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Philip Hammond calls for UK economy to reopen

The former Chancellor Philip Hammond has called the government to ease the lockdown measures and reopen the UK economy.

Hammond told the BBC’s Radio 4’s Today programme, “The reality is that we have to start reopening the economy.

“But we have to do it living with Covid.

“We can’t wait until a vaccine is developed, produced in sufficient quantity and rolled out across the population.

“The economy won’t survive that long.”

Peel Hunt has just released the results of its COVID-19 survey of investors, corporate managers and other UK finance professions (banking/legal/accounting), revealing the City’s views on what shape the recovery will take, how investor habits and priorities will change post lockdown, and the outlook for corporates in a post-COVID market.

Source: London Loves Business

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Hammond warns of threat to economy if MPs reject Brexit deal

Chancellor Philip Hammond said the deal was better for the UK than staying in the European Union because it would help heal a divided nation.

The UK would face “economic chaos” if MPs reject Theresa May’s Brexit deal, the Chancellor has warned.

Philip Hammond appealed for the Commons to support the plan, with the prospect of “very serious” consequences, including job losses, from a no-deal scenario.

His comments came as the Prime Minister travelled to Brussels with her Brexit deal under threat at home and abroad.

Mrs May will hold talks with European Commission president Jean-Claude Juncker and European Council president Donald Tusk before a summit of EU leaders on Sunday which is expected to endorse the deal thrashed out between negotiators from the two sides.

But Spanish Prime Minister Pedro Sanchez has threatened to “veto” progress without further guarantees for Madrid over the status of Gibraltar.

Mrs May also faced domestic difficulties, with her relationship with the Democratic Unionist Party looking increasingly strained as Arlene Foster’s party held its conference in Belfast.

DUP leader Mrs Foster warned that the confidence and supply deal propping up Mrs May’s minority administration would have to be “revisited” if her Brexit deal gets through Parliament.

The DUP has strongly opposed the deal and the guest star at its conference will be Boris Johnson, a prominent critic of the Prime Minister’s approach and a potential rival for the Tory leadership.

The tensions over Gibraltar concern Spain’s demand that the territory’s future is considered a bilateral issue between London and Madrid rather than between the EU and UK.

Mr Sanchez has suggested that Sunday’s summit could be scrapped unless there is a breakthrough.

Mrs May has insisted her deal is in the interests of “the whole UK family” including Gibraltar.

On the domestic front, Mr Hammond’s intervention is aimed at winning over critics including more than 80 Conservative MPs – from both the Leave and Remain sides – who are threatening to vote against the agreement.

He also sought to reassure the DUP over their “understandable concerns” about the Northern Ireland backstop provisions aimed at preventing a hard border with Ireland.

If we want this country to be successful in the future, we have got to bring it back together after this process

Chancellor Philip Hammond

Mr Hammond told BBC Radio 4’s Today programme that he believed the deal on offer was better for the UK than remaining in the EU, stressing that it would help heal the divisions caused by Brexit.

“It’s a way of leaving the European Union with minimum negative impact on our economy,” he said.

“Economics is not the only consideration – we also have to look at the political healing process, bringing our country back together because countries that are disunited and divided are not successful countries.

“If we want this country to be successful in the future, we have got to bring it back together after this process.”

He warned that a no-deal Brexit would unleash “economic chaos”, adding: “If the meaningful vote is lost we are in uncharted territory. We will be faced with potential economic chaos; I am sure we would get a very negative reaction from the business community, from investors, from the markets.

He added “we might end up with no deal, we might end up with no Brexit” if the Withdrawal Agreement is blocked by Parliament.

If the deal does pass the Commons, the repercussions could bring down Mrs May’s Government, with the DUP hinting at withdrawing the support of its MPs.

The DUP’s 10 MPs have proved reluctant to vote with the Government since the terms of the Brexit deal became known and the termination of their Westminster arrangement would be a major blow to the Prime Minister.

DUP leader Arlene Foster told the Times that Mrs May’s deal would be a worse outcome than a Labour government led by Jeremy Corbyn.

“It is, and the reason I say that is on day one of us leaving the European Union there would be no difference, we would be exactly the same as the rest of the UK, but in year five or 10 we would be different,” she said.

“If people are looking to Dublin for representation in Europe because we’re the subject of EU rules that is so dangerous in terms of the union … All the things we build the union on – the economic, the cultural, social, political and historical start to diverge.”

