Posts tagged "British Chambers"

Autumn statement 2012: what business organisations want

From the CBI to the IoD, what Britain’s business organisations want out of George Osborne’s mini-budget

Business organisations have drafted their wish lists ahead of the chancellor’s autumn statement, which has morphed into a mini budget. Find out who wants what.

Confederation of British Industry

The CBI has called on the chancellor to stick to the course on deficit reduction, but to do more to drive growth. It says the government should get the business bank up and running as soon as possible, and warns against a reduction in pension tax relief. Lowering the threshold below £50,000 is not a wealth tax – it’s an income tax which would hit swathes of middle-income earners and small business owners, the CBI argues.

Measures it’s calling for include: local government spending on road maintenance, incentivising take-up of the Green Deal, capping business rates at 2% in 2013, a new capital allowance incentive for infrastructure investment, and scrapping stamp duty on Aim shares to encourage investment in medium-sized businesses.

British Chambers of Commerce

The BCC calls for effective measures to support growth, job creation, exports, investment, and business confidence, such as the delivery of key infrastructure projects across the UK and the creation of a business bank that “heralds a radical and long-term change in the way that companies access finance”.

Other measures it calls for include the implementation of a £100m ‘growth voucher’ scheme for 20,000 businesses; an ‘export voucher’ scheme; a new ‘unblocking fund’ for stalled construction developments; and an increase in the building target of the Homes and Communities Agency by a further 100,000 houses.

The BCC suggests these measures could be paid for by: reforming national insurance contributions for people who stay in work beyond state pension age to raise £400m a year; rolling child benefit into the tax credits system and the Universal Credit (from 2014) to save up to £2.4bn a year; means-tested winter fuel allowances which could save £1.7bn a year; and postponing up-rating of working-age tax credits and benefits, which could save £2bn a year.

EEF manufacturers’ organisation

Access to finance: the EEF calls for an immediate review to increase competition in SME banking including full account number portability, a switching incentive, lowering barriers to new entrants and the merits of an earlier referral of SME banking to the Competition Commission. It also wants a review of the feasibility of a bank or network of regional banks capitalised by the public sector.

Tax and investment: a time-limited 100% first year capital allowance for two years.

Infrastructure: a re-allocation of the £5.3bn underspend by government departments in 2011-12 towards investment in infrastructure.

British Bankers’ Association

The BBA recommends a 100% capital allowance for a limited period of two years; extending the capital gains tax holiday under the Seed Enterprise Investment Scheme for another year. It wants the newly established business bank to help simplify and clarify existing funding to firms in one brand umbrella and thinks it can be used to play a clearing house role. To encourage exports, the BBC recommends ensuring that the provision of short-term trade finance receives appropriate capital treatment.

Council of Mortgage Lenders

It calls for the extension of New Buy beyond its original timeframe of two years and more incentives to stimulate housebuilding; and hopes the Support for Mortgage Interest scheme will be retained at the current more generous levels. It also wants housing benefit under the Universal Credit system to be paid directly to landlords rather than tenants to prevent the accrual of rent arrears.

Association of Convenience Stores (represents local shops)

Calls on the chancellor to focus on the cost of business rates and banking. On business rates, reviewing how business rate increases are calculated and introducing a cap on all future increases at a maximum of 2%; postponing the decision to delay the 2015 revaluation until a full impact analysis can be undertaken and introducing new legislation to allow councils to raise revenue from retail businesses operating large out-of0town car parks to fund rate discounts and other investments in town centres.

On lending, ACS recommends a review of the impact of everyday retail banking practices, such as service charges should be conducted, to understand how these are affecting small business growth.

Institute of Directors

The IoD calls on the government to implement the Davies Commission’s recommendations for new airport capacity; to ensure going green is done at the lowest possible cost by prioritising gas in the short term, rather than over-subsidising more expensive renewables; and to unlock private-sector investment in infrastructure and re-allocate a portion of government spending from current to capital while staying within “plan A”. It also wants a complete overhaul of the tax system with a flat 30% income tax rate, the taxation of profits when they are distributed, at a flat 30% rate and the abolition of capital gains tax. It urges the government to consider a time-limited increase in the rate of capital allowances on new investment in plant and machinery and to freeze road fuel duty and air passenger duty rates in cash terms. It also wants the government to establish a tax regime to encourage the development of shale gas (which is expected in next year’s budget).

