Tag Archives: Politics

Accountancy & Accounts, Business, Economy & Jobs News, FInance, Finance and Banking, Finance News

Tax rises and complicated tweaks piles pressure on businesses

  • Multiple small tax changes announced at the Autumn Budget will create complexity for accountants and businesses
  • Small businesses will be feeling the pressure of new tax changes announced

 

ACCA, the leading global accountancy body, noted that while a commitment for greater stability in public finances is welcomed, including the alignment of economic strategy, a corporate tax roadmap and spending plans, it remains to be seen whether the announcements provide a much-needed boost to business confidence.

 

The changes announced continued the pattern of opaque changes to taxes, such as shifts to thresholds, to boost tax take in the short term, while avoiding long-overdue reform of our tax system, which will be necessary to create a long-term approach to investment and innovation.

 

Lloyd Powell, head of ACCA Cymru/Wales, said: “The focus on investment, economic stability, boosting growth and supporting public services are welcomed – with £1.7bn of additional funding for Wales though the Barnett Formula, the announcement on support for coal tips and a green hydrogen project in Bridgend.

 

“However, although partially offset by changes to allowances, the impact of the £40bn of increased taxes announced – including on Employer National Insurance contributions and thresholds and Capital Gains Tax – will be felt by many businesses across Wales. Business confidence, critical to encourage investment and stimulate growth, has been in short supply in recent months. Following these announcements, it’ll be more important than ever for these businesses to seek the advice of their accountants; to ensure they comply with changes, as well as refocusing business growth plans.

 

“Workers across Wales will welcome the decision not to increase Fuel Duty and to unfreeze Income Tax and NI thresholds from 2028/29.

 

“With a wide range of tax changes announced, the Chancellor should have gone further on simplifying the tax system, with the changes announced arguably adding to existing complexity.”

 

Glenn Collins, head of technical and strategic engagement, ACCA UK, added: “The UK tax landscape is already too complex, and yesterday’s announcements do little to address this. At a time when we need to see a longer-term approach to our tax system to support investment, we have seen more short-term adjustments to raise revenue, adding yet more complication. ACCA has repeatedly called for the government to commit to a programme of tax simplification and it was disappointing not to hear more about that from the Chancellor.

“Expectations were high ahead of the Budget. Ultimately it has left some questions unanswered, perhaps until the next phase of the spending review in spring 2025. Whether this will provide the clarity and certainty business needs remains to be seen.”

Business, Employment, FInance, Pensions

What are the political parties’ pension policies and is it enough?

With the general election fast approaching, political parties in the UK have set out the steps they propose to take with regards to pension schemes in their manifestos.

When in government, the Conservative party used the Autumn Statement and Spring Budget to announce their plans to make pensions more productive for the UK economy.

In April, the party applied the triple lock in full to the state pension for 2024-2025 (an 8.5% increase) and confirmed the abolishment of the lifetime allowance, while also proposing measures such as a pension ‘pot for life’ and the consolidation of small defined contribution pension funds.

The Conservative party has reaffirmed its commitment to the triple lock in its manifesto, introducing the ‘Triple Lock Plus’ which ensures that both the state pension and the tax free allowance for pensioners always rise with the highest rate of inflation, earnings or 2.5%.

The majority of the other political parties, from the national Labour and Liberal Democrats parties to the regional parties Plaid Cymru and the SNP who do not have devolved control of pension policy, are also committed to the triple lock.

The exceptions are Reform UK, who did not specifically mention the triple lock within their ‘Contract with the People’, and the Green Party who suggest that they would replace it with a double lock system linked to inflation and earnings, moving to a flat rate of pension tax relief in line with the basic rate of income tax.

Stuart Price, partner and actuary at Quantum Advisory, said: “Pensions are a key policy area for political parties as most voters will receive the state pension and employees are contributing to workplace pensions throughout their professional life.

“The increase in the state pension earlier this year thanks to the triple lock was welcome news for pensioners – a demographic likely to turn out for elections. The triple lock was especially welcomed by those who rely on this as their main source of income and is also an increasingly popular policy decision amongst adults over 40, with a recent survey by My Pension Expert revealing that over half (51%) of respondents stated that a commitment to maintaining the triple lock would significantly influence their voting intentions in the general election.

