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Covid-19 and the UK economy

April 25, 2020July 26, 2020

Whilst the world has seen many pandemics, the UK like so many other countries around the World has watch from a distance without adequately preparing for the impact that such an outbreak would have here.

Sadly of course the UK has been hit hard, and wasn’t very well prepared, we were slow to test and even today flights are arriving at Heathrow from Italy and the USA and there are no scanners or even basic questions about if travellers are infected or not. So it seems the UK has a lot of lessons that it is finding hard to take on board.

The NHS has done a great job or rather its front line staff have, but again this pandemic shows high lumbering and inefficient the UK health service is. The economy has had to be shut down because of worries that the NHS is unable to cope should infection rates get out of hand.

Hopefully lessons will be learned, but these will be very painful, at the cost of 10,000’s of good companies that would otherwise have grown and developed, but now will be out of business.

The travel and hospitality sectors have been increbible hard hit, and really good people are suffering all as a result, though of course travel requires international locations to also be clear.

Hopefully some positives will come out of this, more people will work from home and cut down the use of public transport, with all its now all too obvious health risks.

Budget 2020

February 9, 2020July 26, 2020

This years budget will be a really interesting one, now the Conservatives have their well deserved majority they can afford to be radical, also the first budget of a new administration is often seen as the time to push through unpopular tax rises, whilst towards election time things need to be less radical and more popularist.

I support Boris and I know his instincts are for big capital spend items, such as the bridget between Scotland and Ireland, I also know he will want to be seen to deliver for the new MP’s he has in the Midlands and North of England.

So what do I expect?

Well big increases in spending on projects for one.

HS2 will most likely go ahead.

Environmental spending, here I am expecting a VAT increase on Fossil fuel, Gas for example is currently 5% that could rise to 20% making it much more attractive to use companies offering renewable sourced electricity instead and taxing that at 5% instead that would put further pressure on the move to renewables.

Levelling up the country has been mentioned a lot, so I think that means soaking Labour London with tax increases to pay for spending in the midlands.

Pension are under threat again, I really hope that is left alone, as we need to be driving up the % of incomes that are invested into the country and for people’s retirement.

If the higher rates of income tax are reduced or the starting point for the 40% then that is different, I really hope that is planned.

Rumours are often circulated intentionally only not to be included in a budget, which then gives a sense of relief which covers over the real intention which is to raise taxes!

Realising the potential of wind

February 8, 2020July 26, 2020

I’ve spend more time this month considering the future for the UK and how we can move to become sustainable and successful in the long term. My main thought is that given the UK is so windy and we have such a large territorial water area that we need to fully embrace the potential for wind. I wrote about this in an earlier blog post, but the thought really has stuck with me.

We can become fully independent of geo-political risks around the world by moving completely away from oil and gas, by de-carbonising our economy we can generate all our needs by offshore and onshore wind power and at the same time sell surplus electricity to mainland Europe and Ireland.

Around 40% of electricity generation comes from renewables at present, which is on target to grow to over 50% in the next few years, but only around 9% of total energy usage comes from renewables, the rest is made up of heating, transport and aviation, which use fossil fuels at present.

There are Key changes:-

From the now earlier date of 2035 all new cars need to be zero emission, so no more petrol or diesel.

From 2025 all new home builds can no longer have gas central heating.

Local Government can do more to help also as transport can be moved to electric only vehicles, if we can move buses, taxis and all small vans to electric only during the next 15 years that will make a great difference

Tree planning – boosting natures ability to absorb carbon by replanting trees and designating more areas to be natural beauty or nature parks is a great supply side measure.

Brexit Day is finally here

February 2, 2020July 26, 2020

Well I can’t believe it but Brexit has finally arrived, any how easy it was once the Brexit blockers were removed from Parliament, I don’t think those selfish MP’s spared any thought for the economic damage their dithering caused last year. The whole point of Parliament is for it to represent the will of the people, not to twist and resist it at every opportunity.

Anyway I take my hat off to Nigel Farage who has driven this whole agenda for the last 20 years, and what a stunning victory for Boris Johnson, without him we really would have been lost, but his popular charm brought victory and with that a majority enough to drive all of this through.

I expect trade negogiations to be straightforward, the EU can’t and won’t offer everything we want but its in their interest to agree to a free trade deal, as we are one of their largest export market.

Boris is also 100% on the money with his plans for Infrastructure spending, the Midlands and North of England really need it after decades of Labour under investment, so HS2 and possibly a bridge between Scotland and Ireland will be a fantastic boost to the economy.

