New UK ISA announced at Spring Budget will encourage savers to “Back Britain” and support UK business, helping to build a stronger economy.
Generous £5,000 allowance is on top of existing £20,000 annual ISA subscription limit.
British Savings Bonds, launching in April, will offer a guaranteed interest rate fixed for three years, increasing the savings opportunities available to consumers.
British savers are set for a boost off the back of the brand-new ISA and National Savings & Investments (NS&I) product the Chancellor outlined at Spring Budget.
The new ‘UK Individual Savings Account’ will give savers an extra £5,000 of tax-free investments that must be invested in UK firms – while the British Savings Bonds product will increase opportunities for people to save for the longer term, whilst encouraging retail demand for government financing. Taken together they will foster cultures of saving and investing in the UK.
The UK ISA will ensure that savers will be able to benefit from the growth of UK businesses. This is part of a number of measures the government is taking, building on Mansion House and Autumn Statement 2023 announcements, to strengthen the UK’s capital markets, boost savings, increase pension fund transparency, and facilitate investment in UK companies.
Chancellor Jeremy Hunt said:“This boost for British savers also unlocks long-term investment for Britain. We are sticking to our plan to get the economy growing, and it is right that this growth is fuelled by British innovation and enterprise in the areas where our country does it best.”
The Chancellor’s approach to create a new ISA allowance to invest in the UK will avoid disrupting people’s existing portfolios while rightly incentivising those that want to back Britain and save beyond the standard £20,000 limit.
This includes investment in those burgeoning small and medium enterprises in the high-growth sectors of the future in which Britain holds comparative advantage over its European neighbours, like digital technology – including being a clear artificial intelligence superpower in the west – and the life sciences – with the largest sector in Europe.
Meanwhile, the British Savings Bonds, a three-year savings product offered through NS&I, will go on sale in early April and will be available to consumers across the UK, with a minimum investment of £500 and maximum of £1 million. Consumers will benefit from an interest rate fixed for three years that is in line with NS&I’s requirement to balance the interests of savers, taxpayers and the broader financial services sector.
The timing will coincide with the further cuts to National Insurance for 29 million working people – putting over £900 a year back into the average worker’s pocket when combined with the cuts to Employee and Self-Employed National Insurance announced at Autumn Statement.
These represent personal tax cuts worth £20 billion, reduce the effective personal tax rate for a median earner to its lowest level since 1975, and represent the next step towards the government’s long term ambition to end the unfairness that means if you get your income for having a job you pay two types of tax, but if you get it from others sources you only pay one.
Pension funds to publicly disclosure how much they invest in UK businesses Vs those overseas.
Schemes performing poorly for savers won’t be allowed to take on new business from employers.
Changes are part of the government’s plan to improve outcomes for savers and consolidate the pensions market.
The Chancellor has today (2 March) announced pension fund reforms as a further step in the government’s plan to boost British business and increase returns for savers. This includes requirements for Defined Contribution (DC) pension funds to publicly disclosure their level of investment in the UK.
The government’s auto enrolment rollout has driven a huge growth in the amount of investment entering UK pension funds, from less than £90 billion in 2012 to around £116 billion in 2022. However, the disclosure requirements for DC pension funds are currently inconsistent across the market and do not require a breakdown of UK investments, sometimes making it difficult for policymakers and savers to understand where this money is invested.
By ensuring pension funds publicly disclose where they invest and the returns they offer, it will make it possible for employers and savers to compare schemes and make informed choices. The government is embarking on Value for Money (VFM) pension fund reforms to improve outcomes for savers and consolidate the DC pensions market. The reforms will ensure that pension managers are focused on securing good returns for savers.
Under the plans:
By 2027 DC pension funds across the market will disclose their levels of investment in British businesses, as well as their costs and net investment returns.
Pension funds will be required to publicly compare their performance data against competitor schemes, including at least two schemes managing at least £10 billion in assets.
Schemes performing poorly for savers won’t be allowed to take on new business from employers, with The Pensions Regulator (TPR) and Financial Conduct Authority (FCA) having a full range of intervention powers.
The plans are subject to a consultation by the Financial Conduct Authority and build on the Government’s Mansion House compact, that encouraged pension funds to invest at least 5% of their assets in unlisted equity.
Chancellor Jeremy Hunt said: “We have already started on a path to drive growth, unlock capital for our most promising companies and improve outcomes for savers – and these new rules mean employers and savers can see how their money is invested and how the returns compare to other schemes.
“British pension funds appear to contribute less to the UK economy than international counterparts do as they invest less in our domestic businesses. These requirements will help focus minds on how to improve overall returns and outcomes for savers.”
Secretary of State for Work and Pensions, Mel Stride MP, said: “The incredible success of automatic enrolment has opened up a huge opportunity to grow the economy, boost British businesses and fuel our futures. It has helped us transform the pensions landscape over the last decade.
“And our Value for Money framework will take this one step further, focusing pension managers on their number one priority – securing the best possible returns for savers – as well as providing a boost to the wider economy.”