“Therefore, it is not surprising that many of the political parties across the country have stated within their manifestos that they will retain the triple lock. It is interesting to note that proposals to reform pension schemes are also being highlighted.”

Labour intends to review the pensions landscape and adopt reforms to ensure that workplace pension schemes take advantage of consolidation and scale, increase productive investment and boost the country’s growth. Green finance is also high on the party’s agenda, with a requirement for pension funds to develop and implement transition plans that align with the Paris Agreement, a plan also echoed in the Liberal Democrats and Green Party’s manifestos.

Other suggested reforms include the Liberal Democrats investing in helplines to ensure quicker responses to queries and underpayments for the state pension, the Green Party working closely with the higher education sector to tackle challenges regarding the Teachers’ Pension Scheme and Reform UK aiming to review pension provision and minimise the complexity of the system.

Stuart Price added: “Reforms to pension systems are good political strategies to enable growth and economic prosperity. However, what we really need is a full review of our pension system as it is clear that the younger generation are not saving enough, which will lead to huge problems in the longer term. The only real answer in my opinion is a legislative increase into the minimum contributions required under auto enrolment legislation from say, an 8% total to at least 12%. From what I have seen this is not mentioned in any of the political parties’ manifestos, which is disappointing.”

Awards, Events, News

2024 Institute of Economic Development Annual Conference open for booking, as Annual Awards also return

Early Bird registrations are now open for the 2024 Institute of Economic Development Annual Conference and Awards Dinner, the UK’s premier in-person event for economic development and regeneration professionals working for local and regional communities.

The IED Annual Conference, which this year will return to BMA House in London on Wednesday 6th November, is titled Economic Transition – How do we deliver long-lasting change in our towns, cities and regions?

Baroness Sharon Taylor of Stevenage OBE, Shadow Spokesperson for Levelling Up, Housing and Communities, is the confirmed opening keynote speaker. Other guest speakers include:

  • Adam Hawksbee, Deputy Director, Onward
  • Dame Irene Hays, Director, Hays Travel
  • Danyal Satter, CEO, Big Issue Invest
  • James Smith, Research Director, Resolution Foundation
  • Mel Barrett, Chief Executive, Nottingham City Council
  • Rachel Rowney, Chief Operating Officer, Local Trust

Tom Stannard, IED Chair, and Chief Executive, Salford City Council; and Bev Hurley CBE, IED Director and Chief Executive, YTKO Group, also feature in the conference programme with further speakers, breakout sessions and panels to be announced in the coming weeks.

Following the one-day conference, the IED Awards Dinner will take place in the Lutyens Suite at BMA House. The awards will once again recognise achievers in the public and private sector through a series of individual, team, and organisational categories. Eight categories are now open for entry and a ninth, Outstanding Contribution to Economic Development, will be selected by the IED Board and expert judging panel.

Leader of the Year

Economic development professionals who have demonstrated outstanding leadership and management in their role, and who motivate and inspire their team to achieve success through effective leadership.

Team of the Year

Exceptional economic development teams who have gone above and beyond in ensuring the smooth running and effective delivery of economic development functions in their organisations.

 

Rising Star of the Year

Younger economic development team members aged 30 or under (as of 1st June 2024) who have demonstrated excellence, commitment, and gone above and beyond in their early career.

Equality, Diversity and Inclusion Champion of the Year

Individuals who have strived to actively promote, celebrate and raise awareness of EDI, improving under-represented involvement in economic development in their organisation or externally.

Social Value Champion of the Year

Individuals who have championed and made a significant contribution to social value creation, developing best practice in their field and making positive impacts in their communities.

Most Innovative Project of the Year

Innovative economic development projects which have pushed the boundaries beyond traditional approaches and delivered additional beneficial outcomes as a result of the innovation.

Collaborative Initiative of the Year

Outstanding cross-sector economic development collaboration between two or more partners drawn from local authorities, private sector, third sector, business and academia.

