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What's happening in the world of accountancy today

News in brief

Author: ICAEW Insights

Published: 18 Sep 2023

2 October 2023: first two Levelling Up areas named; Government to recruit 2,500 via digital skills programme; further £15m invested in mentoring.

Sandwell and Hull will be the first areas to benefit from a new major regeneration project. A key part of the Government’s levelling up programme, the areas have been selected based on analysis considering places against metrics such as educational attainment, gross pay, and life expectancy. These are the first two areas of 20 due to receive bespoke support. They will be backed up by £20m each in new funding.

The Government will recruit 2,500 tech and digital roles via apprenticeships and talent programmes as part of a skills drive. Applications for 500 roles under the new Digital Secondments Programme pilot are now open, which will bring in skills from the private sector this year. The remaining 2,000 opportunities include 1,300 further apprenticeship programme roles and 700 roles created through an expansion of existing departmental digital programmes.

A new £15m mentoring programme has been launched by the government. It will help proved 5,000 teenagers with support, intensive educational mentoring and one-to-one careers coaching. A further 2,600 young people are to be offered job placements who otherwise may be at risk of involvement in crime. The new programme follows studies finding more young people are falling out of education. It builds on the Government’s National Youth Guarantee, backed by an investment of over £500m.

29 September 2023: childcare costs soar by £660; average five-year mortgage drops below 6%; CIPFA CEO Rob Whiteman to retire. 

Parents of nursery and primary school-age children are facing an additional £664 in extra childcare costs a month. Childcare provider Pebble surveyed more than 2,000 parents. More than half said employers are increasingly demanding they spend more days in the office. On average they are being asked to return to the workplace for an additional two days each week. Charities are concerned this is putting extra pressure on families during the cost-of-living crisis, the Guardian reported

The average rate on a five-year fixed mortgage has fallen below 6% for the first time since early July. This week, it fell to 5.99%. The average two-year deal has a rate of 6.5%. Lenders have been given some confidence to cut rates after the end of a run of 14 consecutive interest rate increases by the Bank of England. Around three-quarters of mortgage customers hold fixed-rate deals, the BBC reported. 

CIPFA CEO Rob Whiteman yesterday announced plans to retire in June 2024. He has held the position for the past decade. Under his leadership, the organisation has gone through significant transformation and tackled many challenges. Recently, he helped establish an accelerated route for ACA students to gain dual CIPFA and ICAEW membership. CIPFA announced that work to find a successor has already begun. 

28 September 2023: UK and Washington sign investment and trade MoU; FCA to probe private asset valuations; Meta pays £149m to break London lease. 

The UK and the US state of Washington have signed a new Memorandum of Understanding to boost trade and investment. The UK now has deals with six US states with a combined GDP of more than £2.2trn. The others are Indiana, North Carolina, South Carolina, Oklahoma, and Utah. Collectively the six states imported £5.1 billion of UK goods in 2022. This latest pact targets the aerospace sector. 

The Financial Conduct Authority is set to probe the way investors value the private assets on their books. This review will be an offshoot of its investigation into liquidity in the asset management sector, which was launched last year following a cash crunch facing investors after Liz Truss’ disastrous mini-budget. Private assets are harder to offload quickly, meaning that a rush of redemptions can squeeze some firms cash supplies. Regulators have been looking to boost liquidity in the market to prevent a similar crisis in future, City A.M reported. 

Facebook’s parent company Meta has paid £149m to break its lease on a central London office building. This is the latest in a list of large corporates cutting back on workspace amid the post-pandemic boom in hybrid working. The tech company had not moved into the newly renovated Triton Square office building. It was reported late last year that it was looking to sub-let the space. The £149m payment represents about seven years of rent against the 18 years outstanding on the lease, the Guardian reported. 

27 September 2023: vehicle scams up 74% in UK; water firms ordered to cut £114m from bills; work sick days hit highest level for 10 years. 

Vehicle scams have increased 74% in the UK in the first half of the year. Victims lost almost £1,000 on average, research by Lloyds Bank found. Bogus online advertisements attract people who pay deposits to secure a vehicle, Sky News reported. The Ford Fiesta, BMWs, Audis and motorbikes are commonly featured. People aged between 25 and 34 are the most likely to be targeted, with 68% of scams advertising on Meta-owned social media platforms and 15% on eBay.

Water companies in England and Wales have been ordered to return £114m to customers through lower bills next year. The regulator Ofwat said that companies’ progress on targets to improve leakage and sewage spills has been “too slow”, failing customers and the environment. Over the past year, less than half of companies achieved their target on reducing pollution incidents and most reported an increase in annual leakage, the Guardian reported. 

UK workers are taking more sick days than at any point in the last decade. Staff took on average 7.8 sick days each in the past year, up from 5.8 before the pandemic, the Chartered Institute for Personnel and Development revealed. Minor illnesses, musculoskeletal injuries, and mental ill health were the most common reasons given by staff, with the report crediting stress, COVID-19 and the cost-of-living crisis as wider causes of the increase. It analysed rates of absence in more than 900 organisations, representing 6.5 million employees, the BBC reported. 

