People’s earnings are not keeping up with the rise of inflation, leaving the UK to feel the pinch. With earnings becoming more stagnated, the report by the Institute for Fiscal Studies (IFS) said that households are more likely to be 6 percent worse off than they would have been if the recession had not stopped incomes from rising.
The report believes that the average household income will have fallen by 1.6 percent over the past three years. The IFS measured the household income, ahead of tomorrow’s budget, by looking at what was coming in after inflation was taken into account.
The fall in living standards is also believed to be caused by people receiving less interest from their savings, lower employment levels and tax and benefit changes, the report said.
IFS said the drop in living standards is the most dramatic fall since the 1980s and marks the first drop in the average household’s income over any three year period since the early 1990s.
At a time when the UK is struggling to recover, it means workers feel they are in no position to demand pay rises. The weak job market will also deter workers from making financial demands. Until inflation and interest levels are back to their target levels, the UK will continue to feel an even harder pinch.
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( 3 / 168 )This weeks budget is being promoted as a “budget for growth” by George Osborne, declaring that he had already “asked what is required” of the British public to ensure economic growth in last year’s budget.
The chancellor has promised that there will be no further tax increases or spending cuts and his focus will now be on the UK’s economic recovery.
Although the sharp rise in VAT at the beginning of the year will continue to be felt and an increase in National Insurance will still happen next month, however, the overall budget will not raise any extra money.
So the public don’t need to worry about anymore tax increases or cuts, but what about the current rate of unemployment? What will George Osbourne do to create jobs?
The chancellor stated in an interview that there will be a rise in apprenticeships and work experience schemes. He has obviously taken on board last week’s eye-opening unemployment statistics from the Office for National Statistics, which revealed unemployment in the UK was at its highest since 1994 - being particularly bad in 16 – 24-year-olds.
The increase to the price of fuel is set to continue to be a burden for businesses. The Chancellor said he was “looking very carefully at that” to see if he can afford to do something about the surging prices.
It is a comfort to hear that the UK should not have to brace itself for anymore cuts or increases in tax. However, the cuts and increases that have already been implemented will continue to be felt. Economic growth should be the main focus on Wednesday and it is vital the Chancellor puts in place strong actions, and not just words, to get the UK on the road to recovery.
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( 3 / 166 )Regulatory burden coming from Whitehall may become a thing of the past for small businesses due to a proposal by Business Secretary Vince Cable to impose a three-year moratorium on new regulation for small businesses.
The new government plans to cut red tape and boost the economy will be unveiled in a speech today by business minister Mark Prisk at the Federation of Small Businesses annual conference in Liverpool. Vince Cable was due to make the speech but he has been called to an emergency cabinet meeting over the crisis in Libya.
Vince Cable is expected to revoke regulations that give parents of children up to the age of 17 the right to flexible hours. He is also expected to abolish workers’ rights to request leave for training at companies with fewer than 250 staff.
The power, however, will mostly be in the hands of the companies themselves as they will be invited to pick the rules that cause businesses the most problems. Vince Cable said the least popular regulations would then be put to a Reducing Regulation Committee that would be chaired by the Business Secretary within “months.”
During today’s conference, a box full of rules and regulations that cost businesses the most time and money will be presented to Mark Prisk.
Small and medium-sized businesses account for almost 60% of jobs in the UK and for half the country's economic output. Therefore, it is time that the government make changes to the many regulations that SMEs face. However, it will remain to be seen whether a three-year moratorium will have a big enough effect on business growth.
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( 3 / 8 )Stronger action will be taken on tax cheats who MPs believe are not being punished enough after making deliberate errors on their tax returns.
HM Revenue and Customs has devised a tougher penalty regime that will replace the existing rules which allow many people who enter inaccurate tax returns to escape without receiving a penalty.
The new regime will focus on setting tougher minimum penalty rates regarding deliberate errors found in tax returns. If errors are discovered by HMRC inquiries, penalties will be as much as 100 percent of the tax owed.
MPs have called for a tougher penalty regime following a report published in the Commons Public Accounts Committee, which revealed staggering evidence of tax cheats receiving considerably low penalties, and some receive none at all.
The report said over a quarter of civil investigations into fraud resulted in a penalty of less than 10 percent of the tax due. Concern in MPs was raised when it showed that 14 percent of cases received no penalty at all.
The HMRC said that a new penalty regime has now come to force for tax returns relating to 2008-09 onwards.
It is good to see that tougher penalties are being put in place. For too long now, people have been too confident in making deliberate errors in their tax returns, knowing that they will ‘get away with it’.
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( 3 / 147 )Things aren’t looking any better for job seekers, with unemployment levels being at their highest since 1994, according to the Office of National Statistics (ONS).
In just three months (November to the end of January), unemployment levels rose by 27,000 to 2.53 million, the highest it has been for 17 years.
However, at the same time the ONS revealed that in February the number of people claiming jobseeker’s allowance fell by 10,200 to 1.45 million.
It was good news for workers wage packets, with the ONS report revealing that the average earnings in January were 2.3 percent higher than the previous year. This was thought to be mainly driven by bonus payments in the finance and business services sector.
However, the Bank of England warned that, although the figures for January were higher than expected, when it comes to wage growth it is well below the level of growth.
The ONS report revealed evidence of the increase of the working population with statistics showing that a record number of 50 – 64 year olds were in work, with their numbers rising by 25,000 to 7.3 million.
Ahead of next week’s Budget, the Government will need to act on these statistics. Once again, regulations that are an obstacle for small businesses need to be cut in order for them to create more job opportunities and for them to be encouraged to invest.
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