 

Outstanding Impact

For projects delivered and concluded in the last five years, which demonstrate benchmarked evidence against other similar initiatives. Impacts could include environmental, social, business support (from start-up to growth and scale), rural development and regeneration.

 

*Outstanding Contribution to Economic Development

Individuals who have made a sustained outstanding contribution to any field of economic development over a minimum of 20 years.

 

*To be selected by Institute of Economic Development Board and expert judging panel.

 

To enter the awards, individuals/teams should develop a 500-word entry on ‘why they should win’ and a 50-word summary for promotion in the awards programme, together with an optional one page of additional evidence, and submit to admin@ied.co.uk by 5pm on 31st July.

Details of last year’s winners, and highly commended entries, can be viewed here.

“We are really looking forward to the Annual Conference and Awards Dinner in London, at a venue we know well, following a highly successful event as part of our 40th anniversary celebrations,” said IED Executive Director Nigel Wilcock. “Further details on our Economic Transition – How do we deliver long-lasting change in our towns, cities and regions? conference programme will be announced as and when speakers and sponsors are confirmed, but in the meantime we encourage members and non-members to take up the Early Bird ticket rates for the Annual Conference, which are available until 27th June, and to get their submissions in for the Annual Awards.”

News

Consumer behaviour influenced by personal politics, research reveals

Following Donald Trump’s electoral victory in 2016, a large number of people changed their brand preferences and shopping behavior, preferring to purchase brands which they perceived shared their political views, research from the University of Mannheim Business School reveals.

According to Professor Florian Stahl, Chair of Quantitative Marketing and Consumer Analytics and the University of Mannheim Business School, this trend was much more noticeable for liberals than conservatives.

“A stronger polarisation among liberals after the election of President Trump is consistent with the notion of compensatory consumption. Members of the politically threatened group take compensatory actions such as purchasing more liberal-leaning brands to better establish their political identity,” says Professor Stahl.

With colleagues from ESADE and Columbia Business School, Professor Stahl analysed data on the political leanings of all Twitter users who followed one of 307 major brand accounts between February 2016 and December 2018.

The researchers also harvested data from the YouGov BrandIndex and Nielsen Retail Scanner Data (a record of weekly sales for 27,043 brands) during this time period.

Their findings show an increase in political polarisation in Twitter brand followership, stated behaviour intentions, and actual purchasing decisions, after the election results.

These results were most pronounced in liberal-leaning consumers, who favoured brands that were openly critical of the Trump administration. This is in line with the growth of liberal activism since 2016.

The study was published in the journal Marketing Science.

News

Elections can change social norms, say researchers

News

Levelling Up: pre-White Paper perspectives from economic development professionals published

Ahead of the publication of the long-awaited Levelling Up White Paper, the Institute of Economic Development (IED) is sharing new insight which sets out the views of members on what is required from the UK government’s flagship policy.

Levelling Up: pre-White Paper perspectives from economic development professionals is a collection of thought leadership articles around what could be undertaken in respect of themes such as cities, towns, coastal settlements, community-led levelling up, widening opportunity and social capital, and structures. It then arrives at a series of conclusions drawn mostly from local authority members writing in a personal capacity.

IED Executive Director Nigel Wilcock, who led the development of the paper, said it was not an “attempt to prioritise the potential solutions” around Levelling Up. Instead, its main purpose was to collate and share a “huge body of expertise often based on the lessons learned from the past – both in the UK and more widely” – from a cross-section of its membership.

“It is our intention that each short chapter may offer something relevant to members (and beyond) and will stimulate further debate and thinking,” he explained. “These have tended to address themes from a slightly more spatial perspective than is expected in the White Paper, and of course once that White Paper has been published and considered, the IED will be responding more formally to the consultation. There are some commonalties within chapters but, remarkably, very few contradictory views.”