Julia Hoggett, CEO of London Stock Exchange plc and Chair of the Capital Markets Industry Taskforce, said:“Pension holders should know how much is being invested in equities in their home market.
“Investing in UK companies ultimately benefits those companies and the returns they are delivering, which supports the economy and the country in which pension holders live, to everyone’s benefit and in everyone’s interest.”
James Ashton, Quoted Companies Alliance chief executive, said:“There is huge upside to aligning the UK’s financial assets with innovative homegrown ventures that could be tomorrow’s world beaters.
“We welcome these new disclosures and hope they are the first step to many UK pension funds discovering the numerous high-potential companies whose shares are traded on their doorstep.”
Chris Hayward, Policy Chairman of the City of London Corporation, said: “The Mansion House Compact aims to channel long-term capital from pension funds into growth companies.
“It will support high-growth companies to start, scale and stay in the UK. We welcome the Government’s action to support this objective which will turn the dial to drive investment into UK businesses. It is vital that the pension ecosystem focusses on value for money and long-term returns for savers.”
Chancellor urged to prioritise investment in public services
The Chancellor’s Spring Budget must provide Scotland with the increased funding needed for public services, infrastructure and cost of living support, Ministers have urged.
The UK Government should also heed the recent advice from the International Monetary Fund (IMF) against further tax cuts, Ministers added.
Deputy First Minister Shona Robison has written to the Chancellor ahead of the Spring Budget on 6 March, urging him to:
provide increased funding for public services and capital investment
increase cost of living support, including by ending the two-child limit, benefits cap, young parent penalty in Universal Credit, bedroom tax and Local Housing Allowance freeze
legislate for an essentials guarantee giving basic necessities and a social tariff for energy bills for those who need them most
transfer National Insurance powers so the Scottish Government can design a tax system fully suited to Scotland’s needs
urgently review the support needed for businesses that are continuing to struggle with bills which are too high, including through use of VAT powers
support measures to reduce carbon emissions, including by making it easier for existing buildings to be retrofitted with energy-saving materials
Separately, Public Finance Minister Tom Arthur wrote to Chief Secretary to the Treasury Laura Trott arguing that tax cuts funded by cuts to public spending would “further damage the services our most vulnerable rely on”.
The Deputy First Minister said: “When I presented our draft Budget for 2024-25 in December, I set out that the UK Government’s Autumn Statement had been a worst case scenario for Scotland’s finances.
“Our Block Grant has fallen by 1.2% in real terms since 2022-23 and the UK Treasury is slashing our capital funding by almost 10% in real terms between 2023-24 and 2027-28. Similar pressures are faced by the other devolved governments in Wales and Northern Ireland.
“With the UK Government’s Spring Budget it is vital that they change course. There is a clear need for increased investment by the UK Government in public services and infrastructure, as has been recognised by the IMF. I would urge the Chancellor to use whatever headroom may be available to prioritise investment in public services and infrastructure over tax cuts.
“The Scottish Budget has prioritised funding for social security and public services in line with our three missions. Yet our spending remains constrained by the decisions of the UK Government.
“The UK Spring Budget is a key opportunity to increase funding for our vital public services and the infrastructure that supports our economy and communities, as well as supporting people with the cost of living and investing in our net zero future.
Chancellor sets out next stage of the Government’s plan to halve inflation, grow the economy and reduce debt.
Building on the stability he gained from Autumn Statement, Jeremy Hunt will set out next steps to drive economic growth across the UK.
Plan will help ease the cost of living, remove barriers into work to boost incomes, drive business investment, and support new, high-growth industries of the future.
Chancellor of the Exchequer Jeremy Hunt will unveil the next phase of the Government’s plan to halve inflation, grow the economy and reduce debt in his Spring Budget today.
In his first Budget speech as Chancellor, Jeremy Hunt is expected to build on the stability gained at the Autumn Statement, with new measures to support families and businesses with the cost of living, before setting out an agenda to grow the UK economy.
The Chancellor of the Exchequer, Jeremy Hunt is expected to say:“In the Autumn we took difficult decisions to deliver stability and sound money. Today, we deliver the next part of our plan: a Budget for growth.
“Not just growth from emerging out of a downturn. But long term, sustainable, healthy growth that pays for our NHS and schools, finds good jobs for young people, provides a safety net for older people … all whilst making our country one of the most prosperous in the world.
“Today I deliver that by removing the obstacles that stop businesses investing; tackling the labour shortages that stop them recruiting; breaking down the barriers that stop people working and harnessing British ingenuity to make us a science and tech superpower.”
The Government is already protecting struggling families with one-off payments worth £94 billion. After a decade of reforms, people on low incomes can now earn £1,000 a month without paying tax or national insurance thanks to rises in tax thresholds. This has helped to lift two million people out of absolute poverty, after housing costs, including 400,000 pensioners and 500,000 children.