County Homesearch Company

Start infrastructure and construction projects like improvements to the Dartford Tunnel Crossing; government support for 25-year fixed rate mortgages; stamp duty to be transferred from the buyer to the seller; first-time buyers should have to pay no stamp duty up to £300,000; cap legal fees on house purchases; speed up planning permission; tax empty shops and homes.


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Posted by admin - December 5, 2012 at 08:50

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Is scrapping workers’ rights the Tories’ idea of spreading privilege?

David Cameron may talk about democratising wealth, but his chancellor’s new initiative shows the leadership in its true light

My old flatmate, as I’ve mentioned here before, was fascinated by the question: “Which would you choose, the washing machine or the vote?” This was despite the fact that he benefited from both. But he wanted to analyse which he was keener on. They’re difficult concepts to compare: it’s like trying to choose your favourite out of feeling optimistic and The Simpsons.

To clarify, I don’t mean a washing machine. It’s not just swapping your vote for a free washing machine – not many of us would do that. And neither is it the invention of the washing machine. You’re not being asked merely to live washing machineless in a world where such things don’t exist so you couldn’t miss them. No, you stand to permanently lose access to a labour-saving technology, which you will still observe everywhere, in exchange for a continued ability to minutely influence the democratic process. To have to scrub clothes on a daily basis until your hands go raw in order to put a cross in a Lib Dem box every four years and then get to watch them do that. I, of course, would keep the vote and righteously hand wash my pants till kingdom come. But that’s because this is a hypothetical scenario and I make it a point of principle always to do the moral thing in hypothetical scenarios.

It’s quite an intriguing hypothetical scenario, actually. What would have to have gone wrong with the country for us to be faced with this choice? What satanic power-mongering tempters would have given us these character-testing options? How would the British people come to be faced with such a divisive little poser?

Which brings me to George Osborne. “Just as we should never balance the budget on the backs of the poor, so it is an economic delusion to think you can balance it only on the wallets of the rich,” he said in his speech to the Conservative party conference last week. I think he’s misunderstood the whole balancing metaphor. The challenge for a chancellor isn’t to balance the budget on something but just to balance it – to make it balance. It appears he’s just been looking for somewhere to put the budget rather than achieving equilibrium within it. Backs, he’s probably reasoning, are bigger even than rich people’s wallets. And flatter. You can write a greetings card using someone’s back as a table so, if you’ve got to find somewhere for the budget, better the back of a poor person than some plutocrat’s nobbly wad-holder. But what if the poor person suddenly stands up? Won’t the budget fall on the ground? Altogether better, he must have concluded, to have some sort of filing cabinet.

But let’s leave aside how badly he expressed his banal point because he also used the speech to announce a policy which, like the washing machine quandary, is a work of pure evil. He plans to allow companies to give their employees the option of forfeiting some employment rights in exchange for shares, any rise in the value of which would then be exempt from capital gains tax. There’s a small problem with this, which is that it opens exactly the sort of tax loophole he claims to be trying to close, where ageing male company directors could avoid their capital gains liability by waiving their maternity rights. And there’s a big one, too, which is that it’s metaphorically letting off a dirty bomb in the middle of a class war.

“You don’t need those pesky rights,” the chancellor seems to be saying. “You don’t need cover against unfair dismissal or redundancy – that’s for the sort of loser who gets unfairly dismissed or made redundant. That’s not you, you don’t need flexible working rights – you want to get on. You just need money, a stake in the company. Come over to the other side – join the strong: the shareholders, the rights withholders.” As David Cameron put it in his own conference speech: “I’m not here to defend privilege, I’m here to spread it.” But you can’t spread it to everyone or it ceases to be a privilege and becomes a right. This policy, and Cameron’s attitude, isn’t about healing Britain’s social divides, it’s about recruiting more people to their side of them.

While trade unionists disliked the proposals, they didn’t seem overly concerned any more than business leaders were particularly impressed. “This looks more to be said for effect than because it will make much difference,” said TUC general secretary Brendan Barber while John Longworth, director general of the British Chambers of Commerce, considered it “unlikely to be a game-changer”. The chancellor doesn’t have a reputation for being particularly effective so there’s not much to be feared from his malevolent schemes.

