The auto-enrolment scheme will start in October 2012 and will mean that all employers will be required by law to enroll their employees into a pension and make contributions to it on their behalf.
The employer’s contribution will be a minimum of 3 per cent of the employee’s salary and workers will have the chance to opt out if they wish. The move is aimed at cutting the ballooning private sector pensions deficit.
The survey also revealed that the burden is likely to fall hardest on small firms. Currently 95 per cent of firms that do not have any pension arrangements for employees into which the employer contributes are SMEs.
Commenting, Miles Templeman, Director-General of the IoD, said: “The Government shouldn’t underestimate the cost burden that auto-enrolment is going to place on small firms. Bigger businesses will mostly have pension arrangements for employees set up. Of course we need to improve retirement provision in the UK, but yet again it’s the small entrepreneur who is hit.
“Since the Government isn’t prepared to change course on what’s essentially a major piece of employment regulation, it needs to compensate for this burden with an equally significant deregulation elsewhere. Phasing in auto-enrolment buys us some time, but the private sector can’t be expected to bounce back and create new jobs in the longer run if the Government keeps dropping new cost burdens on firms.”
The survey found that a third of companies would freeze salaries to pay for the scheme, while 9 per cent would cut wages. Some 34 per cent said they would have to pay for contributions from profits, heaping financial pressure on already cash-strapped businesses.
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( 3 / 218 )Small businesses that use online trading platforms, such as Ebay and Gumtree, are being targeted by the HM Revenue & Customs (HMRC).
The tax affairs of businesses that use websites to trade online will be under the scrutiny of the taxman, who will be monitoring computer systems with a hope that they will recognise the businesses that are not paying “the right tax”.
The latest drive against tax evaders follows last year’s similar campaign against the medical profession, which was hailed as a success by the HMRC, raising £10 million from unpaid taxes and fines.
Dance and fitness coaches, private tutors, and cash-in-hand traders, who have the ability to hide second incomes, will also be targeted as part of the HMRC’s aim to recover £7 billion, which is lost to the Treasury each year.
The HMRC will also be on the lookout for tradesmen who are willing to work without charging VAT.
It is hoped that the campaigns will encourage dishonest traders to voluntarily declare their unpaid taxes. If businesses and traders are caught, the campaigns will see them being offered a partial amnesty with penalties capped at between 10 per cent and 20 per cent of their outstanding tax from the last five years.
However, those who fail to act will face fines of between 35 per cent and 100 per cent of the tax evaded.
Mike Wells from HMRC said: “We will use the information we gather to pursue people who choose not to use the opportunities we provide for them to put their affairs in order on the best possible terms. It will be more expensive if we come and find people, so I urge them to come forward and disclose voluntarily.”
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( 2.9 / 204 )A worrying picture was painted today of the state of the UK’s labour market with news that the number of people claiming Jobseeker’s Allowance in May rose at its fastest pace in two years.
However, according to the Office of National Statistics (ONS), unemployment figures fell by 88,000 to reach 2.43 million, which is the largest quarterly drop since summer 2000, taking the employment rate down from 7.9 per cent to 7.7 per cent.
The rise in the number of people claiming unemployment benefits, for the third month in a row, was unexpected. Analysts have cautioned that some of the rise may be due to changes in benefit rules.
The statistics also revealed that more people are entering into part-time work due to failing to find full-time work. The ONS said the number of “under-employed” increased by 46,000 in the three months to April to reach 1.21 million, which is the highest figure since records began in 1992.
According to the ONS, the number of people who left unemployment was almost matched by the number who entered new jobs with the employment total reaching 29.24 million.
Chris Grayling, Employment Minister, said: "This is another encouraging set of figures and a very welcome drop in unemployment. It's also good news that employment is going in the right direction with half a million more people in private sector jobs compared to this time last year.”
Private sector employment rose by 520,000 during the course of 12 months to the first quarter of 2011. The public sector cut numbers by 143,000, leaving left total employment up by about 376,000.
Howard Archer, chief economist at IHS Global Insight, said: "The labour market is currently showing resilience in the face of a struggling economy, but the key question is can it last? We have serious doubts about this and suspect that unemployment will head up in the second half of the year as public sector jobs are increasingly pared and private sector companies become more cautious in the face of persistently sluggish growth."
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( 3 / 223 )The UK inflation rate remained at its two-and-a-half year high of 4.5 per cent in May.
A fall in the cost of travel helped to keep the rate from rising even further as it compensated for the continuing rise of food prices.
Figures released by the Office for National Statistics showed that consumer prices rose by 0.2 per cent and the annual increase in the cost of living as measured by the consumer prices index remained at more than double the Bank of England's 2 per cent target.
The steady reading follows the unexpected strong jump in April. This was due to the increased prices set by travel providers and airlines in the run-up to Easter and the extra holiday for the Royal Wedding.
The figures also showed that "core inflation", which takes out food and energy, fell from 3.7 per cent to 3.3 per cent in May.
With the inflation rate remaining unchanged, pressure will have eased for the Bank of England to raise interest rates from 0.5 per cent. However, the Bank of England has warned that inflation may hit 5 per cent later this year before falling back towards target by 2013.
The central bank is worried that people will put more pressure on employers for pay rises if they expect inflation to remain high. This would then lead to higher prices, which is known as a wage-price spiral.
Consequently, the Bank of England said that there are very few signs that inflation expectations have affected price or wage setting behaviour.
Hetal Mehta, UK economist at Daiwa, said: "While there was no upside surprise on the headline CPI figure, inflation still remains well over the Bank's target and is likely to rise even further in the next couple of months as higher commodity prices feed through. Nevertheless, the current inflationary forces are largely temporary in nature, and a marked fall in January next year is expected once the VAT increase falls out of the calculations.
"As such, we still think the Bank will look through the short-term spike. And the fact that core inflation fell to 3.3 per cent will be reassuring to the Bank, and further diminishes the prospects of a rate increase this year."
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( 2.9 / 222 )Customers of Barclays Bank, who were mis-sold payment protection insurance (PPI), are to be reimbursed the total value of all premiums along with 8 per cent interest.
PPI customers of Barclays who made a complaint before April 20 are to be fully compensated following a judicial review decision. Barclays agreed to process all of the complaints, including those that were put on hold due to having to wait for the outcome of the High Court judgment.
In a statement, a spokesperson for Barclays Bank said: “We have said before that when we get things wrong, we apologise, and work hard and work fast to put them right as quickly as possible.
"Working in close co-operation with the Financial Services Authority and the Financial Ombudsman Service, and in recognition of the delay customers have experienced whilst awaiting the outcome of the High Court judgment, we can confirm that we are contacting customers whose complaint was put on hold on or before 20 April with an offer to settle their complaint in full as a gesture of goodwill."
This week, letters will be sent out to PPI customers confirming that they will be reimbursed, and then on August 31, customers will receive a further letter with full details of their compensation.
Peter Vicary-Smith, chief executive of Which?, said: “Banks have a lot to do to rebuild their reputation after over a decade of mis-selling PPI and then mishandling complaints about it.
"It’s fantastic to see Barclays stepping up in this way, acknowledging their mistakes and refunding customers what they’re owed, no questions asked. Hopefully this will have a domino effect and other banks will follow suit – the sooner the banking industry can consign the PPI mis-selling scandal to the history books, the better.”
To help banks handle their PPI complaints, the Financial Services Authority (FSA) today agreed to temporary arrangements for Barclays, Lloyds Banking Group and RBS, to ensure that they are able to handle the complaints properly. Arrangements include extending the periods of time banks have to deal with the backlog of on hold PPI complaints and the vast amount of new complaints.
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