The Chancellor is expected to announce fairness reforms to energy bills, bringing the bills of families on prepayment meters in line with average direct debit energy bill under the Energy Price Guarantee. This will enable four million families to save £45 a year on their energy bills from July.
He will also announce his plan to go even further with and ambition to get hundreds of thousands more people into work. Support will focus on disabled people and those with long-term health conditions, parents, the over 50s, and people on Universal Credit. The changes are also expected to encourage benefit claimants to move into work or increase their hours with increased sanctions enforcement and Work Coach support, and childcare costs on Universal Credit to be paid up front.
The Chancellor is also expected to reject the narrative of decline, champion the successes the UK has achieved over the past decade, with a promise to build on the country’s competitive advantages to spread wealth and opportunity everywhere.
UK BUDGET MUST REVERSE TORY COST OF LIVING CRISIS
TOMMY SHEPPARD MP AND DEIDRE BROCK MP: SLASH ENERGY BILLS AND PUT MONEY BACK IN PEOPLE’S POCKETS
The SNP has said “the number one priority for the UK budget must be to put money back into people’s pockets” – warning the Tories can’t continue to hammer household incomes.
Ahead of today’s budget, Tommy Sheppard MP and Deidre Brock MP have urged Jeremy Hunt to deliver a comprehensive package to boost household incomes and economic growth. The MPs for Edinburgh East and Edinburgh North & Leith have challenged the Chancellor to deliver the SNP’s five-point plan:
Saving families £1400 on energy bills – by cutting the Energy Price Guarantee to £2000 and maintaining the £400 Energy Bill Support Scheme to the summer.
Raising public sector pay and benefits by CPI – putting money into the pockets of millions of workers and delivering Barnett consequentials for Scottish spending.
Scrapping Tory plans to raise the pension age to 68 and reinstating the Triple Lock – so no one must struggle in old age.
Re-joining the European Single Market – to boost economic growth and halt the multi-billion pound long-term damage being caused by Brexit.
Investing in green growth – by competing with EU and US subsidies to attract green investment.
In addition to the headroom identified by the IFS, and the billions of pounds saved as a result of the falling wholesale price of gas, the SNP is calling for the Chancellor to scrap non-dom tax status, tax share buy backs, and expand the windfall tax, which would raise billions more to fund cost of living support for ordinary households.
Commenting, Edinburgh East MP, Tommy Sheppard said: “The number one priority for the UK budget must be to put money back into people’s pockets – and reverse this Tory-made cost of living crisis.
“Scotland is a wealthy, energy-rich country but families are being fleeced by Westminster. By refusing to act, the Tories are showing why Scotland needs independence, so we can escape Westminster control, re-join the EU, and build a fair and prosperous economy.
“Families are sick to the back teeth of being ripped off by the Tory government. Instead of hammering household incomes, the Chancellor must save families £1,400 by slashing energy bills and deliver a comprehensive package of support.
“The SNP’s five-point plan would reduce bills, raise incomes and boost economic growth, at a time when many families are struggling to get by. With energy companies making record profits and the wholesale price of gas falling, there is no excuse for failing to act.”
Edinburgh North & Leith MP, Deidre Brock, added: “The SNP Scottish Government is doing everything it can with limited fiscal powers, including delivering the Scottish Child Payment, higher energy bill support, and higher public sector pay.
“The UK government must finally step up to the plate and use its reserved powers to introduce a Real Living Wage and raise public sector pay and benefits by CPI. In doing so, it would raise the incomes of millions of workers and deliver Barnett consequentials which would benefit Edinburgh and Scotland.
“This UK Budget is all about choices. Instead of making families in Edinburgh pay for Westminster failure, the Tories must fund support by scrapping non-dom tax status, expanding the windfall tax and taxing share buy backs, which would raise billions.
“And if we are serious about delivering economic growth and reversing decline, the UK government must re-join the European single market and properly invest in green energy.
“Scotland is suffering the consequences of Westminster control. The Tories trashed the economy with Brexit, austerity cuts and thirteen years of mismanagement. And with the pro-Brexit Labour Party becoming a pound-shop Tory tribute act, it’s clear independence is the only way for Scotland to secure the real change we need.”
Budget predictions – Bank of Scotland
Chris Lawrie, area director for Scotland at Bank of Scotland, said: “Business confidence in Scotland rose in recent months and, after business rates were frozen in a bid to help smaller businesses in the Scottish Budget, firms will be looking to the Chancellor to continue supporting long-term, sustainable growth and encourage higher levels of productivity.
“Growing the economy is key and the Budget is an opportunity to bring further stability and encourage investment in future growth. The Chancellor could show that he can help meet these ambitions by increasing capital allowances and providing the greater certainty and support businesses need to invest in a more high-tech, low-carbon economy.”
The Energy Price Guarantee (EPG) will be kept at £2,500 for an additional three months from April to June, saving a typical household £160.
Energy prices are 50% lower than forecast in October, but remain high, with this support helping bridge the gap to lower prices forecast from the end of June.