What worries me is the “effect” that Barber reckons Osborne said this for. The chancellor must think that the country is feeling sufficiently bitter and envious that this sort of thing might work. That people might bin out on their rights just to get ahead. That managers might bribe staff into giving up such rights so that the onus on them to be decent employers is reduced. That the delegates at the Conservative party conference will believe this kind of idea is the only way to prevent a culture of unsackable wasters, perpetually dropping sprogs, from bringing property to its knees. That, for all the Tories’ talk of us all being in it together and the “big society”, this is still the shit that really works. If initiatives like this resonate, it shows how badly Cameron and Osborne have failed to unite the country. And, even if they just think it’ll resonate, it shows they either believe they’ve failed or were never trying to bring people together in the first place.

Obviously this reminds me of Thatcher but at least she unashamedly presented herself as a tough bastard. She didn’t claim to be making friends but to be fighting her enemies. She was divisive and proud of it. But the way the current Tories are sidling up to the same type of policy, exploiting and exacerbating the same anger and hatred as the mists of their hoodie-hugging rhetoric clear, is loathsome. I don’t believe the chancellor has the country’s best interests at heart. I believe he’s using our collective misfortune to play political games and not even doing that particularly well.

David Mitchell’s autobiography, Back Story, is out now


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Posted by admin - October 14, 2012 at 08:36

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The Tories are giving us distractions, not actions | Rachel Reeves

Rather than build for our future, the coalition government has resorted to making endless promises that never bear fruit

With our economy in the longest double-dip recession since the second world war, record numbers of young people unemployed, and government borrowing up by a quarter this year, Britain desperately needs new sources of growth and job creation. Investment in the transport, energy, water and communication systems that we all rely on, as well as new housing and public facilities such as schools, is what we should be looking for.

Instead, the low level of investment in our infrastructure is a major factor behind the economy’s return to recession. The building sector has lost 77,000 jobs since the Tory-led government came to power. Fewer new houses have been started since the beginning of 2011. And data published by the Office for National Statistics on Friday shows that in May to July this year, the volume of new infrastructure work was down 24% from the same period last year.

The causes of this contraction are clear. Public investment has been cut sharply – contrary to the government’s claims that it is spending more than Labour had planned, Office for Budget Responsibility figures show that it will have spent £6.6bn less over three years than Labour had planned, with budgets for schools and affordable housing hit especially hard.

Even more importantly, private-sector investment – on which most infrastructure projects depend – has been hit by George Osborne’s decision to try to raise taxes and cut spending too far and too fast.

The situation has been worsened by dither and delay over critical policy decisions and planning processes. Aviation and airport strategy is still in limbo, cuts to the feed-in tariff have put off potential investors in low-carbon energy and, contrary to rhetoric about streamlining planning, major and minor applications are actually taking longer. In a recent industry survey, 60% of respondents said a “lack of clarity from the government” was the factor that most discouraged infrastructure investors.

Instead of taking action to turn this situation around, the Tory-led government has devoted its energy to creating distractions with statements and announcements that promise much but deliver next to nothing. At last year’s Conservative Party conference, transport secretary Philip Hammond cited the Mersey Gateway Bridge as a project that could be implemented “quickly” – but a preferred bidder is not now expected until 2013. Proposals to resolve traffic congestion around the A14 in Cambridgeshire have been repeatedly announced and repeatedly delayed.

Osborne’s autumn statement included a long list of road-building projects – none of which have actually begun construction. The national infrastructure plan, published alongside the statement, has been described by the British Chambers of Commerce as “hot air, a complete fiction”. Today, a year later, the CBI warns: “Firms fear initiative overload and are becoming impatient with delivery.”

On Monday afternoon the Commons will debate the government’s latest attempt to create the impression of activity – a scheme by which the Treasury hopes to encourage private investment by offering taxpayer-backed guarantees. Labour won’t oppose the measure – but there is no guarantee that it will see any projects going ahead that wouldn’t have happened anyway. It remains utterly inadequate to the scale of the challenge we face, and fails to get to the heart of the problem: the lack of demand in our economy, and a lack of confidence in the government’s ability to get it moving.

For a year now, shadow chancellor Ed Balls has been calling on the government to genuinely bring forward investment in transport and schools, and use a tax on bankers’ bonuses to fund a new affordable house-building programme. If it had taken our advice, there could already be more “diggers on the ground“. And the other measures we have proposed to boost employment and growth would help to create the climate of confidence we need to unlock investment.

