state pension only and -45 for those with a private pension.

The research also shows that consumer confidence in the economy has plummeted. When asked whether the economy would be better or worse in 12 months’ time, confidence fell from -17 in February to -78 in March.

Worryingly, the financial impact of coronavirus follows a period in which large numbers of people were already reporting having cut back on spending, with 39 per cent of consumers in 2019 reporting that they reduced spending on essential items or took money from savings to cover their spending.

This indicates that a significant number of people may have already been close to the point of relying on credit to help manage their personal finances, and the impact of coronavirus could have pushed them to the point where they now need to depend on existing credit cards, loans or overdrafts.

Measures proposed by the FCA last week, due to come into force on Thursday, are designed to provide a temporary solution for consumers who until now have been financially stable. These include a temporary payment freeze on loans and credit cards as well as zero interest on existing overdrafts up to £500, with both put in place for three months.

However, while Which? is generally supportive of the plans, reassurance is needed that the measures can be consistently applied for customers across all banks, and that customers who take up these options will be fully aware of any longer term implications of using them.

This requires the FCA to be as explicit as possible about precisely when the payment holiday period starts – whether it is from the proposed launch date of 9 April, or from the moment the consumer requests support at any point during those three months.

There also needs to be a clear, industry-wide exit strategy for the temporary measures, which must ensure that customers do not end up in unnecessary financial hardship.

There is particular concern about how consumers will be moved off of their £500 interest free overdrafts after three months.

The consumer champion says it is vital that banks do not immediately place consumers back to their original arranged overdraft and rates at the end of any holiday period, and the FCA should consider  “easing off” interest-free overdraft arrangements in a way that does not affect credit scores.

The consumer champion believes that greater transparency will make it easier for people to access services online and make it clear that only those in the most urgent need should seek to directly contact their financial institutions. This should reduce the burden on call centres, providing a greater chance of consumers getting the help they need in good time.

Gareth Shaw, Head of Money at Which?, said: “The impact of the coronavirus outbreak is going to cause a sharp shock to huge numbers of people across the country, and many who were previously in good financial health will now require help from their banks to see them through the coming months.

“While the FCA has taken positive steps to provide assistance, there needs to be urgent clarity so that banks can apply this support consistently for everybody who is eligible, and customers can decide whether these measures represent the best option available to them.”

Hints and tips on managing money if you’ve been furloughed

The Government’s furlough scheme allows for 80% of salary, up to £2,500, to be reclaimed by the employer per month. 

Many companies are now taking advantage of this scheme in order to protect cash and ensure the longevity of the business when social distancing restrictions can be lifted later in the year, say tax and advisory firm Blick Rothenberg.

David Hough a partner at the first said: “For many employees this is a far better outcome than losing their job altogether, maintaining a slightly reduced income and in all likelihood being able to return to the same place of work later.

“However, many families will still feel the impact of this over the next few months whether it be from being placed on furlough, reduced income from the Government’s Self-Employed Income Support Scheme or loss of income altogether.”

He added: “There are some things that many people can do to help manage over the next few months.”

Remove your salary sacrifice deductions

Plenty of employees contribute into a pension pot through salary sacrifice deductions. It is important to save for your retirement, and the Government encourages this by making such deductions tax free, however removing or reducing these payments will increase your take home pay in the next few months. You can top up your pension later in the year when you have more certainty over your income.

Review your direct debits

Review your direct debits with your family to check you aren’t paying for things that you don’t really need. Gym memberships cannot be used at the moment and should be cancelled or deferred. Families should make sure they are not paying for multiple streaming services, or sports packages for which there is no live action. Companies like Spotify offer family memberships which will save money if a household has more than one account holder.

Defer some payments

Payment deferrals, including mortgage deferrals and other loan holidays, should be agreed with the other party but this approach should mean that you can continue pay for crucial items whilst catching up on other payments later in the year.

Many of us pay for our utilities on a monthly basis which is helpful because it means we can predict our monthly spend. However, you might have built up a credit for gas and electric or contributing more than you will actually use in the warmer months coming up. There is an opportunity to schedule these costs differently to help manage through this more challenging time.

