CBI Implodes

The CBI suspends key activities until June after a number of firms quit the UK business group following allegations of rape and sexual misconduct https://t.co/UGMisn1nL0

— BBC Breaking News (@BBCBreaking) April 21, 2023

Tax Investigation Insurance

Market leading tax fee protection insurance for businesses, sole traders and individuals. Protect yourself from accountancy fees in the event of an HMRC enquiry.

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• Deal with any correspondence from HMRC
• Attend any meeting with HMRC
• Appeal to the First-tier Tribunal or Upper Tribunal
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Danker Fired From CBI

Tony Danker, the boss of the CBI, has been dismissed with immediate effect after an investigation into complaints about his conduct in the workplace.

The CBI hired a law firm to investigate him after the Guardian approached it about the complaints. https://t.co/1Tbqe1mbhy

— Osita Mba (@DrOsitaMba) April 11, 2023

Tax Investigation Insurance

Market leading tax fee protection insurance for businesses, sole traders and individuals. Protect yourself from accountancy fees in the event of an HMRC enquiry.

Having a Solar Protect Tax Investigation Insurance policy at your disposal means that should you be one of the many 1000's of businesses or individuals that are selected by HMRC each year to look into your tax affairs your own accountant (your tax return agent) can get on and defend you robustly.

You have the peace of mind knowing that your accountant's (your tax return agent) fees will be paid by the insurance without any Excess for you to find.

Tax Investigation Insurance is an insurance policy that will fully reimburse your accountant's (your tax return agent) fees up to £100,000 if you are subject to enquiry by or dispute with HMRC.

A Solar Protect policy will enable your accountant (your tax return agent) to:

• Deal with any correspondence from HMRC
• Attend any meeting with HMRC
• Appeal to the First-tier Tribunal or Upper Tribunal
• Having the security of knowing that fees will be met in full will enable your Accountant (your tax return agent) to defend your position robustly

Please click here for details.

CBI Calls For Statutory Sick Pay To Be Extended To All Workers

Tax Investigation Insurance

Having a Solar Protect Tax Investigation Insurance policy at your disposal means that should you be one of the many 1000's of businesses or individuals that are selected by HMRC each year to look into your tax affairs your own accountant (your tax return agent) can get on and defend you robustly.

You have the peace of mind knowing that your accountant's (your tax return agent) fees will be paid by the insurance without any Excess for you to find.

Please click here for details.

CBI Predicts Early Interest Rate Rise

The Confederation of British Industry (CBI) has warned that, because of rising house prices, the Bank of England may have to raise interest rates in the first three months of next year, before the general election, as opposed to the third quarter previously forecast.

This of course may be all very well if:

1 There were not a general elction in the offing, and

2 The price rises were not mainly be fuelled by London prices.

As such the Bank of England will defer any rate rise until after the election.

UK Grows Whilst Eurozone Stagnates

According to a survey of 350 manufacturers carried out by the CBI, Britain's manufacturing sector is growing at its fastest rate for nearly two decades. The Telegraph reports that total order books relative to normal levels were at their strongest since March 1995.

The CBI survey's total order book balance rose to +11 this month to from -4 in October, well above expectations of 0 and the long-run average of -17. 

Meanwhile in the Eurozone things are somewhat different. Markit Economics said that its Eurozone Composite Purchasing Managers Index (PMI) for November (published today) fell to a three-month low of 51.5 points from 51.9 points in October.

France, the Eurozone's second largest economy, is dragging the zone down whilst the other smaller economies are all but stagnant.

Such is the effect of using one economic policy (via the single currency) for multiple economies that face different problems.

Push for Growth

As David Cameron at the CBI promises that the government will push for growth and implement a national infrastructure plan (whatever that really means), these promises need to be set against the backdrop of a subdued mortgage/loan market.

The British Bankers' Association (BBA) reports that the downward trend in mortgage approvals continued in September, along with a low demand for personal loans.

The BBA attribute this to personal economic uncertainties.

Fair comment, however, they should also look to their own members' tightening of credit lines (and extortionate interest rates when compared to the Bank of England rate) as another reason for the fall in lending.

Whatever "push for growth" the government may promise/aspire to, the strength of the British economy is based on debt/property; until these areas are stimulated, eg via greater bank lending, significant growth will not occur during the course of this parliament.

Level Playing Field

The government has announced that it will switch the index linking of private sector final salary pension schemes from the Retail Price Index (RPI) to the consumer price index (CPI).

This is in line with the similar measure announced in last month's emergency Budget relating to public sector pensions.

CPI excludes house prices and mortgage payments, is consistently lower than RPI. It is estimated that private pension incomes will fall between 10%-25% in retirement.

The CBI is pressing for legislation to allow those schemes who are specifically required to use RPI to be able to use CPI.

Public Sector Pensions

With a general election looming the CBI have entered the political fray and, quite correctly, pointed out that someone really needs to do something about public sector pensions.

The CBI state that the public sector final salary pension schemes (a burden of around £1 Trillion) are unsustainable and must be overhauled.

The CBI state that public sector pension benefits are now worth an average of 26% of annual salary, this is far beyond the norm in the private sector.

The CBI wants the next government to set up an independent commission to fully investigate pension costs.

All very well.

However, the politicians have a vested interest in retaining the current system, as when they retire they receive a public sector pension.

Brave New World

Richard Lambert, the Director-General of the CBI, has seen the future and it looks "different".

That will be the thrust of the message that he will deliver today at the CBI's annual conference.