Comes as Chancellor set to confirm new cost of living support at Spring Budget, including ending the pre-payment meter premium and help with childcare costs.
MILLIONS of households will get more support with high energy bills to help ease the cost of living, the Chancellor has announced today ahead of the Spring Budget.
The Energy Price Guarantee, which is protecting households by capping typical energy bills at £2,500, will be maintained at the same level for a further three months over April, May, and June, worth £160 in total for a typical household.
The Chancellor is announcing the extension today (15 March) as part of his Spring Budget, which focuses on easing the impact of rising prices, delivering on our promise to halve inflation, and growing the economy by supporting more people into work.
Government support has already cut the typical family energy bill by over £1,300 since October, stopping the average household energy bill hitting £4,279 a year this winter.
The Chancellor’s three-month extension of the Energy Price Guarantee at £2,500 means households won’t feel the full force of Ofgem’s Price Cap between April and June – which stands at £3,280 – helping to bridge consumers into the summer.
Lower wholesale gas prices are expected to feed through to lower household energy bills from July, where Cornwall Insight data suggests the Ofgem Price Cap will reach an estimated £2,100 a year for a typical household.
From April, more support is coming online with 8 million low income and vulnerable households set to receive at least £900 in cash payments over the next year, benefits and pensions set to rise by over 10 per cent, and the National Living Wage increasing to a record £10.42 an hour, so that it always pays to work.
The Spring Budget will go even further, providing hundreds of pounds more in help with childcare costs for parents on Universal Credit and ending the energy premium paid by households who use pre-payment meters, which will save 4 million families £45 a year from July.
Prime Minister Rishi Sunak said: “We know people are worried about their bills rising in April, so to give people some peace of mind, we’re keeping the Energy Price Guarantee at its current level until the summer when gas prices are expected to fall.
“Continuing to hold down energy bills is part of our plan to help hardworking families with the cost of living and halve inflation this year.”
Chancellor Jeremy Hunt said: “High energy bills are one of the biggest worries for families, which is why we’re maintaining the Energy Price Guarantee at its current level.
“With energy bills set to fall from July onwards, this temporary change will bridge the gap and ease the pressure on families, while also helping to lower inflation too.”
Energy Secretary, Grant Shapps said: “Putin’s illegal war has cost British families, which is why we’ve stepped in to pay around half of the typical household energy bill.
“With wholesale prices falling families will start to benefit, but in the meantime we’re stepping back in with the Energy Price Guarantee to prevent the typical electricity and gas bill exceeding £2,500. It’s just part of our plan to help families this winter.”
At Autumn Statement the Chancellor announced that the EPG was due to rise to £3,000 on April 1, with the government then expecting to borrow £12 billion to fund this support. Since then, energy prices have fallen by 50%, cutting the borrowing needed to fund energy support by two- thirds to £4 billion.
The change announced today also follows the latest Ofgem Price cap of £3,280 from April to June which, in large part, sets the cost for this three-month extension. Households would pay the full Ofgem price cap rate if there was no Energy Price Guarantee.
Holding down energy bills is also part of the government’s plan to halve inflation this year, and in November the Office for Budget Responsibility said that the EPG would lower the peak rate of inflation.
Plan expected to remove barriers to people getting into work and tackle Britain’s economic inactivity problem.
Support will focus on disabled people and those with long-term health conditions, over 50s, and low-earners and parents on Universal Credit.
Changes are expected to encourage benefit claimants to move into work or increase their hours with more Work Coach support, and childcare costs on Universal Credit to be paid up front.
Chancellor Jeremy Hunt is expected to set out the ambition to get hundreds of thousands more people into work in his Budget next week.
Benefit claimants are expected to be encouraged to move into work or increase their hours, through changes to the Universal Credit system and increased job support programmes. As a result of measures set to be announced at Budget, hundreds of thousands of claimants will be asked to attend more regular meetings with work coaches, skills bootcamps will be expanded and the Work Capability Assessment will be scrapped.
The government will also start paying childcare costs on Universal Credit up front, rather than in arrears. Currently many low-income working parents are unable to afford the up-front cost of childcare, making it harder for them to get into work. The maximum amount people can claim for childcare on Universal Credit will also be increased by several hundred pounds, making childcare more affordable for thousands of working parents.
These measures will help people get jobs, increase their hours and extend their working lives – all contributing to the government’s priority to grow the economy.
The Chancellor’s plans are expected to benefit disabled people and those with long-term health conditions, people on benefits and the over 50s. Currently there are more than a million vacancies in the economy, and one fifth of the working population is economically inactive – out of work and not looking for work.
Jeremy Hunt, Chancellor of the Exchequer, said:“Those who can work, should work because independence is always better than dependence.
“Already we’re seeing near record levels of employment in Britain, but we need to go further to build a country that rewards work and gives everyone the chance of a better future.