Prepare a six-month budget

If you feel that your available cash is going to be less than normal for the next few months you should aim to make a six-month plan and budget your income and expenses over that period.

If restrictions are lifted in the early summer many people will gradually see their incomes return to a normalised level in months four to six.

You will find it helpful to see that your payments can be managed over a longer period and it will also highlight if there are items you are spending money on that you may need to cut back on at early stage.

Rock Star … or Rock Bottom?

“We have to take a win-at-all-costs attitude to ensure British businesses survive. This is no time for unworkable criteria and red tape – the Government needs to realise this now before it’s too late.”

CHANCELLOR Rishi Sunak was hailed a ‘rock star’ when he announced a range of measures to support British businesses facing a financial crisis due to the coronavirus outbreak.

But one entrepreneur says unless the Chancellor cuts the red tape and changes the criteria preventing firms from accessing vital funding – bosses will soon brand him ‘rock bottom’.

“The Chancellor has made it clear that his intention is to support the British economy and protect British business. The only way to do that in the current COVID-19 situation is to make sure the money is ready and easy to access,” said entrepreneur Eddie Black.

“The headlines about the Government’s announcement about helping businesses via the Coronavirus Business Interruption Loan Scheme (CBILS) are fantastic and the Chancellor looks like a rock star. The reality is very different to the headlines.”

Eddie (above), managing director of ECO, says that having read the terms of the loan, and having had in-depth conversations with a range of lenders on the panel, there’s some serious failings in the arrangements which could send businesses to the wall.

The loans are:

  • facilitated via the Enterprise Finance Guarantee (EFG) scheme and only protects the banks up to 80 per cent
  • subject to the usual credit and due diligence (this is estimated to be a four to six-week process)
  • subject to the ability to service the loan – businesses need to provide evidence of future forecasts and business performance predictions

Eddie says this has knock-on effects for the banks: “Originally the banks were going to get 100 per cent guarantees and now it’s only 80 per cent. 

“If there are defaults it will be down to the banks to pursue the debtor and take assets.

“The EFG Scheme might not be a favoured route for them because it means the British Business Bank can say that any inability to pay was down to the lender’s poor due diligence.”

In terms of eligibility criteria for the British Business Bank scheme, an SME must:

  • be UK-based in its business activity, with annual turnover of no more than £45m
  • have a borrowing proposal which, were it not for the current pandemic, would be considered viable by the lender, and for which the lender believes the provision of finance will enable the business to trade out of any short-to-medium term difficulty.

It’s this reliance on future forecasts and business performance projections which Eddie says is such a contradiction.

He went on:  “The British Business Bank criteria states that a company needs to be viable now. Businesses have had all future, or current, opportunities or contracts suspended, and/or, in worst case scenarios, cancelled, without knowing what comes next. 

“Businesses don’t know if that opportunity or contract will be there in the future. Will the client even exist?

“The serviceability and criteria elements are a complete contradiction in terms. No-one knows what the future holds. In many ways, it’s the survival of the fittest.

“There is a risk that businesses will default – that is why it has been described as a war chest.

“The best of British businesses will topple like dominoes if the Government don’t protect the banks. The banks should not be held accountable for lending money that they would not have been asked to lend if it were not for COVID-19.

“If the Chancellor really wants to back British business he needs to back the banks and put the liability on them to ensure that it gets this help into the economy.

“This is a sink or swim scenario and millions of jobs – and the livelihoods of families – are on the line.

“There may be a concern from the Government that businesses will flaunt the rules if these serviceability factors and criteria are not in place, and that might be holding them back on ensuring that this help is available immediately and is easily accessible.

“But businesses which flaunt the rules can be pursued at a later date. Most businesses are not geared up for failure and are in it for the long haul.

“The help is needed now. The money has been pledged and, even if there is a risk of some of it going down the drain, it is better than not getting it into the economy at all.

“We have to take a win-at-all-costs attitude to ensure British businesses survive. This is no time for unworkable criteria and red tape – the Government needs to realise this now before it’s too late.”

ECO has bases at Annan and Creca in Dumfries and Galloway, and in the North-West of England and works all over the UK. It employs 55 people which is due to increase to 80 when it opens its new HQ in the summer.