£6.08 will be the new rate for the 18 plus worker, while 18 to 20 year-olds will get £4.98. Apprentices will receive £2.60 an hour while 16 to 17 year-olds will get £3.68. The LPC was unanimous in its recommendations “despite all the economic uncertainties”, according to its Chairman, David Norgrove.
The rise in the rate has been welcomed in some quarters. Neil Bentley, deputy Director-General of the CBI said: “This moderate increase strikes the right balance during a period of economic uncertainty. It means workers on the minimum wage will not fall behind the rest of the workforce in terms of pay rises.”
Business Secretary, Vince Cable said that the rises would benefit 890,000 people and claimed that they “reflected the current economic uncertainty while at the same time protecting the UK's lowest-paid workers".
However, some unions and business groups are not happy at the rises, for different reasons. According to Len McCluskey, General Secretary of Unite, "This small increase in the minimum wage is completely outstripped by the current rate of inflation”. Whereas his counterpart at the TUC, Brendan Barber said that the "modest" rise should stimulate local economies where workers spend their wages.
According to the British Chambers of Commerce (BCC), the rises could price young people out of work at a time when youth unemployment is at a record high. David Frost, Director General of the BCC said that the rises were “the wrong increase at the wrong time” and that it was “clear from speaking to businesses that a significant number are having to freeze wages in 2011. These changes will be a barrier to job creation, and ultimately economic recovery."
Only time will tell who is right.
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( 3 / 140 )The first day of the new tax year, also dubbed ‘Black Wednesday’ or even ‘Worse Off Wednesday’ by some, has left many people pondering their financial future. The changes in tax and benefits could apparently leave some people as much as £600 a year worse off but the Treasury insists that the combination of rises and cuts will only affect the better off, with the ‘overwhelming majority of households’ being winners, not losers.
Amid much criticism by Labour and action groups, the Treasury argues that the poorest 80 per cent of households will actually be better off. Around 21 million people earning up to £35,000 will gain and over half a million people will no longer pay tax at all, as the personal allowance was raised from £6,474 to £7,474.
There was also a one percent rise in employees’ National Insurance contributions, a freeze on the inheritance tax threshold, an extra 5% on stamp duty for homes worth more than £1m and restrictions on tax relief on pension contributions for those who save more than £50,000 per year.
The annual increase in the state pension and changes to benefits won’t start until Monday but Labour are already saying that the changes would hit the poorest the hardest and that it would be a "very, very tough day for families.”
Some of the most controversial changes have been to the thresholds in the tax credits system. Effectively, the more people earn, the faster their payments will reduce. Tax relief for employer-supported childcare will no longer be available to claimants who are high earners and universal child benefit has been frozen for three years.
As far as savings are concerned, the limit for saving in a tax-free Individual Savings Account (Isa) has risen to £10,680, of which half can be saved in cash. There is also a new reduced annual allowance for tax-free pension saving in place.
Pension contributions that qualify for tax relief will be reduced to an annual allowance of £50,000 instead of the previous limit of £255,000. And from now on there is a change to converting pension pots into income. These include the end of the effective compulsion to buy an annuity by the age of 75.
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( 3 / 165 )A report published yesterday by the Chartered Institute of Purchasers and Buyers (CIPS) has shown that activity in the services sector accelerated at its greatest pace in March for over a year.
The Markit/CIPS Purchasing Managers' Index (PMI) rose to 57.1, a "marked improvement" on February's 52.6. A figure above 50 indicates expansion. And the pound rose by more than a cent against the dollar in response, as the services sector accounts for around three-quarters of the UK economy.
The feared weakening of the sector in response to government cuts has abated for the time being. More activity was the result of increased business enquiries and higher levels of new work.
CIPS’ chief executive David Noble said: “A complex array of forces were at play in the UK services sector last month, resulting in the strongest rate of growth for over a year, but also a further squeezing of profit margins. Where possible companies tried to avoid passing on higher costs due to highly competitive market conditions.”
However, Noble went on to warn that, although there was a marginal increase in recruitment for the first time in nine months, there are likely to be a few wobbles to come, not least as businesses wait to see the true impact of government spending cuts over the summer months.
Markit’s senior economist, Paul Smith said: “Services activity growth surprised well to the upside in March, and points to the strongest expansion of the sector since the economy was surging out of its recession early last year."
The results of the survey took analysts by surprise, with Ross Walker at RBS saying: “It’s extraordinarily strong. The scale of the improvements suggests there is some genuine underlying recovery.”
However, others warned that the figures might represent a ‘blip’, particularly given that the British Chambers of Commerce figures suggest a slow to modest growth in the services sector.
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( 2.9 / 149 )A survey of 6,000 UK businesses by the British Chamber of Commerce (BCC), published today, will show that the economy edged back to growth in the first quarter of this year after a contraction late last year. However, despite the growth, manufacturers’ confidence in the economic outlook has fallen sharply.
According to BCC Chief Economist, David Kern, growth will continue this year but at a slower rate. "The survey results show a fragile economy with some areas of strength, but sufficiently disappointing to take the view that the Bank of England should go easy on rates," he said.
The survey reveals that eight out of 10 manufacturers expect rising materials costs to force them to raise prices and their prediction is gloomy for profitability and turnover in the next three months. However, exports are strong, helped by a pick up in global demand and a weak pound.
Generally, there has been a worsening across all the key balances, pointing to a difficult economic environment in recent months, the survey says. The service sector showed mixed results, with improvements "slight and still inadequate."
Against this backdrop and with high inflation and an uncertain recovery, most economists expect the Bank of England to maintain the rate at its historic low of 0.5 percent on Thursday. Kern believes that the results of the survey show that the longer it waits to raise the rate, the better the growth profile of the economy.
BCC Director General, David Frost said: “The results show our economy faces a difficult year. The recovery will be consistently choppy. As the public sector cuts start to bite, the Government must get the detail right on the measures announced in the Budget to generate economic growth by helping businesses thrive."
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( 3 / 140 )According to the Work and Families Act, which came into force on April 1st, mothers are entitled to 39 weeks of paid leave as opposed to the current time of 26 weeks. Statutory Maternity Pay (SMP) is now paid at a rate of 90 per cent of salary for the first six weeks and then a maximum of £112.75 for a further 33 weeks.
Women will also be able to go into work for a total of 10 days during their maternity leave without losing their SMP entitlement.
The period of notice for returning to work from maternity leave will be extended to two months from the current 28 days, to make it easier for businesses to plan their staffing needs.
And now fathers can claim two weeks’ Statutory Paternity Pay (SPP) at £108.85 a week or 90% of their average weekly earnings - whichever is the least - from the date of birth or up to eight weeks from the birth. This means that parents could take six months off work each.
And the right to flexible working will be extended to the carers of sick or disabled people from April 6th, whereas it is currently limited to the parents of young children.
To cheer employers up even further, the government aims to increase paid maternity leave again to one year by the end of the current parliament. The Act also allows for the government to introduce a right for fathers to request up to 26 weeks unpaid paternity leave.
While the government says that the cost to businesses will be "quite small" at between £25m and £70m, a survey conducted by the British Chambers of Commerce showed that more than half the firms polled opposed giving extra paternity leave on the grounds of the huge administrative burden it imposes.
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