DUP leader Arlene Foster and deputy leader Nigel Dodds have strongly opposed Theresa May's deal (Brian Lawless/PA)
DUP leader Arlene Foster and deputy leader Nigel Dodds have strongly opposed Theresa May’s Brexit deal (Brian Lawless/PA)

The DUP’s Westminster leader, Nigel Dodds, used his speech to urge Mrs May to ditch her Brexit plan.

“The DUP wants a deal with the European Union, we understand that businesses, families and communities want certainty,” he said.

“But it is not this deal. It is not a deal at any price. The Prime Minister used to say that. We still say that.

“So, Prime Minister, the message from this conference, from every section of this party is – bin the backstop.”

The Daily Telegraph reported that the next stage of Mrs May’s Brexit sales pitch will be on the immigration concerns believed to have been a key factor in the Leave vote.

According to leaked Cabinet papers, the Home Office has drawn up plans to issue low-skilled migrants with 11-month visas “with restricted entitlements and rights” while they are living in the UK.

Alternative plans could allow EU migrants aged between 18 and 30 to live and work in the UK for two years, with a strict cap on numbers.

The Government will abolish the cap on highly skilled “tier 2” migrants entirely, the report said, with the plans set out in the week beginning December 3 – a week before the crunch Brexit vote is expected in the Commons.

Source: Shropshire Star

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Hammond says UK will need new Budget strategy in event of no-deal Brexit

Chancellor Philip Hammond has warned that the Government will have to adopt a new economic strategy if Britain leaves the European Union without a deal with Brussels.

On the eve of the Budget, Mr Hammond said he would have to tear up his plans for the economy and set out a new Budget if there was no Brexit deal when the UK leaves the bloc in March 2019.

“If we were to leave the European Union without any deal – and I think that’s an extremely unlikely situation but of course we have to prepare and plan for all eventualities as any prudent government would – if we were to find ourselves in that situation then we would need to take a different approach to the future of Britain’s economy,” he told Sky News’s Sophy Ridge on Sunday programme.

“We would need to look at a different strategy and frankly we’d need to have a new Budget that set out a different strategy for the future.”

He added: “We would want to see how markets and businesses and consumers responded to that.

“Then, as any responsible government would, we would take appropriate fiscal measures to protect the economy, to prepare us for the future and to strike out in a new direction that would ensure that Britain was able to succeed, whatever the circumstances we found ourselves in.”

The Chancellor also hinted he would use his Commons statement on Monday to provide additional funding to smooth the transition to Universal Credit amid warnings low income families are being driven into debt.

“I’ve already put over £2 billion pounds into, over the last two Budgets, into smoothing that transition,” he said.

“We continue to look at how this process is working and if we find cliff edges and difficulties, frictions in the move from the old benefits system to Universal Credit then of course will always try to smooth those out and be pragmatic about it.”

In other measures, the Chancellor is expected to announce £28.8 billion to upgrade England’s motorways and other major arterial roads in a drive to invest in the UK’s infrastructure.

In an interview with The Sunday Telegraph, he also hinted there would be more money for defence and superfast broadband when he sets out his plans in the Commons.

Mr Hammond also signalled his determination to pursue a digital tax to ensure internet giants like Facebook pay a greater share of their profits into the Exchequer.

The Chancellor was handed an unexpected pre-Budget boost by the Office for Budget Responsibility, which suggested stronger than expected tax receipts and slower Government borrowing could hand him an additional £13 billion.

There is a real sense that it is just simply unfair that these very large internet companies are not paying their fair share of tax in the UK

Philip Hammond

As well investing in the road network – with a further £420 million for councils to repair potholes – the Telegraph reported he was preparing to spent at least a quarter of a billion pounds to help connect rural areas to the high speed internet.

After having previously having clashed with Defence Secretary Gavin Williamson over military spending, Mr Hammond indicated there would be extra cash in the Budget for the armed forces.

The Telegraph said there could be a cash injection for the military of up to £1 billion ahead of a long-term spending settlement next year.

“You are looking at someone who was defence secretary for three years. I absolutely get the problems and the challenges in defence,” he said.

Mr Hammond, who raised the prospect of a digital tax on the internet giants in his Conservative Party Conference speech in Birmingham, said the Government still hoped to get international agreement on the issue.

However, if that proved impossible, he indicated the UK was ready to act alone.

“British people have a really very strong sense of fairness, and there is a real sense that it is just simply unfair that these very large internet companies are not paying their fair share of tax in the UK,” he said.

“And when you get a really strong, across the board, sense of unfairness among the population something has to be done.”

