By now we should all have had our fill of possible tax changes to be outlined in tomorrow’s Spring Budget.
The Tories find themselves in a last chance saloon and the main economic escape route is tax giveaways.
After the latest series of forecasts from the Office for Budget Responsibility, Jeremy Hunt is scrambling to find the least offensive revenue raising measures and public spending savings to deliver without breaching fiscal rules.
We have become a nation addicted to mid-course corrections. The Autumn Statement last November included 50 new tax-and-spend decisions, and 67 if previous ad-hoc measures are included.
Hunt’s direction of travel has been clear. He is trying to make work pay better as the 2 per cent reduction in national insurance contribution, which came through in January, demonstrates.
Budget challenge: Jeremy Hunt is scrambling to find the least offensive revenue raising measures and public spending savings to deliver without breaching fiscal rules
Hunt also aims to get some of the 750,000 or so people added to welfare rolls since Covid-19 into the workforce by toughening up enforcement.
Set against the overall burden of taxation, as a result of frozen allowances, and the sclerotic pace of public administration, political impact has been minimal.
In the build-up to fiscal events it is quite unusual for chief executives to venture outside of their comfort zone.
So full credit should go to Stuart Machin, one of the comeback squad at M&S, for a robust intervention accusing the Government of ‘economic illiteracy’.
A reform of business rates to reflect the nation’s changed shopping habits and a distorted system has looked necessary for a decade.
Machin notes that with an effective tax rate of 45.7 per cent (including business rates), retailers are paying some of the highest levies despite lesser profit margins than other FTSE 100 firms.
Moreover, the apprenticeship levy isn’t working because of regulation and bureaucracy. M&S effectively has self-funded the training of 12,000 young people.
Finally, he recognises the validity of the Mail campaign to end the farce of charging tourists 20 per cent VAT to shop in Britain.
The topic has gone quiet despite hints that the Office for Budget Responsibility might deliver the thumbs up to abolition.
Machin is hopeful that M&S can help restore Oxford Street as the nation’s favoured shopping venue now that it is overcoming Michael Gove’s opposition to redevelopment of its emblematic store adjacent to Selfridges.
VAT relief for overseas visitors would be a huge boost to retail and hospitality. Time to give our nation of shopkeepers something to celebrate.
Homecoming
Lloyd’s of London, along with the Bank of England and the London Stock Exchange, is one of the three pillars of the City.
The ‘Names’ scandal of 1988-92, the migration of syndicates to Bermuda and settlement of sexual harassment charges more recently have diminished the London insurance market’s cachet.
So it is terrific that Amanda Blanc is returning Aviva to Lloyd’s after a two decade absence, with the £242million purchase of Probitas.
It offers specialist underwriting such as professional liability and property catastrophe.
Founded by former Eagle Star executive Ash Bathia and backed by Saudi Re, Probitas’s shift of the ownership to Aviva is a boost for Lloyd’s and the Square Mile.
Since taking over at Aviva in 2020, Blanc has sold off most of Aviva’s global operations and seen off activist investor Cevian.
Expansion plans now consist of bolt-on acquisitions in wealth and risk management rather than grand deals.
Encouraging.
Misplaced secrets
Hard not to feel schadenfreude following the National Audit Office report on the Bank of England’s ethical record.
The Bank is known for rigour in making sure that media exuberance is suppressed by locking journalists down for several hours when key monetary reports are published and removing newspapers from its distribution list should embargoes be breached.
In spite of overhauling its own internal compliance, there were 628 minor and 28 major breaches (none identified) among colleagues in the year to August 2023.
As a school report might say: ‘Has a difficult time completing the work in a timely manner.’