For the future, Labour will be setting out a vision for a more productive economy, with rules encouraging investment for the long term, in which modern, high-quality infrastructure will be critical. And as the shadow business secretary, Chuka Umunna, has emphasised, we are ready to work on a cross-party basis to develop the strategic vision and stable policy framework that investors and the industry need to deliver it.

The Olympic Games showed how, with the nation united behind it, and the right combination of public and private enterprise, the most ambitious project can be delivered on time and on budget, to provide a perfect platform for Britain at its best. Now let’s get to work on laying the foundations for the fairer, stronger economy we want to build for the next generation.


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Posted by admin - September 17, 2012 at 08:51

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UK government borrowing: what the economists say

Economists give their views on the unexpectedly bad government borrowing figures for June

A slump in corporate tax receipts pushed the exchequer into deficit in July, despite expectations of a surplus of £2.5bn.

Gustavo Bagattini, RBC Capital Markets

It’s the same story we’ve been seeing since the beginning of the year: that tax receipts are down, which is not surprising given the weaker growth performance of the economy. I think the other thing to remember is before this release we were already behind schedule in terms of borrowing for the year as a whole, so it does take in a risk for an upward revision to government borrowing requirements coming November. It probably means [that] come November the government is going to have to announce further fiscal tightening at that stage.

Philip Shaw, Investec

[The figures] are poor. A couple of reasons for that: tax receipts have performed badly through the financial year and there’s been a considerable drop in corporation tax inflows this time around, and the spending numbers are strong as well. Overall, it’s becoming clearer that the weakness of the economy is having a material impact on the public finances and it certainly looks as if the OBR’s forecasts for this year for borrowing will be overshot. It certainly puts the chancellor in a real dilemma with respect to whether he should turn on the taps for infrastructure spending. A big programme of investment would be a major risk. If the authorities become successful in stimulating the economy via monetary policy, that’s the ideal way forward. But it’s not clear that either QE or the Funding for Lending Scheme will be effective.

Vicky Redwood, Capital Economics

We should treat the figures with some caution. The ONS warns that the timing of self-assessment tax receipts can vary from year to year, so more receipts than usual might come through in August. And the drop in corporation tax reportedly partly reflected a drop in oil and gas receipts, due to the closure of the Elgin gasfield. Nonetheless, a deterioration has been seen for several months now. Indeed, at this rate, borrowing for 2012/2013 overall will massively overshoot the OBR’s forecast of £120bn (excluding Royal Mail effects) by over £35bn. And with the recovery falling well short of the OBR’s expectations, we think that the government will struggle to cut borrowing at all next year either.

Tom Vosa, National Australia Bank

The monthly numbers are terrible, but the trend so far isn’t disastrous – we still have a lower cumulative deficit than we has this time last year. Unless we see a further fall in revenue, the government could possibly still have a small undershoot for the fiscal year as a whole.

Alan Clarke, Scotia Bank

July was not a good month for UK public finances. Even if the deterioration halts and borrowing is the same as that month a year ago for the rest of the year, then full year borrowing will be around £13bn higher than forecast. Excluding the impact of the Royal Mail Pension Fund, this has been the second-worst four-month start to a fiscal year since the crisis began. This will raise pressure on the government to keep the fiscal plan on track – tighten more to make up for lost ground, or loosen a little and hope that the extra growth delivers better public finances.

Jason Conibear, forex specialists Cambridge Mercantile

Plan A now has so many holes in it, it is fast resembling a piece of Swiss cheese. Despite the government’s austerity measures, it still seems powerless to reduce the deficit. Net debt continues to march upwards, and now stands at nearly two thirds of GDP. The government is borrowing more to pay the bills too – all of which makes a mockery of the chancellor’s centrepiece economic policy. While Plan A is a fine idea in theory, the chancellor’s obsessive focus on deficit reduction isn’t working; and to make matters worse, it is distracting him from the underperforming economy as a whole. When austerity is merely an article of blind faith and not an economic instrument, something is badly wrong.

David Kern, British Chambers of Commerce

The small deficit in July was disappointing and larger than the market expected. The figure highlights the huge challenges facing the UK in restoring stability to its public finances. Deficit reduction is a difficult and arduous task, which will put pressures on both business and consumers over the coming years. Judging by these figures, we expect total borrowing in 2012/13 to exceed the total predicted by the OBR at the time of the March Budget by around £10bn.