I really hope for a budget with a long term plan to reduce income tax, particularly the abolition of the 45% rate and reducing both the starting point and rate of the current higher rate 40% – we need the £80K starting point Boris mentioned in the pre-election period and a lower actual rate, maybe 30% or 25%, though I accept this can’t happen in a very short time scale but if we move in that direction, the economy and country will really be transformed, to become the economic powerhouse we always used to be.

Introducing RecruitSleuth

January 26, 2020July 26, 2020

We are partnering with a Recruitment App and Website business called RecruitSleuth this company offers a great product and solution and will be powered by our own database.

They offer to take a CV, strip it apart and analyse the performance of the companies a candidate has worked for and show that in graphical form. In working this way they can offer insights into how a person has influenced the companies they have worked for, or if nothing else the type of environment it has been to work in.

Additionally they search for key directors within a sector and geographical area which can then be used to headhunt.

The idea is great and whilst working on their website they are also developing an Android and IOS app to go with it. Their website can be found at RecruitSleuth. We will keep you updated on how our discussion go, and when their website is fully functional.

Getting to carbon neutral will be very challenging.

January 26, 2020July 26, 2020

Over the last year I have been increasingly supportive of the Governments committment to making the UK carbon neutral by 2050, it seems a long way in the future but 30 years goes by in no time, I remember finishing university and spending a year in Australia that seems like yesterday but was 30 ago years now..!

We are making progress in two areas, Wind power and in particular offshore wind is really moving quickly and before long more than 50% of the UK’s energy will come from this source, another 7 Gigawatts of capacity is moving forward via Dogger Bank and the three wind farms whose construction there has just started.

In time I can see us being able to phase out oil and then gas fired power stations and in time biomass also.

Solar power is popular but less than 5% of homes have them installed and the UK is not a very sunny place so the potential there must be limited.

Electric cars are becoming more available and people really want to make the switch once mileage range is a little higher and prices a little lower, I sense that the automotive industry is at a tipping point and we’ll soon see electric vehicle sales rising as a % just as fast as we have seen wind power increasing as a proportion of generation.

A really big challenge however is domestic heating, all new homes must be electric only heated and that has to be made law very soon. Then existing homes need to convert to electric via heat pumps either air or ground source, that will be very expensive and hard to achieve.

But the good thing is that we are at least making progress.

Budget 2020 – a golden opportunity

January 25, 2020October 15, 2020

At the time of writing this blog post which is towards the end of January the UK is just shrugging off the impact of the brexit logjam we all experienced last year. Our previous parliament tried and tried to block brexit going through but in doing so the confidence of the country took a real hit. It was so irresponsible of our politicians at that time not to consider the impact of their actions on the whole country.

Business stopped invested, people stopped spending. But the clear election result has changed that and now in this new decade there is a realisation up and down the country that we are in a new place, there is renewed optimisim, a sense of determination to get through things and make a success of things in 2020.

We already have the great announcement of the rise in the living wage to £8.72 and the intention to rebalance Government spending to better benefit the midlands and the North.

Pensions

What I would really like but don’t expect is an announcement of higher auto enrolment contributions for both employers and employees, I expect there will be a body such as the low pay commission setup to report back each year and make recommendations, that is a good idea but is going to take time. To tackle long term pensions and poverty in old age we need contributions going in to pensions for everyone sufficient to give a replacement income of around 60%.

At the moment, there is a lower earnings and an upper one, the lower is being abolished from the mid 2020’s but no date yet, we need the same for the upper one. Self employed are not within the scope of auto-enrolment but need to be. The correct level of contributions is something in the order of 12-16% of total earnings, whilst actual contributions are 8% of a band of earnings. So a long way to go. Increasing both employers and employee rates to 6% phased over 3 years would be a huge step forward, announcing that now would allow businesses and individuals to plan ahead.

By doing this we can abolish in work and in retirement poverty, of course pensions are long term investments but every day now as people retire they have a small but growing auto enrolment pension which they didn’t before. Due to the increases in contributions last year that is now growing faster, as every month passes that expected pension grows a little higher.

Income tax

The next big issue that is holding back our entire country is the excessive level of income taxes, Boris made a bold pledge to raise the threshold for the higher rate to £80K from £50K that is exactly what is needed, to remove a large swathe of middle class income from the higher 40% rate.

For me this budget is a golden opportunity to change direction on tax, the chancellor should declare that our direction of travel is now towards lower rates and higher thresholds. If I was Chancellor I would be announcing:-

Abolish the 45%
Increase the starting threshold for 40% in stages from £50K to £80K
Reduce the % for the higher rate starting now reducing to 38% with a target of 30%
Aim to reduce the basic rate to 15%

That really would set the hares racing and restore competitiveness to our country.