Source: Shropshire Star

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Wages, Rates, Recycling, Connectivity – Spring Statement Need to Knows

No Budget this time around but Chancellor Hammond has issued his Spring Statement – here’s what you need to know with a summary of what Philip Hammond said in Parliament:

The Spring Statement gives people and businesses certainty and stability to plan for the future. Major tax or spending changes will now be made once a year at the Budget in the Autumn.

Living Wage

In April 2018 the National Living Wage will rise to £7.83. National Minimum Wage rates for under 25s and apprentices will also rise.

The tax-free personal allowance – the amount you earn before you start paying income tax – will rise to £11,850 from April 2018.

Business rates revaluation – 2021

At Autumn Budget 2017 it was announced that business rates revaluations will take place every three years, rather than every five years to makes bills more accurately reflect the current rental value of properties. However, the next revaluation, currently due in 2022, will be brought forward to 2021.

Transport in English cities

£1.7 billion was announced at Autumn Budget 2017 for improving transport in English cities. Half of this was given to Combined Authorities with mayors. The government is now inviting bids from cities across England for the remaining £840 million.

Digital connectivity

The Autumn Budget 2017 launched a £190 million Challenge Fund to help roll out full-fibre to local areas. Hammond has now allocated the first wave of funding, providing over £95 million for 13 areas across the UK.

Reducing single-use plastic waste through the tax system

Disposable plastics like coffee cups, plastic cutlery and foam trays damage our environment. The government is seeking views on how best to use the tax system to encourage the responsible use of plastic.

Some of the money raised from any tax changes will be used to encourage the creation of new, greener products and services. In addition, £20 million from existing budgets will be given to businesses and universities to research ways to reduce the impact of plastics on the environment.

Seeking views on the role of cash in the new economy

While cash will continue to be an important method of payment, more people are moving towards digital payments every year. The government is seeking views on what more it can do to support people and businesses who use digital payments, ensure that those who need to are able to pay with cash and prevent the use of cash to evade tax and launder money.

Supporting people to get the skills they need

To support upskilling and retraining, the government is seeking views on extending the current tax relief to support self-employed people and employees when they fund their own training.

Housing

An investment programme of at least £44 billion over the next five years was announced at Autumn Budget 2017, putting the UK on track to raise the supply of homes to 300,000 a year on average by the mid-2020s.

Economy and jobs

The economy has grown for five consecutive years, and exceeded expectations in 2017.

Employment has increased by 3 million since 2010, which is the equivalent of 1,000 people finding work every day. The unemployment rate is close to a 40-year low. There is also a joint record number of women in work – 15.1 million.

The Office for Budget Responsibility (OBR) expect inflation to fall over the next 12 months and wages to rise faster than prices over the next five years.

Borrowing

Borrowing has fallen by three-quarters since 2010. In 2009-10 the UK borrowed £1 in every £4 that was spent. The OBR expect that we will borrow £1 in every £18 this year.

Even so, the UK’s debt remains equal to around £65,000 per household.

The cost of debt interest payments is around £50 billion each year – more than the amount spent on the police and armed forces combined.

Brexit

Over £1.5 billion has been allocated to departments and devolved administrations to prepare for Brexit in 2018-19. It is part of the £3 billion to be spent over two years announced at Autumn Budget 2017.

Colliers International Reacts

Oliver Kolodseike, Senior Property Economist said: “The Chancellor delivered his Spring Statement, which laid out scant initiatives impacting on commercial property. The Office for Budget Responsibility revised up its 2018 growth forecast marginally from 1.4% in the Autumn Statement to 1.5% and now believes that positive real wage growth will return in the second quarter of 2018. This does not come as a surprise. However, it is indeed surprising that the OBR is now more pessimistic about the longer-term outlook for the UK economy beyond 2020. For both 2021 and 2022, it now predicts slower growth. This comes despite the strongest labour market in four decades, a predicted return of positive real wage growth, signs of rising productivity and improving public finances, which should provide the government with extra money to spend should they have to.”

Infrastructure investment

Mark Charlton, Head of UK Research at Colliers International said: “Recognising the cost to the UK economy of congestion on British roads (c. £9bn per annum), £1.7bn was announced in the Autumn Budget for improving transport in English cities. Half of this has been allocated to Combined Authorities with mayors. The government is now accepting bids from English cities for the remaining £840m. The resulting infrastructure spend could result in new relief roads and the subsequent release of land parcels ripe for development. This could provide opportunities for the development community – both residential and commercial (retail and logistics).”