While there are many calls for the government to abandon its austerity plan, this is not the answer. To maintain credibility, we need to persevere with spending cuts, but supplement them with forceful policies to boost growth. This may mean taking some difficult choices in the months ahead. The chancellor has persuaded the financial markets that he is determined to tackle the deficit, and now is the time for him to make use of his hard-won credibility to support growth. If the UK is to return to growth, we need to see more deregulation, increased infrastructure spending, and the creation of a state-backed business bank.


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Posted by admin - August 21, 2012 at 21:44

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The investment strike is one the government would do well to bust | Michael Burke

The private sector’s refusal to invest ensures that household and business suffer inflation, while the economy stagnates

Some City economists are discussing the possibility of a “triple-dip” recession and the both the British Chambers of Commerce and the Ernst & Young Item Club, which use the same model of the economy as the Treasury are urging a cut in interest rates to zero.

After last week’s dire GDP data for the second quarter of this year there are sound reasons to be alarmed. But much greater clarity is required about the causes of the economic slump and how to remedy it.

Professional opinion at the end of last year was overwhelmingly that the British economy would grow in 2012. The consensus estimate compiled by the Treasury was that it would grow by 0.6% this year. This now looks wildly optimistic. In addition, the prospect of an Olympics bounce would have been far greater if the mayor of London had not cut the budgets for all the agencies promoting tourism, international students and foreign direct investment to London. These cuts in public spending are magnified at the national level and only exacerbate the crisis.

The British economic slump has now lasted four years, and output is still 4.5% below the previous peak level. The decline in gross fixed capital formation accounts for nearly 80% of the fall in output. The slump is driven by an investment strike, that is, a refusal by the private sector to invest. As a result, a cut in interest rates is unlikely to have any material effect. Firms are saving, not borrowing.

The investment strike has also curbed growth in key sectors. The pound fell by around 30% in 2008 and has recovered only a proportion of that ground since. Yet exports have barely risen in the intervening period. In a cautionary tale for all those advocating currency devaluation as a panacea, the performance of the British economy shows that the positive impact has been negligible. Instead, the decline in imports has been three times greater than the rise in exports. The improvement in net exports (exports minus imports) is because British consumers and British firms have simply been priced out of world markets.

One consequence of a plummeting currency and reduced investment has been that the British slump has been far greater than in any other major economy, when measured in international purchasing terms – that is, US dollars. What both households and businesses will have experienced is a sharp rise in inflation even as the economy was stagnating, the combination known as “stagflation”.

In an economic expansion firms borrow to invest. This borrowing is from the savings of the household sector, although it is mediated through the banks. Currently firms are increasing their savings, or paying down debt which amounts to the same thing. The household sector is unable to increase its borrowing. Therefore the government is forced to increase borrowing on its own account. The investment strike is therefore both the source of the slump and the source of the government’s budget deficit. As a result, and despite all the attacks on the incomes of the most vulnerable via welfare cuts and the government slashing its own investment, the budget deficit has started to rise once more.

Since both the cause of the slump and the cause of the deficit are the same, the investment strike by firms, economically the remedy is very simple. Government policy should aim break that strike and release sufficient resources to fund an investment-led recovery. Politically, however, we seem to be some distance from this rational outcome to the current crisis. As a result, it seems set to persist some time longer.


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Posted by admin - August 4, 2012 at 17:21

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Government to drop no-fault dismissals

Adrian Beecroft’s ‘hire and fire’ law shelved after majority of small businesses fail to get behind it

The controversial proposal for a new “hire and fire” law allowing small businesses to dismiss workers without giving a reason has been shelved after companies themselves showed no support for the idea.

A consultation by the Department for Business, Innovation and Skills is thought to have found that only a little over a third of private sector employers support the idea of compensated no-fault dismissal, first suggested by a report commissioned by David Cameron from the venture capitalist Adrian Beecroft.

Nearly two-thirds of all businesses, and about the same proportion of those with fewer than 15 staff, for which the new law was intended, said they opposed the plan or were unsure. “It literally comes down to 13 businesses that support it,” said one source at the department, which had replies from 135 companies, of which just over half were micro-businesses.

On Monday the department would not confirm that compensated no-fault dismissal had been abandoned, and said officials were still considering all responses to the consultation, which closed on 8 June.