I sense Javid and Boris are both bold men with the right ideas so I am very hopeful that announcement along these lines will be forthcoming, it really will be interesting to see if they grasp the golden opportunity which their majority offers them and the potential to get that through whilst labour is in such disarray.

Bio – Adrian is the CEO of our sister site Reporting Accounts a local politician and chartered accountant. He contributes to many website about Business Intelligence.

IR35 is coming and it will shake up contracting

January 19, 2020July 26, 2020

I’ve been doing some contracting work myself whilst working for Compelling Media and Telford and Wrekin Council, I’ve been reading about IR35 but and preparing for the changes that will bring, but I don’t think contractors in general are properly aware of what it means and the impact it will have on them.

IR35 has been around for some time and applies to Officer roles and the public sector, from April 2020 onwards it is being rolled out to the private sector for Medium and Large companies based on the Companies Act definitions of 50 employees and £5m turnover.

What it means is that if a contractor is under the control of the company then they should be deducting PAYE and NIC from any payments made and treating the contractor as an employee but without holiday pay and other benefits, if the contractor works via an agency then the payments they make need to go through an umbrella organisation which then deducts PAYE and NIC instead. So if a series of test on control are met, then that person has to have PAYE and NIC deducted somewhere or by someone.

Talking with agencies they are not clearly saying that to prospective contractors and are very vague in how potential contracts are presented.

This will hit hard if the Government are tough with the enforcement of the change, to what extent this is going to be tough is hard to say, all will soon be revealed however!

A great forum I have come across on contracting and my profile can be found at contractinguk it is a bit lefty and full of pushing arrogant liberal types but at the same time full of very knowledgeable people.

Telford and Wrekin and their so called climate emergency

January 19, 2020July 26, 2020

Last year my local authority Telford and Wrekin declared a climate change emergency, this was a brave move by the Council and recognises that that World is in trouble and urgent action is needed to address the issue of Climate Change and CO2 emmissions.

However what has been done in the last six months? Well very little indeed it seems, there has been no change to the Council’s policy on vehicle procurement, though that is been planned for, there has nothing done to address the fact that T&W is bottom of the league for the number of charging points in the Borough. Some things are being thought about for the Councils own staff and buildings, but what about the Borough in general.

House building is moving forward at a rapid place, but no requirements for solar panels, heat exchangers and so on, just standard gas central heating builds with no charging points and all homes being built to the same old minimum building regulations.

Sadly this is just a PR exercise at present, when it should be a leadership by example program. There has been no emergency budget, no change nothing of substance.

Shame on Telford and Wrekin!

Wind Energy the UK has enough for all of the EU and Eastern Europe too!

January 19, 2020July 26, 2020

A major challenge facing the whole world and the UK is the impact of carbon usage in the economy and reliance of it in almost every aspect of our lives.

I read Biology at University and always had an appreciation of the issue, but like everyone else I am only now seeing the full scale of the issue. There are however hopeful signs, the media and population are now actively discussing the issue. Politicians have made a strong committment to become carbon neutral by 2050 at least in the UK, and slowly things are changing.

I went with my wife to look at a new car, and whilst Mercedes didn’t yet have an electric model of the version of the car we want, they are launching one in 2021 and will have a hyrid in 2020. So electric cars are coming and reasonably soon!

The greatest thing about the UK is not its weather, but it does have a very key benefit, the UK is one of the windest countries in the World and we have large territorial waters which are amogst the the closest to shore and the windest at the same time.

Wind farms are springing up in these offshore waters at a rapid rate and a very large amount of new build is planned and already in progress. Onshore wind has also expanded a lot.

Between onshore and offshore and nuclear we are already generating around 40% of our electricity requirements.

As electric car ownerhip increases then the amount of CO2 emmissions will rapidly reduce and as wind generation expands the % of energy generated from fossil fuels will drop also.

There is actually enough energy potential in our offshore estate to provide all of the electricity needs for the UK, the EU and Eastern Europe also. I can’t see this ever being allowed by the EU or countries like Russia, but the UK could in theory generate all of Europe’s (East and West) electricty from wind power and there would then be no need for any fossil fuel generation.

Here are a list of UK Wind Farm Operators and links to our sister site Reporting Accounts where you can find detailed information on each one

Talisman Energy UK Ltd

I will update this post as I find more companies, this whole area is really promising, it offers the World and the EU in particularly a way to achieve carbon neutrality, lots of employment opportunities for UK companies and as our own North Sea Oil is depleting anyway a solution so we are not dependant on Russia or the Middle East for our energy needs.