Levelling Up: pre-White Paper perspectives from economic development professionals goes on to highlight a number of “recurring themes”:

  • Levelling Up and economic development is about people and communities, yet they are frequently left out of the narrative. Community confidence, aspiration, skills and opportunity need to be at the centre of everything that is considered.
  • Trickle-down economics has not worked. Economic growth in the UK over the recent past has generally delivered benefits for a few whilst barely touching many. Against a backdrop of the Levelling Up agenda, much of the work undertaken can therefore be considered to have failed.
  • The failure of the various initiatives is partly because the approach was never designed to address inequalities – but also partly because the challenges relating to Levelling Up involve multiple issues covered by several different government departments and organisations. There is a need for far more cross-initiative working.
  • Attempting to work cross-departmentally within government is nirvana – often desired and seldom achieved. Considering interlocking issues at a local level is, however, more achievable and suggests that devolution should be deepened and accelerated.
  • The current approach to devolution is flawed – with local actors now responsible for administering the same Westminster funds with the same rules as before it is unsurprising that the outcomes achieved remain the same.
  • Devolution can better align local economic development with local needs and local governance. Such a model can address policy silos and should be aligned with the requirement to make economic development a statutory function.
  • Ensuring that economic development is a statutory function can then make certain that the delivery of economic development initiatives takes place against the backdrop of greater certainty with a focus on the long term.
  • There is no need for disheartenment from some of the initiatives failing – failure is a mechanism for refinement, but this is not recognised sufficiently within public sector approaches.

Nigel concluded: “Economic development has long been considered as a function that needs to address areas of market failure – it is this mantra that has shaped the profession. However, how might the profession be shaped for the decade ahead if we look down the telescope from the other end? Perhaps there are elements of economic development that would be shaped more effectively if they were considered outside of the market? Should we be completing gymnastics on a pin head to demonstrate the value for money of interventions to improve public realm; better align education and training with the economy; or address the most intractable problems in communities? Alternatively, in a world where Levelling Up is the new objective, should the better local statutory provision of economic development be a given?”

Contributors to Levelling Up: pre-White Paper perspectives from economic development professionals include economic development professionals based at Derby City Council, Harrogate Borough Council, Liverpool City Region Combined Authority, South & East Lincolnshire Councils Partnership and in Dumfries, South-West Scotland.

News

Family business groups yield the greatest political influence

Family business groups are better positioned to play the political game than their non-family counterparts and benefit their affiliate firms, according to new research by emlyon business school.

The study, conducted by Professors Addis Gedefaw Birhanu and Filippo Carlo Wezel, looked into whether business groups have a competitive advantage in the political environment in comparison to non-family-owned businesses and which type of company ownership is more likely to leverage this advantage.

The researchers found that the overlap of management and ownership, and their stability over time, grants family business groups an edge over other firms when it comes to developing trust and exchanging favours with a low risk of traceability with politicians.

In order to find this, the researchers analysed the context of Egypt and Tunisia when they experienced a sudden and peaceful government change following the Arab Spring.

This government change disrupted the ‘ruling-bargain’ that dominated those countries for several decades and allowed researchers to measure the lost benefits of political influence and identify if certain business groups benefit more from political influence than others.

“Our research found evidence that family business groups have unfairly benefited from the privatisation of state-owned firms, privileged access to licenses and scarce resources such as land for real estate development, and loans from government owned banks,” says Professor Birhanu.

However, the results also revealed that while affiliation with family business groups is beneficial, in contexts like Egypt and Tunisia, abrupt political changes can cost these firms profoundly.

The research revealed that during the Arab Spring, affiliates of family business groups suffered a huge profit loss, as high as 29 per cent, of the average profitability in the sample.

The researchers say that any policy intervention that aims to address the political influence of family business groups should focus on the macro-institutional conditions that make political influence more attractive than attempting to weed them out.

The research paper was published in the journal of  Strategic Organisation.

Business Research, News

Top business school partners with geopolitical think tank

From power relations between countries, to issues around maritime zones and trade wars, today geopolitics is an essential skill for managers to understand. This is why ‘IRIS Sup’, the school of the French Institute for International and Strategic Affairs (IRIS) and NEOMA Business School, have signed a new global partnership.

