News in brief
28 October 2021: new finance model to cut cost of nuclear power stations; pubs warn wage rises to increase pint prices; poorer countries spend five times more on debt than climate crisis.
A new funding model to attract a wider range of private investment into new nuclear power projects has been set up. Business Secretary Kwasi Kwarteng announced the new Regulated Asset Base model, which is expected to cut the cost of new nuclear power projects in Britain, saving consumers more than £30bn on each new large-scale station. The switch will reduce the UK’s reliance on overseas developers for financing by increasing the pool of private investors to include British pension funds, insurers and other institutional investors.
Pubs are warning the price of beer will rise by up to 30p per pint, to help pay higher wages and energy costs. The warning follows news that the national living wage will rise to £9.50 per hour in April for those over 23 years old. City Pub Group says doing so will cost it about £1m a year and price increases are its only option to cover the increases. It joins other industry bodies calling for help for the sector, the BBC reported.
Lower income countries spend five times more on debt than coping with the impact of climate change and reducing carbon emissions. Anti-poverty charity Jubilee Debt Campaign found 34 of the world’s poorest countries are spending $29.4bn (£21.4bn) on debt payments per year, compared with $5.4bn (£3.9bn) on measures to reduce the impact of the climate emergency. By 2025, it expects the figures for these countries will increase to seven-fold what is spent on addressing climate risks. Low income countries still regularly pay more than 10% interest on loans compared to an average 1.5% to 2.5% paid by rich countries, City A.M reported.
27 October 2021: Pay rebound for workers hit by the pandemic; HMRC’s CGT receipts hit record £11.5bn; ‘Plan B’ COVID-19 measures could cost UK economy £18bn.
Workers and jobs hardest hit by the pandemic saw the biggest rebound in pay last year. The Office for National Statistics found that employees aged 16 and 17 saw weekly pay drop 11.4% in 2019/20, before growing 12.5% in 2021. Construction workers’ pay rose 16.8% in 2021 and fell 10.4% in 2020, and manufacturing staff’s pay increased 8.3% after a 3.1% drop. However, a revival in pay rates for men has meant the gender pay gap has widened, the BBC reported.
HMRC receipts from capital gains tax (CGT) have risen 62% in the past five years, from £7.1bn in 2015/16 to £11.5bn in 2020/21. This is a record high in a twelve-month period, data from accountancy firm Haysmacintyre shows. The data’s release comes amid concern over potential further increases, City A.M reported. The rise has been credited to the recovery of the stock market and property prices, uncertainty following the Office for Tax Simplification’s previous recommendation to align CGT rates with income tax, and a new 30-day requirement to pay CGT on UK residential property.
Leaked Treasury documents suggest the government’s “plan B” to handle COVID-19 could cause £18bn of damage to the economy over five months. The plan entails a return to remote working and extended use of vaccine passports, the Guardian reported. The documents were drawn up by the Treasury and the Cabinet Office’s Covid-19 taskforce on the basis that a move to “plan B” would last until March 2022. However, the government is first attempting a focus on more booster jabs for the over-50s and pushing the vaccine programme for over-12s.
26 October 2021: vulnerable renters to get £65m support package; UK trade partners agree to end export credit support for unabated coal power; National Living Wage to increase.
A £65m package will support vulnerable renters struggling due to the pandemic. The funding will be given to councils in England to support low-income earners in rent arrears and will be made available through the winter months. It is intended to reduce the numbers of households at risk of homelessness due to rent and bill difficulties. The Department for Levelling Up, Housing and Communities said the package comes on top of the government’s £500m Household Support Fund.
Key international trade partners have agreed to end export credit support for unabated coal-fired power plants. The agreement, made at the Organisation for Economic Co-operation and Development (OECD), included the US, EU, Australia and Canada and was encouraged by UK Export Finance. The ban ensures exporters in OECD member countries will be unable to apply for export credit and tied aid support for new coal fired power plants without operational facilities and existing coal-fired power plants lacking specific equipment requirements.
The National Living Wage is expected to rise from £8.91 per hour to £9.50 in the Budget. The 6.6% increase for all those aged 23 and over is more than twice the current 3.1% rise in the cost of living, the BBC reported. The move comes after pressure on the government to help low-paid employees and younger workers, who are among the worst hit by the COVID-19 pandemic.
25 October 2021: NAO highlights 48% rise in criminal courts’ backlog amid pandemic; UK now in global top three issuers of green bonds; UK joins terms agreement talks on new international tax rules.
A National Audit Office review has revealed a 48% increase in the crown courts’ backlog of cases between 31 March 2020 and 30 June 2021, and a 308% rise in the number of cases waiting more than a year. The figures highlight the impact of the pandemic on criminal courts. Her Majesty’s Courts & Tribunals Service spent £63m on pandemic response and recovery in the criminal courts, in addition to that spent on expected operational activities. The estimated system-wide costs of delivering a long-term criminal justice action plan for 2022-23 and 2023-24 are £2.2bn.
The second sale of the UK’s Green Gilt has raised £6bn to help fund green projects across the country. The order book was 12 times oversubscribed and combined with the first sale last month – the largest green issuance by any country – totals £16bn. The UK is now one of the top three biggest national issuers of green bonds in the world, the Treasury announced. It said the money will support projects such as zero-emissions buses, offshore wind and schemes to decarbonise homes and buildings.
The UK will contribute to terms of agreement for transitioning from the existing Digital Services Taxes to a new multilateral tax regime. Austria, France, Italy, Spain and the US also agreed to the terms discussion, which aims to ensure participants implement the OECD/G20 Inclusive Framework’s regime in a way that supports their national economies and public finances. Moving to the new regime will allow for the termination of trade measures adopted in response to Digital Services Taxes. The six countries have therefore committed to continuing discussions on processes through constructive dialogue.