However, ministers will publish details of a new proposal for fast-track settlements on Tuesday, which are being seen as an alternative to the Beecroft scheme.

Under fast-track settlements, employees will have a chance to leave by mutual agreement with a payout and possibly a reference, but they will agree to drop any future claim against the company. Companies will be reassured that staff who refuse the offer and go through the normal redundancy procedure will not be able to use the offer as evidence against their bosses.

Norman Lamb, the employment minister, who has pushed through the fast-track settlements legislation, said that the new option was intended only when there was a “genuine problem” with a worker, such as persistent underperformance, turning up late for work on a regular basis, or “misconduct”.

“If you can leave on agreed terms, you can leave with dignity intact, you’re not compromised in the labour market, and you can tell your friends you chose to leave,” said Lamb. “It’s much better than being sacked.”

The consultation on no-fault dismissal is also understood to have had replies from eight business groups, of which two agreed with Beecroft’s suggestion that compensated no-fault dismissal would give businesses confidence to hire more staff and so help create jobs, while several other leading organisations, including the British Chambers of Commerce, came down against the idea, and the Confederation of British Industry was said to be equivocal.

Officials published evidence from Germany, which had been promoted as an example of an economy where the introduction of no-fault dismissal for businesses employing fewer than 10 people had created jobs. But their research claims jobs had been generated at a higher rate in companies that were too big to qualify for the exemption.


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Posted by admin - June 20, 2012 at 07:49

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Government set to drop no-fault dismissal plans

Adrian Beecroft’s ‘hire and fire’ law shelved after majority of small businesses fail to get behind it

The controversial proposal for a new “hire and fire” law allowing small businesses to dismiss workers without giving a reason has been shelved after companies themselves showed no support for the idea.

A consultation by the Department for Business, Innovation and Skills is thought to have found that only a little over a third of private sector employers support the idea of compensated no-fault dismissal, first suggested by a report commissioned by David Cameron from the venture capitalist Adrian Beecroft.

Nearly two-thirds of all businesses, and about the same proportion of those with fewer than 15 staff, for which the new law was intended, said they opposed the plan or were unsure. “It literally comes down to 13 businesses that support it,” said one source at the department, which had replies from 135 companies, of which just over half were micro-businesses.

On Monday the department would not confirm that compensated no-fault dismissal had been abandoned, and said officials were still considering all responses to the consultation, which closed on 8 June.

However, ministers will publish details of a new proposal for fast-track settlements on Tuesday, which are being seen as an alternative to the Beecroft scheme.

Under fast-track settlements, employees will have a chance to leave by mutual agreement with a payout and possibly a reference, but they will agree to drop any future claim against the company. Companies will be reassured that staff who refuse the offer and go through the normal redundancy procedure will not be able to use the offer as evidence against their bosses.

Norman Lamb, the employment minister, who has pushed through the fast-track settlements legislation, said that the new option was intended only when there was a “genuine problem” with a worker, such as persistent underperformance, turning up late for work on a regular basis, or “misconduct”.

“If you can leave on agreed terms, you can leave with dignity intact, you’re not compromised in the labour market, and you can tell your friends you chose to leave,” said Lamb. “It’s much better than being sacked.”

The consultation on no-fault dismissal is also understood to have had replies from eight business groups, of which two agreed with Beecroft’s suggestion that compensated no-fault dismissal would give businesses confidence to hire more staff and so help create jobs, while several other leading organisations, including the British Chambers of Commerce, came down against the idea, and the Confederation of British Industry was said to be equivocal.

Officials published evidence from Germany, which had been promoted as an example of an economy where the introduction of no-fault dismissal for businesses employing fewer than 10 people had created jobs. But their research claims jobs had been generated at a higher rate in companies that were too big to qualify for the exemption.


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Posted by admin - June 19, 2012 at 08:41

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British Chamber of Commerce argues for £5bn emergency measures

Chancellor George Osborne should take advantage of low borrowing costs and unleash recession-busting policies, says BCC

George Osborne should take advantage of record low borrowing costs to unleash a £5bn package of emergency recession-busting policies, the British Chambers of Commerce (BCC) said on Friday, as it slashed its growth forecast for 2012.