“But for many people, there are barriers preventing them from moving into work – lack of skills, a disability or health condition, or having been out of the jobs market for an extended period of time. I want this back-to-work Budget to break down these barriers and help people find jobs that are right for them.
“We need to plug the skills gaps and give people the qualifications, support and incentives they need to get into work. Through this plan, we can address labour shortages, bring down inflation, and put Britain back on a path to growth.”
Changes to the Universal Credit system are anticipated to encourage claimants to move into work or increase their hours with additional support from their Work Coaches.
Changes to Universal Credit will include:
Paying parents on Universal Credit childcare support up-front when they are moving into work or increasing their hours, rather than in arrears meaning low-income families will find it easier to afford and it will help remove a barrier that many face when thinking about going back to work.
Increasing the maximum amount parents on Universal Credit can receive in childcare support by several hundred pounds, making childcare more affordable for thousands of parents.
Alongside these changes, strengthened work search requirements are expected to encourage over 700,000 lead carers of children on Universal Credit to look for work or increase their hours and will receive additional Work Coach support to do so. Previously they would have had only limited requirements, or no requirements at all.
The Administrative Earnings Threshold (AET), the minimum amount a person can earn without being asked to meet regularly with their Work Coach, will be increased from the equivalent of 15 to 18 hours of earnings at the National Living Wage for an individual claimant. The couples AET, where a second member of a household may not be asked to look for work if their partner is working, will be removed entirely. This is expected to ask over 100,000 additional claimants to meet more regularly with a Work Coach and take active steps to move into work or increase their earnings.
Strengthening the application of the Universal Credit sanctions regime. This includes additional training for Jobcentre Work Coaches to ensure they are applying sanctions effectively, including for claimants who do not look for or take up employment, and automating administrative elements of the sanctions process, including sending automated messages to claimants who fail to meet with their Work Coach, to reduce error rates and free up Work Coach time.
For disabled people and long-term sick:
A Health and Disability White Paper will be published on the day of the Budget outlining our plans to scrap the Work Capability Assessment. Under the current system disabled people need to have a health assessment and be found incapable of work to receive additional income support through the benefits system. Scrapping the Work Capability Assessment is the biggest reform to the welfare system in a decade, meaning that disabled people can try work without fear of losing their benefits, and reducing the number of assessments needed to qualify for health-related benefits.
For the over 50s:
Returnerships will offer skills training that focuses on flexibility and takes previous experience into account, shortening the length of time they have to be in training.
Skills bootcamps will be expanded by 8,000 places per year in 2024-25, up from 56,000 currently, reskilling people in important sectors such as construction and technology.
Latest figures show that employment is at 75.6% and unemployment is close to a record low of 3.7%.
Charities and business groups react to the Chancellor’s expected Budget announcement of getting hundreds of thousands more people into work.
Plan expected to remove barriers to people getting into work and tackle Britain’s economic inactivity problem.
Support will focus on disabled people and those with long-term health conditions, over 50s, and low-earners and parents on Universal Credit.
Changes are expected to encourage benefit claimants to move into work or increase their hours with more Work Coach support, and childcare costs on Universal Credit to be paid up front.
STAKEHOLDER REACTION: CHARITIES
Victoria Benson, Chief Executive, Gingerbread said:“Single parents are all too often locked out of work because they can’t afford the upfront childcare costs.
“We welcome this change and the increase in childcare support available to low income single parents. We know that single parents want to work and that those who are working want to work more hours and these changes will help many to do just this.”
Dan Paskins, Director of UK Impact, Save the Children said:“The UK Government has made the right decision in deciding to pay childcare fees for those on Universal Credit upfront rather than in arrears. This system was stopping people getting into work and putting people into debt.
“We’re delighted also for Save the Children’s parent campaigners who have spent years trying to get this system changed and given evidence many times in person about how this system has been negatively impacting their lives.
“This is good for families, good for our economy and most of all, good news for children. It is a simple and effective change which will help put money in families’ pockets and make life easier for parents juggling work and childcare.”
Laura Davis, Chief Executive, The British Association for Supported Employment said:“The British Association for Supported Employment (BASE) welcomes the Government’s announcements, which focus on empowering more disabled people to feel confident in entering or re-entering the labour market.
“We’re particularly pleased to hear about the plans to scrap the work capability assessment which will be a great step towards ensuring people can try employment without fear.
“We believe everyone who wants to work, can, with the right job and the right support, and should be provided every opportunity to dream big, without fear of being financially worse off.
“We look forward to hearing the detail in the Back to Work Budget on the 15th March and would welcome the opportunity to work with the government over the upcoming months to ensure that the right support into employment is available to all disabled people across the country.
“BASE is proud to represent the amazing Supported Employment Services and Employer-Partners, who are committed to embedding inclusive recruitment, using the evidenced-based model that works. Our place, train and maintain model supports Disabled, Neurodivergent and disadvantaged people across the UK, into well matched sustainable careers that meets their needs and those of the labour market.”