26 September 2023: NHS in Wales faces increasing workforce challenges; carmakers call for extension on 10% tariff; Aldi reports record sales.

Despite increasing to record levels, the NHS workforce in Wales continues to face challenges. These include issues with recruitment and retention, sickness absence and a heavy reliance on temporary staff. It has seen a 27% increase in workforce numbers since 2012/13, however there were 6,800 vacancies across all staff groups at the end of March 2022, while more staff are leaving than at any other time in the last five years. Levels of sickness absence grew to an estimated 1.4 million working days in 2022/23 and agency staff now represent 5.5% of the overall NHS workforce, at a cost of £325m.

Carmakers are calling on EU leaders to delay plans for a 10% tariff on electric car exports from Europe. Those backing the call, put forward by the European Automobile Manufacturers Association (ACEA), include Renault, BMW and Mercedes-Benz. The tariff is due to be enforced from January, but they are pushing to delay its introduction by at least three years, the Guardian reported. ACEA members’ biggest car export market is the UK and it has calculated that a 10% tariff would cost EU car and truck makers €4.3bn over the next three years.

Aldi has reported record sales, with the company saying cost-of-living concerns drove up shopper numbers. Annual sales topped £15.5bn in the year to December 2022, nearly a £2bn increase from a year earlier and a record in its 33-year history in the UK, Sky News reported. The company said rising inflation has changed the way Britons buy groceries, benefitting its profit and market share.

25 September 2023: Warner Bros Studios Leavesden to expand; 910% price mark up on branded foods; UK Trade Envoy visits Taiwan. 

Warner Bros Studios Leavesden will undergo a major expansion, creating 4,000 jobs and boosting Britain’s film and TV production industry. The development in Hertfordshire, expected to be complete in 2027, will add 10 new sound stages (37,000 sq metres) to the studios, bringing its total to 29. It is expected to increase its contribution to the UK economy by more than £200m and its production capacity by more than 50%, the Guardian reported

Some branded food items are costing three times that of their budget counterparts. Which? analysed the prices of almost 26,000 food and drink products for its inflation tracker at eight major supermarkets. It found that rice, spaghetti, baked beans and tea bags were among staples costing up to 910% more than supermarkets own-brands. The tracker showed annual grocery inflation slowed to 12.5% in August - its lowest since September 2022. This is a significant drop from the highs of 17.2% found earlier this year, Sky News reported

UK Trade Envoy Lord Faulkner of Worcester will visit Taiwan to strengthen bilateral trade and investment. This year, discussions began on a UK-Taiwan Enhanced Trade Partnership including energy and net-zero, digital trade and two-way investment – which Lord Faulkner aims to continue. Ten British renewable energy businesses will join him at the 18th UK-Taiwan Renewable Energy Conference to share UK best practice on offshore wind development and emerging technologies. 

22 September 2023: Co-op invests £70m into fresh price cuts; BoE keeps interest rates on hold; plans to expand Ofcom content rules online. 

The Co-op has invested a further £70m into lowering pricing for customers as its losses narrowed after the sale of one of its businesses to Asda. The retailer had already pumped £20m into price cuts in the first half year. This new investment includes 200 reductions for users of its loyalty card scheme, City A.M reported. The company also invested £5m in extending its 30% colleague discount on Co-op branded products in its stores. 

The Bank of England (BoE) has kept interest rates on hold for the first time in almost two years. The decision follows a surprise fall in inflation in August. It also highlights risks to the economy and leaves borrowing costs at 5.25%. The BoE warned that rates will remain high to tackle inflation, the Guardian reported

New plans to bring Internet-based TV channels on smart TVs in line with existing Ofcom content rules. The shift would maximise the potential of the TV industry regarding content reach and ensure fair competition amid an increasingly fierce global battle for viewers. Traditional television channels are already subject to the rules. It would also ensure children and vulnerable viewers remain protected and enable audiences to complain to Ofcom.

21 September 2023: slowing food prices drive surprise fall in inflation; Edinburgh tram line cost exceeded £1bn; second cost of living payment date confirmed.

Slowing food prices helped drive a surprise fall in inflation in August. The cost of living is now at its lowest level in 18 months. Inflation fell to 6.7% in the year to August, down from 6.8% in July. It is the third month in a row that the figure has dropped. Price rises for milk, cheese and eggs slowed the most, while fish and vegetable prices also eased. There was also a drop in hotel and airfare costs. Economists had expected the figure to increase due to rising fuel prices, the BBC reported. 