Business Rates Revaluation

John Webber, Head of Colliers Rating, said: “The Chancellor’s proposal to bring the next Business Rates Revaluation forward to 2021 and that revaluations would then be every three years rather five, enabling a fairer reflection of rental values, is all very good but it does nothing to help those businesses, particularly the retailers, who are struggling with the system today.  The change from a seven year to a five year, then a four year and finally a three year revaluation system, only underlines how the Government has finally realised how disastrous the seven year 2017 Revaluation really was. The Chancellor has missed a trick in his Spring Budget by failing to properly tackle the issue of business rate reform, leaving many businesses and retailers out to dry, particularly as the 2018/9 rate bills for 1st April start to hit home.”

Late payments

The Chancellor’s announcement of a new consultation on late payment should be the beginning of the end for unfair payment practices which hit small businesses across the UK, the Federation of Master Builders (FMB) has said.

Brian Berry Chief Executive of the FMB said: “The Chancellor’s announcement of a consultation to tackle the scourge of late payment should mark a turning point on this issue. We should use this opportunity to bring about a spring clean of payment practices which negatively impact on small business. Construction giant Carillion’s collapse at the start of the year brought to light once again the need to eliminate poor payment practises that plague the construction sector particularly.  Indeed, one London based small building firm was once paid more than 270 days late by a construction giant. Now is the time to move away from these unsustainable business models which threaten the existence of many firms and their supply chains.

“This announcement should be followed by a fundamental rethink ending in the permanent abolition of late payment terms and the exploitative use of retention payments.”

More on late payments

Commenting on the Spring Statement, John Newcomb, Chief Executive of the Builders Merchants Federation said: “The BMF is pleased to see the government focus attention on tackling the issue of late payments which is a big issue for our members, particularly for smaller builders merchants. The collapse of Carillion gave a clear indication of how vulnerable suppliers can be to their customers and we support measures that minimise these risks to our members in the future. In order to keep Britain building and delivering the building blocks for growth, it is vital that merchants are paid quickly.”

Source: TwinFM

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Hammond won’t solve housing crisis without further reforms, Treasury select committee warns

Philip Hammond’s attempt to relieve the housing crisis requires further reforms, according to the Treasury select committee.

Last year’s cut in stamp duty to help first-time buyers get on the housing ladder is likely to increase prices by at least the amount the reduction is intended to save, MPs said.

The influential committee urged borrowing caps on councils to be lifted if the target to build 300,000 new homes a year is to be met.

The chancellor’s move to fix the housing crisis in his autumn budget but the Government will “find it very difficult to meet this ambition” without further action, the committee said.

“Greater measures are needed to increase housing supply,” the report states.

“300,000 homes a year will not be achieved with the current measures. The Government will need to show greater commitment to housing supply to achieve its aspiration and will need to bring forward additional policy measures.”

The committee’s analysis of the Chancellor’s budget called for “unfair” RPI measures used to calculate interest rates on student loans, rail fares and air passenger duty (APD) to be ditched.

MPs also called for the Office for Budget Responsibility to issue a special forecast on the economic impact of Brexit before Parliament votes on crucial exit laws.

Nicky Morgan, who chairs the Treasury committee, said: “The OBR expects a fall in private sector investment due to Brexit-related uncertainty. An agreement between the UK and the EU27 on a ‘standstill’ transitional arrangement is therefore urgent.”

The committee said there “needs to be a step change” in help for first-time buyers.

Councils are limited in how much they can build by a cap on borrowing.

The Chancellor raised the limit for councils in areas of high affordability by £1 billion but it should be abolished, the committee said.

Private housebuilders create around 150,000 homes a year so without significant local authority building, the target will not be reached, it warned. Stamp duty reforms announced in the autumn Budget mean a cut for 95% of all first-time buyers who pay it and no stamp duty at all for 80% of first-time buyers, with savings of up to £5,000.

Forecasts by the OBR found a reduction in stamp duty in isolation will increase the affected first-time buyer house prices by double the reduction.

The committee said the only sustainable way to address housing market affordability is to significantly housing supply, adding: “The autumn budget alone is unlikely to achieve this”.

Morgan said: “The Chancellor pledged to ‘fix the broken housing market’, but the Government is going to find it very difficult to meet this ambition.

“The increase in the cap on borrowing for local authorities to build homes is a step in the right direction, but it doesn’t go far enough.

“The borrowing cap restricts the number of homes that local authorities could deliver. To achieve the Government target of 300,000 new homes per year, the cap should be abolished. The potential of local authorities to build should be unleashed.”

Local Government Association Chairman Lord Porter said: “This is significant recognition of our central argument about the vital role councils must play in solving our housing shortage.

“Our national housing shortage is one of the most pressing issues we face and, as a nation, we have no chance of housing supply meeting demand unless councils can build again.”

Source: iTV