STAKEHOLDER REACTION: BUSINESS REPRESENTATIVE ORGANISATIONS & TRADE BODIES
Syma Cullasy-Aldridge, Chief Campaigns Director, CBI said:“As firms struggle to fill more than one million job vacancies in the economy, it’s good to see the Government finding ways to support people back into the workplace.
“Childcare costs are a barrier to many parents returning to work, especially those on lower incomes. It’s absolutely right that Government childcare support for those on Universal Credit is now paid upfront. The Government needs to announce the launch of a review into childcare to ensure it works for everyone.
“Helping the over 50s return to work requires flexible skills support from firms, so the Government should be listening to business-wide calls for a reform of the Apprenticeship Levy.
“Business will hope to hear more on how the Government can help support people back into the workplace at next week’s Budget – big gaps in our workforce require big solutions.”
Kate Nicholls, Chief Executive, UKHospitality said:“Despite having record numbers of people working in hospitality, labour shortages continue to hold back our sectors growth potential.
“The 150,000 vacancies in hospitality are forcing venues to reduce trading hours and days, significantly impacting businesses to the tune of £25 billion in lost sales and £7 billion in lost tax to the Treasury, which hamstrings our very real capability to deliver record sales when firing on all cylinders.
“The measures announced by the Government are positive and will help get more people into work. In particular, the introduction of more flexible, shortened skills training and breaking down some of the barriers to work that exists within Universal Credit will be beneficial.
“With hospitality so central to the everyday economy and a proven driver of economic growth, investment and jobs, it’s absolutely right that addressing these shortages are a priority for the Chancellor. Making this work for such a strategically important sector will allow hospitality to help the Government deliver its twin objectives of getting the economy growing and bringing down inflation.
“Through our work with Ministers on the over 50s working group and as a Disability Ambassador for the Cabinet Office, I look forward to continuing to work with the Government on labour, skills and training.”
Neil Carberry, Chief Executive, the Recruitment & Employment Confederation, said:“Our analysis shows that labour & skills shortages could cost the UK economy up to £39billion per year from 2024 – around the same as two Elizabeth lines.
“So it is important that action is taken, particularly in childcare which can be a significant barrier to work for many families. Helping those furthest away from the labour market into work is vital – and has been our focus through the Restart programme. Schemes like Restart prove the job is not one for government alone, businesses and recruitment experts can also play their part to great effect.”
Elizabeth Taylor, Chief Executive, Employment Related Services Association (ERSA) said:“At the Employment Related Services Association, we welcome the announcement that barriers to employment will be removed for some economically inactive groups.
“The employment support sector has the experience and knowledge to deliver this, and we know what works, so we sincerely hope that we will have a part to play. We know the differences between those who are voluntarily and involuntarily not currently seeking work, we recognise that employment support needs to be tailored to the individual, these are not homogenous groups.
“Providers in the sector will be required to work with those who will not engage with Jobcentre Plus. The employment support sector has a proven track record of community-based engagement, of delivering advice and support, and expertise in matching people with the right job that can be sustained. Returning to work must be an attractive proposition – let’s make it one.”
People who refuse to stop promoting tax avoidance in the UK could serve time in prison. the Chancellor is expected to announce at next week’s Spring Budget.
Fewer non-compliant tax avoidance schemes operating in the market cuts the likelihood of people getting involved with them and facing thousands of pounds in unexpected future tax bills and penalties as a result
Part of Chancellor’s commitment to help protect taxpayers and public services.
People who refuse to stop promoting tax avoidance in the UK could serve time in prison, the Chancellor is expected to announce at next week’s Spring Budget.
The UK loses around £400 million per year to marketed tax avoidance, money which could be going towards public services, and it is the users of schemes, including agency workers, contractors and freelancers, who can end up with big tax bills, rather than the promoters who sold it to them.
Wednesday’s expected announcement is part of the Chancellor’s commitment to continue cracking down on those selling tax avoidance schemes to help protect taxpayers and public services.
Chancellor of the Exchequer Jeremy Hunt said: “It is everyday people who lose out from tax avoidance, whether it’s individuals facing big bills after getting involved with harmful schemes or funding being taken away from public services.
“That is why I am determined for promoters to face the music for the damage they cause and the lives they harm by stopping them in their tracks.”
Marketed tax avoidance schemes tempt people into avoidance landing them with unexpected tax bills. Promoters of schemes are behind the schemes, and they often use a network of sellers to help them. Over the last 18 years, they have shifted focus away from wealthy clients towards people on middle incomes. Today the market is dominated by umbrella companies that choose to target contractors and agency workers.
To help everyday taxpayers, HMRC are laser-focused on driving promoters out of business. 31 tax avoidance schemes and 27 of their promoters had been named by HMRC to warn thousands of taxpayers to not to get involved.
There are also already financial penalties in place for promoters who ignore “Stop Notices” and don’t stop promoting.
But the Chancellor is expected to go one step further at the Budget by announcing a consultation that could result with promoters serving time in UK prisons when found guilty in a court of law.
