Mr Balls made his comments in response to the governments “funding for lending” scheme, which was announced last week and aims to lower the cost of borrowing.
The Shadow Chancellor said: “The figures show that lending has fallen every month for the last couple of years. There is clearly an element of banks needing to build their balance sheets but it is much more to do with demand rather than supply of credit.
“I am deeply sceptical that the reason why banks wouldn’t be lending to corporate customers at the moment is because corporate customers feel the cost of finance is the real hurdle.
“Fundamentally it is about confidence and expectations of market growth rather than the availability of credit.”
He added: “The right thing to do is to inject stimulus into the economy. I would have a VAT cut right now.”
Speaking following the announcement of the “funding for lending” scheme, John Cridland, CBI director-general, said in a statement: “The Bank of England's action on liquidity is a sensible pre-emptive move and will provide new liquidity to banks at a time of greater Eurozone related turbulence in the financial markets.”
He added: “The new 'Funding for Lending' scheme will need to be practical for banks to participate, offer lower funding costs than found on the markets and most importantly, be easily accessible to small and medium-sized businesses who will be the backbone of our future economic recovery.”
For more information, speak to London Accountants Harris Lipman.
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( 3 / 145 )Yesterday (June 14th 2012) the government published their banking reform white paper, which sets out proposals for implementing the recommendations of the Independent Commission on Banking (ICB).
Under the proposals outlined within the white paper, the government are set to ring-fence retail banking operations from riskier operations such as investment banking; and the Financial Secretary to the Treasury, Mark Hoban, told the House of Commons: “The government will ring-fence retail deposits from the risks posed by international wholesale and investment banking.
“A ring-fenced bank will be economically and legally separate from the rest of its group, and run by an independent board.”
Although the government have announced proposals to ring-fence retail banking from investment banking, the government have also made some concessions after lobbying by the banks.
As part of the concessions made from the government, the ring-fenced banks will be able to offer simple hedging products, subject to the necessary safeguards; whilst smaller banks, with a value of less than £25 million, will not be required to set up a ring-fence despite the ICB proposals.
The government have also opted not to apply a higher leverage ratio to large ring-fenced banks.
Within the Vickers report, the ICB had called for the biggest banks to have a ratio of four percent in an attempt to limit the risks they take; however the government does not see a case for increasing beyond the Basel III level, currently proposed at three percent.
For more information, speak to London Accountants Harris Lipman.
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( 3 / 141 )A report from the Parliament’s official auditors, the National Audit Office (NAO), has revealed that tax officials failed to follow their own strict rules whilst negotiating deals, which allowed corporations to withhold billions of pounds in tax.
The report was ordered after the public accounts committee questioned the way Goldman Sachs was let off up to £20 million in tax on a handshake with the permanent secretary for tax, Dave Hartnett.
Within their report, the NAO have said that HMRC did not seek proper legal advice, involve its own specialists or even take notes whilst negotiating settlements with large companies.
However, despite these findings, the NAO concluded that five negotiated settlements, which were the subject of the report, were “reasonable” and fair to the public purse.
Although the NAO have concluded that the five negotiated settlements were “reasonable” and fair to the public purse, the chair of the public accounts committee, Margaret Hodge, claims that questions still remain over why officials bypassed the proper processes.
She said: “With billions of pounds of tax at stake it is extremely worrying that the department failed to involve its own specialists in the final negotiations and follow its own rules by settling for less than it could have won in litigation.
“These deals have sent a message that it's one rule for big business and another rule for everyone else.”
For more information, speak to London Accountants Harris Lipman.
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( 3 / 120 )Leading think-tank, the Organisation for Economic Cooperation and Development (OECD) have suggested that over the last decade, out of nearly all other countries in the developed world, UK workplace pension schemes have returned some of the worst results for its savers.
According to the OECD, British pension company returns fell 0.1 percent every year between 2001 and 2010, whilst nearly all other developed countries saw their pension pots swell – with Spain and the USA being the exception.
Within its OECD Pensions Outlook 2012, which reveals the performance of pension schemes throughout the developed world, the OECD pointed to a growing role for private pension firms within the UK, in closing the gap between pre and post retirement.
The OECD also suggest within their Pensions Outlook 2012 that the introduction of auto-enrolment pensions to the UK later this year, for all workers not currently covered by private pension plans, should increase the uptake of occupational pension schemes.
Following the release of the figures, Policy Director at the National Association of Pension Funds, Darren Philp said: “Investment performance has been very poor because of the exceptionally weak worldwide economic environment. UK funds are broadly in line with the global average but that performance is disappointing nonetheless.
“Final salary pension schemes have generally been moving out of equities in recent years as they attempt to trim their exposure to risk.”
He added: “The UK will struggle to pay for its retirement and the weak returns of recent years make it even more important that we improve these pensions. Strong workplace pensions are a must.”
For more information, speak to London Accountants Harris Lipman.
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( 3 / 114 )Former Cabinet Secretary, Lord O’Donnell, has claimed that the Treasury is in “danger of being swamped by the pressures placed on it” and should consider receiving funding from the financial services industry.
Speaking for the first time in the House of Lords, since stepping down as Cabinet Secretary last year, Lord O’Donnell warned that the Treasury may be struggling to address the problems caused by the ongoing global financial crisis, with his comments coming amid criticism that the Treasury has failed to develop radical policies to help boost economic growth.
During his speech, Lord O'Donnell suggested that part of the department dealing with financial services and stability could be funded by the financial industry to save taxpayers' money.
Along with suggesting that the Treasury should consider receiving funding from the financial services industry, in a similar way to the Financial Services Authority (FSA) and the City regulator, Lord O’Donnell also warned that too many Treasury officials are leaving and that pay levels were too low.
He told the House of Lords that it was in everyone’s best interests for the Treasury to continue to recruit the best, adding: “Otherwise the Treasury is in danger of cutting off its arms, as well as its nose, to make its hair shirt fit.”
For more information, speak to London Accountants Harris Lipman
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