‘IRIS Sup’ is one of France’s leading think tanks specialising in geopolitical and strategic issues, and alongside NEOMA, they have now joined forces to strengthen their teaching in geopolitics and management.

Ranked among the best think tanks in the world on foreign policy and international affairs, IRIS is the only think tank in France that directly links a research centre and a school. With this partnership, IRIS Sup’ will now offer NEOMA students the opportunity to follow a course of study specialising in geopolitics that is renowned and recognised by the world of work.

“It is absolutely necessary to provide future managers with solid knowledge to better understand the current world,” says Michel-Edouard Leclerc, President of NEOMA Business School and member of the IRIS Board of Directors.

“The Covid-19 crisis, the American presidential elections, the rise of China, and the possible European awakening are all elements that prove that external events have immediate repercussions within our borders. Having an education in geopolitics is no longer a choice, it is a necessity,” says Pascal Boniface, Director of IRIS.

The partnership will provide four mixed courses around topics such as geo-economics, risk management, corporate responsibility, defence, security, and crisis management – to name a few.

“The courses are extremely complementary: at NEOMA, students acquire a good knowledge of how companies work, and at IRIS, they will acquire monitoring methods and develop their capacity for analysis and decision-making in complex international environments,” says Christine Aubrée, IRIS’s director of courses.

“More and more students are passionate about these subjects. They are aware that geopolitics is an integral part of business development”, says Delphine Manceau, Dean of NEOMA Business School.

NEOMA’s mission is to respond to this expectation and to help students develop a sharp eye for the realities of the international world.

News

59% of consumers believe taking a stance matters, research reveals

New research by Kubi Kalloo shows brands can gain exponentially by understanding consumer opinions
Opinion split on whether companies are being authentic or opportunistic when engaging with social and political issues
15% of consumers had already boycotted brands on the basis of the stance they had taken

London, UK, 16 March 2021: Brands can and should take a stance on social and political matters, according to new research by Kubi Kalloo and its partner Alligator Digital. A survey of 600 people in both the US and UK has uncovered that 59% of consumers believe taking a stance matters. Of this percentage, two-thirds take the issue seriously and are likely to buy from or boycott a brand based on their social media posts about an issue.

In a year that has seen major social and political upheaval, with movements such as Black Lives Matter, an accelerating climate crisis, and human rights issues gaining traction and spreading through social media channels, the way brands respond to these events directly impacts how consumers view them. The survey also found that 15% of consumers had already boycotted a brand based on their response to the Black Lives Matter movement – this figure rises to 1 in 4 for consumers under the age of 35 years. This doesn’t mean it is less risky to avoid the conversation. Rather, it shows that brands need to know how and when to join the conversation.

Knowing your consumer = how and when to act

Kubi Kalloo’s research tested three examples of social media posts of brands responding to a social and human rights movement and the consumer reaction to them. The first post was simply relaying the message, the second post was educating the consumer, and the third post was evidencing commitment to change at a broader level.

Among one consumer type, the brand taking a stance and committing to change, rather than solely relaying the message of the social issue, saw a 14% increase in intent to purchase after seeing the social media posts; it resulted in the group feeling the brand was more inclusive (+14%), progressive (+12%) and inspiring positive change (+12%). These positive changes in perception of brands committing to change were evident across each of the consumer segments.

In having a social or political voice, the research shows the necessity for brands to understand the consumer audience to make sure they are supported. The jury is still out on whether brands should join the conversation, with 53% saying brands and politics shouldn’t mix for instance, and 47% they should. But the findings are clear signs this proportion is changing, and strong incentives for brands to get involved in the conversations that matter to them.

Kristin Hickey, CEO and Founder of Kubi Kalloo, comments: “Does taking a stance actually matter? Yes, it does. Brands taking a stance on important issues in our society impacts how people feel about them and whether they choose to engage with them or turn their backs. Brands can be beacons of and influencers for important cultural change. However, the divide in results highlights that an intimate knowledge of your audience is really crucial when taking these stances, now more than ever; the opinions of a more socially-conscious consumer are being formed, and they are expecting brands to ‘do the right thing’.