While individuals are ultimately accountable for their own tax affairs, this action will also help up to 2.4 million contractors, including hospital workers, who can become involved in tax avoidance through the agencies they trust to handle their tax affairs. According to HMRC, hospital workers, including those working part-time, are the highest users of tax avoidance schemes in the UK out of any sector.
Fewer non-compliant tax avoidance schemes operating in the market cuts the likelihood of people getting involved with them in the first place, and facing thousands of pounds in unexpected future tax bills and penalties as a result.
Case Study – Tanya, nurse
Tanya got caught up in a tax avoidance scheme and has shared her story as a warning to others.
Tanya is a single parent. She works as a critical care nurse at her local hospital. She found her job through an agency, and they recommended an umbrella company that provided payroll services. Tanya chose an umbrella company that gave her the highest take-home pay. This turned out to be a tax avoidance scheme which she joined. This left her with an unexpected tax bill, on top of the high fees she had paid to the umbrella company for using the scheme.
“I was sold on the benefits of higher pay.”
Tanya explains: “As a nurse I trust my patients and they trust me, that is the relationship of care. I trusted my agency and umbrella company and I feel like they lied to me and scammed me, I thought my umbrella company would care but they didn’t.
“My agency and umbrella company sold me the benefits of higher pay through what they described as their Tax Plan model. This has now left me owing HMRC money and my umbrella company has washed their hands of me, they just disappeared and left me with the tax bills.”
It is unlikely that Tanya will be able to recover the high fees charged by her umbrella company, as they are now seeking voluntary liquidation. She must also pay tax of nearly £7,500 and some interest.
Tanya contacted HMRC and wanted to sort everything out. If she can’t settle her taxes and pay what she owes in one go, she will be offered time to pay her tax bill by instalments.
As well as criminalising promoters of such schemes, the Chancellor is also expected to announce that their directors could be quickly disqualified from directing companies. This builds on the government’s existing work to deter promoters from promoting schemes.
UK Chancellor Jeremy Hunt met with finance ministers and central bank governors from world’s major economies at G20 in Bengaluru, India
Chancellor also met with Indian technology business leaders on first overseas trip to deepen UK/India economic ties
Chancellor set out the UK’s growth agenda ahead of Spring Budget next month
Jeremy Hunt has concluded his first international visit as Chancellor to Bengaluru, India, for the first G20 Finance Ministers and Central Bank Governors meeting held under India’s 2023 Presidency.
The Chancellor, alongside Andrew Bailey, the Governor of the Bank of England, attended a meeting of G7 Finance Ministers and Central Bank Governors on Thursday 23 February.
They were joined virtually by Ukrainian Finance Minister Serhiy Marchenko. Their statement sent a strong message of condemnation for Russia’s war of aggression against Ukraine, announced an increase of financial support for the Ukrainian government to a total of US$39 billion in 2023 and committed to continue supporting vulnerable countries hardest hit by the economic impact of the war.
On Friday, the UK announced a fresh wave of internationally co-ordinated sanctions and trade measures, to further restrict Russia’s capability to wage war in Ukraine both now and in the future.
The Chancellor also attended the first G20 Finance Ministers and Central Bank Governors meeting under the Indian Presidency. He condemned Russia’s brutal acts in the strongest terms, emphasising– like many other Ministers present – that securing peace was the most important action for global growth.
He also underscored the need for bilateral official creditors and private sector to urgently help address low and middle-income country debt vulnerabilities in developing countries; the importance of multilateral development banks boosting lending from their existing balance sheets; and called on the G20 to fulfil its pledge to channel $100 billion of IMF Special Drawing Rights in support of developing countries.
The Indian Presidency issued a Chair’s statement at the end of the meeting. It highlighted, among other things, the continued need to fight inflation, and the importance of supply-side policies, especially those that increase labour supply, boost growth and alleviate price pressures.
There was also G20 consensus, including China, on the need for swift resolution of existing debt restructuring cases and to work on the impacts of food and energy insecurity on the global economy.
While in Bengaluru, the Chancellor had productive bilateral meetings with U.S. Treasury Secretary Janet Yellen, Federal Reserve Chairman Jerome Powell, French Minister of Economy and Finance Bruno Le Maire and Kristalina Georgieva, Managing Director of the International Monetary Fund. He also met with Australian Treasurer Jim Chalmers.
At a meeting with Indian Finance Minister Nirmala Sitharaman, both sides agreed to make further progress on the UK-India Free Trade Agreement and deepen bilateral economic and financial ties. They agreed to make swift progress on setting up the next UK-India Economic and Financial Dialogue.
The Chancellor took the opportunity whilst in Bengaluru to meet with business leaders, home to India’s fast-growing tech hub. He visited the offices of Indian consultancy and tech multinational Wipro, which employs over 4,000 people in the UK.