The central theme of his address will be that the recession has forced businesses to undertake a fundamental rethink of how they operate, raise finance and to cut the shackles of their past reliance on banks for providing finance.

Lambert will also say that businesses will work to create a more flexible workforce.

The lecture forms the backdrop to the publication by the CBI of "The Shape of Business — The Next Ten Years".

Lambert argues that the new "norm" will be for a more collaborative, less transactional world. Businesses will work more closely with customers, suppliers, employees and shareholders.

The sharp eyed amongst you will observe that banks and politicians have been left out of the above list.

Hardly surprising, given that the politicians and banks are largely responsible for the current financial quagmire; and have come up with precious few practical initiatives for the future economic well being of this country.

Growth

It seems that the green shoots of economic recovery, at least in the service sector, are returning. Q3 2009 saw the first period of growth in the financial sector in two years.

PricewaterhouseCoopers and the Confederation of British Industry (CBI) report that the number of firms reporting rising business volumes outweighed fallers by 31% to 24% (a positive skew of 7%).

However, the report predicts that up to 60,000 financial services jobs could be lost this year.

Lost

It seems that Alastair Darling, when he makes his budget speech on Wednesday, will announce that £60BN of taxpayers' money spent on bailing out the banks will never be repaid.

It is also predicted that Darling will cut public expenditure by £15BN.

If only Gordon Brown had put something away for a rainy day when times were good!

However, on the upside, the CBI said that the worst of the UK recession is over but warns that there will be no recovery until this time next year.

Darling Does U Turn

Alistair Darling, Chancellor of The Exchequer, has done a U turn over his plans for single rate 18% capital gains tax.

Having unleashed a storm of protest from business groups (such as the CBI) who complained that the removal of tapering relief would damage entrepreneurship, Darling has agreed to give £100K in tax relief for owners of small businesses who sell up and retire.

Therefore where will Darling now find the extra money needed to meet his U turn on CGT?

What the Chancellor gives with the one hand, he takes with the other.

Darling Digs Heals In

Alistair Darling, the Chancellor of The Exchequer, dug his heels firmly into the ground yesterday; when he met with business leaders who were pressing him to change his plans to abolish tapering relief on capital gains, and replace it with a flat rate 18% charge.

Darling refused to be moved by their pleas.

The Director General of the CBI, Richard Lambert, put a brave face on it and said that the talks had been "positive". He claimed that the Treasury had to look at ways to encourage entrepreneurs.

The CBI, British Chambers of Commerce, Institute of Directors and Federation of Small Businesses believe that the change will negatively impact small businesses and entrepreneurs.

Mr Lambert said:

"We believe the pre-Budget proposals represent a significant step in the wrong direction for the UK economy, and we will continue to press the case for them to be changed.

As things stand, they will hold back vital investment in businesses of all sizes and send out totally the wrong message about the Government's attitude to enterprise."

That's probably very true. However, the announcements made by Darling wrt the tax changes were not done on the basis of sound economics but out of political expediency. Gordon Brown had run scared of an election, and the Tories fox (wrt inheritance tax) needed to be shot.

The remaining years of the Brown/Darling "partnership" will be unhappy ones for the British economy, political short-termism and fudge will replace any semblance of fiscal probity.

The Banana Republic of Great Britain

Richard Lambert the Director General of the CBI put the boot into Britain's financial services industry yesterday, by likening the regulatory system's failure in its handling of the crisis at Northern Rock as akin to something from a "banana republic."

Quote:

"Outside the movies, a run on the bank is something that happens in a banana republic.

That one should have happened, under our noses, in a mature and prosperous country like the UK, is almost unimaginable."

He poured scorn on the tripartite system, whereby financial regulation is split between the Treasury, Bank of England and the Financial Services Authority, saying that it had "failed to deliver the goods" and needed to change.

Adding that the Bank of England's lender of last resort facility should be reassessed, and rules governing how deposits are protected must also be overhauled.

Quote:

"No institution will ever go down that route again if it remains unchanged. What happened to Northern Rock is just too grim a precedent."

It all comes down to confidence in the system, regrettably as a result of numerous scandals (endowments, pensions, bank charges, over zealous lending etc) people in Britain have totally lost in the financial services industry.

It will take more than a revamp of the tripartite system to restore that confidence.

Rate Rises In The Pipeline

Those of you who breathed a sigh of relief last Thursday, when the Bank of England chose not to raise interest rates, should take heed from the warning issued by Mervyn King (Governor of The Bank of England).

King, in a speech to business leaders at a CBI dinner in Wales, has put borrowers on notice that there will be further rises in rates. King warned of "persistent inflationary pressures" the result being that the Bank "may need to take further action".

King warned of the dangers of excess debt:

"It is unwise to borrow so much that the repayments are affordable only if interest rates remain at initial levels."

That is a clear message to all, that further rates rises are coming.

King noted that there are inflationary pressures within the system, as there are attempts by businesses to raise prices as spare capacity has been taken up by strong demand stoked by a buoyant world economy, as well as the fastest growth in business investment for almost a decade.

King added:

"There has been some underlying upward pressure on inflation that is in part hidden by the volatility in domestic energy prices."

He said that the Bank's Monetary Policy Committee (MPC) would be watching gauges of spare capacity, of companies' pricing plans, and of inflation expectations.

Quote:

"If these indicators remain elevated, the MPC may need to take further action."

The message is clear, those of you who are heavily in debt need to ensure that your finances can withstand a rise of between 0.5% to 1% in rates in the coming year.