The BCC, which represents more than 100,000 firms, now believes the economy will produce growth of only 0.1% this year, down from its previous forecast of 0.5% – even assuming that a major European recession and banking crisis is avoided.

David Kern, the BCC’s chief economist, said the chancellor should exploit some of the hard-won credibility he has gained with his austerity programme and boost the flatlining economy with £5bn-£6bn of public spending.

“The forceful measures adopted by the chancellor since June 2010 have earned him considerable credibility in the financial markets, and he is now in the position to increase spending on growth-enhancing policies without endangering Britain’s AAA rating. This is necessary because persistent stagnation threatens to damage the economy’s long-term productive potential,” Kern said.

He called for infrastructure spending, as well as tax breaks for firms hiring new staff and capital allowances that make it cheaper for companies to buy new equipment. The BCC now expects growth of 1.9% next year, revised up from its previous estimate of 1.8%.

Rachel Reeves, the shadow chief secretary to the Treasury, said: “These forecasts would be very disappointing if confirmed by events. Their estimate is far lower than the OBR’s anaemic growth forecast of 0.8% for 2012 in March.

“With the BCC arguing for infrastructure investment and targeted tax cuts to get the economy moving again, what more evidence can David Cameron and George Osborne need that their policies have failed and that they now need a change of course and a plan B for growth and jobs?”

Official figures show that the economy has sunk back into recession, recording two successive quarters of negative growth. With next week’s extra bank holiday expected to depress activity, despite extra sales of diamond jubilee souvenirs, the BCC expects another contraction in the third quarter of the year, followed by a stronger autumn.

“Though growth will return, it will be over a longer period than expected,” said Kern. “GDP and consumer spending will only return to pre-recession levels in the second half of 2014 or early in 2015. Though growth might be low, the economy will expand in spite of the difficulties continuing to face the eurozone. However, if there is a disorderly euro breakdown, then growth is likely to be lower.”

The BCC’s demand for urgent action came as the yield on government bonds, or gilts, a measure of how much the Treasury has to pay to borrow, hit another record low, below 1.58% on 10-year bonds, as investors sought a safe haven from the turmoil in the eurozone.

America’s borrowing costs also sunk to new lows, despite fresh evidence that the recovery in the US economy may be petering out.

Official figures showed that GDP rose at an annual rate of 1.9% in the first quarter of 2012, down from the previously estimated growth rate of 2.2% and far slower than the 3% clocked up in the fourth quarter of last year.

The sluggish pace of growth was in line with analysts’ expectations, but came amid further evidence of the challenges still facing the US economy – and by extension president Barack Obama’s re-election campaign.

Weekly applications for unemployment benefits hit 380,000, a five-week high, the US labour department said.

The latest ADP National Employment Report – a closely-watched survey – showed the US private sector added 133,000 new jobs from April to May, lower than the 150,000 analysts expected.

Gus Faucher, senior macro-economist at PNC Financial Services, said the GDP figures were in line with expectations but the jobs figures, particularly from ADP, were more worrying. “On top of last month’s figures they suggest that growth may have slowed down,” he said.


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Posted by admin - June 1, 2012 at 08:11

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Exports close UK trade deficit

UK exports to countries outside the European Union grow – but economists warn net trade still likely to dent GDP growth

The trade deficit in the UK shrank in March as exports to the US, China and Russia grew strongly, official figures show.

The UK’s trade deficit on goods and services was £2.7bn in March, compared with £2.9bn in February, while the deficit on goods alone was flat at £8.6bn.

Exports to countries outside the EU grew 12%, driven by chemicals and cars, while the eurozone crisis continued to take its toll as EU exports were flat month on month.

While the deficit shrank slightly, economists said net trade was still likely to have knocked 0.2% off gross domestic product (GDP) growth, putting a dampener on hopes that growth figures for the first quarter of the year will be revised upwards.

Vicky Redwood, chief UK economist at Capital Economics, said: “March’s UK trade figures showed a bit of an improvement, although the external sector still looks likely to have dragged on GDP growth in the first quarter overall.”

The UK economy shrank 0.2% in the first three months of the year, following a 0.3% decline in GDP in the final quarter of 2011, meaning the country entered a technical recession.

The chancellor, George Osborne, is relying on a shift in the economy towards the private sector, particularly in manufacturing and exports, to withstand his far-reaching package of public sector spending cuts.