Speaking up can be powerful; backing it up with behaviour is better

These results show the need for brands to be bold, make themselves suitable for the conversation and back up their statements with tangible action. Currently, only 45% of people believe that brands are being sincere when they take a social or political stance, with the 55% majority tending to believe they are being opportunistic. This position changes significantly, however, when people are exposed to evidence of authentic transformation at the heart of the brand and business operations supporting it, as evidenced by the results of the brand committing to change.

Kristin continued: “Once you know your consumer, you then need to ask ‘How do I communicate our brand values to this consumer?’. It is evident from this research that taking a stance needs to be supported with action, but also evidenced by action. Make sure your brand is not just talking but is actually doing something, otherwise consumers are likely to see your stance as inauthentic and simply opportunistic – there are plenty of examples of brands contradicting their statements with how they actually carry out their businesses.”

Kristin concluded: “The issues brands are speaking about are having a huge impact on the lives of real people. It’s important to take a stance, but in doing so you must understand that your actions will have a tangible impact. With appropriate understanding of the issues at stake, brands can activate their voice positively and with minimal downside risks. But it all comes down to knowing your audience, respecting their emotions, owning your own brand values and evidencing you are actioning them, not just posting them.’

About the research:
The research was self-sponsored and supported by Kubi Kalloo’s partners Alligator Digital. The survey was a case study of 600 people in the US and UK, and the sample was balanced for gender, age, region and political ideology. The research also included a series of focus groups and WhatsApp tasks discussing consumers positive and negative examples of brands.

News

Why COVID-19 will change European business forever

By Professor Régis Coeurderoy & PhD candidate Xuejing Yang from ESCP Business School

The Covid-19 pandemic has caused worldwide disruption and we are now facing potentially tremendous changes, including de-globalization. The largest European companies could be seriously damaged by this, and Europe will need to help new industries emerge with a solid regional basis if they want to survive.

By comparing the development over the past two decades of the largest multinationals in Europe Middle East and Africa, Americas, and Asia Pacific regions, we can assess Covid-19’s short term and long-term effects on European companies, and the potential consequences of de-globalization. What we see is that European companies have the highest dependence upon host regions, while Asian and American companies remain strongly dependent upon their home regions. Therefore, the dependence of European business on the global economy under certain circumstances, will create a vulnerability among European companies if de-globalization does occur. Therefore, in the short run, Europe could be the main victim of a strong post Covid-19 de-globalization wave; and therefore, it will need to help new industries emerge with a solid regional basis for its future competitiveness.

This is reflected when we look at emerging industries across the globe. Industries are constantly evolving, and in the past two decades, many industries have disappeared and others have emerged. The largest European companies currently rely heavily on traditional industries such as oil and gas, yet across the globe we can already see a large number of new innovations in the medical, biotechnology and Information Technology industries, which are concentrated in the United States. This is due to the rapid rise in the demand for personal protective equipment (PPE), testing and tracing, and the surge for healthcare capacity. Therefore, Europe should be prepared to increase investment in these industries and plan in advance if they are to ensure stability for their economies in the future.

As well as healthcare, during this pandemic we have also seen the developments that car makers like Ford, Tesla and GM have been helping to solve the shortage of ventilators and masks through the flexible production lines of their Industry 4.0 factories – this opens up a new perspective on the future of manufacturing development. The production mode of Industry 4.0 will allow the production of various commodities to function through one single manufacturing facility. This may redefine the supply chain, and countries may accelerate the adoption of the flexible production model of Industry 4.0, thereby reducing the dependence of key products on the international supply chain. This should be an opportunity for Europe to increase the investment of innovation through Industry 4.0 and increase exposure to the future of manufacturing industry.

EU countries should be more united to form an integrated economy and larger internal market, in order to enhance the competitiveness of European companies. As well as this, European companies should definitively increase the efforts for investments that Industry 4.0 provides, specifically in the healthcare and manufacturing industries. Ultimately, the increased adoption of Industry 4.0 amongst European companies could be a great opportunity for them to prepare for the potential threats of de-globalization.