The true cost of Edinburgh’s tram line has soared to £1.043bn. The 18.5km line was originally due to open in May 2011, at a cost of £545m. The complete line opened in June this year, 12 years later than planned. Edinburgh Council faces debt repayment costs worth 1% of its total budget each year for 30 years, the Guardian reported. A public inquiry report has found a “litany of avoidable failures”. It describes “poor management and abdication of responsibility on a large scale” that have had “a lasting impact on the livelihoods of Edinburgh residents.”

Millions of UK households will receive £300 from the government between 31 October and 19 November. This is the second of three cost of living payments - totalling £900 - being sent directly from the Department for Work and Pensions. It is part of a package of support with the average household being paid £3,300 in the past year. Eligible pensioner households will also receive a further £300 payment later this year as an addition to the Winter Fuel Payment. The money is being sent out automatically, Sky News reported

20 September 2023: oil prices exceed $95 per barrel; UK inflation forecast highest of advanced economies; FCA faced political pressure to approve crypto firms.

Oil prices have nearly reached $100 (£86) per barrel. Underwhelming levels of shale production in the US are adding to concerns of global supply shortages. Brent Crude saw prices increase 1.49% to $95.84 per barrel, while WTI Crude soared 2.35% to $93.63. In the UK, the average price of a litre of petrol has already risen by 10p since the beginning of August to 155.5p, its most expensive level since mid-December last year, City A.M reported.

The Financial Conduct Authority came under “political pressure” to welcome crypto firms into the British market, its former chairman has said. Charles Randell said “there was a lot of political pressure to welcome firms, some of which are now under criminal investigation by the US Department of Justice. And all the evidence that we had at the FCA was that wasn’t a very good idea” The revelation signals a wider governance challenge for regulators, the Guardian reported.

Prices will rise faster in the UK than any other advanced economy this year, a forecast suggests. The Organisation for Economic Co-operation and Development said UK inflation would average 7.2% in 2023. This is the highest predicted rate in the G7 group, which includes the US, Germany, France, Japan, Canada and Italy. It raised its forecast for UK inflation by 0.3% from its previous estimate for 2023, the BBC reported.

19 September 2023: backlash to India’s iGaming tax; CBI asks members to donate £3m; pubs closing at rate of more than 2 a day.

A new tax is dividing India's computer games sector. EY reported there were 421 million people in India playing online games last year, predicted to rise to 442 million this year. The combined revenues of these games were 135bn rupees (£1.30bn) in 2022, 22% higher than in 2021. Annual growth is expected to continue at this rate. In July the government introduced a 28% tax on iGaming – online gambling or "real money" games players pay to enter. These are on average three times larger than e-sports games which remain untaxed, however e-sports are growing in popularity at a record rate. Meanwhile many iGaming companies say the tax renders their business unviable and are calling for changes, the BBC reported.

The Confederation of British Industry (CBI) has appealed to its members to provide £3m within the next few days. The scandal-hit business lobby group is facing collapse. It reportedly asked the companies that remain members to donate to tide it over while it continues discussions about a potential merger with MakeUK, the manufacturers’ trade body. This comes days before an annual meeting at which it normally presents its accounts, the Guardian reported. 

Pubs in England and Wales are closing at a rate of more than two per day, new figures show. This is a 50% increase on the first quarter of 2023. A total of 383 pubs have either been demolished and/or redeveloped. This is nearly as high as the figure for the whole of 2022, which saw 386 pubs lost for good. The British Beer and Pub Association has called for an extension of business rates relief to prevent further permanent closures, Sky News reported

18 September 2023: taxpayer foots £7.4bn faulty Covid loan bill; TikTok fined €345m for breaking EU data laws; Port Talbot steelworks gets £500m from government.

Taxpayers could have to pay £11.5bn from faulty Covid-era loans, the Department of Business, Energy and Industrial Strategy has found. The government has already had to foot a £7.4bn bill to settle bad loans with banks claiming a further £1.13bn, amid increasing levels of fraud. Some £2.23bn more in arrears is expected, as well as £750m in default, City A.M reported. Nearly 15% of bounce back loans have been settled by the government. Across all loans, £1.7bn has been flagged by lenders as potential fraud – a 43% rise on previous estimates.

TikTok has been fined €345m (£296m) for breaking EU data law in its handling of children’s accounts. This included failing to shield underage users’ content from public view, the Guardian reported. The Irish Data Protection Commission, which regulates TikTok across the EU, said the video app had committed multiple breaches of GDPR rules. It also found the “family pairing” scheme, which gives an adult control over a child’s account, did not check whether the adult was the child’s guardian. TikTok was previously fined £12.7m in April for illegally processing the data of 1.4 million children under 13. 

Port Talbot's steelworks will be given up to £500m by the UK government in a bid to keep the plant open and produce steel in a greener way. Tata steel will add £700m of its own as it invests in cutting emissions. The UK government has agreed to fund the installation of £1.25bn new electric arc furnaces for steelmaking. But the package could mean as many as 3,000 job losses across the UK. The site in south Wales is home to Britain's biggest steelworks and is one of the UK's largest polluters, the BBC reported

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