The deficit in trade in goods with the EU, the UK’s biggest trade partner, widened by £700m to £4.5bn in March, as exports were unchanged at £13.2bn and imports rose 4% to £17.6bn.

The deficit on trade in goods with non-EU countries narrowed by £0.8bn to £4.1bn in March, as exports rose 12% to £13.2bn and imports rose 4% to £17.3bn.

David Kern, chief economist at the British Chambers of Commerce (BCC), said the eurozone crisis and stronger pound will put pressure on exporters.

He said: “The government must take action to address the issues faced by our exporters.

“British companies, particularly small and medium-sized firms, have huge untapped potential to increase exports. Giving them extra support will help them compete on equitable terms, and will benefit the national economy as a whole.”


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Posted by admin - May 15, 2012 at 17:23

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Unfair dismissal reform divides government and unions

Employment reform to double time an employee has to work for a company before being able to make unfair dismissal claim

The amount of time an employee has to work for an organisation before he or she can make an unfair dismissal claim against the employer has doubled to two years, in a move the government says will boost growth but unions say will result in a “hire and fire” culture.

Anyone taken on before 6 April who feels they have been unfairly dismissed will still be able to make a claim after just one year of employment, but new employees will be subject to the two-year rule. The change will not affect cases where dismissal is automatically judged to be unfair because someone has been sacked for trying to exercise their employment rights – these can still be brought at any time.

The change is part of a package of reforms that the government claims will directly save businesses £10m a year, and could deliver wider benefits worth more than £40m annually. It says the changes will make it “easier for businesses to take on staff and improve the process when staff have to be let go”.

Other changes include allowing judges to sit alone in unfair dismissal cases, where previously they sat with a panel of lay members; allowing witness statements to be provided in writing; and doubling the maximum amount businesses can be awarded in costs for a vexatious claim to £20,000.

There were 218,000 tribunal claims in 2010-11, a rise of 44% since 2008-09, but down on the 2009-10 figure of 236,000. Just under a quarter of cases taken to tribunal in 2010-11 involved a claim for unfair dismissal, while more than half involved alleged breaches of the working time directive.

The government estimates that defending a claim costs a business an average of £4,000, while the taxpayer faces a bill of £1,900 for each claim.

The business secretary, Vince Cable, said: “For too long now the system in place for employment tribunals has been a bloated and bureaucratic obstacle for employers and the taxpayer. For employers they were finding that weak and vexatious cases were too much of the norm, too easy to bring forward, while for the taxpayer they were proving ever more expensive to run.

“We have seen claims drop in the last year and we want to see this continue as we introduce alternative measures in the coming months helping both parties resolve workplace disputes.”

Groups representing employers have welcomed the change, claiming it will give smaller companies, in particular, more confidence to take on staff.

Neil Bentley, deputy director general of the CBI, said: “It will be a particular boon for young people and those who’ve been out of work, as it will give them longer to demonstrate their value to employers.”

John Longworth, director general of the British Chambers of Commerce, said: “Dismissal rules are a major barrier to growth for many businesses. The majority of small businesses have ambitions to grow, and this will boost their confidence to hire.”

But unions warn that it could lead to a hire and fire culture. The TUC has warned that 2.7 million people will be at increased risk of losing their jobs, and that far from helping younger workers, it could actually have a detrimental effect as they are likely to be the workers with the shortest employment history.

The TUC general secretary, Brendan Barber, said: “The government’s proposals to weaken unfair dismissal rights risk generating a hire and fire culture in the UK and will lead to the creation of insecure employment that is here today and gone tomorrow.

“Cutting back on protection against unfair dismissal will do nothing to boost the economy. If people are constantly in fear of losing their jobs it will lead to even less consumer spending, and losing your job is one of the worst things that can happen to anyone, especially when unemployment is so high.”

• Who is affected by the new two-year rule?

Anyone taken on by an employer from 6 April 2012. If you are already employed, you qualify to take a claim against that employer after one year.

• What types of claims are not affected?

Any unfair dismissal claims that involve someone being sacked simply for trying to exercise their employment rights: for example, for opting to take full maternity leave or refusing to work through one of the breaks they are legally entitled to. A full list is available on the Directgov site.

• Do employees have to pay to take a claim?

No, but the government wants to introduce a charge in 2013. It claims this will prevent people taking vexatious claims against employers.


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Posted by admin - April 6, 2012 at 16:06

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