Chancellor of the Exchequer Jeremy Hunt said: “Meeting fellow Finance Ministers face to face is an excellent opportunity to make real progress on the key global economic issues of our time.
“I first visited India 38 years ago, and it’s been fascinating to see how much the country has changed in this time – there are positive lessons to be learnt from their successful rapid development.
“It’s been great to hear from Indian technology business leaders here in Bengaluru how they are pushing the country’s economy forward, and I look forward to further collaboration between India and the UK as we continue to trade and create jobs – delivering on the government’s plan to grow the economy”
While speaking at the meetings, the Chancellor set out the UK government’s intention to protect the most vulnerable from cost-of-living pressures, whilst maintaining fiscal sustainability with debt falling and not adding to inflationary pressure.
He added that the upcoming Spring Budget on 15 March will drive economic growth , focusing on skills, business and infrastructure investment and research and innovation, as well as reviewing regulations of the UK’s key growth industries.
130% rise in working claimants during the pandemic
Low-income workers facing “perfect storm” this spring unless ministers improve “woefully inadequate” levels of support, warns union body
Cost-of-living crisis already depressing value of UC, TUC analysis reveals
*NEW POLL* shows many families already struggling to make ends meet
The TUC has warned that millions of low-income workers face a “perfect storm” this April with universal credit (UC) falling behind the cost of living as energy bills and taxes rise.
The warning comes as new TUC analysis reveals that the number of workers on UC has increased by 1.3 million since the eve of the Covid-19 pandemic.
The analysis of official statistics shows that over 2.3 million workers were in receipt of UC at the end of 2021, compared to just over one million on the eve of the pandemic in February 2020.
This represents an increase of 130 per cent over the last two years and means 1 in 14 (7.2 per cent) working adults now claim UC.
The TUC says the huge rise in UC recipients has been driven by working households being pushed into financial hardship during Covid, with millions facing a cost-of-living crunch this year.
Basic value of universal credit now lower than at start of pandemic
The TUC says that the basic value of UC is now lower than at the start of the pandemic as a result of UC not keeping up with inflation.
TUC estimates show that the value of UC has fallen by £12 a month in real terms when measured against CPI inflation and £21 a month when measured against RPI inflation compared to just before the pandemic (February 2020).
The TUC says this trend will only get worse in the months ahead with inflation forecast to rise further.
Struggling to cover the basics
The TUC warns that millions of low-paid families face a crunch point in April when energy bills and national insurance contributions go up – at the same time as UC continues to fall in value.
New polling – carried out for the union body before last week’s energy cap announcement and Bank of England forecasts – shows that many are already struggling to make ends meet:
One in eight workers (12 per cent) say they will struggle to afford the basics in the next six months. And a fifth of working people (22 per cent) say they’ll struggle to afford more than the basics.
Low-paid workers are more likely to be struggling. One in six (17 per cent) low-paid workers (those earning less than £15,000 a year) say they will struggle to afford basics in the next six months, and three in 10 (29 per cent) say they’ll struggle to afford more than the basics.
Parents of young children, disabled workers, key workers and BME workers are more likely to be struggling:
Nearly one in five families (18 per cent) with kids under 11 will struggle to afford the basics
Over one in five (21 per cent) disabled workers will struggle to afford the basics, compared to 10 per cent of non-disabled workers
14 per cent of key workers say they’ll struggle to afford the basics in the next six months, compared to 10 per cent of non-key workers
14 per cent of BME workers say they’ll struggle to afford the basics in the next six months, compared to 11 per cent of white workers
The poll also reveals that a fifth of workers (21 per cent) say they have Christmas debts to pay off this year – a number that rises to over a quarter (28 per cent) for workers with children of school age.
Better support needed
The TUC says the government must do far more to help struggling households to get through the months ahead.
The union body says the cost-of-living support announced by the Chancellor on Thursday is “woefully inadequate” and will provide families with just £7 extra a week – most of which will have to be repaid.
The TUC is also calling for UK Government to use the upcoming spring budget to:
Increase to UC to 80 per cent of the real Living Wage.
Introduce a windfall tax on energy companies, using the money to reduce household energy bills
Boost the minimum wage to least £10 an hour now
Work with unions to get pay rising across the economy
TUC General Secretary Frances O’Grady said: “Millions of low-paid workers face a perfect storm this April.
“At the same time as energy prices and national insurance contributions shoot up, universal credit is falling in value.
“The government must do far more to help struggling families get through the tough times ahead. The support package announced by the Chancellor last week is woefully inadequate.
“Universal credit urgently needs boosting and we need further action to reduce fuel costs for those battling to make ends meet.
“Oil and energy companies shouldn’t be making bumper profits, while many struggle to heat their homes.
“If ministers fail to do what is necessary, more households will be pushed below the breadline.”
On the need to boost pay, Frances added: “The best way to give working families long-term financial security is to get pay rising across the economy.
“That means increasing the minimum wage to at least £10 an hour now, and ministers requiring employers to negotiate sector-wide fair pay agreements with unions.”
